JUST DIAL IPO Grey Market premium Rs 70: Retail investor get Just dial ayt Rs 483; listing at Rs 550-600

JUST DIAL IPO: priced at Rs 530 (same as for anchor investor);
retail Rs 483 (Rs 47 discount)

Grey Market Premium: Rs 70 (expect listing Rs 550-600)

Likely allotment is 50% for retail (i.e 1 in every 2 application will get minimum 25 shares)

Reliance Industries: A D6 discovery with potential; further signs of E&P turnaround; Buy :Goldman Sachs

What's changed
RIL-BP announced a new E&P discovery in D6 block in KG Basin in eastern
Indian offshore after market hours on Friday, 24th May. The well, drilled in
a water depth of 1,024 mts to explore the prospectivity of a new Mesozoic
reservoir lying over 2,000 mts below the already producing reservoirs in
the D1-D3 gas fields, encountered a gross natural gas and condensate
column of 155 mts. RIL said the appraisal program for this discovery will
be launched in the coming months to define scale and quality of the field.
This marks the first E&P success for RIL-BP following 18 months of
remapping of the D6 block, helped by recent govt policy and approvals.
Implications
The announced discovery looks significant given that the largest D6
discovery had a gross hydrocarbon column of 194 mts (MA-2 well).
Moreover, if this discovery leads to a new commercial reservoir, it could
meaningfully add to D6 reserves, in our view. RIL had said they would be
mobilizing a second rig into D6 in July 2013, which would aid in further
exploration and workover operations in existing wells. As per the revised
field development plan, RIL-BP are planning to drill the next well in MA
field. Overall, we believe, this discovery further strengthens our view that
RIL’s E&P business is turning around. Moreover, we believe that a policy
move towards market driven gas pricing in the next 2-3 years could mean
that our base case gas price of US$8/mmbtu from FY15 could well be the
medium term floor with potential for earnings upside. In the 4Q analyst
meet, RIL had sounded positive on E&P on policy direction, reservoir
situation and its ability to implement planned projects.
Valuation
Reiterate Buy on RIL with 12-m SOTP-based TP of Rs1,070. We think RIL’s
capex in core segments will lift its cash returns over the medium term.
Key risks
Low refining margin; further weakness in petchem margins.
INVESTMENT LIST MEMBERSHIP
Asia Pacific Buy List

Angel Broking - Daily Reports and Market Summary - 27.05.2013

Dear All,                           

 

Forwarding you the Daily Reports and Market Summary 27.05.2013. Kindly click on the following links to view the Report.

 

Market Outlook

 

Technical Report

 

Derivatives Report

 

Market Summary

SBI - Q4FY13 Result Update - Centrum

Q4FY13 Result Update

State Bank of India

Rating: Buy

Target Price: Rs2,550

CMP: Rs2,178

Upside: 17%

A mixed bag

SBI’s Q4FY13 bottomline disappointed on higher provisioning though asset quality performance was encouraging (except for higher restructuring) - GNPA improved by 55bps QoQ to 4.8% and slippage rate eased by 100bps QoQ to 2.4%. While the operating environment remains tough, we believe that the macro is gradually on the mend with reforms aimed at project implementation likely to augur well for a pick up in credit demand as well as asset quality concerns. At current level, the stock offers a favourable risk-reward equation for long term investors. Maintain Buy and price target of Rs2,550.

m  Asset quality metrics improve; but not out of woods yet: Asset quality matrices registered dramatic improvement with: 1) slippages at Rs58.7bn -2.4% rate vs 3.5% in the previous quarter. 2) GNPA improving by 4%/55bps QoQ to 4.75% 3) PCR improving by ~500bps to 67%. The only discouraging aspect was a jump in incremental restructuring (Rs83.8bn vs Rs25bn avg for last four quarters) as some Q3 slippages got restructured. However, it should be noted that the o/s standard restructured book stands at 3.1% of loans vs +6% for most peers. Certain exposures to discoms (in process of getting restructured) along with other identified stress of Rs50bn could add to restructured book over the quarters to come.

m  NIM slips QoQ: NII de-grew by 4.4% YoY to Rs110.8bn though largely in line with our estimate of Rs113bn. Sequentially, NIM contracted by ~15bps QoQ to 3.2%. Yield on advances declined 20 bps QoQ on Rs7bn reversals on FITL provisions pertaining to higher restructuring. The management sounded optimistic about NIM expansion during FY14, despite incremental focus on low yield loans, led by relief from reversal of interest income arising from NPAs and restructuring.

