Buy Graphite India; target Rs 68: ICICIdirect.com

"Graphite India's (GIL's) Q1FY14 performance was marginally below our estimate on the back of muted capacity utilisation. Capacity utilisation during the quarter under review stood at 67 percent, lower than our expectation of 74 percent. Subsequently, the standalone topline during the quarter stood at Rs 403.8 crore, lower by 21.0 percent QoQ and 3.3 percent YoY and below our estimate of Rs 464.2 crore. Electrode prices improved YoY although electrode sales volumes were lower during the quarter. Standalone EBITDA margin during the quarter was at 16.3 percent, broadly in line with our estimate of 16.7 percent and notably higher than 12.1 percent reported in Q4FY13. The subsequent standalone EBITDA for Q1FY14 came in at Rs 65.8 crore (our estimate: Rs 77.7 crore) while the consequent standalone PAT was at Rs 39.3 crore (our estimate: Rs 45.0 crore). Going forward, we believe currency depreciation will aid the operating margins in absolute terms. We have modelled consolidated capacity utilisation of 67 percent and 70 percent (on expanded capacity of 98,000 tonne) in FY14E and FY15E, respectively, and arrived at a BUY rating on the stock with a target price of Rs 68."

"On the back of a muted global steel demand scenario, the demand for graphite electrodes is likely to remain subdued over the short to medium term. However, GIL is trading at a substantial discount (~38 percent) to its international peers, thus making the case for upgrading the stock from HOLD to BUY. Going forward, we have modelled capacity utilisation of 67 percent and 70 percent (on a consolidated basis) in FY14E and FY15E, respectively. We have valued the company at a 30 percent discount to its global peer's average EV/EBITDA of 7.7x (resultant FY15E EV/EBITDA at 5.4x) and arrived at a target price of Rs 68 with a BUY rating on the stock," says ICICIdirect.com research report.

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Accumulate Tata Chemicals; target Rs 270: P Lilladher

Accumulate Tata Chemicals; 

target Rs 270: P Lilladher

"Tata Chemicals' Q1FY14 results turned out to be lower than expectations. Adjusted PAT came at Rs1.2bn, -24 percent YoY against an estimate of Rs1.6bn due to pressure on margins. Going forward, in the standalone business, while soda ash manufactured volumes are likely to be stable, we expect margins to remain range-bound due to increase in energy and other costs. Management also highlighted that continuous decline in global fertiliser prices will pressurize margins of manufacturers in the near term, while traders will stand to benefit out of it due to shorter turnaround time. On the North American side, margins are likely to remain under pressure due to weak export realizations and increase in costs. We have trimmed our estimates by 15 percent/13 percent to Rs28.0/32.2 to account for near-term margin pressures. Revised target price stands at Rs270 (previous Rs330). We expect stock to remain under pressure in the near-term due to challenging business environment, both in soda ash as well as fertilisers. Accumulate the stock with a target price of Rs 270," says Prabhudas Lilladher research report.

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Tata Power slumps to 4-year low, down 18% on Q1 net loss

Tata Power Company  shares crashed 18.5 percent intraday Tuesday to touch more than four-year low of Rs 68.25 after it reported loss during April-June quarter .

The private power producer posted consolidated net loss of Rs 114.7 crore in first quarter (April-June) as against profit of Rs 145.9 crore in a year ago period, dented by higher interest payment and forex loss, but its standalone performance was quite good.

Consolidated net revenue increased higher-than-expected 29 percent on yearly basis to Rs 9,292 crore during June quarter while earnings before interest, tax, depreciation & amortisation (EBITDA) margin jumped 290 bps year-on-year to 21.7 percent as against analysts' forecast of 21.2 percent.

Analysts on an average had expected the power company to report net profit at Rs 224 crore on revenues of Rs 9,004 crore for the quarter.

Meanwhile, foreign exchange loss rose by 6.5 times to Rs 292.8 crore during April-June quarter from Rs 45.2 crore in corresponding quarter of last fiscal.

Finance costs (interest payment) ballooned 64.3 percent year-on-year to Rs 902 crore in first quarter. Finance cost includes Rs 45 crore being provision for interest on amounts which have not been deposited with the statutory authorities on account of disputes which are pending.

On standalone basis, net profit increased to Rs 357 crore from Rs 312.30 crore and revenues rose to Rs 2,484.89 crore from Rs 2,190.02 crore Y-o-Y.

At 15:15 hours IST, the stock was quoting at Rs 72, down 13.98 percent amid hefty volumes on the BSE.

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Rupee at new low: Market braces for more RBI tightening

The pain continues for rupee as it hits fresh lows versus the dollar. The Reserve Bank (RBI) steps are not working and maybe now the market is bracing for more tightening from the RBI and perhaps for some big bang announcements from the government, says CNBC-TV18's Latha Venkatesh.

The rupee was expected to start on a back foot today because of the dollar strength versus emerging market currencies, but nobody was quite prepared for this kind of a fall in the rupee.

The dollar was marginally stronger compared to some Asian currencies like the won or the Malaysian ringgit, but that is marginal 0.3-0.2 percent. In India, it was about over a percent stronger than the rupee. The previous all time low of the rupee 61.20/USD was an watershed mark, she added.

Once rupee breached that level, corporates who had not covered for near-term imports, just rushed in. This also perhaps clicked the stop loss boxes for foreign institutional investors (FIIs) as many of them bought forward dollars. So, the forward rate also jumped from about 7.5 percent to 8 percent, going up from Rs 4.60-4.70 paise all the way to nearly Rs 4.85 paise for a one-year forward and that would make it about 8 percent.

Interbanks also covered for their clients. In the forward market, at about 61.78-61.80/USD levels some bit of selling of dollars was seen - either people were unwinding positions on their own or maybe the RBI showed its hand there was a minor amount of PSU banks offering dollars.

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Idea Cellular may test Rs 180: Jagannadham Thununguntla

Jagannadham Thununguntla, Strategist & Head of Research of SMC Global Securities told CNBC-TV18, " Idea Cellular  is one of the very few stocks probably left in the market now where people can confidently think about holding and probably even creating a long even at this level. Maybe I think Rs 180 level is definitely coming in it."

"The stock is consistently doing well in terms of operation performance. On top of that the share placement probably can create additional trigger to the stock. I think Idea can go up," he said.

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Exit Reliance Communications: Jagannadham Thununguntla

Jagannadham Thununguntla, Strategist & Head of Research of SMC Global Securities told CNBC-TV18, "I think Reliance Communications  (RComm) is slightly different ballgame. It is a very volatile in nature. So, one should have that kind of a risk appetite to really absorb all the newsflow and on top of that the company ofcourse has debt and the company has been eagerly trying for in many formats be it in terms of demerger or be it in terms of asset sale to reduce their debt. But every time even though there maybe a short-term bounces, the consistency is a major question mark."

                                                  

"I feel that RComm should be preferred to only those investors who have that kind of risk appetite. Otherwise, I think it makes sense to exit from Reliance Communications and probably look at Idea Cellular ," he said.

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SBI may correct to Rs 1550: SP Tulsian

                                   

SP Tulsian of sptulsian.com told CNBC-TV18, "I don't know how State bank of India (SBI) will really be able to present any kind of comfort on the asset quality. I won't be surprised to see the share correcting to level of about Rs 1550 or so."

The share touched its 52-week high Rs 2,550 and 52-week low Rs 1,665.00 on 10 January, 2013 and 01 August, 2013, respectively. Currently, it is trading 34.06 percent below its 52-week high and 0.98 percent above its 52-week low. Market capitalisation stands at Rs 115,010.05 crore.

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