16 April 2012

Motilal Oswal: INFOSYS 4QFY12: Disappoints on all fronts; Back-ended nature of revenue expectation; Limited scope for beat on guided EPS; 5.7/4.3% cut in FY13/14 EPS estimates

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Infosys Technologies (INFO IN; Mkt Cap USD26.9b, CMP INR2,403, Buy)
Ashish Chopra

-      Infosys' 4QFY12 results disappointed on all fronts (1) Significant miss to 4Q revenue guidance,  (2) Weak outlook for FY13, yet requiring a high ask rate in seasonally weak quarters (4.9% CQGR over 2Q-4QFY13 to meet top-end of the guidance), and (3) tepid margin guidance despite doing away with wage hikes. All these do not just bode negatively for Infosys, but raise concerns on the FY13 growth prospects for the sector.
-      4QFY12 revenue declined 1.9% QoQ (2.1% in constant currency) to USD1,771m (v/s est of USD1,808m and  guidance of USD1,806-1,810m), on sudden and unexpected ramp downs in quite a few engagements within BFSI and in North America. EBIT margin declined 130bp QoQ to 29.9% (v/s est of 110bp decline to 30.1%). Higher other income (INR6.52b v/s est of INR4.6b) drove PAT outperformance (INR23.16b v/s est of INR22.77b).

Infosys Technologies - Black Friday :Macquarie Research,

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Infosys Technologies
Black Friday
Event
 We downgrade Infosys to Neutral. Infosys disappointed the market by
missing its muted 4Q guidance and providing FY13 outlook that would lead to
earnings downgrade across the street. While the stock declined 12% on
Friday, we do not see value emerging given the bleak growth prospects.
Better earnings performance from other IT vendors during the next two weeks
can further weaken the investment argument for Infosys.
Impact
 Is Infosys FY13 guidance conservative? We do not think that Infosys mgmt
is building in extra caution while guiding for 8-10% US$ revenue growth next
year. Given the delay in new project launches seen by Infosys in March, we
think a significant beat on 1Q guidance is difficult. This implies the CQGR ask
rate for the remaining three quarters to meet the 10% growth target would be
5%. With a fluid macro environment and the company facing a slowdown in its
largest vertical, chances of beating the 5% CQGR are slim, in our view.
 Global tech results and Infy guidance – the disconnect. The CEO
mentioned on the call that higher share of discretionary revenues makes the
comp vs. other Indian vendors tough. While the Infy client portfolio is slightly
more skewed to discretionary services, the data point on new software license
sales from software vendors and Accenture consulting order guidance
indicate stable discretionary spend scenario.
 Estimate changes. We now forecast 9% US$ revenue growth for FY13 (vs.
12.5% earlier). Infosys has guided for 50-100bps margin decline, largely on
account of lower utilisation in FY13. The decision to keep wages flat provides
a margin cushion to the company. This, coupled with weak INR (forex
estimates unchanged) should restrict margin erosion to 20bps, in our view.
 Sector implications: Sequential decline at the BFSI vertical and North
American geo were the key 4Q disappointments and cast worries on vendors
with exposure to this vertical/geo. Our understanding from the Infy earnings
call was that it’s possible other vendors addressing different portfolios at the
same client might have not been affected by the ramp downs. Definite proof of
this is likely in the results from other vendors over next two weeks.
Earnings and target price revision
 We have reduced our FY13/FY14 EPS by 4%. Our new DCF-based target
price of Rs2,450 (was Rs2,950) implies a target PER multiple of 15x.
Price catalyst
 12-month price target: Rs2,450.00 based on a DCF methodology.
 Catalyst: Up: Raise in FY13 guidance, Down: Superior results from peers
Action and recommendation
 We do not think the 12% sell-off is overdone and rate the stock Neutral.
Investors looking to shift weight should consider TCS and Wipro, in that order.

