Anand Rathi Shares and Stock Brokers Limited (hereinafter “ARSSBL”) is a full service brokerage and equities research firm and the views expressed therein are solely of ARSSBL and not of the companies which have been covered in the Research Report. This report is intended for the sole use of the Recipient and is to be circulated only within India and to no countries outside India. Disclosures and analyst certifications are present in Appendix. Anand Rathi Research India Equities India I Equities Country Daily 4 September 2013 India Morning Bell All the latest research and data Bajaj Corp. - Well oiled; Buy. We value the stock at a target price of `335 at a PE of 22x Sep’14e earnings. Bajaj Almond drops continues to report healthy growth and is on the way to hit a 65% market share in almond-based hair oils. Kailash Parbat, cooling oil, has stabilized and is expected to report cash breakeven in FY14. The company is expected to report 21% earnings CAGR over FY13-15. We believe the acquisition of NOMARKS and the success of Kailsh Parbat will help erase the tag of a ‘single-product company’. Dalmia Bharat - Key highlights. Dalmia Bharat’s plants in TN and AP have combined cement capacity of 9m tons. Its market share in South is up from 7.1% in FY10 to 9.2% in FY13, making it a dominant player. Market share in TN and Kerala is at 14% and 13%, respectively. It derives 47% of sales from TN, 21% from Kerala, 13% from Karnataka and the balance from AP. The Telangana issue in AP may result in a chaos in near term, given opposition to division of the state from some quarters. We expect South to remain an oversupply zone until 2017, given surplus in AP and upcoming capacities in Karnataka. Derivatives view. Sensex: 18235 Nifty: 5341 India: Demand-side GDP at 2.4% in 1QFY14 2.4 3.0 0 2 4 6 8 10 12 14 1QFY07 3QFY07 1QFY08 3QFY08 1QFY09 3QFY09 1QFY10 3QFY10 1QFY11 3QFY11 1QFY12 3QFY12 1QFY13 3QFY13 1QFY14 (Real growth, %) Demand side GDP Source: CSO Chart of the day Markets 3 Sept ’13 1 Day YTD Sensex 18235 -3.4% -6.1% Nifty 5341 -3.8% -9.5% Dow Jones 14834 0.2% 13.2% S & P 500 1640 0.4% 15.0% FTSE 6468 -0.6% 9.7% Nikkei* 13889 -0.7% 33.6% Hang Seng* 22164 -1.1% -2.2% Volumes (US$m) 3 Sept ’13 1 Day Avg '13 Cash BSE 322 23.6% 369 Cash NSE 1,683 15.1% 1,966 Derivatives (NSE) 22,913 45.5% 26,729 Flows (US$m) 3 Sept ’13* MTD YTD FII – Cash Buy 305 676 98,270 Sell 411 712 86,760 Net -106 -35 11,485 FII - Derivatives Buy 3,998 6,943 684,780 Sell 4,087 6,885 674,622 Net -89 58 10,097 DII – Cash Buy 207 310 12,891 Sell 119 264 15,423 Net 88 46 -2,497 Others 3 Sept ’13 1 Day YTD Oil Brent (US$/bbl)* 115.6 -0.1% 9.3% Gold (US$/oz)* 1,413.5 0.1% -15.6% Steel (US$/MT) 590.0 0.0% 1.3% `/US$ 67.73 0.0% -18.8% US$/Euro* 1.32 0.0% 0.2% Yen/US$* 99.55 0.0% -12.9% Call Rate 10.15% -10.bps 115.bps 10-year G-Secs 8.58% 11.2bps 53.bps EMBI spreads 369.33 -2.2bps 121.bps @7:30am *Provisional Source: BSE, Bloomberg
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India Morning Bell - rathionline.com BELL …Bajaj Corp. - Well oiled; Buy. We value the stock at a target price of ... Bajaj Almond drops continues to almond-based hair oils. Kailash
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Anand Rathi Shares and Stock Brokers Limited (hereinafter “ARSSBL”) is a full service brokerage and equities research firm and the views expressed therein are solely of ARSSBL and not of the companies which have been covered in the Research Report. This report is intended for the sole use of the Recipient and is to be circulated only within India and to no countries outside India. Disclosures and analyst certifications are present in Appendix. Anand Rathi Research India Equities
India I Equities Country
Daily
4 September 2013
India Morning Bell
All the latest research and data
Bajaj Corp. - Well oiled; Buy. We value the stock at a target price of `335 at a PE of 22x Sep’14e earnings. Bajaj Almond drops continues to report healthy growth and is on the way to hit a 65% market share in almond-based hair oils. Kailash Parbat, cooling oil, has stabilized and is expected to report cash breakeven in FY14. The company is expected to report 21% earnings CAGR over FY13-15. We believe the acquisition of NOMARKS and the success of Kailsh Parbat will help erase the tag of a ‘single-product company’.
