26 September 2010
Economic Times: Week ahead: Positive momentum likely to continue on Dalal Street: Analysts
NEW DELHI: Stock market is likely to extend the positive momentum this week, as India remains the hot spot for foreign funds inflows, the main driving force behind recent bull run, analysts have said.
"Overseas investors are pouring in money in local equities and the trend is likely to continue for coming days, which will help the market to extend gains this week also," Bonanza Portfolio Vice President (Research-Equity) Avinash Gupta said.
Though volatility in the markets cannot be ruled out, as the expiry of derivative contracts is due this week, he added.
With problems still not over in Europe and more slowdown expected in the rate of Chinese economy growth, India and some Asia-Pacific countries remain obvious choices for foreign funds.
"This trend is likely to continue for some time and the positive momentum is likely to be there in the Indian markets this week also," brokerage house ICICIDirect said in a note.
After more than 32 months, both the benchmark BSE Sensex and NSE Nifty revisited the 20,000 and 6,000 levels last week, fuelled by strong FII inflows.
On a week-on-week basis, the Sensex gained 450 points or 2.3 per cent to close at 20,045.18, while the Nifty rose by 133 points or 2.3 per cent to 6,018.3 points at close. Market posted fourth weekly consecutive gains.
"The vertical breakout suggests that markets are likely to move further higher," Globe Capital Markets Senior Research Analyst Nirav Vakharia said.
Though equity analysts say investors should take cautious approach as market is at a very high level, they do not expect sharp correction in the coming days.
"It appears that it will require some significant negative development in the global space for Indian markets to fall significantly from here. Otherwise, we may see some occasional profit booking," an analyst said.
Brokers said US GDP data for the second quarter would be an important event to watch out for this week.
"GDP data of US and UK, consumer confidence data and employment data of US may give further direction to equities," SMC Global Securities Research Head (Retail) Saurabh Jain said.
Source: Economic Times
MS Advisory and PMS: IPO Recommendations: Subscribe - VA TechWabag, Tecpro Systems
MS Advisory and PMS: IPO Recommendations
Subscribe: VA TechWabag, Tecpro Systems
May Subscribe: CantabilRetail, AshokBuildcon
ICICI Securities: Buy IDFC
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Company Background IDFC is a specialised financial intermediary with existing businesses in project finance, principal investments, asset management (for third party funds), investment banking, institutional broking and advisory services. The company has a strong management and has depicted a consistent performance with 19% CAGR in PAT during FY08-10. We expect advances to grow at 26% CAGR to | 39652 crore and PAT at 20% CAGR to | 1534.8 crore over FY10-12E.
Advances growth at 39% YoY and 15% QoQ to | 28901 crore led to a sharp rise of 38% YoY and 6% QoQ in NII in Q1FY11. We expect NII to grow at 23% CAGR over FY10-12E due to assets growth. NIM has remained stable at 3.6% though we believe the same will come under slight pressure with rising rates. However, infrastructure status, on the other hand, should help guard against a sharp rise in cost of funds. Proportion of non-interest income has been hovering around 44-47% of total income. We believe with the loan book building up, this proportion will decline to 41% by FY12E. The AUM size stands at $6.9 billion generating hefty fee-based income protecting bottomline. Income from investment book also remains a 30% contributor to non interest income.
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Kotak Sec recommends: Shri Lakshmi Cotsyn - target price Rs 220
Shri Lakshmi Cotsyn (SLC) is a leading manufacturer of quality textile
products like fusible interlining, fabric, suiting, shirting, terry towel,
home furnishing, garments, quilt fabric and comforters. It also
manufactures specialized products like fire retardant, waterproof, nuclear
bio chemical and camouflage printed fabric. It exports to reputed clients
like IKEA, Wal-Mart and J C Penny among others. It has successfully
diversified into defense products like bullet proof jackets, helmets and
protected armored vehicles which are bulletproof and blast proof. Due to
expansions in technical textiles and focus on higher margin defense
business we expect PAT of SLC to grow at CAGR of 24.4% from FY10 to
FY12E. At the current market price of Rs.154 SLC is trading at very
attractive valuation of 3.3x FY12E fully diluted EPS of Rs.46.6. We are
positive on the medium to long term growth prospects of SLC. Therefore,
we are initiating coverage with a BUY recommendation on SLC with a
price target of Rs.220 (43% upside potential) over a 12-month horizon.