16/4/12: Categories Turnover (BSE) (Rs. crore) Clients NRI Proprietary Trade Data

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Categories Turnover (BSE)

(Rs. crore)
ClientsNRIProprietary
Trade DateBuySalesNetBuySalesNetBuySalesNet
16/4/121,231.481,243.78-12.300.320.47-0.15441.11424.5116.60
13/4/121,873.791,820.6753.121.450.540.91667.84686.79-18.95
12/4/121,529.321,529.71-0.401.020.600.43529.49529.85-0.36
Apr , 1213,150.0213,024.25125.7713.494.029.474,639.584,660.93-21.35
Since 1/1/12132,023.81133,750.41-1,726.6089.5986.183.4147,116.5445,900.431,216.11

  Disclaimer:
  • DII and FII turnover is consolidated information of BSE and NSE.
  • BSE data is compiled on the basis of marking of 'client type' while executing orders on BOLT-TWS in equity segment.
  • NSE Data has been compiled on the basis of trading codes entered by the trading members at the time of order entry and corresponding client category classification provided by the trading members as part of unique client code details upload.
  • NRI - Non Resident Indians
  • FII - Foreign Institutional Investors
  • DII -Domestic Institutional Investors (Includes Bank, DFIs, Insurance, New Pension Scheme and MF).

16/4/12: DII trading activity on BSE and NSE on Capital Market Segment

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DII trading activity on BSE and NSE on Capital Market Segment.
DII trading activity on BSE and NSE on Capital Market Segment(In Rs.Crores)
CategoryDateBuy ValueSale ValueNet Value
DII16/4/12932.45714.22218.23


  • DII trading data across BSE and NSE collated on the basis of trades executed today by Banks, DFIs,Insurance and MFs on BSE and NSE.
  • This trade data is provisional and subject to change, inter-alia, on account of custodial confirmation process, modifications etc.

16/4/12: FII trading activity on BSE and NSE on Capital Market Segment

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FII trading activity on BSE and NSE on Capital Market Segment

FII trading activity on BSE and NSE in Capital Market Segment(In Rs. Crores)
CategoryDateBuy ValueSale ValueNet Value
FII16/4/121,341.241,850.67-509.43

  Disclaimer:
  • FII trading data across BSE and NSE collated on the basis of trades executed today by FIIs on BSE and NSE.
  • This trade data is provisional and subject to change, inter-alia, on account of custodial confirmation process, modifications etc.

RBI Policy Preview - Expect 25bps cut in repo rate; Edelweiss PDF link

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In the forthcoming annual monetary policy review, the RBI is likely to cut repo rate by 25bps while keeping CRR unchanged. Our expectation is based on the assessment that investment activity is in deep slump and demand-led inflationary pressures have receded meaningfully (in our re-arranged WPI basket, it has dipped to historical average levels). At the same time, with falling inflation, real interest rates have risen meaningfully since December and call rates are hovering around 50bps above repo rate. In sum, monetary conditions have tightened even as growth has slowed and inflation has eased. Accordingly, we expect the central bank to initiate rate cut cycle with 25bps, although the policy tone is likely to remain hawkish.   
Regards,

Market Summary -16.04.2012 -Angel Broking - PDF link

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Derivatives Report -16.04.2012 -Angel Broking - PDF link

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Technical Report -16.04.2012 -Angel Broking - PDF link

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Market Outlook -16.04.2012 -Angel Broking - PDF link

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Weekly Review dated 13.04.2012. Angel Broking, PDF link

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Weekly Review dated 13.04.2012. Kindly click on the following link to view the Report.


Monetary policy: RBI hints at rate cut tomorrow to boost growth : ET

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 The Reserve Bank today hinted at lowering interest rates saying that focus of monetary policy needs to be shifted to arrest declining growth while keeping inflation under control.

"Inflation expectations moderated in the fourth quarter of 2012-13 but remain high. With significant upside risks to inflation, monetary policy needs to keep them anchored, while shifting the balance of policy to arrest the deceleration in growth momentum," RBI said on the eve of annual monetary policy.

RBI in its Macroeconomic and Monetary Development Report also cautioned that inflation is likely to remain "sticky" at the current level through out the fiscal (2012-13).

The inflation was 6.89 per cent during March, while the growth during 2011-12 declined to three-year low of 6.9 per cent. The government, however, has pegged it at 7.6 per cent for the current fiscal.

"Monetary policy needs to support growth without risking external balance or inflation by excessive fuelling demand," it said.

Noting that inflation is under control, the report however, warns that high oil prices and suppressed inflation will still leave this at the current levels in the new fiscal and that excessive consumption demand has to be curtailed.

"The path of inflation in FY13 could be sticky with high oil prices, large suppressed inflation, exchange rate pass-through, impact of (indirect) tax hikes, wage pressures and structural impediments to supply response," the central bank report said.

However, the report points out that the GDP growth is likely to improve moderately in the current financial year.