m  Loan growth at 21%: Loan book grew in line with industry at 20.5% YoY with large corporate segment (40.4% YoY) and international loans (25% YoY) in the lead. Meanwhile, mid-corporate and SME segments at 18% and 12.4% YoY respectively grew at a relatively slower pace likely led by cautious view due to stress. Importantly, recent management initiatives on the retail segment have begun yielding results with loan growth picking up to 15% in Q4FY13 from 12.8% in Q1 and 13.6% in Q2FY13 and 14% in Q3FY13. Incrementally, the bank intends to focus on safe credit avenues (AAA corporate) with a view to protect risk-adjusted returns.

m  Maintain Buy: The Q4FY13 performance reflects continuity of challenges in operating environment (NIM pressure & higher restructuring). However, we believe that incremental stress asset creation in FY14 should be lower because 1) significant pain has been recognized 2) low restructured book (3.1% of loans) implies lower risk of slippages and 3) administrative reforms aimed at addressing investment cycle should begun yielding results. At the current market price, the stock trades at 1.7x FY14E ABV, 9.2x FY14E EPS. In the light of the correction post Q4 results, the current market price indicates an upside of 18% to our fair value estimate of Rs2550 (SBI (SA): Rs1860 (1.3x Sep’14E), Associate banks: Rs380, Non-bank businesses: Rs280 and Misc investments: Rs30). We maintain Buy.

Thanks & Regards, 

FII DERIVATIVES STATISTICS FOR 27-May-2013

FII DERIVATIVES STATISTICS FOR 27-May-2013
	BUY		SELL		OPEN INTEREST AT THE END OF THE DAY
	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores
INDEX FUTURES	108263	3284.15	102737	3117.50	581184	17747.31	166.65
INDEX OPTIONS	810594	24513.81	830522	25059.84	1993510	60795.58	-546.03
STOCK FUTURES	262224	7578.46	265204	7703.78	1094861	31465.48	-125.32
STOCK OPTIONS	50993	1419.22	50201	1394.90	173933	5008.75	24.32
						Total	-480.38

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FII & DII trading activity on NSE, BSE and MCX-SX 27-05-2013

Category		Buy	Sell	Net
		Value	Value	Value
FII		2525.75	2119.72	406.03
DII		696.51	1212.9	-516.39

 

-- 

JUST DIAL IPO: grey market premium Rs 70; priced at Rs 530 (same as for anchor investor); retail Rs 483

JUST DIAL IPO: priced at Rs 530 (same as for anchor investor);
retail Rs 483 (Rs 47 discount)

Grey Market Premium: Rs 70

Likely allotment is 50% for retail (i.e 1 in every 2 application will get minimum 25 shares)

Indiabulls Real Estate : Cash generation remains solid; maintaining momentum in the current macro environment; JPMorgan

IBREL’s net cash generation of Rs1.5B for 4Q (Rs8.5B, or Rs22/share, for
FY13) was significantly ahead of reported PAT (of Rs0.5B). The company
achieved its highest-ever pre-sales of Rs30B in FY13 (vs Rs19B in FY12).
New launch momentum for IBREL continued to surprise positively, with the
launch of three high-value projects in the last three quarters, in addition to the
regular flow at its suburban mid-income projects. With IBREL becoming
decisively positive free cash flow, it concluded a buyback and announced a
dividend in FY13. Pre-sold projects (Rs83B) and unsold inventory under
construction (Rs 120B) give visibility on pre-tax cash flows of over Rs75B
over the next 4-5 years. Maintain Overweight with Mar-14 PT of Rs150.
 Operating performance remains robust: IBREL achieved pre-sales of
Rs30B in FY13, up from Rs19B in FY12. Of the total Rs30B in pre-sales,
~Rs13B came from the Worli project and remainder from the suburban
portfolio. For FY14, IBREL guided to pre-sales of Rs36B (up 20% Y/Y),
driven by inventory sales in recent large luxury launches in South Mumbai
and suburban projects. Incremental office leasing was 0.1msf, taking leased
area to 2.5msf, with annualized rental income of Rs4.9B. IBREL expects
the remaining 0.8msf of un-leased area to be completely leased by Mar-14.
 Cash flows far better than reported earnings: Cash flow for the quarter
was Rs1.5B (vs. reported PAT of Rs0.5B). This, coupled with inflow of
Rs1.4B from share sale by EWT, was used to pay IPL advances under the
demerger arrangement. For FY13, IBREL generated Rs8.5B in cash flow
(vs. FY13 PAT of Rs1.7B) which was used to fund the buyback (Rs2.7B),
funding EWT (net Rs2B), reducing IPL advances of Rs4B. Revenue
recognition for the year at Rs13B primarily came from the suburban
portfolio and lagged the pre-sale run rate (Rs30B for FY13). As the Worli
project hits recognition (expected in 3Q), earnings should see a substantial
scale-up over the next two years. Net debt was largely stable Y/Y.
 Buyback + dividend: During the year, IBREL bought back 10% of the
stock and declared a Rs2/share dividend (53%) payout. Given it will likely
be FCF positive, increased payouts are likely in FY14.