Dalmia Bharat - Key highlights. Dalmia Bharat’s plants in TN and AP have combined cement capacity of 9m tons. Its market share in South is up from 7.1% in FY10 to 9.2% in FY13, making it a dominant player. Market share in TN and Kerala is at 14% and 13%, respectively. It derives 47% of sales from TN, 21% from Kerala, 13% from Karnataka and the balance from AP. The Telangana issue in AP may result in a chaos in near term, given opposition to division of the state from some quarters. We expect South to remain an oversupply zone until 2017, given surplus in AP and upcoming capacities in Karnataka.
BANK OF INDIA 145 289 (49.9) MMTC LTD 46 320 (85.5) NATL FERTILIZERS 18 52 (64.4)
CANARA BANK 207 400 (48.2) MCX INDIA LTD 393 986 (60.0) SUZLON ENERGY 6 14 (58.2)
JAIPRAKASH ASSOC 36 70 (47.9) INDIAN BANK 65 154 (58.0) JUBILANT LIFE 71 166 (57.3)
YES BANK LTD 253 454 (44.1) INDIA TOURISM 515 1,202 (56.6) PUNJ LLOYD LTD 22 45 (51.2)
Large Caps Mid Caps Small Caps(>US$1bn) (US$250m-1bn) (US$100m-250m)
Source: Bloomberg
Anand Rathi Shares and Stock Brokers Limited (hereinafter “ARSSBL”) is a full service brokerage and equities research firm and the views expressed therein are solely of ARSSBL and not of the companies which have been covered in the Research Report. This report is intended for the sole use of the Recipient and is to be circulated only within India and to no countries outside India. Disclosures and analyst certifications are present in Appendix. Anand Rathi Research India Equities
Net gearing (%) (109.3) (79.2) (76.9) (76.2) (75.7)
Source: Company, Anand Rathi Research
Consumer
Visit noteIndia I Equities
4 September 2013
Bajaj Corp.
Well oiled; Buy
Key takeaways from management meet
Large scope for growth in premium hair oil. The hair oil market in India is growing at 5-6% in volumes, and one third of it remains un-branded. This point to a vast growth potential for organised players like Bajaj Corp. Also, almost 46% of the organised hair oil market still comprises the basic coconut hair oil, auguring well for premium oils like Bajaj Almond Drops. Management expects healthy revenue growth of 15%+ for premium hair oils in the coming years.
Muted response to products of competitors. HUL’s Dove Elixir hair oil is priced at an expensive `185. Dabur’s Almond hair oil has not been able to grow market beyond 3-4% after withdrawal of the aggressive marketing support. Moreover, Keo Karpin, the other largest brand in the segment also continues to loose market share with limited investment. Against these, Bajaj Almond Drops hair oil, priced at `50, holds a sweet spot.
Likely rise in input prices may hit margins. Cost of light liquid paraffin, the key input, may move upwards due to sharp rupee depreciation of ~15%. Anticipating this, Bajaj Corp. raised prices of its products by 6% in April 2013 and may hike prices again after 1-2 quarters to pass on higher costs, if any, to end consumers. Also, diesel prices are rising, raising freight costs. This may adversely affect its product’s price competitiveness and margins in the long run.
Our take. We value the stock at a target price of `335 at a PE of 22x Sep’14e earnings. Bajaj Almond drops continues to report healthy growth and is on the way to hit a 65% market share in almond-based hair oils. Kailash Parbat, cooling oil, has stabilized and is expected to report cash breakeven in FY14. The company is expected to report 21% earnings CAGR over FY13-15. We believe the acquisition of NOMARKS and the success of Kailsh Parbat will help erase the tag of a ‘single-product company’. Risk. Higher raw-material prices and keener -than-expected competition.
Rating: Buy Target Price: `335 Share Price: `241
Relative price performance
Bajaj Corp
Sensex
150
170
190
210
230
250
270
290
Sep-
12
Oct
-12
Nov
-12
Dec
-12
Jan-
13
Feb-
13
Mar
-13
Apr-1
3
May
-13
Jun-
13
Jul-1
3
Aug-
13
Sep-
13
Source: Bloomberg
Key data BJCOR IN / BACO.BO52-week high / low `284 / `159Sensex / Nifty 18206 / 53373-m average volume US$0.6m Market cap `36bn / US$531mShares outstanding 148m
Appendix Analyst Certification The views expressed in this Research Report accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. The research analysts are bound by stringent internal regulations and also legal and statutory requirements of the Securities and Exchange Board of India (hereinafter “SEBI”) and the analysts’ compensation are completely delinked from all the other companies and/or entities of Anand Rathi, and have no bearing whatsoever on any recommendation that they have given in the Research Report. Important Disclosures on subject companies Rating and Target Price History (as of 3 September 2013)
The research analysts, strategists, or research associates principally responsible for the preparation of Anand Rathi Research have received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues.