"Growth is likely to improve moderately in 2012-13, supported mainly by a pick-up in industry on the back of consumption demand and some improvement in investment," the report says, adding however, the recovery may be slow in the current fiscal, especially in the first half.

According to the RBI-appointed Professional Forecasters' Survey, the 2012-13 growth is pegged at 7.5 per cent, which is 10 basis points below the government projection for the year. However, the apex bank has not made a GDP projection for the year yet.

"Early indicators suggest that growth may have bottomed out in the third quarter of 2011-12 but recovery may be slow during 2012-13," it said.

During the third quarter of last financial year, GDP growth was at 6.1 per cent, which is the lowest quarterly growth in three years.

Also, recent IIP data for January and February have indicated a slip in growth momentum of Indian economy. About future investment climate, the central bank said if the pace of public expenditure increases, private investments are likely to see a complimentary effect.

"If increased capital outlays in the latest budget are speedily translated into government capital expenditure, it could crowd in private investment," it said adding, however, that the fall in investment is likely continue in the near term.

FII DERIVATIVES STATISTICS FOR 16-Apr-2012

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FII DERIVATIVES STATISTICS FOR 16-Apr-2012 
 BUYSELLOPEN INTEREST AT THE END OF THE DAY 
 No. of contractsAmt in CroresNo. of contractsAmt in CroresNo. of contractsAmt in Crores 
INDEX FUTURES516501335.69642701669.273744049683.55-333.58
INDEX OPTIONS41311310780.6142180311000.37143061137383.01-219.76
STOCK FUTURES505811533.71486581431.8582184323112.70101.86
STOCK OPTIONS350981040.35350351040.53445091246.74-0.18
      Total-451.66

Inflation - Core declines; agri needs monitoring :: Edelweiss PDF link

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WPI inflation remained stable at ~6.9% YoY in March, broadly in line with our and market expectation. Core inflation has declined below 5%, as expected, but key highlight was rise in primary articles inflation (food and non food articles) both YoY and MoM. This causes some concern and needs to be monitored closely in the coming months, as any sustained spike in agro inflation can materially alter the inflation outlook for FY13.
In coming months, we see headline inflation hovering at current levels. Key risks to the outlook arise from poor monsoons or another spike in commodity prices, perhaps due to another round of QE. In terms of monetary policy tomorrow, the declining trajectory of demand-driven inflation and faltering investments should lead to 25bps repo rate cut by RBI, although CRR rate is likely to be left unchanged.

Regards,

REVEALED: Six secrets to reduce your car loan EMIs :Rupee Times in Rediff

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A look at few things about car loans which can save a lot of money for every car loan customer.
Believe it or not, buying a car is still considered a status symbol in India. Though the advent of the small car has created a huge dent in this reputation, the fact still remains that a car is a cherished dream of every Indian. And owning a car is made simpler by the fabulous offers by various banks and car finance companies in India on almost every car model.
Now, you don't need to book a car (most of the models) in advance, there is no requirement that you pay entire cost of the car in cash, just pay a part of the total cost, add some creditworthiness and rest is taken care of by a decent car loan.
Almost every car, be it used or new, is financed and acessible to all those who inspire confidence in banks and car finance companies.
With the car loan taking so much importance and lots and lots of information bombarded on the average consumer via different media, it is very easy to get lured into a trap. To know the intricacies of car loans is the only way one can avoid getting into an unwanted situation and later repent in leisure.

RBI for hiking prices of petroleum products :ET

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Making a case for increasing prices of petroleum products and deregulating diesel prices, the Reserve Bank today said these steps are necessary to contain fiscal slippages and arrest decline in growth.

"The policy design to achieve macro-objectives hinges on deregulation and the upward adjustment of oil prices by letting the demand effects work towards diminishing fiscal and external risks," the RBI said in its Macroeconomic and Monetary Developments in 2011-12.

While petrol prices are market-linked, the government decides the rates of LPG, kerosene and diesel, which usually results in a large budgetary expenditure on subsidies.

"This would provide space for fiscal and monetary policy to act in tandem to achieve the growth and inflation objectives in 2012-13 that otherwise appear to be at cross purposes," it said.

The RBI said that the imports bill will remain high unless prices of petroleum products are raised for a complete pass-through and demand for precious metals is curbed.

"This would provide space for fiscal and monetary policy to act in tandem to achieve the growth and inflation objectives in 2012-13 that otherwise appear to be at cross purposes," it said.

