SNI MARKET OUTLOOK UPDATE 10TH MARCH 2014 : .Expect market to open on a negative note on account of global cues. Asian markets are down by 1% as China exports unexpectedly slump and Japan GDP growth slower than estimates. However we are positive on the domestic front on account of fall in USDINR and impressive CPI and IIP data. We have Buy rating for investment in stocks like SBI, PNB, L&T, Maruti, Hero Motocorp etc. Among the Technology stocks we have buy rating for investment on Infosys and Tech Mahindra Ranbaxy has recalled Generic Lipitor Batches in U.S. on faulty labels. We have sell rating on the stock. Research Updates: Hindalco: Utkal Alumina on track to lowest cost & full ramp-up. Bottom of the cycle valuations; Buy - We have returned from our site visit of Utkal Alumina with renewed confidence in our positive view on Hindalco (HNDL). We reiterate that HNDL offers value to long-term investors despite volatility in LME. The company is exiting its heavy capex cycle, while cash flows are improving due to commissioning of new low cost upstream facilities in India and downstream auto segment investments at Novelis. Strong copper TcRc margins are also helping cash flows. The stock trades at attractive bottom of the cycle valuations (EV of 6.9x FY15E EBITDA, 1xFY15E BV, 9.5x FY15E EPS). Maintain Buy TECH MAHINDRA: Well placed; continued revenue traction; concerns on cash and margins allayed - TECHM expects traction in revenue growth to continue in FY15 as well, with deal signings and pipeline both remaining healthy. Cash conversion in FY14 was hit by one-offs like acquisition payouts, stamp duty. Normalized cash conversion quality is comparable to tier-I IT. Amid steady revenue and profit growth, despite the continued hunt for acquisitions, we see the payout ratio increasing going forward. We expect TECHM to grow its USD revenues at a CAGR of 14.8% over FY14-16 and EPS at a CAGR of 16% during this period. Our Target Price of INR2,350 discounts FY16E EPS by 14x. TECHM remains amongst our preferred picks in the Technology space. For more details log on to sainathinvestment
Posted on: Mon, 10 Mar 2014 03:25:36 +0000