Wipro Q4 net up 10.5%, sees Q1FY15 revenue at $1.72-1.79 bn

India's third largest software services exporter Wipro 's IT services revenues met analysts' expectations and margin beat forecast but the guidance for June quarter is muted. Net profit of the company grew 10.5 percent sequentially to Rs 2,226.5 crore on revenue of Rs 11,703.6 crore (3.3 percent Q-o-Q) during the quarter. IT services revenue in rupee terms rose 2.8 percent Q-o-Q (up 24 percent Y-o-Y) to Rs 10,619 crore and dollar revenue increased 2.5 percent (up 8.5 percent Y-o-Y) to USD 1.72 billion during the quarter.
                          The guidance range for Q4FY14 dollar revenue was USD 1.712 billion to USD 1.745 billion and analysts had expected it at USD 1.720 billion and rupee revenue at Rs 10,541 crore. "Our focus on process simplification, automation and platform-based delivery continues to deliver results and we are seeing the benefits through improved productivity, reduced timelines in execution and greater business agility," says TK Kurien, executive director & chief executive officer. Wipro expects revenues from IT services business to be in the range of USD 1.715 billion to USD 1.755 billion during April-June quarter of financial year 2014-15. It says this guidance is based on conversion rate of 61.62 a dollar. Operational performance was very strong. Earnings before interest and tax (EBIT) grew 9.5 percent on sequential basis to Rs 2,605.4 crore and margin expanded 150 basis points to 24.5 percent in the quarter gone by. Analysts had expected both at Rs 2,409 crore and 22.85 percent, respectively. 
                                    For the year ended March 2014, EBIT came in at Rs 9,030 crore, up 29 percent compared to previous year and margin jumped 195 basis points to 22.6 percent. "We continue to systematically work on improving our operational efficiencies resulting in expansion of full year IT services operating margins by 195 basis points," says Suresh Senapaty, executive director & chief financial officer. Full year IT services revenue rose 18 percent to Rs 39,950 crore and dollar revenue jumped 6.4 percent to USD 6.618 billion. Wipro says it added 59 new customers in Q4. Some of the deals won during the quarter were: 1) Five-year infrastructure managed services contract with a Fortune 500 global leader in specialty chemicals. 2) Seven-year engagement with Xoserve, an organization which is an integral part of the restructured gas distribution market in Britain. 3) A leading apparel and footwear company has renewed its multi-year engagement with Wipro, for application support services in a managed services model. 4) Deal from a multinational telecommunications company to manage IT and network operations for enterprise business in India. 5) Large deal in the Basel II risk & compliance domain from a large state owned bank in India. Wipro, which has announced earnings after market hours, has declared a final dividend of Rs 5 per equity share for the year ended March FY14. 
                             The payout date for final dividend is fixed as July 31, 2014. Meanwhile, the company says its IT products segment delivered revenue of Rs 1,111 crore for the quarter, up 3 percent compared to a year-ago period and revenue was Rs 3,880 crore, down 1 percent Y-o-Y. Wipro's stock closed at Rs 585.55, up 2.39 percent on the Bombay Stock Exchange.

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Sun to make Rs 18cr open offer to Zenotech shareholders.

Sun Pharma will make an open offer worth Rs 18.4 crore to acquire a little over 28 percent stake in Zenotech Laboratories Ltd. The proposal comes in the wake of Sun Pharma's proposed USD 4-billion deal to merge Ranbaxy Laboratories with itself as the latter holds significant stake in Zenotech. Through the open offer, Sun Pharma plans to acquire more than 96 lakh shares of Zenotech, amounting to 28.1 percent. The price would be Rs 19 per share translating to an aggregate of Rs 18.42 crore, according to regulatory filing by Zenotech. Zenotech shares today closed on BSE at Rs 22.20 a rise of 4.96 percent from its previous close. Ranbaxy held 46.79 percent stake in Zenotech as on March31. "... the merger of Ranbaxy into Sun Pharma pursuant to the scheme will result in Sun Pharma indirectly acquiring 46.79 percent of the voting rights held by Ranbaxy in, and control over, the target company (Zenotech), although the acquisition of voting rights in or control over the target company is not the objective of the primary acquisition," the filing said. The Sun Pharma-Ranbaxy deal is subject to various approvals including from their respective shareholders.