LIC Housing Finance - Margin improvement drives earnings beat; JPMorgan

LICHF’s 4Q FY13 PAT of Rs3.16B (+25% Y/Y) beat estimates (JPMe:
Rs2.4B), primarily due to a sharp NIM improvement (2.45% vs. 2.09% in
Dec-Q) on a lower cost of funds (down 27bp Q/Q). Earnings were also
aided by provision write-back on the back of last Q’s NPA recovery. Book
spread (138bp) has finally started to catch up with incremental lending
spread (160bp), thereby helping margins. The key delta to the spreads
hereon, in our view, will be LICHF’s ability to scale up project loans in
the mix – now at a multi-year low (3.4%). We reduce our FY14/15
earnings estimates by 10-12% as we lower our spread assumptions.
 NIM surprised positively on lower cost of funds: LICHF’s 4Q NIM at
2.45% was up 36bp Q/Q and a positive surprise. NIM improvement was
primarily driven by a lower cost of funds, down 27bp Q/Q to 9.4% in
Mar-Q. Yield on individual portfolio increased by a marginal ~7bp Q/Q;
while developer loan yield was muted at 13.1%, down 230bp Y/Y.
Overall the spread on book (138bp) has started to catch up to the
incremental spread (160bp) and provides some headroom for additional
improvement ahead.
 Loan growth remains robust: Overall loan growth remained steady at
23% Y/Y, with individual loan growth even higher at 25% Y/Y.
Individual disbursements also held up well at 19% Y/Y, while developer
loan disbursements came off in Mar-Q (down 31% Y/Y/62% Q/Q) after
witnessing a sharp increase in Dec-Q. Overall developer loan share at
3.4% is at its lowest point and should pick up ahead given an
improvement in the approvals pace in key markets of Mumbai / Delhi.
 Asset quality showed improvement sequentially: Asset quality saw an
improvement on a sequential basis with GNPA in absolute terms down
12% Q/Q and GNPA ratio at 0.61% down 13bp Q/Q. Fresh slippage in
the developer book for the Q was Rs0.7B but also had recoveries of last
Q’s NPA (net reduction of Rs 0.7B). On a Y/Y basis, the GNPA/NNPA
ratios increased by 19/21bp, respectively, due to some stress in the
developer portfolio, while individual loan portfolio asset quality held up
well. With teaser provisioning releasing through FY14 (teaser portfolio),
the incremental credit cost hit to the P&L should be lower at the margin.