Anand Rathi Ratings Definitions
Analysts’ ratings and the corresponding expected returns take into account our definitions of Large Caps (>US$1bn) and Mid/Small Caps (<US$1bn) as described in the Ratings Table below:
Ratings Guide Buy Hold Sell Large Caps (>US$1bn) >15% 5-15% <5% Mid/Small Caps (<US$1bn) >25% 5-25% <5%
Anand Rathi Research Ratings Distribution (as of 28 Feb 2013) Buy Hold Sell Anand Rathi Research stock coverage (184) 65% 27% 8% % who are investment banking clients 4% 2% 0% Other Disclosures This report has been issued by ARSSBL which is a SEBI regulated entity, and which is in full compliance with all rules and regulations as are applicable to its functioning and governance. The investors should note that ARSSBL is one of the companies comprising within ANAND RATHI group, and ANAND RATHI as a group consists of various companies which may include (but is not limited to) its subsidiaries, its affiliates, its group companies who may hold positions, views, stakes and may service the companies covered in this report independent of ARSSBL. Investors are cautioned to be aware that there could arise a potential conflict of interest in the views held by ARSSBL and other companies of Anand Rathi who maybe affiliated, connected or catering to the companies mentioned in the Research Report; even though, ARSSBL and Anand Rathi are fully complaint with all procedural and operational regulatory requirements. Thus, investors should not use this as a sole basis for making their investment decision and should consider the recommendations mentioned in the Research Report bearing in mind the aforementioned.
Further, the information herein has been obtained from various sources which we believe is reliable, and we do not guarantee its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities (hereinafter referred to as “Related Investments”). ARSSBL and/or Anand Rathi may trade for their own accounts as market maker / jobber and/or arbitrageur in any securities of the companies mentioned in the Research Report or in related investments, and may be on taking a different position from the ones which haven been taken by the public orders. ARSSBL and/or Anand Rathi and its affiliates, directors, officers, and employees may have a long or short position in any securities of the companies mentioned in the Research Report or in Related Investments. ARSSBL and/or Anand Rathi, may from time to time, perform investment banking, investment management, financial advisory or any other services not explicitly mentioned herein, or solicit investment banking or other business from, any entity and/or company mentioned in this Research Report; however, the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the other companies of Anand Rathi, even though there might exist an inherent conflict of interest.
Furthermore, this Research Report is prepared for private circulation and use only. It does not have regard to the specific investment objectives, financial situation and the specific financial needs or objectives of any specific person who may receive this Research Report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this Research Report, and, should understand that statements regarding future prospects may or may not be realized, and we can not guarantee the same as analysis and valuation is a tool to enable investors to make investment decisions but, is not an exact and/or a precise science. Investors should note that income from such securities, if any, may fluctuate and that each security's price or value may rise or fall. Past performance is not necessarily a guide to future performance. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investments mentioned in this report.
Other Disclosures pertaining to distribution of research in the United States of America
This material was produced by ARSSBL, solely for information purposes and for the use of the recipient. It is not to be reproduced under any circumstances and is not to be copied or made available to any person other than the recipient. It is distributed in the United States of America by Enclave Capital LLC (19 West 44th Street, Suite 1700, New York, NY 10036) and elsewhere in the world by ARSSBL or an authorized affiliate of ARSSBL (such entities and any other entity, directly or indirectly, controlled by ARSSBL, the “Affiliates”). This document does not constitute an offer of, or an invitation by or on behalf of ARSSBL or its Affiliates or any other company to any person, to buy or sell any security. The information contained herein has been obtained from published information and other sources, which ARSSBL or its Affiliates consider to be reliable. None of ARSSBL or its Affiliates accepts any liability or responsibility whatsoever for the accuracy or completeness of any such information. All estimates, expressions of opinion and other subjective judgments contained herein are made as of the date of this document. Emerging securities markets may be subject to risks significantly higher than more established markets. In particular, the political and economic environment, company practices and market prices and volumes may be subject to significant variations. The ability to assess such risks may also be limited due to significantly lower information quantity and quality. By accepting this document, you agree to be bound by all the foregoing provisions.
1. ARSSBL or its Affiliates may or may not have been beneficial owners of the securities mentioned in this report.
2. ARSSBL or its affiliates may have or not managed or co-managed a public offering of the securities mentioned in the report in the past 12 months.
3. ARSSBL or its affiliates may have or not received compensation for investment banking services from the issuer of these securities in the past 12 months and do not expect to receive compensation for investment banking services from the issuer of these securities within the next three months.
