India Morning Report: Another “Happy Thursday!” for the markets

Bajaj Auto was the biggest story as it expanded margins more than 1.5% to above 21%, putting behind shallow stories of losing share that have mostly affected Hero Motocorp and changed the Automobiles trade as four-wheelers dulled down in Q2 and Q3 to kill the recovery India Inc was to prescribe for the Economy.(we promised to shutout the debt deal bingo and we did, the compromise anemic as ever and the Taper posted now for post Q2 2014)

Mindtree also screeched up the noise with better margins but the coming Holiday Season quarter is likely to ascribe a sea change between Bajaj Auto and Mindtree in sales and bottomline performance

HCL Tech however completely the IT revival story with a big bang jump in top and bottomline and keeps the defensives on the speculative list for the rest of Earnings season, l likely to jump further from the 60% rise on the bourses year to date(Udate: HCLT really milked the Rupee for a EBIT nearing 24%)

Banks will remain dull and Indusind may indeed be proscribed, but with not many stuck on to bank scrips any short in banking stocks is likely to be not more than pennies

In case investors are kept away from the facts yet, most of the good companies have performed in duble digit increases in topline and profits have been strong, likely to not just outperform but fuel the rally. Bajaj Auto broke the $1 Bln quarter mark nearly and will do so comprehensively in the next two quarters itself with a INR 51 Bln topline and gross proifts at 21% plus margins

Mindtree’s $124 mln and toughening of pipelines to nearly $150 mln is good as they hibernate for the winter, Infy having started off with 5 large deal wins and TCS getting back into New Jersey’s Big Pharma offices plus another Bank/FI even as Data Centers popped up on everyone’s radars especially in Europe and HCL’s growth in the segment will be good to follow for other IT satraps If HCL does not grow the IMS business (Data Centers and Helpdesk) it is likely another stumble ahead for Indian substitution services

DCB and Heidelberg both matched up to a INR  3 Bln topline and have already been traded for coming out of a hole, in terms of performance

The Banknifty in fact is due for a buy in at 10200 levels with great bank results leading the way for India having proved itself in the quarter and the Rupee gets blamed for the expanding margins, taking the currency down again to 63 levels before it comes back and yields stabilise lower after the policy turn. MSF rates will continue lower to 8.5% mark eventually if Rajan does stick to the recommended 7.50% repo rates level and does not increase it again for the 6.5% bears in wPI

Hindi on whimsy: Akasmat(Sudden, equally apt in both up and down moves); utavala na hona(to not look too eager)

India Morning Report: Really, you want BHEL and L&T back – the new bust cycle

Bharat Heavy Electricals Limited
Bharat Heavy Electricals Limited (Photo credit: Wikipedia)

 

The previous one of course was having to sponsor harmful, noxic ( noxious, toxic and a mouthful of names for the new knowing breed of Indian broker houses) but powerful psu banks even though they were improving on NPAs. This cycle though we have consolidated well, so called speculators find an excuse for misgoverned and misadroitly travelling comets ( limited shelf life, bound to fizzle and skizzle near ones) in BHEL and L&T governing models of both are beat and got propped up only temporarily for a few and now do nothave the dime to last the bad times coming probably. Un fortunately, that also gives the excuse to the noxic PSE banks to be speculated from their “new” bottoms but they remain negative accretions to your portfolio and India GDP even at the new prices

 

However, that bust cycle could be a long hill trek away as India manages to snag the plus flow cycle from competing assets in the nearby shallow and giant yielding emerging markets with the same return with the slightly elevated interest rates around 8% at their best. Fixed Income markets would repsond positively to this expected change in flow as the change is a stable one. Bajaj Auto remains a top pick but would be a slow accrual apart from its speculative bursts and more or loss maintains a very small edge over the Munjal company ( Hero motocorp) even as the Munjals hope for more motivation for their dime in the compete with Honda which will continue to ddrain the big bellwether

 

Deutsche Bank has lost its banking mandate int he subcontinent and as boutique firms are now few and far inbetween in dispensations like India one should be careful of their current foray of picks into the india consciousnervously ready to get forced to withdra further despite the increasing eight for our diaspora in Asia governance and Anshu jain’s inspiring knowledge of Emerging market superiority in the new equation.