Crude oil prices have been rising due to geo-political reasons, including the Iran situation. The prices had touched a high of USD 125 a barrel last month.

High subsidies are putting pressure on the country's fiscal deficit, which has touched 5.9 per cent of GDP last fiscal and 5.1 per cent in 2012-13.

The government targets to bring down the subsidy bill to below 2 per cent of GDP this fiscal and 1.75 per cent in the subsequent years. Government has made a provision of Rs 40,000 crore towards fuel subsidy.

On the current account deficit, RBI said that the government should take steps to retain it at the current levels.

"Steps need to be taken to facilitate a complete pass-through of international commodity prices, especially by raising domestic prices of petroleum products, curb the demand for precious metals and accelerate reforms to attract FDI," it said.

It said the robust demand in gold and continuing high crude oil prices could adversely affect India's trade balance.

NSE, Bulk deals, 16-Apr-2012

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DateSymbolSecurity NameClient NameBuy / SellQuantity TradedTrade Price /
Wght. Avg.
Price
Remarks
16-Apr-2012CELESTIALCelestial Biolabs LimitedSUNIL AGRAWALBUY1,24,00026.14-
16-Apr-2012IVRCLINFRAIVRCL LimitedGENUINE STOCK BROKERS PVT LTDBUY18,98,31170.49-
16-Apr-2012IVRCLINFRAIVRCL LimitedGENUINE STOCK BROKERS PVT LTDSELL18,98,31170.49-
16-Apr-2012IVRCLINFRAIVRCL LimitedMERRILL LYNCH CAPITAL MARKETS ESPANA S.A. SVBBUY21,25,00070.83-
16-Apr-2012IVRCLINFRAIVRCL LimitedPENGUIN DEALTRADE PRIVATE LIMITEDBUY17,25,00070.96-
16-Apr-2012IVRCLINFRAIVRCL LimitedPENGUIN DEALTRADE PRIVATE LIMITEDSELL17,25,00071.75-
16-Apr-2012KARURVYSYAKarur Vysya Bank LtdBOYANCE INFRASTRUCTURE PVT LTDSELL5,59,882380.03-
16-Apr-2012KFAKingfisher Airlines Ltd.TRANSGLOBAL SECURITIES LTD.BUY43,06,63220.02-
16-Apr-2012KFAKingfisher Airlines Ltd.TRANSGLOBAL SECURITIES LTD.SELL42,53,63220.02-
16-Apr-2012MTEDUCAREMT Educare LtdASHISH KACHOLIABUY3,00,00099.46-
16-Apr-2012MTEDUCAREMT Educare LtdMERILL LYNCH CAPITAL MARKETS ESPANA S.A. SVSELL3,00,82799.55-
16-Apr-2012NUTEKNu Tek India LimitedLOVELY WILLIAMSBUY9,65,7550.70-
16-Apr-2012VARUNVarun Industries LimitedGAJANAN ENTERPRISESBUY1,63,51560.93-
16-Apr-2012VARUNVarun Industries LimitedGAJANAN ENTERPRISESSELL1,59,16860.91-

Brazil Outlook :: BNP Paribas

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Brazil
In Brazil, the surprise came once again from monetary policy. After four consecutive cuts of 50 bp, the central bank (BCB)
decided to ease monetary conditions more rapidly, cutting its key policy rate (Selic) by 75 bp on 7 March. Neither the press
release nor the minutes provided much explanation for this decision, leaving the door open to several assumptions. The
only elements of certainty are the future path of the Selic (expected to be cut to as low as 9%) and the government’s
determination to bolster the industrial sector and combat the appreciation of the exchange rate.

BSE, Bulk deals, 16/4/2012

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Deal DateScrip CodeCompanyClient NameDeal Type *QuantityPrice **
16/4/20125121618K Miles SoftwareRANGAWALA ASLAMBHAI YUSUFBHAIB4500054.46
16/4/20125121618K Miles SoftwareRUPAL PIYUSH AVLANIS3500054.54
16/4/20125121618K Miles SoftwarePAULOMI KETAN DOSHIS3500054.48
16/4/2012531194Brahmaputra InfraBRAHMAPUTRA FINLEASE PRIVATE LIMITEDS7500051.60
16/4/2012532871CELESTIALSUNIL AGRAWALB13805626.00
16/4/2012530337Exelon InfraHARSHA JAINB1000009.90