4. However, one or more of ARSSBL or its Affiliates may, from time to time, have a long or short position in any of the securities mentioned herein and may buy or sell those securities or options thereon, either on their own account or on behalf of their clients.
5. As of the publication of this report, ARSSBL does not make a market in the subject securities.
6. ARSSBL or its Affiliates may or may not, to the extent permitted by law, act upon or use the above material or the conclusions stated above, or the research or analysis on which they are based before the material is published to recipients and from time to time, provide investment banking, investment management or other services for or solicit to seek to obtain investment banking, or other securities business from, any entity referred to in this report.
Enclave Capital LLC is distributing this document in the United States of America. ARSSBL accepts responsibility for its contents. Any US customer wishing to effect transactions in any securities referred to herein or options thereon should do so only by contacting a representative of Enclave Capital LLC.
Additional information on recommended securities/instruments is available on request.
Anand Rathi Shares and Stock Brokers Limited (hereinafter “ARSSBL”) is a full service brokerage and equities research firm and the views expressed therein are solely of ARSSBL and not of the companies which have been covered in the Research Report. This report is intended for the sole use of the Recipient and is to be circulated only within India and to no countries outside India. Disclosures and analyst certifications are present in Appendix. Anand Rathi Research India Equities
Cement
Post-Conference NoteIndia I Equities
Year end 31 Mar FY09 FY10 FY11 FY12 FY13
Sales (`m) 17,536 21,543 17,459 23,422 27,906
Net Profit (`m) 1,160 1,325 (22) 1,290 1,248
EPS (`) 13.7 15.6 (0.3) 15.2 14.7
Growth (%) (66.9) 14.2 NA NA) (3.3)
PE (x) 7.7 6.7 NA 6.9 7.1
P BV (x) 0.7 0.6 0.3 0.3 0.3
RoE (%) 9.5 9.8 (0.1) 4.6 4.2
RoCE(%) 10.3 8.0 2.1 8.4 7.7
Dividend Yield (%) 1.8 0.9 1.1 1.4 1.8
Net Gearing (%) 175.9 187.5 49.8 57.4 102.6
Source: Company, Anand Rathi Research Note: FY09/10 includes the sugar and Power
`
Senses: 18308 Nifty: 5415
Share Price: `105
Key data DBEL IN / DALA.BO52-week high / low `204 / `95Sensex / Nifty 18308 / 54153-m average volume US$0.02mMarket cap `8.9bn / US$148mShares outstanding 81.2m
The South king. Dalmia Bharat’s (Dalmia) plants in TN and AP have combined cement capacity of 9m tons. Its market share in South is up from 7.1% in FY10 to 9.2% in FY13, making it a dominant player. Market share in TN and Kerala is at 14% and 13%, respectively. It derives 47% of sales from TN, 21% from Kerala, 13% from Karnataka and the balance from AP.
Healthy investments. Dalmia’s investments through its 85% subsidiary, Dalmia Cement Bharat (DCBL), include 100% stake in Dalmia Cement Ventures, which has plans to undertake greenfield cement projects; 100% stake in Adhunik Cement (1.5m ton) and 76% stake in Calcom Cement (1.3m ton) both in North-East; and 45% stake in OCL India that has 5.3m ton capacity in Odisha. It sells under the brands of ‘Dalmia Cement’, ‘Vajram, ‘Rockfort’, ‘Dalmia Superoof’, ‘Dalmia Superfoundation’, ‘Dalmia Coastal’ and ‘Konark’. KKR had taken a 15% stake in DCBL in 2010.
Growing capacity. Over a period of time, the company has established plants in four locations across three states at a capex of `30bn. Its revenue has seen a 24% CAGR over FY07-12. Growth plans include a 2.5m ton greenfield plant in Belgaum, Karnataka, by Sep’15 at a capex of `13.5bn. It also has a 1.4m ton grinding unit under construction in West Bengal under OCL and clinker (1m ton), cement expansion (0.9m ton) underway in Calcom Cement. Group capacity is expected to rise to 22m ton by Sep’15 from 17m ton currently. It continues to explore organic, inorganic modes of expansion.
South India landscape. The Telangana issue in AP may result in a chaos in near term, given opposition to division of the state from some quarters. We expect South to remain an oversupply zone until 2017, given surplus in AP and upcoming capacities in Karnataka. Cement prices in TN and Karnataka may not remain isolated from disturbances in AP, but should stabilize in the near term with more players agreeing to maintain production discipline. Given impediments of project setup like risk-return (EBITDA/ton of `800 vs cost of `6000) land/clearances hassles, consolidation is the key.
