21 December 2012

LKP LIKES : Raymond (Buy, Target Rs600)


Raymond (Buy, Target Rs.600)
Ø  Raymond is India’s most trusted apparel brand with top of the mind consumer recall across all its 4 brands – Raymond, Parx, Park Avenue & Color Plus. The Rs35bn company operates ~ 900 stores in India (80% of which is franchisee owned) due to which it has a relatively asset light business model with an asset turnover of 3x and a comfortable cash conversion cycle of ~ 115days.
Ø  The current year in our opinion is a year of consolidation for Raymond and although its 10% ROE business does not seem exciting we believe that this business could post a smart turnaround in operations next fiscal and the company has the potential to record a net profit of Rs2bn and report an EPS of Rs35
Ø  Its 125 acre land parcel in Thane in our opinion is worth Rs30bn whenever it is able to monetize the same in which case it could use the proceeds to pare down debt worth Rs10bn. The present market capitalization of Rs28bn makes Raymond trading at 13xFY’13-14E earnings a good investment bet with a one-year price target of Rs600. BUY

TECHNICAL VIEW

Ø  Daily price chart suggests the formation of an ascending triangle formation, the breadth of which is close to 200 points for Raymond. This indicates that with the completion of the pattern and the breakout above 430 levels the stock could be in for a strong upside in the next year or so.
Ø  Even the larger pattern is a complex inverse Head and Shoulder which further adds support to the breakout level. It is also one of the strongest stock and is the closest in its peer group to its all time high levels (630), which indicates that it is one of the best price performers in its sector since the last 2-3 years. The rising trendline can be considered as a strong support level for the stock.

Thanks and Regards
LKP Advisory

FII DERIVATIVES STATISTICS FOR 21-Dec-2012

FII DERIVATIVES STATISTICS FOR 21-Dec-2012 
 BUYSELLOPEN INTEREST AT THE END OF THE DAY 
 No. of contractsAmt in CroresNo. of contractsAmt in CroresNo. of contractsAmt in Crores 
INDEX FUTURES1251983700.831299223823.8645731613268.40-123.03
INDEX OPTIONS60234117692.8356571516678.71165328748412.551014.12
STOCK FUTURES2135506189.242063366244.94123557636066.82-55.70
STOCK OPTIONS466921325.21461601326.88838142336.35-1.67
      Total833.72

 


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FII & DII trading activity on NSE and BSE 21-12-2012

CategoryBuySellNet
ValueValueValue
FII2691.092575.74115.35
DII1426.051167.84258.21

 


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Ashok Leyland - Management Interaction - Centrum


Management Interaction Takeaways
Ashok Leyland
Neutral
Target Price: Rs25.8
CMP: Rs27.3
Downside: 5.5%
Challenges persist; Maintain Neutral
We interacted with the management of Ashok Leyland to get the sense on recent developments. Overall demand environment for the M&HCV segment continues to be challenging with inventory and discounting levels inching up compared to 2QFY13 levels. The management now expects a volume drop of 5-10% for FY13E compared to flattish volume growth guided in 2QFY13. We continue to maintain our Neutral rating on the stock with a revised target price of Rs25.8 in line with the earnings downgrade.
Key takeaways:

Angel Broking -Market Summary - 21.12.2012

Angel Broking - Derivatives Report - 21.12.2012

Angel Broking - Technical Report - 21.12.2012

Angel Broking - Market Outlook - 21.12.2012

South Indian Bank - Management Interaction - Centrum


Management Interaction Takeaways
South Indian Bank
We have interacted with the management of South Indian Bank and following are the key takeaways from  the same:-
m  Asset quality stable: After the double whammy (NAFED & branch fraud) in Q2FY13 earnings, Q3FY13 has been a quieter quarter on asset quality front according to the management implying less likelihood of major deviations in terms of slippages or restructuring. The management expects to report improvement in GNPA on a sequential basis (%GNPA had risen to 1.74% in Q2FY13 and 68% QoQ). The management expects the Q3FY13 GNPA to come down to 1.5-1.6% led by one account (exposure of Rs 500mn) which was recognized as NPA previously but has been restructured subsequently. On the restructuring front, the bank has already restructured the entire lending to Rajasthan and UPSEB and there has been regular interest servicing till date. The TNSEB exposure continues to remain a standard asset.

