Market Updates03 Jun11
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Market Outlook »
Nifty may trade in 5,434-5,608 range.The policy inaction from the government and the probable future charge sheets and more revelations on account of 2G probe
will continue to keep the market at bay and a decisive break out of 5600 levels looks tough. Pharma, we believe, is likely to outperform over the next two quarters on account of non-cyclicality and good volume growth registered by the sector. Technically, market is likely to find support at 5,450 & 5,420 levels and would face resistance at 5,550 & 5,640 levels.
Buy Advanta
Buy BHEL 1911.65 target 1950
Buy Jubilant Food 160.00 target 170
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Buy IGL 337.00 target 345
Buy MIC Electronics 17.90 target 20
Buy IFB 110.00 target 120
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Investment »
Berger Paints
Investment rationale
> The company is planning to acquire a construction products company to expand its operations. It intends is to improve its
sales and profit. Berger Paints is planning to sell the construction products through its channels.
> Encouraged by the success of its franchise model of business in Tamil Nadu, Berger Paints India plans to open 300 such
stores by 2013. Over the last one year, 50 franchise stores have been in operation in Tamil Nadu. The company expects that
Rs 1 billion additional turnover can be raked in from this new retail initiative over the next two years.
> BPIL plans to invest about Rs 3.50 billion to launch a paint manufacturing complex at Hindupur in Anantapur district of
Andhra Pradesh. The government of Andhra Pradesh has allotted 48 acres of land for the proposed project. The complex will
include a 1.5 lakh kilolitres plant to manufacture water based paint. BPIL plans to invest about Rs 2 billion in the plant
and to invest a further amount of Rs 1 billion to scale up the capacity to 3 lakh kilolitres over a five-year term.
> The company is establishing an automotive and industrial paints factory having a capacity of 50 kilo liter a year. The
facility will be located at Jejuri near Pune in
Berger is expanding the capacity of its
> For the year-ended March 31, 2011, the company`s net profit increased by 25% to Rs 1.50 billion from Rs 1.20 billion in
the previous fiscal year on the back of 23% surge in net sales at Rs 18.91 billion.
> Margins during the period under review were in line with that of the previous year. Going forward rising raw material cost
is a cause of concern for the company; in order to restrict margin pressure the company sees price increase of 8-10% in the
current fiscal.
Indian Overseas Bank (IOB)
Investment rationale
> IOB plans to scale up the overseas contributions in its business from the existing 10% to 15% this fiscal. The bank is
also planning to open branches in
> The management expects 25-30% growth in advances and deposits in FY12. Total business grew from Rs 195.77 billion at the
end of March 10 to Rs 259.02 billion at the end of March 11 recording growth of 35% on y-o-y basis. Deposits outperformed
the industry and grew by 31% from Rs 1,107.95 billion at the end of March 10 to Rs 1,452.29 billion at the end of FY11.
Advances grew by 41% to Rs 1,137.91 billion at the end of March 11 as against Rs 807.82 billion in the corresponding
previous year.
> NIM for the quarter and the year improved from 2.74% for FY10 to 3.11% for FY11. NIM for the quarter stood at 3.16% as
against 2.84% in the corresponding previous quarter. Management expects NIM to be around 3% in FY12. The increase in saving
account interest rates by 50 bps to 4% will have 3-5 bps effect on NIM.
> Gross NPA has declined by 14% on y-o-y basis and 5% on q-o-q basis to Rs 30.89 billion. The % GNPA has slipped to 2.72% as
against 4.47% a year ago and 3.26% a quarter ago. The Net NPA on the contrary, has declined by 33% on y-o-y basis and 11% on
q-o-q basis to Rs 13.28 billion. The NNPA stood at 1.19% against 2.52% a year ago and 1.51% a quarter ago. Going ahead,
management plans to reduce GNPA to the tune of 2000 for FY12.
(Source SMC Global)
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