Relative price performance
DBEL
Sensex
90
110
130
150
170
190
210
Sep-
12
Oct
-12
Nov
-12
Dec
-12
Jan-
13
Feb-
13
Mar
-13
Apr-1
3
May
-13
Jun-
13
Jul-1
3
Aug-
13
Sep-
13
Source: Bloomberg
4 September 2013 Dalmia Bharat – Key highlights
Anand Rathi Research 2
Quick Glance – Financials and ValuationsFig 1 – Income statement (`m)
Year end 31 Mar FY09 FY10 FY11 FY12 FY13
Net sales 17,536 21,543 17,459 23,422 27,906 Sales growth (%) 18.4 22.8 NA 34.2 19.1 - Op. expenses 13,372 17,056 14,784 17,748 21,591 EBIDTA 4,164 4,486 2,675 5,674 6,316 EBITDA margins (%) 23.7 20.8 15.3 24.2 22.6 - Interest 1,470 1,757 1,724 1,513 2,314 - Depreciation 872 1,320 1,753 1,817 2,059 + Other income 359 597 1,516 756 796 - Tax 1,021 681 611 1,229 1,336 Effective tax rate (%) 46.8 33.9 85.5 45.4 48.8 Consolidated PAT 1,160 1,325 103 1,476 1,402 PAT growth (%) (66.9) 14.2 NA 1,329.7 (5.0)Adjusted PAT 1,160 1,325 (22) 1,290 1,248 FDEPS (`/share) 13.7 15.6 (0.3) 15.2 14.7 CEPS (`/share) 24.0 31.2 20.4 36.7 39.1 DPS (`/share) 1.9 1.0 1.2 1.4 1.9 Source: Company, Anand Rathi Research Note: FY09/10 includes the sugar and Power
Fig 3 – Cash-flow statement (`m) Year end 31 Mar FY09 FY10 FY11 FY12 FY13
Fig 2 – Balance sheet (`m) Year end 31 Mar FY09 FY10 FY11 FY12 FY13
Share capital 169 169 169 169 169 Reserves & surplus 12,601 14,098 27,615 28,736 30,841 Shareholders’ fund 12,770 14,267 27,784 28,905 31,011 Debt 23,383 28,954 18,375 17,266 32,824 Deferred Tax Liab (net) - - - - -Minority interests - - 4,086 4,272 5,174 Capital employed 36,152 43,221 50,245 50,442 69,009 Fixed assets 28,791 30,536 37,086 35,542 52,124 Investments 5,636 7,248 6,592 11,935 11,804 Working capital 3,087 6,125 2,555 3,228 5,395 Cash 925 2,203 4,543 664 999 Capital deployed 36,152 43,221 50,245 50,442 69,009 No. of shares (m) 84.4 84.4 84.7 84.7 84.7 Net Debt/Equity (%) 175.9 187.5 49.8 57.4 102.6 W C turn (days) 64.8 78.0 90.7 45.1 56.4Book Value (`/share) 151 168 328 341 366 Source: Company, Anand Rathi Research Note: FY09/10 includes the sugar and Power
Fig 4 – Ratio analysis @ `105 Year end 31 Mar FY09 FY10 FY11 FY12 FY13
P/E (x) 7.7 6.7 NA 6.9 7.1Cash P/E (x) 4.4 3.4 5.1 2.9 2.7EV/EBITDA (x) 6.2 6.3 6.0 2.4 4.6EV/Sales (x) 1.5 1.3 0.9 0.6 1.0P/B (x) 0.7 0.6 0.3 0.3 0.3RoAE (%) 9.5 9.8 -0.1 4.6 4.2RoACE (%) 10.3 8.0 2.1 8.4 7.7Dividend yield (%) 1.8 0.9 1.1 1.4 1.8Dividend payout (%) 17.5 8.2 NA 11.0 15.2Debt/Equity (x) 1.8 2.0 0.7 0.6 1.1Receivable days 33.2 36.2 32.9 18.4 24.7Inventory days 106.4 104.8 105.0 43.6 40.1Payable days 243.3 169.5 192.8 144.4 196.0Working capital days 64.8 78.0 90.7 45.1 56.4Fixed asset T/O (x) 0.7 0.7 0.5 0.6 0.6Source: Company, Anand Rathi Research Note: FY09/10 includes the sugar and Power
Fig 6 – Sales Mix (FY13)
Tamil Nadu, 47
AP, 9
Kerala, 21
North East, 7
Karnataka, 13Others, 3
Source: Company
Appendix Analyst Certification The views expressed in this Research Report accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. The research analysts are bound by stringent internal regulations and also legal and statutory requirements of the Securities and Exchange Board of India (hereinafter “SEBI”) and the analysts’ compensation are completely delinked from all the other companies and/or entities of Anand Rathi, and have no bearing whatsoever on any recommendation that they have given in the Research Report. The research analysts, strategists, or research associates principally responsible for the preparation of Anand Rathi Research have received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues.