 

But then this opinion was probably wasted in a morning report and further detailed analyses are unlikely to follow unless pulled into the dime

 

Biocon is on loose but so is Stride Arcolabs Orchid and Optocircuit as also the Lupin Lab and the Cipla teams which thankfully seem to have let go of a divestment opportunity because they realise more premium is deserved and were not clubbed into a distress sale as was Jet Airways lasting the seige to come out with a 24% stake for etihad. Of course, that means that Spicejet and Indigo have the best possible premium likely in the hunt for the next deal esp as Emirates egts into a twirl over etihad’s close on the deal. Meanwhilw, thankfully the rush for Africa has not resulted in new redfining markets as the India story has hardly corded into the move to build and operationalise the right infrastructure

 

 

 

 

 

India Morning Report October 12, 2012: The Correction Continues Into The Weekend Close!

Also, India Closing Report (October 08-12, 2012)

The 5650 mark holding, markets see saw with two up days on Tuesdaya nd Thursday and rejuvenating interest in South East Asia and China with Chinese banks agains ppushed into increasing credit outlays at lower rates.

Portfolio investments in Inida have shown interest at current index levels between 5650 and 5675 and as expected rerating has seen knowledge of internals coming tot he fore with the JP group scrips making a late rally since midweek leading with JP Power and JP Infra but more pertinently, superior stock selection showing in Dr Reddys Sun Pharma, Bajaj Auto vs Hero Motocorp and even Maruit Suzuki. Healthcare uptrend continues with market expansion and 30% plus growth in Healthcare sector moving more investments to the sector while lowering hopes in Consumer Discretionary and Non Discretionary (FMCG)  leading to more movement towards ITC and Baja Auto and the returning bulls in Jubilant Foods as Yum foods plans for India and that of P&G find few listed companies for the bidding consumption wars.

The Power NBFCs incl REC and Powergrid (plus PFC and PTC) are on cue for the SEB Bad debt while SBI’s derating on 25 stock of restructured debt staying to cause heartburn even as sector scrips from NBFCs, M&M Financial, Bajaj and LIC Housing taking up the slack and ICICI Banka nd HSFC Bank moving into position for bumper results. Infosys seems to have avoided the Friday morning rush to prove its results on the investorate and the weekend will get busy rerating India’s old numero uno in GDP contribution, the IT Services and offshoring sector.

Infy reported lower Rupee revenue growth with less than INR 100B in Q2 Revenues and the USD revenue or the Net Profit weakness did not help them. The bargain price of Infy questionably could be below 2000 and not the current 2300 as management takes over the dias with network broadcasters. EBIT’s actually fallen sequentially despite the good Rupee Dollar Conversion in the quarter A rerating of the annual Dollar growth in revenues ( constant currency down to 5.7%) acould not be balanced by increase in wages. 98.58 B INR revenues up only 2% sequentially or $1.797 B in USD terms down from conservative estimates.

 

India Earnings season: Hero Moto corp expected to grow 16% and profits 28%

In the next few hours Bajaj Auto’s 20% growth will be compared to Hero Motocorp having already beaten its own profit expected with a 22% growth expanding margins to 21.3%

Hero had the largest volume gains in the latest quarter bringing market share back to 40% even as erstwhile partner Honda caught up to a formidable #3 with a 200k per month sales

Bajaj Sales still compare at 68% of Hero’s INR 61 bln for the quarter after Hero grew 16.86% y-0-y, Hero’s profits grew 43% Quarterly volumes were the highest at 1.6 mln units in three months with Bajaj trailing at 1 mln

Its Operating profit margins on adjusted basis counted as low as 12.7% while unadjusted basis still compares at 15.7% against 17.6% for Bajaj Auto strictly on business expenses at both companies

Hero’s sales are higher by 14% over September 2011 but its not known if its shares in the higher margin >125 cc has increased from the low 6% last quarter Bajaj sells 18% in the higher CC categories for its profit margins and has also included growing CV (Auto sales) in these data

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