Market Outlook

India Research
February 24, 2012
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 (%) (Pts) (Close)

Dealers Diary
Indian markets are expected to open higher tracking positive cues from the markets worldwide. The Asian stocks have opened in the green and crude oil advanced after U.S. jobless claims held at a four-year low and German business confidence exceeded forecasts. The European markets closed mixed on Thursday as negativity caused by the EU Commission comments on economic activity in the euro area and speculation about a big sale program for European equities and worries about a possible downgrade of the creditworthiness of Portugal kept markets under pressure. The US markets however edged higher on Thursday as upbeat jobs data overshadowed some disappointing earnings news. The initial jobless claims came in unchanged in the week ended February 18th. Economists had expected jobless claims to edge up to 355,000 from the 348,000 originally reported for the previous week. Meanwhile Indian shares ended in the red for a second day in a row on Thursday, as negative Asian cues prompted investors to stay on the sidelines on the settlement day of February series derivative contracts.

(0.4) (0.4) (0.6) (0.9) (0.3) (0.3) (0.3) (0.8) 0.4 (0.2)
Chg (%)

(66.8) 18,079 (22.1) (35.2) (63.2) (17.7) (19.3) 5,483 6,341 6,906 6,310 7,733

(40.4) 12,308 (80.7) 10,090 30.5 (9.9)

(Pts)

(1.4) (170.8) 11,944 8,804 6,275

(Close)

0.4 0.8 0.4 0.4 (0.9) 0.3

46.0 12,985 23.8 21.3 41.6 (27.3) 6.0 2,957 5,938 9,596 2,968 2,410

Markets Today
The trend deciding level for the day is 18,111/5,494 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18,217 18,355/5,527 5,570 levels. However, if NIFTY trades below 18,111 / 5,494 levels for the first half-an-hour of trade then it may correct up to 17,973 17,867/5,450 5,417 levels.
Indices SENSEX NIFTY S2 17,867 5,417 S1 17,973 5,450 PIVOT 18,111 5,494 R1 18,217 5,527 R2 18,355 5,570

(0.8) (168.3) 21,381

Indian ADRs Infosys Wipro ICICI Bank HDFC Bank

Chg (%)

(Pts)

(Close)

(0.8) 0.9 (2.9) (1.0)

(0.5) 0.1 (1.1) (0.4)

$59.7 $11.4 $37.5 $34.3

News Analysis

Advances / Declines Advances Declines Unchanged

BSE

NSE

Result Reviews: Ranbaxy Labs, ABB, Aventis Pharmaceuticals

Refer detailed news analysis on the following page

1,050 1,845 103

456 1,007 56

Net Inflows (February 22, 2012)

` cr FII MFs Purch 4,024 662 Sales 3,057 1288 Net 967 (626) MTD 16,278 (2,308) YTD 27,359 (4,163)

Volumes (` cr) BSE NSE

3,223 18,316

FII Derivatives (February 23, 2012)

` cr
Index Futures Stock Futures

Purch 6,098 7,683

Sales 5,961 7,968

Net 137 (285)

Open Interest 12,680 26,426

Gainers / Losers
Gainers Company
Voltas Lanco Infra Amtek Auto-$ BPCL Oracle Fin

Losers Company
Jaiprakash Asso HDIL Reliance Cap Sun TV Network IVRCL LTD

Price (`)
111 21 141 657 2,218

chg (%)
7.8 6.9 5.4 5.1 4.7

Price (`)
75 113 420 315 54

chg (%)
(6.8) (6.2) (5.3) (4.9) (4.9)

Please refer to important disclosures at the end of this report

Sebi Registration No: INB 010996539

Market Outlook | India Research

Result Reviews - 4QCY2011 Ranbaxy Laboratories

For 4QCY2011, Ranbaxy's net sales came in higher than our expectations, however net profit came in-line with expectations and OPM came in lower than our expectations. For 4QCY2011, the company posted net sales of `3,743cr, growth of 57% yoy, mainly driven by Lipitor exclusivity. The US, the key geography that contributed mainly to the company's growth, posted sales of US$407mn, registering growth of 2,330% yoy. The company's margin for the quarter stood at 23.0%, lower than our expectation of 33.0%. However, net profit before extraordinary items came in at `583cr, registering growth of 182% yoy. We recommend Neutral on the stock.

ABB
ABB India (ABB) announced its 4QCY2011 results, which were disappointing on the top-line front but met expectations on the bottom-line front. The companys top line grew by mere 6.2% yoy to `2,200cr (`2,072cr), which was 8.8% lower than our estimate (below street) of `2,412cr. Modest growth during the quarter can largely be attributed to the process automation segment, which declined by 7.1% yoy, thus overshadowing decent growth delivered by the power systems (15.2%) and power products (10.2%) segments. For CY2011, the companys top line posted healthy growth of 17.1% yoy to `7,449cr (`6,359cr). On the operating front, the companys EBITDA margin expanded by 333bp yoy to 4.9%, in-line with our estimate (5.1%). Sequentially, the companys margin improved by ~110bp, indicating cost efficiencies aimed by the management during its previous commentaries. Segment wise, the power products and automation products segments posted a sharp uptick of ~290/340bp (yoy/qoq) and 920/420bp (yoy/qoq), respectively. For CY2011, EBITDAM came in at 4.9%, registering a yoy improvement of ~360bp. Despite lower revenue, margin expansion and lower tax incidence boosted the companys PAT by eight-fold (on the corresponding years low base) to `64.1cr, in-line with our estimate of `61.9cr. For CY2011, PAT grew by 191% yoy to 184.5cr (`63.2cr). At current valuations of 49.2x CY2012E EPS, the stock is richly valued. Post the earnings commentary, we do not expect any significant change to our growth and earnings estimates and, hence, do not warrant a change in our recommendation. We maintain our Sell recommendation on the stock; however, the target price is under review.

February 24, 2012

Market Outlook | India Research

Aventis Pharmaceuticals
For 4QCY2011, Aventis posted net sales growth of 17.9% yoy. The company's OPM came in at 13.6% vs. 7.2% in 4QCY2010. Sales growth was driven by domestic formulation growth of 24.5% yoy. Consequently, the company's net profit came in at `36cr, registering 23.6% yoy growth. We maintain our Sell recommendation on the stock with a target price of `1,937.

Economic and Political News

India's current account deficit is a matter of concern: Finance Minister Exporters unlikely to get tax incentives in FY2013 budget Ministers to discuss ONGC share sale on Monday West Bengal government to seek re-allotment of 10 coal blocks

Corporate News

Tata Steel seeks shareholders' nod to up borrowing limit Adani considers buying BG stake in Gujarat Gas CCI approves Sasan Power Infra, RPower merger Lupin reaches patent litigation settlement agreement with US based firms Subex wins multi-million dollar deal from African firm

Source: Economic Times, Business Standard, Business Line, Financial Express, Mint

February 24, 2012

Market Outlook | India Research

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

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February 24, 2012