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India Research
January 13, 2012
Dealers Diary
Indian markets are expected to open flat taking cues from mixed opening in the Asian markets today and positive closing in the global markets yesterday. The Indian markets ended lower yesterday as IT major Infosys cut its full-year revenue guidance and HDFC reported a below estimated PAT growth of 10%. Also, decent IIP data of November, which stood at 5.9% yoy, reduced hopes of a CRR cut this month. Globally, most of the US and European markets ended modestly higher yesterday as investors held out hopes that Europe would muddle through its debt troubles. Meanwhile, data from the US economy illustrated that the retail sales for December 2011 grew lower than expected at 0.1% yoy (Bloomberg estimate 0.3%) and initial jobless claims rose to 399,000 in the week ended January 7 (prior 375,000), which led to weakness in the early trade in the US. The markets now will be closely watching out from the domestic WPI number for December 2011 (Bloomberg estimate 7.4%).
Domestic Indices BSE Sensex Nifty MID CAP SMALL CAP BSE HC BSE PSU BANKEX AUTO METAL OIL & GAS BSE IT Global Indices Dow Jones NASDAQ FTSE Nikkei Hang Seng Straits Times Shanghai Com
Chg (%) (0.9) (0.6) 0.3 0.2 0.0 0.7 1.1 0.8 1.1 (0.8) (6.0) Chg (%) 0.2 0.5 (0.2) (0.7) (0.3) (0.1) (0.1)
(Pts) (138.4) (29.7) 14.1 8.8 0.8 48.2 70.3 (63.7) (347.9) (Pts) 21.6 13.9 (8.4) (62.3) (56.6) (3.5) (1.0)
(Close) 16,038 4,831 5,520 6,084 6,126 6,975 8,464 7,852 5,484 (Close) 12,471 2,725 5,662 8,386 19,095 2,744 2,275
Markets Today
The trend deciding level for the day is 16,060 / 4,835 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,157 16,276 / 4,866 4,900 levels. However, if NIFTY trades below 16,060 / 4,835 levels for the first half-an-hour of trade then it may correct up to 15,941 15,844 / 4,800 4,769 levels.
Indices SENSEX NIFTY S2
15,844 4,769
S1
15,941 4,800
R1
16,157 4,866
R2
16,276 4,900 Indian ADRs Infosys Wipro ICICI Bank HDFC Bank Chg (%) (8.8) (4.4) (1.3) (0.8) (Pts) (5.0) (0.5) (0.4) (0.2) (Close) $51.9 $10.0 $30.0 $28.1
News Analysis
Industrial production (IIP) growth picks up in November 2011 IRB clarifies on aircraft purchase CEAT to issue convertible warrants to promoters 3QFY2012 Result Review Infosys, HDFC
Refer detailed news analysis on the following page
Sales
2,132 555
Net
498 (72)
MTD
2,033 (151)
YTD
2,033 (151)
Sales
1,979 1,850
Net
(115) 218
Open Interest
11,885 26,135
Gainers / Losers
Gainers Company
United Brew Shree Renuka Sug Manappuram Finance United Spirits Sun TV Network
Losers Company
Infosys Coromandel Intl Biocon Bata India TCS
Price (`)
472 32 55 576 298
chg (%)
12.9 7.5 7.3 6.5 6.4
Price (`)
2,589 262 264 562 1,093
chg (%)
(8.4) (4.5) (4.5) (4.1) (3.9)
HDFC
For 3QFY2012, HDFCs standalone net profit grew by 10.1% yoy, which was below our estimates mainly because of lower gains from investments compared to 3QFY2011. Removing gains from sale of investments, HDFCs operating income increased by healthy 18.2% yoy. Loan growth remains healthy: For 3QFY2012, HDFCs loan book grew by healthy 21.2% yoy and 4.1% qoq to `132,208cr. Approvals in 3QFY2012 stood at`19,883cr (up 21.2% yoy), while disbursements stood at `16,078cr (up 18.8.0% yoy). The spread on loans over the cost of borrowings stood at 2.27% for 9MFY2012 compared to 2.29% for 1HFY2011. For 3QFY2012, other income increased marginally by 1.3% yoy to `304cr. While growth in dividend income (97.5% yoy) and profits from deployment in MFs (74.6%) was strong, it was negated by the dip in treasury income (decline of 47.4% yoy). HDFCs asset quality continued to be stable during 3QFY2012, with gross NPA ratio falling by 3bp yoy to 0.82%. On a six-month overdue basis, gross NPA ratio stood at 0.53%. Gross NPAs increased by 19.6% yoy to `1,109cr. HDFC continued to maintain a 100% provision-coverage ratio for 3QFY2012, similar to the last quarter. Outlook and valuation: At the CMP, HDFCs core business (after adjusting `215/share towards value of the subsidiaries) is trading at 4.4x FY2013E ABV of`106.7 (including subsidiaries, the stock is trading at 4.3x FY2013E ABV of `158.9). We expect HDFC to post a healthy PAT CAGR of 15.7% over FY201113E.However, considering that the stock is currently trading at 4.5x one-year forward P/ABV (only slightly lower than its median of 4.6x over the last five years) and at a 56.5% premium to the Sensex in P/E terms (compared to an average of 37.5% over the last five years), we consider the stock to be fully valued and, hence, recommend Neutral on the stock.
Corporate News
LIC to invest `1.9 lakh cr in FY2012 Mahindra announces rejig of top management NMDC floats new SPV company for Chhattisgarh plant Suzlon's subsidiary wins order in U.S. for wind turbines
Source: Economic Times, Business Standard, Business Line, Financial Express, Mint
Results Calendar
13/01/2012 16/01/2012 17/01/2012 18/01/2012 19/01/2012 Sintex South Indian Bank TCS, HCL Technologies, Automotive Axle MindTree, Infotech Enterprises, Jindal Steel HDFC Bank, Bajaj Auto, Hero Motocorp
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