 Corporate News Headline | |||||||||||||||||||||||||||||||||||||||||||||
| • | Reliance Communications said that it was open to acquisitions in India as a part of its strategy to grow its presence in the domestic market and would do so at the right opportunity. (BS) | ||||||||||||||||||||||||||||||||||||||||||||
| • | Tata Power is looking to help arrange coal supplies from Australia, Indonesia and Africa for small power producers amid a growing shortage of the resource in India. (BS) | ||||||||||||||||||||||||||||||||||||||||||||
| • | Bharti Airtel, in talks to buy the African mobile operations of Kuwait's Zain for USD 9 bn, has issued a term sheet to banks to raise up to USD 8.5 bn in offshore loans to fund the deal, banking sources said. (BS) | ||||||||||||||||||||||||||||||||||||||||||||
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| Economic and Political Headline | |||||||||||||||||||||||||||||||||||||||||||||
| • | Finance Minister Pranab Mukherjee exuded confidence that the economy will soon return to 9%-10% growth, but said that double-digit inflation and excessive borrowing were major challenges. (BS) | ||||||||||||||||||||||||||||||||||||||||||||
| • | Housing starts in the US fell in February as record snowfall in parts of the country hampered construction, while fewer building permits signaled demand is stagnating. Builders broke ground on 575,000 homes at an annual rate last month, down 5.9% from January's revised 611,000 pace that was higher than initially estimated, Commerce Department figures showed in Washington. (Bloomberg) | ||||||||||||||||||||||||||||||||||||||||||||
| • | Prices of goods imported into the US fell in February more than anticipated, a sign there is little inflation pressure coming from abroad. The import price index decreased 0.3%, the first decline in seven months, compared with a revised 1.3% January gain, Labor Department figures showed in Washington. (Bloomberg INDEX SPOT LEVELS TODAY
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Strong & Weak Stocks
This is list of 10 strong stocks:
Chennai Petro, Educomp, LITL, Sun TV, TCS, Hind Zinc, JSW Steel, Sesa Goa, Hero Honda & Indusind Bank.
And this is list of 10 Weak Stocks:
Bajaj Hind, Balrampur Chini, Dish TV, Nagarjuna Fertil, ICSA, Chambal Fert, KS Oils, Hind Uni Lvr, Tata Comm & BEML.
Nifty is in Up trend
NIFTY FUTURES (F & O):
Rally may continue up to 5228-5230 zone by non-stop.
Support at 5186 & 5195 levels. Below these levels, expect profit booking up to 5150-5152 zone and thereafter slide may continue up to 5116-5118 zone by non-stop.
Buy if touches 5082-5084 zone. Stop Loss at 5048-5050 zone.
On Positive Side, cross above 5262-5264 zone can take it up to 5296-5298 zone by non-stop. If crosses & sustains this zone then uptrend may continue.
Short-Term Investors:
Bullish Trend.
Up Side Target at 5239.70.
Stop Loss at 5050.30.
We are trading near the target level. We should believe that, target level won't be crossed. If closes this level by 3 consecutive days then uptrend may continue up to 5334.40 level by non-stop.
Equity:
SBIN (NSE Cash)
Yesterday's rally was surprising & Speculative buying too. Buying should continue today also.
If rally continues, then it can touch 2046.45 level during intra-day trades. It should close this level for further uptrend.
If profit booking starts, then expect a surprise fall up to 1968.20 level and have caution.
ICICIBANK (NSE Cash)
Yesterday's rally was surprising & Speculative buying too. Buying should continue today also.
If rally continues, then it can touch 959.60 level during intra-day trades. It should close this level for further uptrend.
If profit booking starts, then expect a surprise fall up to 912.20 level and have caution.
JSWSTEEL (NSE Cash)
Rallied on yesterday & in line with expectations. Buying should continue today also & Buying should be considered as a speculative.
If rally continues, then it can touch 1227.05 level during intra-day trades. It should close this level for further uptrend.
If profit booking starts, then expect a surprise fall up to 1179.75 level and have caution.
TATAMOTORS (NSE Cash)
Rallied on yesterday & in line with expectations. Buying should continue today also & Buying should be considered as a speculative.
If rally continues, then it can touch 806.60 level during intra-day trades. It should close this level for further uptrend.
If profit booking starts, then expect a surprise fall up to 772.10 level and have caution.