Reliance Infrastructure Overcoming regulatory shackles ::Prabhudas Lilladher

! Electricity revenues improve, Q4FY13 PAT up by 27% YoY: Reliance
Infrastructure (RInfra), in Q4FY13, has reported revenue de-growth of 12.7% YoY
on the back of 44% YoY de-growth in EPC revenues. However, there has been an
impressive 28% YoY growth in electricity sales (on account of increased
contribution from CSS and WC to the tune of Rs910m) and 75.6% growth in BOT
sales. A better traction in Infrastructure EBIT margins led to 27.7% and 18.9%
YoY improvement in PAT in Q4FY13 and FY13, respectively.
! Performance of SPVs: Mumbai circle added 72,600 and Delhi added 146,650
customers in FY13. Delhi distribution clocked sales of Rs49bn, growth of 37%
YoY and number of units stood at 14.3bn units, up 5% YoY. Road portfolio
earned revenues of Rs5.2bn. Number of units traded in the trading arm stands
at 5.3bn units.
! Updates: EPC order book stands at Rs110bn, declining from Rs121bn in Q3FY13.
Western region trassmission lines are yet to become operational on account of
‘Right Of Way’ issues; however, the project will achive COD in Q3FY14E.
Regulatory assets in Mumbai and Delhi circle stand at Rs48bn and Rs55bn,
respectively, which the company plans to recover from FY14E onwards. The
capital expenditure envisaged for the next three years stands at Rs80bn with an
outstanding equity commitment of Rs15bn. The company is further planning to
bid for new distribution circles in power and distressed (along with fresh) BOT
projects in the roads segment.
! Valuation: At CMP, stock trades attractively at 0.3x P/BV FY15E. While mild
overhangs in Regulatory and Infrastructure business continue to remain,
contribution from new assets will help revive the sentiment towards the stock.
We have downgraded the estimates factoring lower revenue growth from EPC
and Infrastruture businesses. We maintain ‘Accumulate’ on the stock.

Mahindra Satyam :TP: ` 135 Buy : Dolat

View: Satyam has been delivering improved performance quarter after quarter.
It has made commendable progress in its financial performance with 8 quarter
Revenue CQGR of 4% and 1300bps improvement in the operating profitability.
The pipeline continues to be robust with improved deal participation and success
ratio both on the RTB and discretionary side. We maintain our positive stance
on MSAT/TechM in view of impending merger and likely rerating on the stock.
Revenue Inline: Mahindra Satyam reported Q4 FY13 numbers broadly inline
with our estimates with a 1% growth in USD revenues at USD 356mn inline
with DE of USD 358mn. Volumes grew by 2% QoQ, however the realizations
were soft owing to adverse cross currency movement.
Traction intact: IT services revenues were up by 1.2% in QQ in ` terms owing
to sustained new deal addition. BPO degrew by 27% QQ as the revenues
boosted by Holiday weekend revenues in Q3 were absent during the quarter. It
has set up its large deals focus group to ensure better success ratio in the deal
wins. It is confident of benefiting from likely pent up demand in the discretionary
spending based on its strong positioning and expect to exceed NASSCOM
14% revenue growth outlook for FY14.
Exceptional item flares reported PAT: Operating profits degrew by 14% QQ
(280bps decline QQ to 16.9%) owing to smoothening of BPO revenues during
the quarter and on account of one time charge on change in policy on providing
for leaves/gratuity contingencies. It has gained from a reversal of impairment
provision of subsidiary of about ` 135bn as against outgo on Aberdeen settlement
in Q3 leading to a growth of 468% in reported PAT. PAT for the quarter stood at
` 4.5bn. Adjusted PAT down 7% QQ and was below DE.

V-Guard Industries Ltd. Result as per our estimates: GELP

Q4FY13 Result Highlights
For the quarter ended March 2013, V-Guard reported a top line of `3,787 mn, compared to
`2,734 mn in 4QFY12, marking a YoY growth of 39%. Revenue growth was the result of growth in
two major divisions of the company viz. Electronics (stabilizers, UPS and inverters) and
Electrical/Electro Mechanical (cables & wires, water heaters etc), which grew by 38% and 39%
YoY respectively. As expected, the sales in non south market grew by around 75% and its core
south market sales grew by 30% during the quarter.
However, EBITDA margins for the quarter were significantly lower to 5.3% (down 680 bps YoY)
due to higher advertising spends and inventory write-down due to fall in copper prices.
Advertising expenses for the quarter stood at `136 mn as compared to `30 mn in Q4FY12. There
was a one-off expense in the quarter of `30 mn on account of shifting the solar water heater
factory from Coimbatore to Perundurai. Another hit in EBITDA margin was on account of an
increase in the freight costs which could not be passed on to the consumer due to severe price
cuts given the sharp correction in copper prices. Interest expense for the quarter were up by
43% YoY to `63 mn and after giving effect depreciation and taxes, the company’s PAT stood at
`89mn (down 53% YoY). On the positive side, the company has informed that it has already
undertaken price increases in 1QFY14, as demand has started picking up given onset of summer
season

