SNI MARKET OUTLOOK UPDATE 05TH MARCH 2014 : Expect market to open on a positive note on account of global cues. US market gained over 1% and most of the Asian markets are up by half to one percent as the geopolitical tensions between Ukraine and Russia subsided. Brent crude fell by 2% to $109/bbl. The Election commission is expected to announce the schedule for general election today. We have a buy rating for investment in private banking space on stocks like Yes Bank, ICICI Bank, IndusInd Bank. Tech Mahindra remains one of our preferred picks in the Technology space. Our Target Price of INR2,350 discounts FY16E EPS by 14x Research Updates: 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. 50% of the margin headwinds should be offset by levers. If growth remains strong, margin headwinds in FY15 will be completely offset. Our Target Price of INR2,350 discounts FY16E EPS by 14x. TECHM remains amongst our preferred picks in the Technology space. BATA INDIA: Growth set to pick‐up driven by ~40 net store openings ‐ BATA plans to target untapped segments like Sports within kids category and wedding footwear. Company expects to launch its media campaign soon, which should boost revenue growth. Large Format Flagship Stores (where ASPs are higher) are doing better than the Small Format Family Stores, which will help boost margins. ‐ At CMP of INR1042, the stock trades at 26.5x and 21.6x CY14 and CY15 EPS respectively. We revise our target price from INR 1,170 to 1,200 on the stock valuing the company at 25x CY15 EPS of INR48 on the stock. AUTO: Dashboard February 2014 update – Growth continues in two‐wheelers and tractors; other segments sees sharp decline ‐ Considering the slowdown in economic activity and consequent weakness in consumer and business sentiments, demand continues to remain weak across auto segments. MHCVs and cars have been the worst impacted. However, tractor volumes continue to remain strong on favorable monsoon and high farm income. For more details log on to sainathinvestment
Posted on: Wed, 05 Mar 2014 03:52:48 +0000
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