Anand Rathi Ratings Definitions
Analysts’ ratings and the corresponding expected returns take into account our definitions of Large Caps (>US$1bn) and Mid/Small Caps (<US$1bn) as described in the Ratings Table below:
Ratings Guide Buy Hold Sell Large Caps (>US$1bn) >15% 5-15% <5% Mid/Small Caps (<US$1bn) >25% 5-25% <5% Anand Rathi Research Ratings Distribution (as of 28 Feb 2013) Buy Hold Sell Anand Rathi Research stock coverage (184) 65% 27% 8% % who are investment banking clients 4% 2% 0% Other Disclosures This report has been issued by ARSSBL which is a SEBI regulated entity, and which is in full compliance with all rules and regulations as are applicable to its functioning and governance. The investors should note that ARSSBL is one of the companies comprising within ANAND RATHI group, and ANAND RATHI as a group consists of various companies which may include (but is not limited to) its subsidiaries, its affiliates, its group companies who may hold positions, views, stakes and may service the companies covered in this report independent of ARSSBL. Investors are cautioned to be aware that there could arise a potential conflict of interest in the views held by ARSSBL and other companies of Anand Rathi who maybe affiliated, connected or catering to the companies mentioned in the Research Report; even though, ARSSBL and Anand Rathi are fully complaint with all procedural and operational regulatory requirements. Thus, investors should not use this as a sole basis for making their investment decision and should consider the recommendations mentioned in the Research Report bearing in mind the aforementioned.
Further, the information herein has been obtained from various sources which we believe is reliable, and we do not guarantee its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities (hereinafter referred to as “Related Investments”). ARSSBL and/or Anand Rathi may trade for their own accounts as market maker / jobber and/or arbitrageur in any securities of the companies mentioned in the Research Report or in related investments, and may be on taking a different position from the ones which haven been taken by the public orders. ARSSBL and/or Anand Rathi and its affiliates, directors, officers, and employees may have a long or short position in any securities of the companies mentioned in the Research Report or in Related Investments. ARSSBL and/or Anand Rathi, may from time to time, perform investment banking, investment management, financial advisory or any other services not explicitly mentioned herein, or solicit investment banking or other business from, any entity and/or company mentioned in this Research Report; however, the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the other companies of Anand Rathi, even though there might exist an inherent conflict of interest.
Furthermore, this Research Report is prepared for private circulation and use only. It does not have regard to the specific investment objectives, financial situation and the specific financial needs or objectives of any specific person who may receive this Research Report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this Research Report, and, should understand that statements regarding future prospects may or may not be realized, and we can not guarantee the same as analysis and valuation is a tool to enable investors to make investment decisions but, is not an exact and/or a precise science. Investors should note that income from such securities, if any, may fluctuate and that each security's price or value may rise or fall. Past performance is not necessarily a guide to future performance. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investments mentioned in this report.
Other Disclosures pertaining to distribution of research in the United States of America
This material was produced by ARSSBL, solely for information purposes and for the use of the recipient. It is not to be reproduced under any circumstances and is not to be copied or made available to any person other than the recipient. It is distributed in the United States of America by Enclave Capital LLC (19 West 44th Street, Suite 1700, New York, NY 10036) and elsewhere in the world by ARSSBL or an authorized affiliate of ARSSBL (such entities and any other entity, directly or indirectly, controlled by ARSSBL, the “Affiliates”). This document does not constitute an offer of, or an invitation by or on behalf of ARSSBL or its Affiliates or any other company to any person, to buy or sell any security. The information contained herein has been obtained from published information and other sources, which ARSSBL or its Affiliates consider to be reliable. None of ARSSBL or its Affiliates accepts any liability or responsibility whatsoever for the accuracy or completeness of any such information. All estimates, expressions of opinion and other subjective judgments contained herein are made as of the date of this document. Emerging securities markets may be subject to risks significantly higher than more established markets. In particular, the political and economic environment, company practices and market prices and volumes may be subject to significant variations. The ability to assess such risks may also be limited due to significantly lower information quantity and quality. By accepting this document, you agree to be bound by all the foregoing provisions.
1. ARSSBL or its Affiliates may or may not have been beneficial owners of the securities mentioned in this report.
2. ARSSBL or its affiliates may have or not managed or co-managed a public offering of the securities mentioned in the report in the past 12 months.
3. ARSSBL or its affiliates may have or not received compensation for investment banking services from the issuer of these securities in the past 12 months and do not expect to receive compensation for investment banking services from the issuer of these securities within the next three months.