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Fund Talk - Stick to your SIPs till close to your goal :: Business Line


Stay invested in the equity market for a minimum five years to reap its rewards. It is good to have a mix of large and mid-cap funds in the portfolio along with an index fund.
About three years ago, taking the cue from your column, I started investments in mutual funds through Systematic Investment Plans (SIPs).
I decided to allocate 40 per cent of my portfolio to Goldman Sachs CNX-500 (VIP), 15 per cent to HDFC Top-200, 10 per cent each to Mirae Emerging Blue Chip and SBI Emerging Business Fund and 25 per cent to DSP Blackrock Micro Cap fund.
The SIPs are continuing as of now. Within the allocated funds, I have spread them into two to three SIP dates within a month in every fund to overcome volatility.
Now that the index has come up from the bottom it has experienced in the recent past, the profits on these funds (on the total investment) stand at 10, 20, 16, 28 and 16 per cent, respectively.
I also have other one-time investments in Birla Agri Commodities and Quantum Long Term Equity Fund which are not very satisfying when compared with the other above investments. I want to exit them.
The VIP in Goldman Sachs CNX-500 would also end in a month. Should I book part or full profits on these investments even if it would mean bearing exit cost? If so, in which funds?
I am willing to continue SIPs in all or few of them along with any other new funds being suggested (subject to a maximum of six and without gold funds) for the next five years. My ability to take risk is medium.
Surendra Babu, Hyderabad

Take loan against insurance policies for lower rates :: Business Line


I am 51 years old and my wife is 46.We have twins and they are in the second year of their higher secondary. We run a fast food centre and our monthly profit is Rs 85,000. But of late we are facing labour shortage and it is impacting our profits.
Our monthly expenses are Rs 20,000 and our savings are Rs 30,000. Since we don’t understand the world of investments, we have put money only in insurance products and fixed deposits and their current value is Rs 25 lakh.
We have a taken loan of Rs 7 lakh from a NBFC at an interest of 17 per cent. Is it advisable to close the loan?
We have two plots in Chennai worth Rs 70 lakh. Our concern is that our children are not keen on higher studies and want to start a mobile showroom. Is it advisable to set up a shop for our children? We also wish to know how to invest our monthly surpluses. How much do we need to save for our retirement?
— Ramesh

GMDC- Monopoly At Attractive Valuation:: Nirmal Bang


Monopoly At Attractive Valuation
We have assigned a Buy rating to Gujarat Mineral Development Corporation
(GMDC) due to monopolistic nature of its business, steady volume and earnings
growth and attractive valuation. We expect GMDC to post 18%/22%/21% CAGRs
in revenue/EBITDA/PAT, respectively, over FY12-FY15E, driven by 11%/9% rise in
lignite volume/realisation, respectively, in the same period. GMDC trades at P/E
of 9.0x/8.4x/7.3x FY13E/FY14E/FY15E earnings, respectively, while EV/EVITDA
multiples are at 4.8x/4.3x/3.5x, respectively, for the same period. We have set a
target price of Rs265 (6.0x FY14E EV/EBITDA) on GMDC, up 34% from the CMP

Tata Consultancy Services Commentary stable, Seasonality to impact quarter:: PL Research


We attended Tata Consultancy Services’ (TCS’) “Sell Side Analysts’ Meet” on
December 17, 2012. The management retained its stance on a stable outlook for
FY13. However, Q3FY13 performance is likely to be impacted by lower number of
working days and furloughs. The company didn’t share median consensus
expectation for the quarter. We tweak our model for higher tax rate, hence revise
our target price to Rs1,400 (from Rs1,450).

Prestige Estates- FY13 sales booking to beat guidance by ~20% :: Motilal Oswal


FY13 sales booking to beat guidance by ~20%
Execution on track to meet revenue booking, collections uptick guidance
We met Prestige Estates Projects’ (PEPL) management and visited key sites to get updates
on the business and outlook of Bangalore real estate market. The key takeaways are:
 Despite moderation in the launch plan over 2HFY13, PEPL is comfortably poised to
beat FY13 sales guidance of ~INR25b by almost 20%. 8MFY13 sales stood at ~INR22.5b.
 Execution progress steady in most annuity assets. We estimate annualized rental
income to post ~35% CAGR over FY12-15E to ~INR4.6b.
 Progress in development projects are on track to meet guidance of 2-2.5x scale-up in
quarterly revenue run-rate. We expect an uptick in collections run-rate to INR6b/Q.
 Upgrading our NAV-based target price by ~9% to INR195 and FY13E/14E EPS estimates
by 4-8%. While the stock has already been re-rated in line with expectation, further
upside hinges on strengthening of P&L and cash flow hereon. Maintain Buy.

SGX Nifty 5,901.50 -27.50 ; Markets to open DOWN

SGX Nifty 5,901.50 -27.50
8:50 AM India time
Dec 21, 2012
Markets to open DOWN