WEEK IN A NUTSHELL
WIN-dow to the week that was
Week in a Nutshell (WIN)
Flat frontline indices mask a volatile week gone by, with markets looking ahead to
the impending Monetary Policy Review and unfolding results season for further
direction. While we now expect a 25bps cut in Repo rates, the associated
commentary in our view will be markedly dovish.
The result season thus far has clearly beaten expectations, and with large frontline
stocks reporting next week, we expect the positive trend to continue.
After the government announced a string of long awaited measures, it was now
the turn of Indian Telecom companies.
This week saw the first moves towards the
end of hyper competition with Top Telcos withdrawing the Special Tariff that were in
play. While base tariff may not have moved, the trend of falling RPM has decisively
changed with potential hikes across the range of offering.
Our interaction with the mgmt of RCom reaffirmed this shift in industry focus on
RPM and profitability improvement.
Read our detailed note.
surprised the markets with higher order intake for the qtr
while allaying fears of impairment on the orders at hand. With book to bill at 2.8x
TTM and international strategy holding well, any pick up in domestic scenario will
give the stock its next leg up.
Asian Paints -
sparkled with a 30% PAT growth, with domestic Decorative Paints
volumes growing robustly by ~13% YoY, beating both consensus as well as our est.
Our channel checks suggest that demand remains healthy even in 4Q. We upgraded
the stock to Buy with TP of INR5k.
volume growth was a 12 Qtr low impacted by pricing transitions, weak
offtake and high base in different product categories. A bigger shocker was higher
royalty payout to parent (increasing from 1.4% in FY13 to 1.9% in FY14E and to
3.15% in a phased manner, latest by FY18E). We’ve lowered TP from INR540 to 450.
Reduction in discounts gave a fillip to margins coupled with higher diesel
vehicle sales that helped realizations. With forex benefits yet to flow in, we remain
positive on the back of volume pick up and further discount reductions.
Some of the highlights of this edition:
CEO meeting Note
Upgrade to Buy
LT: Order intake (INR b) robust
FY15E Earnings sensitivity to gas
Correction in TiO2
WWW – WIN Weekend Wisdom
Don’t let emotions get in the way of your mind
WIN – Week In a Nutshell