Top 10 Widely Held Stocks

Transcription

1 Top 10 Widely Held Stocks Oct 18, 2013 Research Team Ajay Kumar Srivastava Swati Saxena Gaurav Sharma 1

2 RELIANCE POWER CMP(`): 72.2 Mcap (` Cr.): EPS (`): 3.61 Book Value(`): Week High: Week Low : Net profit of Reliance Power declined 4.80% to Rs crore in the quarter ended June 2013 as against Rs crore during the previous quarter ended June Sales rose % to Rs 6.64 crore in the quarter ended June 2013 as against Rs 1.82 crore during the previous quarter ended June Reliance Power's 100-MW concentrated solar power (CSP) project in Rajasthan has received approval for carbon credits under the United Nations Framework Convention on Climate Change. Reliance Power Ltd posted 15% rise in its fourth quarter consolidated net profit at Rs266 crore, compared with Rs231 crore in the corresponding quarter last year. For FY13, total income was Rs 4,926 crore and net profit Rs 1,011 crore. Capacity addition during the year totaled 1,300 MW, with 600 MW at Butibori (Maharashtra), 660 MW (of 4,000 MW) at Sasan and 40 MW of solar power at Rajasthan The company has the largest portfolio of power projects in the private sector based on coal, gas, hydro and renewable energy, with an operating portfolio of 1,540 MW. The company also has the largest captive coal reserves in the private sector, estimated at more than two billion tonnes. Besides, the company has purchased three coal mines in Indonesia and is also having plans to develop coal bed methane based generation capacity. Since the past nine weeks, the stock has been trading with in range (63-73) and has been forming indecisive candlesticks on the weekly chart. An either side break from this range will decide the trend of the stock for the coming sessions. Closing above 73, the stock will run-up towards 77 and below 63, the stock may slip towards 58. 2

3 RELIANCE INDUSTRIES CMP(`): Mcap (` Cr.): EPS: Book Value(`): Week High: Week Low : Reliance Industries Ltd posted net profit of Rs5,490cr in the July-September quarter, 1.5% higher than that in the second quarter of This was despite a 19% drop in its gross refining margins. Operating margins declined 100 bps to 7.6% in Q2FY'14 as cost of raw materials as a percentage to net sales rose 70 bps to 75% while other expenses rose 30 bps to 6.5%. Reliance Industries Ltd (RIL) has pegged its remaining reserves in the D1 and D3 discoveries in the KG-D6 block at 1.2 trillion cubic feet (tcf). Reliance Industries and its partners in KG-D6 block-bp Plc and Niko Resources have got approval to invest $4 billion in the R-Series gas-field in the block. The recent gas discovery should help in improving production visibility from the KG-D6. The company would be mobilizing a second rig into D6 in July 2013, which would aid in further exploration and work over operations in existing wells. The stock has been trading with-in a rising channel formation on the weekly chart. Currently it has posted strong run-up after testing the bottom support line. For an extension to this run-up, it is important for the stock to consolidate above 920 levels on a closing basis. 3

4 SUZLON ENERGY CMP(`): 7.70 Mcap (` Cr.): 1632 EPS: 0 Book Value(`): Week High: Week Low : 5.70 Suzlon Energy Group announced a new contract win with a 65 MW project, located in the southern Department of Colonia in Uruguay. Suzlon Group signed an agreement with China's Poly Longma Energy (Dalian) for sale of the company's 75% stake held in its China-based manufacturing subsidiary - Suzlon Energy Tianjin for US$ 28 mn. Suzlon Group signed an agreement with China's Poly Longma Energy (Dalian) for sale of the company's 75% stake held in its China-based manufacturing subsidiary - Suzlon Energy Tianjin for US$ 28 mn. Net Loss of Suzlon Energy reported to Rs crore in the quarter ended June 2013 as against net loss of Rs crore during the previous quarter ended June Sales rose 59.03% to Rs crore in the quarter ended June 2013 as against Rs crore during the previous quarter ended June Although the demand from the Indian and other emerging markets is growing, the subdued outlook for large markets like the US and Europe will remain an overhang on the company's consolidated performance for next few quarters. The stock has been able to post a long awaited run-up. It gained more than 10% on a week on week basis. Going ahead, sustaining above 7.5 levels is important. Above that the stock is having potential of testing 8.7 levels shortly. 4

5 JAIPRAKASH ASSOCIATES CMP(`): Mcap (` Cr.): 9930 EPS: 1.75 Book Value(`): Week High: Week Low : Net profit of Jaiprakash Associates rose % to Rs crore in the quarter ended June 2013 as against Rs crore during the previous quarter ended June Sales rose 10.79% to Rs crore in the quarter ended June 2013 as against Rs crore during the previous quarter ended June On year on year basis, the operating margin contracted by 340 bps to 23.7% but on sequential basis the operating margin expanded by 90 bps from 22.9%in Q4FY13. Upside in revenue is largely on account of real estate business as the two major business of the company i.e. Cement and Construction turned a mixed performance. The cement prices may firm up after pick up in construction activity, especially as upcoming elections in some states will boost execution of public infrastructure projects. Its rising debt is a major concern and at the end of FY12 its total debt was Rs cr. For better performance in coming quarters; the company needs to maintain such reductions in interests and expenses. The stock has gained more than 16% from its previous weeks closing levels and has just crossed its 100 day EMA on the daily chart placed at 46 level. The stock has to sustain above this mark for some more time so as to continue its run-up. 5

