Sunday, October 26, 2014

Buy Larsen and Toubro , says Parul J. Saini, Executive Director at RBS Asia Securities.

Saini told CNBC-TV18, "Larsen and Toubro (L&T) is on our buy list and that has been disappointing for us. One positive that I would highlight that the company has continue to reiterate its order inflow guidance for this year although if you look at most sell side estimates even including our own are for order inflow decline this year. So if L&T is able to post orders that are actually up or flat year over year for the full fiscal I think that could be positive catalyst for the stock."
He further added, "The thing I would highlight is that number of mega project approvals came through on November 18th and the next cabinet meeting for next leg of project approvals is on December 18th, so you could see some more big ticket project approvals come through which should bolster sentiment on capital goods names like L&T."


>Cyient Ltd: Impressive growth, but recent re-rating limits upside

Cyient reported revenue growth significantly ahead of our expectations with strong growth both onsite and offshore. Organic growth at 5.3% QoQ and 20.7% YoY (in USD terms) was impressive. Margins recovered partially helped by utilisation and offshore ratio both of which improved for Data Transformation, Network and Operations (DNO). The temporary increase in sub-contracting costs onsite for a DNO project continued this quarter as well. We increase revenue estimates, cut margin estimates on higher sub-contracting expenses and maintain Hold with a new TP of Rs530 based on 11xSep-16E EPS.

 ⇒ Good revenue growth even excluding Softential: Cyient’s revenue was much ahead of our expectations as onsite revenue proportion remained high in DNO (though down 100bpsQoQ). DNO onsite revenues increased through Softential’s contribution while offshore grew at an impressive 12.7% QoQ in USD terms showing the potential of the utilities contract that is still ramping up. Engineering also showed good growth at 4.5% QoQ in USD terms led by Aero & Defence, Semiconductor and Off-Highway while Medical & Consumer Electronics (an area that is not considered a strategic priority anymore by Cyient) declined.

Margin recovery only partial with sub-contracting and utilisation drags: DNO continues to see some onsite work that has become a larger component of revenue than expected. While DNO utilisations have begun to normalise this quarter, Engineering utilisation declined 160bps QoQ. A pleasant surprise was the 3.3% QoQ improvement in engineering realisation. We expect margins to continue to recover through 2HFY15E helped by utilisation improvements in Engineering and DNO as well as slightly lower sub-contracting costs and good control on operating expenses. We still expect FY15E margins to be soft expecting a nearly three-fold increase YoY in sub-contracting expenses.

To read full report: CYIENT LIMITED


>GREED & FEAR: Jokowi Update (CLSA)


Wall Street equity benchmarks are back near record highs on relief stemming from America’s renewed military involvement in Iraq, however limited, and the, for now, seeming lack of escalation in Ukraine. Still GREED & fear continues to view the Ukraine situation as one likely to trigger more stress for markets since there is, so far as GREED & fear can tell, no concrete evidence that Russian President Vladimir Putin has backed down.

As for US equities, the incremental reduction in tapering represents a rising risk as does the
fact that the US Treasury bond market is still not confirming the narrative of the consensus,
namely an assumed cyclical acceleration in the American economy. Still the coming days of
central bank speech making at Jackson Hole, with related deliberations on the labour market, should make markets even more sanguine as Chairwoman Janet Yellen is likely to remind investors further, if such a reminder is needed, that she is the uber-dove. Meanwhile, aside from the bond market, the rising fundamental risk to the US stock market is perhaps best illustrated within the equity universe by the fact that American small caps have been underperforming since March. Thus the Russell 2000 Index peaked in early March and has since underperformed the S&P500 by 9.7% (see Figure 1).

To see figures and read full report: JOKOWI UPDATE



MUMBAI ‐ Following are details of shares pledged by company promoters,
based on disclosures made by companies to the stock exchanges.

To read full report: PLEDGED SHARES