This is based on the DCF method of valuation, with 12.6% WACC and
4.0% terminal growth rate.
Gray Market Premium Prices for India IPO: Sept 26, 2010
Company Name | Offer Price | Premium |
(Rs.) | (Rs.) | |
Indosolar Ltd. | 29 (Lower Band) | DISCOUNT |
Tirupati Inks (FPO) | 43 (Upper Band) | 6.5 to 7 |
Career PointInfosystems | 295 to 310 | 150 to 155 |
Eros International | 158 to 175 | 43 to 45 |
Microsec Fin | 113 to 118 | 15 to 17 |
RamkyInfrastructure Ltd. | 405 to 468 | 32 to 35 |
Orient Green Power | 47 to 55 | DISCOUNT |
Electro Steel | 10 to 11 | 1.10 to 1.20 |
Gallantt Ispat | 50 (Fixed Price) | 5 to 7 |
VA TechWabag | 1230 to 1310 | 300 to 325 |
CantabilRetail | 127 to 135 | 14 to 15 |
Tecpro Systems | 340 to 355 | 30 to 32 |
AshokBuildcon | 297 to 324 | 25 to 27 |
Sea TV Network | 90 to 100 | 19 to 20 |
Bedmutha Ind | 95 to 102 | 8 to 10 |
Business Line: VA Tech Wabag — IPO: Invest at cut-off
VA Tech Wabag — IPO: Invest at cut-off
Strong foothold in developing nations, sound financials and debt-free status are positives.
Business Line
Investors with a long-term perspective can consider subscribing to the initial public offer of VA Tech Wabag (VA Tech), an Indian water solutions provider with a multinational presence. Well-entrenched in the high-potential water-treatment business, strong foothold in developing nations, sound financials and debt-free status buttress our recommendation.
Business Line: Tecpro Systems — IPO: Invest at cut-off
Tecpro Systems — IPO: Invest at cut-off
The company's edge in the ‘balance of plant' space lies in its well-entrenched presence in coal and ash handling projects.
Business Line
An established track record of project execution, quality order book and technical collaboration with international players, besides high trajectory of earnings growth strengthen the prospects of material-handling player Tecpro Systems. Investors with a two-year perspective can consider investing in the initial public offer of Tecpro. The offer price of Rs 340-355 discounts the company's consolidated per share earnings estimated for FY-11 by 12-13 times. The valuation is at a good discount to peers such as McNally Bharat Engineering and TRF.
Business Line: Ashoka Buildcon — IPO: Invest
Ashoka Buildcon — IPO: Invest
With a sizeable order book from third parties in road and electrical works, the company is in a position to capitalise on the considerable potential in these segments.
Bhavana Acharya
Business Line
Investors may subscribe to the initial public offer of infrastructure player Ashoka Buildcon. At the upper end of its price band of Rs 297-324, the offer discounts FY-10 consolidated earnings by 22 times and estimated FY-11 earnings by 14 times. Larger players in this space such as Jaypee Infratech and IRB Infrastructure trade at valuations of 21-22 times the trailing earnings. However, Ashoka may have scope for higher growth.
Business Line
Investors may subscribe to the initial public offer of infrastructure player Ashoka Buildcon. At the upper end of its price band of Rs 297-324, the offer discounts FY-10 consolidated earnings by 22 times and estimated FY-11 earnings by 14 times. Larger players in this space such as Jaypee Infratech and IRB Infrastructure trade at valuations of 21-22 times the trailing earnings. However, Ashoka may have scope for higher growth.
Business Line: Cantabil Retail — IPO: Avoid
Cantabil Retail — IPO: Avoid
Despite healthy revenue and margin growth and diversified offerings, execution risks and other challenges dampen prospects.
Bhavana Acharya
Business Line
Investors may avoid subscribing to the initial public offer of retailer Cantabil Retail. The offer values the company at 15 times the per-share earnings of FY10 at the higher end of its price band of Rs 127-135, and 13 times estimated FY11 earnings.
Peers such as Koutons Retail and Kewal Kiran Clothing trade at valuations of 12-14 times. Value retail saw valuations revised down following poor performance, inventory build-up and doubts over scalability.
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