OPTIONS (NSE):
NIFTY 5100 CALL OPTION
Closed Positively on yesterday & that was a surprise. Uptrend should continue & Bulls should not get panic at lower levels.
If rally continues, then it can zoom up to 137.85 level by non-stop.
If profit booking starts, then it can tumble up to 71.50 level by non-stop and have caution.
RELIANCE 1000 CALL OPTION
Closed Positively on yesterday & that was a surprise. Uptrend should continue & Bulls should not get panic at lower levels.
If rally continues, then it can zoom up to 52.40 level by non-stop.
If profit booking starts, then it can tumble up to 8.10 level by non-stop and have caution.
STOCK FUTURES (NSE):
POLARIS FUTURES
Looks like speculative rally. Uptrend should continue today also.
Buy with a Stop Loss of 160.35 level for Intra-Day Gains. Target at 182.55 level.
IDEA FUTURES (5 Trading Days Holding)
Choppy Trading expected with Positive bias in next 5 trading days. Uptrend should continue today & Bulls should not get panic today.
Buy with a Stop Loss of 59.85 level with a Target of 63.55 level today. It may zoom even up to 66.10 level in next 5 trading days.
Stop Loss for next 5 trading days can be kept at 57.70 level.
INVESTMENT VIEW
Hitachi Home Goes For Volumes, Hi-End Consumer Backed By Hi-Tech Products!
Hitachi Home-MNC White Goods Play
BSE 523398; CMP Rs 224.10
At 10 times FY10 estimated EPS of Rs 22, Hitachi is perhaps the strongest MNC play in the white goods segment that taps into the inherent aspirational demand of Indian consumer, rising income and an upgradation to quality.
The Rs 600 crore Hitachi Home & Life Solutions (India) Limited (HHLI) has been engaged in the business of manufacturing and sales of range of air conditioners in Indian and selected markets outside India.
While the range of Room Air Conditioners and Packaged Air conditioners are being manufactured in India the company sources the higher end of air-conditioning systems like chillers and set free from its affiliated companies worldwide. It is also engaged in the business of trading for the Refrigerators and Washing Machines.
Consumer Appliances
The Indian consumer durable industry is estimated to be in the range of Rs 250,000 Mn. The home appliances industry (products that your company deals in) is estimated to be around Rs 87,500 Mn. Refrigerators contribute to the largest share of this at around Rs 38,000 Mn. followed by Room Air Conditioners at around Rs 27,500 Mn. and Washing Machines at 14,000 Mn.
Air Conditioning
The Indian air-conditioning industry is witnessing a radical change. There is a significant trend of the growing demand for the branded products. This has resulted in to reduction of the share of the unorganized sector. The simplification of fiscal structure of duties has put up all the players on the equal platform.
Also there has been an increase in the awareness and need for more of value added features in the air conditioners. The air conditioner industry enjoys the highest growth as a category in the appliances and is expected to grow over 20% in the years to come.
The Ductable and the central airconditioning system (CAS) which contributes to over Rs. 9,000 Mn. has been buoyant in the recent years and the growth in this category has exceeded 20%. This can be mainly attributed to the sizable capex rise both in the manufacturing and service sector especially in the IT and ITES services.
Room Air Conditioners
The category consists of both the Window AC and Split AC for the use in residential and commercial spaces. The increase in the affordability levels and high ambient temperatures experienced in the summer months are the key growth drivers for the AC market in India.
Growing aspiration levels, purchase power of consumers and easy availability of finance schemes are the factors which have resulted in the acceptance of air conditioners as the utility items rather than a luxury one in many households and are now one in many preference list of household items.
Hitachi has introduced a new product in Splits AC 'IOTA' at an aggressive price point to catch on the trend. This price point is still at approximately 50% premium over the market average price.
Commercial range of Air Conditioners
The commercial air-conditioning comprises of both the Ductable Split AC and Large sized chillers. These find usage in the entire commercial sector comprising restaurants, retail shops, banks, offices, malls, supermarkets. The market for this segment is expected to grow in the range of 20-25%. The gamut of usage for the segment has increased.
The huge opportunity provided has seen a large number of global players entering this segment and the competition is going to heat up in near future. HHLI with its range of Microcool Ductable is committed to doing well in this sector.
HHLI has launched the 16.5 Tr Ductable Aircon. This is unique because first time in India Hitachi has launched a truly convertible Ductable Air conditioner. Convertible means that it can be suspended from ceiling or can be mounted on the floor. Hence this product not only caters to the consultant's specification but also adds to the architects delight.