HDFC Good Numbers, Re-iterate OW :Morgan Stanley Research,

F4Q13 PAT at Rs15.5bn (+17% YoY) was 2% below
MSe owing to lower NII (partly owing to back-ended
AUM growth and higher fees). Underlying NII
(adjusted for ZCB costs) was up 18% YoY.
Individual AUM growth was strong at 24% YoY.
Spreads improved sequentially. Consolidated PAT
was up 17% YoY, 22% QoQ.
Individual AUM growth continues to be strong
(+24% YoY, +6% QoQ): Despite noise around
competition over the last year or so, individual loan
approvals and disbursements for HDFC were up 29%
and 33%, resp., in F2013, and HDFC is likely gaining
market share (based on industry data). We continue to
like the retail mortgage space, given growth potential,
profitability and pricing discipline owing to base rate
regime. Non-individual AUM growth was muted at 13%
YoY, 6% QoQ. Overall AUMs grew 20%.
Spreads expanded to 2.3% for F13 from 2.28% for
F9M13: With wholesale funding rates coming off sharply
in the current FY (as seen from NCD issuances), we
expect spreads to do well in F2014.
Underlying NII was up 18% YoY, fee income growth
picked up to 47% YoY. The miss in NII (likely owing to
back-ended AUM growth) was offset by higher fees on
non-individual loans. Cost control was good (+10% YoY),
and asset quality continues to be strong (0.7% GNPL
ratio, down from 0.74% in F4Q12).
Maintain OW, Raise TP to Rs1,010. The stock trades
at 3.6x F14e BV (adjusted for subs) and 17.5x F14e P/E,
15x F15e P/E. Valuations, in our view, are reasonable in
the context of strong earnings outlook – 22% EPS
CAGR in F13-15e; 20%+ ROE – coupled with a strong
balance sheet – 0.7% NPL ratio and 13.8% Tier I ratio.

Copper vs. Steel Demand & Price Implications In A Consumer Driven China ::Citi

 China in Transition — Our economists argue that China is on the cusp of an imminent rebalance towards consumer-led
growth. Indeed investment to GDP which peaked at a record 49.7% in 2011 has begun to roll over, falling to 47.5% in 2012.
Such a rebalance is clearly negative for early cycle commodities such as steel and iron ore, while copper should be relatively
resilient due to its late cycle demand profile. In this note we quantify the impact of this transition on demand and prices.
 Credit could be key — Declining returns are likely to force capital away from investment and towards consumption. Between
2008-2012 total social financing, the broadest measure of credit extension, accelerated from 130% of GDP to 186%.
Profitability of investment has been sacrificed as excess credit has had to chase lower returns. The ratio of credit required to
generate a unit of GDP averaged 2.4x in 2009-2011, up 71% on pre-crisis levels. Unsurprisingly, the credit to commodity
relationship is strong as the lion’s share of investment went into infrastructure spend. Copper and iron ore display a strong
relationship with credit growth with R2 of 65% and 67% respectively. The declining efficiency of credit is reflected in the
increasing amount of funding required to drive a tonne of consumption which has risen 2x since 2008; from $167k/t to $339k/t
for copper and $1,738/t to $3,350/t for steel.
 Impact on Commodity Markets — Using a range of scenarios based on % of GDP spend and urbanisation trends seen in the
development of other countries, we conclude that by 2020 copper consumption in China could actually be up to 20-35% lower
than consensus expectations of ~12.7mt at 8-10mt, while steel fares worse with up to 30-55% downside vs. consensus
expectations of >1bn tonnes at 450-700mt. Based on our cost curve analysis this would reduce the long term price of iron ore
to $55/t (real) and copper to $5,000/t (real). This compares to consensus long term prices of ~$80/t iron ore and $7,000/t
copper suggesting ~31% downside to iron ore forecasts and 29% downside to copper price forecasts
 What are equities pricing in? — One could argue that the bearish iron ore story is now well told and priced in to equities,
while in copper the market continues to maintain faith in the concept of limited supply growth. However, we calculate that the
UK iron ore equities are pricing in $90/t long term and copper $7,100/t, suggesting ~40% downside to iron ore equities and
30% to copper. This suggests that the potential scale of the decline in iron ore demand has still not been fully appreciated,
while the downside in copper is also not reflected in the market’s perception of the equities.

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