EXTRACTS FROM EQUITY RESEARCH MORNING CALL - N Bang

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RAJESH DESAI

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Nov 14, 2012, 11:39:49 PM11/14/12

Ø EXTRACTS FROM EQUITY RESEARCH MORNING CALL

· U.S. stocks fell, sending the Dow Jones Industrial Average to the lowest level since June, as concern about the budget debate in Washington and an Israeli air strike erased an early rally led by technology shares.

· Asian stocks outside Japan headed toward a two-month low amid concern the U.S. budget standoff will curb economic growth. Japanese shares gained on speculation a possible change of government in Japan may result in more central bank action to stimulate the economy.

· Today market is expected to open on a lower note and likely to remain under pressure during the day.

· IIP came at -0.4% vs expectation of 2.8%

· October WPI inflation came at 7.45% Vs 7.81% (MoM)

· IVRCL to sell three road projects by this month end (DNA)

· Telenor wins licences in six biggest states; to pay Rs 4,018 cr.

· 2G spectrum auction disappointed: Bid amount against blocks stood at Rs.9,407.64 cr. 101 blocks have been sold. Telecom Minister said that should have got Rs.1 lakh cr but got less than Rs.10,000 cr . This is likely to put some pressure on fiscal deficit.

· Reliance Industries reports further fall in gas production from its eastern offshore KG-D6 fields to 25.1 m standard cubic meters a day.

· DCB has done preferential allotment of 93 lakh shares at Rs 43.68. This will lead to around 4% equity dilution. Before this in March, DCB had done equity dilution at Rs 47.84. Since the bank has done dilution at lower price we feel it is negative.

· MSCI adds Divis Lab and United /breweries and deletes GMR infra and United phosphorus.

· Jaguar Land Rover, subsidiary of Tata Motors, has sold 25,176 vehicles globally in October, a 10% increase YoY.

· The real estate private equity arm of global investment firm Xander Group is close to acquiring a 35% stake in a unit of Indiabulls Real Estate for 1,000 cr. (ET)

· The long-pending pharmaceutical pricing policy, which was awaiting Cabinet approval, may now be reviewed again by a group of ministers (GoM) as the Prime Minister’s Office (PMO) wants it to address concerns raised by the finance ministry on the issue. Now, FM P Chidambaram, would be a “special invitee” to the ministerial panel, headed by Sharad Pawar. The GoM is now set to meet again on November 16 in the wake of concerns raised by the finance ministry on the draft policy submitted last month for Cabinet consideration, a source said.

Results announced

Wockhardt	· Result is good · Excluding revenue of Nutrition business sold, the revenue has grown 29% YoY and remained flat on QoQ basis. · Operating margin has improved both YoY and QoQ to 38.4% against last quarter 36% and last year 29.4% · PAT adjusted to extraordinary and forex gain comes to Rs 386 cr which is up by 88% YoY but down by 1.3% QoQ on account of higher tax. · Company reported Q2 EPS of Rs 35.11 excluding discontinued operation and exceptional items.
Himatsingka Seide	· Result is ok · Revenue grew 27% YoY partially because of rupee depreciation · Margin remained stable · Qtr EPS adjusted to exceptional and forex loss is Rs 1.4
JP Associate	· Result is ok · Company reported PAT of Rs 128 cr against expectation of Rs 124 cr and profit of Rs 124 cr last year and Rs 139 cr in last quarter.
DLF (Insti)	· DLF’s 2QFY13 revenue was 20% below our expectations on account of nil revenue booking from NTC land sale, which will now get reflected in 3QFY13. · Adjusted for this, revenue was in line with our estimate. · However, profit adjusted for NTC land sale was marginally below our expectations on account of weak margins. · Operationally, it was another weak quarter, resulting in a volume of 2.96mn sq ft (down 17% YoY), pre-sales worth Rs12.5bn (down 25% YoY) and leasing of 0.53mn sq ft (down 44% YoY) in 1HFY13. · The management has assured that 2HFY13 will be promising on the back of the launch of 9mn sq ft of new projects, Rs50bn of net debt reduction and stronger margins. · *We reiterate our view that DLF’s core recurring operating cash flow will continue to remain weak, and therefore have retained our Sell rating on the stock with TP of Rs174/share*.
GMR Infra (Insti)	· GMR Infrastructure (GIL) reported Rs20.1bn net sales for 2QFY13, 16% below our estimate due to lower power segment revenue, sequential decline in EPC revenue and a fall in domestic airport traffic. · EBITDA rose 2.2% YoY to Rs5.1bn, but 25% below our estimates primarily due to lower PLF (plant load factor) at two gas-based power plants following gas shortage. · Consequently, GIL posted Rs1.79bn net loss (above our net loss estimate of Rs683mn and Bloomberg consensus net loss estimate of Rs362mn). · We have revised our earnings estimates to factor in poor performance of the power segment and a fall in domestic passenger traffic. · *We have reduced target price on GIL from Rs30 to Rs27, but retained Buy rating on it.*