4. However, one or more of ARSSBL or its Affiliates may, from time to time, have a long or short position in any of the securities mentioned herein and may buy or sell those securities or options thereon, either on their own account or on behalf of their clients.
5. As of the publication of this report, ARSSBL does not make a market in the subject securities.
6. ARSSBL or its Affiliates may or may not, to the extent permitted by law, act upon or use the above material or the conclusions stated above, or the research or analysis on which they are based before the material is published to recipients and from time to time, provide investment banking, investment management or other services for or solicit to seek to obtain investment banking, or other securities business from, any entity referred to in this report.
Enclave Capital LLC is distributing this document in the United States of America. ARSSBL accepts responsibility for its contents. Any US customer wishing to effect transactions in any securities referred to herein or options thereon should do so only by contacting a representative of Enclave Capital LLC.
Additional information on recommended securities/instruments is available on request.
Nifty A-T-M IVs closed the day @31.1%.
Trading Ban None.
Nifty Option Equilibrium moved down to 5465 (-10pts).
NIFTY ended the day approximately 3.8% lower. Market volumes (Rs1,688bn) were up 44%.
Session Recap Fund Flow FIIs were net sellers of (-Rs7.2bn) & (Rs16.3bn) in provisional cash & directional futures respectively. Their selling in index futures was a mixture of long closures (17,545cts) and fresh shorts (50,963cts). DFIs were net buyers of +Rs6bn in provisional cash.
NIFTY Sep-13 is trading at 3 pts premium to spot. Nifty OI was up approximately 0.6m shrs. Major option changes were in the Sep-13 5600CE (+0.5m shrs), Sep-13 5700CE (+0.5m shrs), Sep-13 5900CE (+0.5m shrs), Sep-13 5500PE (-0.5m shrs) & Sep-13 4600PE (+0.4m shrs).
Futures OI is down by Rs7.08bn (-1.7%) and constitutes 33% of overall market-wide position.
Anand Rathi Shares and Stock Brokers, its affiliates and subsidiaries, do and seek to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Disclosures and analyst certifications are located in Appendix.
2 - Sep 3 - SepNIFTY
Index Highlights
Spot Near Fut. Mid Fut. Near Basis Mid Basis Near OI (mn sh) Mid OI (mn sh)
5,550.8 5,344.6 5,554.6 5,372.1 5,577.3
3.1 3.9 30.6 26.5 18.7 18.0
1.6 1.6
5,341.5
Particulars 3 - Sep 2 - Sep Sentiment Indicators
PCR OI PCR Vol Historical Volt. % A-T-M IV Call % A-T-M IV Put %
1.41 1.48 1.19 1.04 35.14 28.50
30.70 27.20 31.80 29.20
Type 3 - Sep 2 - Sep
Market Volume Activity
Cash Deliveries* Delivery % Cash* F&O* Total Mkt Vol*
45.7 39.8 34.0 36.2
113.9 96.5 1,066.5
1,665.9 1,162.9 1,551.9
Price (%) Fut OI (%)Open Interest GainersTicker
ITC -5.7 16.0
COAL 1.2 15.7
NATP -2.8 12.9
PWGR -3.9 12.4
HEXW 1.6 11.6
Fut OI (%)Price (%)
Open Interest Losers
Ticker
SNDB -2.6 -11.7
LPC 1.8 -8.6
IDFC -5.1 -8.3
UNTP -3.3 -7.6
UNBK -6.1 -6.6
Symbol Buy Sell Net (D) Net (W) Net (I) OI (Rs) OI (Δ Rs)
* Price & OI changes are segregated as D = Daily, W = Weekly & I =Contract Inception * OI (Y High) = Current Futures OI in shrs as a % of Year high OI
Appendix Analyst Certification The views expressed in this Research Report accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. The research analysts are bound by stringent internal regulations and also legal and statutory requirements of the Securities and Exchange Board of India (hereinafter “SEBI”) and the analysts’ compensation are completely delinked from all the other companies and/or entities of Anand Rathi, and have no bearing whatsoever on any recommendation that they have given in the Research Report. The research analysts, strategists, or research associates principally responsible for the preparation of Anand Rathi Research have received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues.