6 UNITECH CMP(`): Mcap (` Cr.): 4643 EPS: 0.73 Book Value(`): Week High: Week Low : REDUCE Unitech Ltd has inked a multi-crore deal to lease space at one of its IT SEZs in Gurgaon to MNC human resource firm Aon Hewitt. Unitech s net profit rose 13.13% to Rs crore in the quarter ended June 2013 as against Rs crore during the previous quarter ended June Sales rose 57.17% to Rs crore in the quarter ended June 2013 as against Rs crore during the previous quarter ended June Strong growth in revenue was largely on account of steady growth across all segments. The core real estate business registered a growth of 10% to Rs crore. And the transmission tower business was up by 21% to Rs crore. The company is witnessing sharp contraction in margins largely on account of change in revenue mix. The financing cost for the company has increased as the company is facing challenges in terms of availability as well as cost of funding for real estate projects. The stock is in a down trend, to show any meaningful run-up it is important that it sustains above 18 level on a closing basis, failing to do the same will take the stock towards 16.5 levels in the coming sessions. POSSIBLE REPLACEMENT M&M Financial Services Ltd. 6

7 NHPC CMP(`): 18.8 Mcap (` Cr.): EPS: 1.81 Book Value(`): Week High: Week Low : REDUCE NHPC plans to start electricity generation from four more projects, having generation capacity of 1,250 MW, in the current Five-Year Plan period ending 2017.The addition would take the company's total power generation capacity to 6,997 MW. NHPC has slashed its capital expenditure plan for the current Five-Year Plan by 31%, as clearances and law-and-orderrelated issues have affected its projects' progress. NHPC Ltd has so far suffered cost over-run of more than Rs 1,000 crore on the Subansiri hydro power project in Assam, which is stalled because of local protests. NHPC is facing tough times. The company s projects worth 10,000 megawatt are awaiting clearances for the past three-four years and more than 2,000 MW projects are suspended because of protests and socio-political factors. It has planned more than 4,000 MW during the 12th Plan period. Its capital expenditure for the 12th Plan is Rs 29,000 crore. Of this, 30% would be from equity and remaining 70% we would be from debt. The stock has been trading close to its 200 EMA (19.5) and 100 EMA (18.6) on the daily chart. It has tested both the averages nut was unable to sustain. An either side break and sustainability in the same direction will confirm its trend for the coming sessions. POSSIBLE REPLACEMENT NTPC 7

8 TATA STEEL CMP(`): Mcap (` Cr.): EPS: Book Value(`): Week High: Week Low : Tata Steel is planning to raise $1 billion through a foreign bond issue also, looking at the option to raise another $1.2 bn by selling stake in other Tata Group companies. Tata Steel reported flat profits at Rs 1,356 crore despite a 6% growth in income of Rs 9,363 crore for the first quarter ended June 30,2013. The company's domestic sales volume rose 26 per cent to two million tonnes due to ramped up capacity in Jamshedpur. Flat products (used mainly in automotive/heavy machinery industries) volume rose 44%, the company said. Its European operations (Tata Steel Europe, formerly Corus) sold 3.14 million tonnes (3.21 mt) due to soft market demand. In the face of volatile raw material prices and systemic weakness in demand in key markets, the next months will be challenging for Tata Steel. The outlook for the Euro Zone area continues to be depressed and the company had to revise its cash flow expectation and valuations of the Group's European operations. In continuation to its past move, the stock has posted strong run-up and has gained more than 13% in the past two weeks. A fresh trend line break on the daily and weekly charts has also been witnessed. The stock is looking strong and there are higher chances that bullish bias will persist. 8

9 IFCI CMP(`): 24.4 Mcap (` Cr.): 3862 EPS: 2.48 Book Value(`): Week High: Week Low : ADD Net profit of IFCI declined 41.13% to Rs crore in the quarter ended June 2013 as against Rs crore during the previous quarter ended June Sales declined 17.13% to Rs crore in the quarter ended June 2013 as against Rs crore during the previous quarter ended June The company has shown moderated growth from past few quarters. The increase in interest rates has not allowed its growth in top line to be translated into bottom line. The company is looking at increasing its competency through its subsidiaries which have their own ability to raise funds. The stock has broken above a falling trend line placed on the weekly chart. This is a positive development indicating that the stock is in strong hands and up side move may continue in the near term as well. 9

10 RCOM CMP(`): Mcap (` Cr.): EPS: 2.99 Book Value(`): Week High: Week Low : 50.2 ADD Reliance Communication and Reliance jio signed two agreements to lease RCom's intra-city cable network and telecom towers to Reliance Jio. The deals would earn RCom Rs 14,000 crore through the lifetime. Reliance Communications is putting in place a plan to capture 40% of all new smartphones on its network in the 13 circles it offers 3G services. Reliance Communication continues to be a free cash flow positive company, also the recently signed contracts and deals are likely to enhance the profitability of the company. After a steep run-up from 105 till 164 levels, the stock is witnessing profit taking. 144 is an important support which must be held on the downside. Till the stock is sustaining above this level, there are higher chances that 160 plus levels will be tested again in the near term. 10

11 SBI CMP(`): Mcap (` Cr.): EPS: Book Value(`): Week High: Week Low : SBI has tied up with Air India to launch a co-branded travel credit card. The offering includes Platinum as well as Signature cards. The bank has plans to set up 25 more ATMs in Hyderabad during the current financial year. recently the bank had opened several specialized branches in the city - NRI branch, overseas branch for exporters and importers, SME branch and a Kohinoor branch for high net worth individuals. SBI s net profit declined 13.61% to Rs crore in the quarter ended June 2013 as against Rs crore during the previous quarter ended June The business of the bank has been increasing with a moderated pace, though the asset quality has deteriorated during last quarter but if the bad loans in the SME segment gets recovered in the September quarter, we may see a slight reduction in the net NPA, hence an improved profitability can be witnessed in future. Since the past three weeks, the stock has been trading with in a 100 points range ( ). An either side break from this range will confirm the move in its direction. 11