SC imposes green levy on trucks entering Delhi (12-10-2015)
We are facing an unprecedented situation: Sahitya Akademi chief (12-10-2015)
Clueless Sahitya Akademi as authors return awards (12-10-2015)
StanChart’s global restructuring to see less impact here (12-10-2015)
FPIs debt limit auction sails smoothly amid higher demand (12-10-2015)
Investment in food start-ups rises 93% in 2015 (12-10-2015)
DBT plan saves Rs 14,672 cr on liquefied petroleum gas subsidy in a year: Govt (12-10-2015)
Retain ‘buy’ on Motherson, target Rs 340: UBS (12-10-2015)
Maintain ‘buy’ Motherson Sumi Systems, but reduce target price to Rs 340 (earlier Rs 355). We believe MSSL is a key beneficiary of increasing auto demand in India given its dominant position in India’s wiring harness market. We expect strong revenue growth and margin expansion in SMR and SMP businesses, driven by a strong order book. We, however, reduce our EPS for FY16 and FY17e 7% and 5%, respectively, as we now build in a more conservative margin improvement trajectory for the SMR and SMP businesses. We expect SMR/SMP ebitda margins (IFRS) to improve from 9.8% and 5.6% in FY15 to 11% and 7% by FY17 versus 12% and 8% previously.
We believe Motherson’s global business should continue to trade at the higher end of the space, given the strong medium term growth outlook and management’s strong ability to add value through acquisitions. We roll forward our price target by three months.
In our downside case, we assume SMR (mirrors) and SMP (polymers) business revenues to grow at 10% CAGR over FY16-18 and expect no ebitda margin improvement for these as well as the India business from FY15 levels. We get an EPS of Rs 10.58 and 12.5 for FY17e and FY18e respectively. Thus in our downside case the stock is trading at 23x FY17e P/E, which does not seem unreasonable for the 24% EPS CAGR over FY15-18e.
‘Hold’ GAIL as a proxy for oil: HSBC (12-10-2015)
Retain ‘hold’ on Gas Authority of India (GAIL) but lower our target price to R330 (earlier R385) as we adjust for lower oil prices and marginally lower gas volume. We continue to value GAIL on a sum-of-the-parts basis. We value the transmission segment at an 8x EV/ebitda, in line with global peers, and the LPG segment at 6x, which is a mid-cycle multiple, in line with peers. We value investments at a holding company discount of 20% to market prices.
GAIL’s business suffering due to low oil price. GAIL has four main businesses, three of which depend directly on the price of oil. A low oil price therefore is not good for company’s profitability. Note that GAIL has doubled its gas cracker capacity.
We have cut our estimates of the profitability of the LPG and Petrochemical divisions to factor in our reduced oil price assumptions of $55.4 per barrel for CY16e, $60 per barrel for CY17e, $70 per barrel for CY18e, and $80 per barrel for CY19e (versus $62.5 per barrel, $75 per barrel, $90 per barrel and $95 per barrel previously), in line with HSBC’s house view.
We have also lowered our FY16e, FY17e and FY18e gas transmission volume assumptions to 91, 97, and 110 mmscmd, respectively (from 97, 107, and 117). Another overhang is the ongoing dispute with Qatar on take-or-pay obligations due to lower offtake of term volume.
Infosys drags technology stocks lower (12-10-2015)
Infosys shares declined nearly 4% on Monday as the company lowered its FY16 dollar revenue guidance range to 6.4-8.4% from 7.2-9.2%. Infosys, however, retained its constant currency revenue guidance for FY16 at 10-12%. The scrip closed at Rs 1,122.50 on BSE – down Rs 45.35, or 3.88%.
In a volatile session of trading, shares of Infosys – India’s second-largest IT company — started on a positive note as the stock hit its 52-week high on both BSE and NSE. A total of 1.64 crore shares changed hands across the stock
exchanges – four times the three-month daily average of 44.6 lakh.
During the quarter ended September, Infosys’ net profit rose 12.1% sequentially to Rs 3,398 crore while the rupee revenue went up 8.9% to Rs 15,635 crore. On the other hand, dollar revenue climbed 6 % to $2.392 billion, making it the steepest climb in 16 quarters.
The overall financial performance of the company continues to look good and IT stocks will recover in the near term, said an analyst with a domestic brokerage firm requesting anonymity, adding that Infosys has seen a great improvement in aspects like attrition rates of its employees. For the quarter ended September 30, Infosys
reported an annualised standalone attrition rate of 14.1% – down nearly 700 bps year-on-year.
The decline of Infosys shares dragged other IT scrip as the BSE Teck index closed 117.39 points, or 1.87%, lower. In the IT universe, shares of TCS – India’s largest IT company – lost 1.21% while shares of Wipro lost 1.24%.
Shares of HCL Technologies, however, closed 0.7% higher. During last week, HCL Technologies issued a revenue warning for Q1FY16. In a filing to the stock exchanges, the company said it expects a tepid US dollar revenue growth during Q1 due to negative forex impact of 80 bps, a slowdown in the infrastructure management services (IMS) segment due to transition issues and client-specific issues in a public services application development and maintenance (ADM) project, which should lead to a provision of $20 million.
The IT scrips have outperformed the benchmark indices during the current calendar so far. The sectoral index for IT shares on BSE gave more than 5% yields during the year against -2.2% returns by Sensex. Brokerages continue to sound bullish about the prospects of IT scrips.
Switzerland-based investment banking firm Credit Suisse said in a note to investors that Q2FY15 earnings for IT companies would be positive. “September 2015 is likely to be a strong quarter for most Indian IT firms due to seasonal strength and favourable moves in the key currencies like dollar. We believe that the demand environment remains stable and this quarter’s underlying growth trends may reflect the same,” said Anantha Narayan director-equity research, Credit Suisse, in the report.