Anand Rathi Ratings Definitions
Analysts’ ratings and the corresponding expected returns take into account our definitions of Large Caps (>US$1bn) and Mid/Small Caps (<US$1bn) as described in the Ratings Table below:
Ratings Guide Buy Hold Sell Large Caps (>US$1bn) >15% 5-15% <5% Mid/Small Caps (<US$1bn) >25% 5-25% <5% Anand Rathi Research Ratings Distribution (as of 28 Feb 2013) Buy Hold Sell Anand Rathi Research stock coverage (184) 65% 27% 8% % who are investment banking clients 4% 2% 0% Other Disclosures This report has been issued by ARSSBL which is a SEBI regulated entity, and which is in full compliance with all rules and regulations as are applicable to its functioning and governance. The investors should note that ARSSBL is one of the companies comprising within ANAND RATHI group, and ANAND RATHI as a group consists of various companies which may include (but is not limited to) its subsidiaries, its affiliates, its group companies who may hold positions, views, stakes and may service the companies covered in this report independent of ARSSBL. Investors are cautioned to be aware that there could arise a potential conflict of interest in the views held by ARSSBL and other companies of Anand Rathi who maybe affiliated, connected or catering to the companies mentioned in the Research Report; even though, ARSSBL and Anand Rathi are fully complaint with all procedural and operational regulatory requirements. Thus, investors should not use this as a sole basis for making their investment decision and should consider the recommendations mentioned in the Research Report bearing in mind the aforementioned.
Further, the information herein has been obtained from various sources which we believe is reliable, and we do not guarantee its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities (hereinafter referred to as “Related Investments”). ARSSBL and/or Anand Rathi may trade for their own accounts as market maker / jobber and/or arbitrageur in any securities of the companies mentioned in the Research Report or in related investments, and may be on taking a different position from the ones which haven been taken by the public orders. ARSSBL and/or Anand Rathi and its affiliates, directors, officers, and employees may have a long or short position in any securities of the companies mentioned in the Research Report or in Related Investments. ARSSBL and/or Anand Rathi, may from time to time, perform investment banking, investment management, financial advisory or any other services not explicitly mentioned herein, or solicit investment banking or other business from, any entity and/or company mentioned in this Research Report; however, the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the other companies of Anand Rathi, even though there might exist an inherent conflict of interest.
Furthermore, this Research Report is prepared for private circulation and use only. It does not have regard to the specific investment objectives, financial situation and the specific financial needs or objectives of any specific person who may receive this Research Report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this Research Report, and, should understand that statements regarding future prospects may or may not be realized, and we can not guarantee the same as analysis and valuation is a tool to enable investors to make investment decisions but, is not an exact and/or a precise science. Investors should note that income from such securities, if any, may fluctuate and that each security's price or value may rise or fall. Past performance is not necessarily a guide to future performance. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investments mentioned in this report.
Other Disclosures pertaining to distribution of research in the United States of America
This material was produced by ARSSBL, solely for information purposes and for the use of the recipient. It is not to be reproduced under any circumstances and is not to be copied or made available to any person other than the recipient. It is distributed in the United States of America by Enclave Capital LLC (19 West 44th Street, Suite 1700, New York, NY 10036) and elsewhere in the world by ARSSBL or an authorized affiliate of ARSSBL (such entities and any other entity, directly or indirectly, controlled by ARSSBL, the “Affiliates”). This document does not constitute an offer of, or an invitation by or on behalf of ARSSBL or its Affiliates or any other company to any person, to buy or sell any security. The information contained herein has been obtained from published information and other sources, which ARSSBL or its Affiliates consider to be reliable. None of ARSSBL or its Affiliates accepts any liability or responsibility whatsoever for the accuracy or completeness of any such information. All estimates, expressions of opinion and other subjective judgments contained herein are made as of the date of this document. Emerging securities markets may be subject to risks significantly higher than more established markets. In particular, the political and economic environment, company practices and market prices and volumes may be subject to significant variations. The ability to assess such risks may also be limited due to significantly lower information quantity and quality. By accepting this document, you agree to be bound by all the foregoing provisions.
1. ARSSBL or its Affiliates may or may not have been beneficial owners of the securities mentioned in this report.
2. ARSSBL or its affiliates may have or not managed or co-managed a public offering of the securities mentioned in the report in the past 12 months.
3. ARSSBL or its affiliates may have or not received compensation for investment banking services from the issuer of these securities in the past 12 months and do not expect to receive compensation for investment banking services from the issuer of these securities within the next three months.
4. However, one or more of ARSSBL or its Affiliates may, from time to time, have a long or short position in any of the securities mentioned herein and may buy or sell those securities or options thereon, either on their own account or on behalf of their clients.
5. As of the publication of this report, ARSSBL does not make a market in the subject securities.
6. ARSSBL or its Affiliates may or may not, to the extent permitted by law, act upon or use the above material or the conclusions stated above, or the research or analysis on which they are based before the material is published to recipients and from time to time, provide investment banking, investment management or other services for or solicit to seek to obtain investment banking, or other securities business from, any entity referred to in this report.
Enclave Capital LLC is distributing this document in the United States of America. ARSSBL accepts responsibility for its contents. Any US customer wishing to effect transactions in any securities referred to herein or options thereon should do so only by contacting a representative of Enclave Capital LLC.