In the chiller division your company has launched large capacity chillers. HHLI will be able to leverage its strength of technically sound exclusive dealers across India who share HHLI value system of delivering high level of customer satisfaction.
Refrigerators and Washing Machines
HHLI introduced 3- Door Refrigerators and Big Capacity Washing Machines last year. These are imported from Hitachi factory in Thailand. The concept of 3-Door and the top loading fully automatic washing machines in large capacities is gaining popularity in India.
While sales have stabilised, HHLI has strategically decided to operate in the premium range in this segment. HHLI is poised to grow in this segment.
Product Wise Performance
HHLI is in the forefront in Indian Air-conditioning industry with many firsts to its credit. HHLI has always pioneered in technology and innovation. HHLI has always been far ahead than the competition in introducing newer concepts and features in the air-conditioning.
Hitachi was the first one to introduce products like Hi-Wall Split AC, Remote controlled ACs, ACs with Plus one Technology to name a few.
The company has always been considered as a technology powerhouse rendering solutions for the Indian Homes. The consistent efforts of marketing and sales team to position our offerings as differentiated products in the market place has helped HHLI to become the major company in the "Mass Premium" category.
In the room air conditioners, our company has introduced New IOTA Split AC. Atom+One and Quadricool TM together with IOTA have reaffirmed HHLI's place as the innovation leader in the minds of Indian consumer.
Because of its strong focus on quality of products and standards which are stricter than the Indian standards, HHLI has become a brand of choice in the consumers' mind. Hitachi has been able to capture sizeable premium on it's products and also maintained it's market share.
In the Ductable category, HHLI has repeated the trend of out performing the market and has grown at a rate of 27% over last year. The addition of new 16.5 Tr truly convertible Ductable Microcool air conditioner surely is going to help your company to repeat history this year also.
HHLI through its imported screw chillers and addition of roof tops and large capacity chillers is poised to grow in a segment which is set to grow at a tremendous pace.
(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
INVESTMENT VIEW
Morgan Stanley Downgrades Hindustan UniLever To Underweight
We remain UW due to: 1) potential earnings growth volatility; 2) potential increase in
Competitive pressures from P&G; 3) potential rise in input cost pressures; and 4) potential slowdown in revenue growth. We spoke with management and here are the key takeaways from our conversation:
No conclusive slowdown in consumption:
Contrary to the sharp slowdown reported by AC Nielsen for the industry for October-09 (from 14.8% in H1F2010 to 5.9% in Oct-09); there are no signs of a significant slowdown at the ground level. However, consumer downtrading in categories such as laundry continues and sharp price rises are also causing consumer downtrading in tea.
Although there is no conclusive evidence of consumer demand slowdown yet, the company is closely monitoring the potential impact of high food inflation on FMCG consumption.
Soap brands relaunched, PP growth steady:
HUL has relaunched all its soaps brands and has deployed its complete portfolio to improve its market share. Management is hopeful of improving market share and believes that the current signs may not be reflective of the potential underlying trend.
Personal products segment growth remains steady for HUL, contrary to the
slowdown demonstrated by the AC Nielsen retail off take data.
Ad spend likely to be under 12% in F2010:
HUL's ad spend to sales ratio was around 13% in H1F2010. However, H2F2010 ad spend to sales ratio is likely to be lower and hence the F2010 ratio is likely to be under 12%. However, during the six months ended Mar-09, HUL's ad spend to sales ratio was 10%. Hence it is likely that the ad spend to sales ratio may witness an increase in H2F2010 yoy.
Tax rate likely to be at 23%:
HUL's tax rate in H1F2010 was around 23.2%, it is likely that F2010 tax rate will be in a similar range. The tax rate during the six months ended Mar-09 was around 20% and it is likely that HUL may witness 300 bps rise in the tax rate in H2F2010.
(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 16-Mar-2010 | 2013.65 | 1635.81 | 377.84 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 16-Mar-2010 | 1010.94 | 1169.49 | -158.55 |
Disclosure: I don't have any positions in the above said scrips & NIFTY FUTURES.
Disclaimer:
"I do not make any warranties, express or implied, as to results to be obtained from using the information in this e-letter. Investors should obtain individual financial advice based on their own particular circumstances before making any investment decisions based upon information in this report."
-- Arvind Parekh
+ 91 98432 32381