                                          Sun Pharma stock priceOn April 07, 2014, Sun Pharmaceutical Industries closed at Rs 587.25, up Rs 15.35, or 2.68 percent. The 52-week high of the share was Rs 653.10 and the 52-week low was Rs 423.18.The company's trailing 12-month (TTM) EPS was at Rs 0.95 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 618.16. The latest book value of the company is Rs 41.64 per share. At current value, the price-to-book value of the company is 14.10.

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Wild ride ahead for Indian stock markets

If history is anything to go by, equity investors in India are in for a wild ride in the days and months following the general elections which conclude on May 16. Following the most recent election in 2009, when the Indian National Congress (INC)-led coalition won an overwhelming victory, the benchmark SandP BSE Sensex returned 20.5 percent in the five days after the election. By contrast, in 2004, when the Bharatiya Janata Party (BJP) lost the elections, the index declined 16 percent in the five subsequent days. "Past experience shows that elections can be harbingers of significant post-election volatility," Nomura strategists led by Prabhat Awasthi wrote in a report on Tuesday. 
                                             However, in the months after the elections, the market ultimately tends to reflect economic realities, notes Awasthi. For example, market losses after the BJP`s 2004 loss eventually turned to gains as the improving economy overtook the initial disappointment. The market rose 14.5 percent in the nine months after the elections. In 2009, meanwhile, the market continued to rise as the economic recovery continued after the global financial crisis, returning 40 percent in the nine months after the elections. So what should investors expect this time around? A win by the BJP-led National Democratic Alliance (NDA) will likely lead to a positive knee-jerk reaction, followed by sustained gains through the remainder of the year, forecasts Nomura. Recent opinion polls have shown the opposition BJP, led by Prime Ministerial candidate Narendra Modi, holding a strong lead, which has gotten investors excited given Modi`s more business friendly stance. 
                                             The party has promised to recharge the economy, improve infrastructure, quicken oil and gas exploration and reform the tax system to attract investors. The bank`s current year-end target for the Sensex is 24,700 - 10.5 percent higher than current levels. It sees the possibility of 5-10 percent further upside from this level if the NDA forms the government with a strong BJP plurality. Indian stocks, which last month recorded their best monthly gain since October, have risen 6 percent since the start of the year. "Our positive stance on the market is driven not by a positive view on the growth recovery, but by an expected reduction in macro stress beyond market expectations," Awasthi said. 
                                          "The first of these, a reduction in the current account deficit, has largely played out. We also believe that inflation will remain under control. If anything, a strong government could facilitate this process through higher fiscal discipline in the short term and increased emphasis on the supply side in the longer term," he added. If the BJP-led NDA does not win enough seats to build a wider majority coalition, this would be a "negative shock" for the markets, Awasthi noted. "Investor disappointment would likely mean large capital outflows, resulting in a resurgence of balance-of-payments pressure. The sovereign credit rating could be downgraded as credit risks are likely to re-emerge," he said. HSBC, which is underweight Indian equities, holds a more cautious view on the implications of the elections for the market. "It continues to be the most loved market in the region and has received large FII [foreign institutional investors] inflows, which have stretched valuations to above average levels," said Gary Evans, global head of Equity Strategy at HSBC. "This puts the market at risk, given that the growth outlook remains fragile on the back of fiscal tightening, high inflation, elevated corporate leverage, and rising NPLs [non-performing loans] in the banking sector," he said The bank expects the Sensex will end the year lower from current levels. It has a year-end target of 21,750 for the index - 3 percent below current levels.

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Sun Pharma to acquire Ranbaxy in deal worth $3.2bn

Drug major  Sun Pharmaceutical Industries  on Monday said it will acquire Daiichi Sankyo-owned Ranbaxy Laboratories   in an all-stock transaction totalling equity value of USD 3.2 billion. Taking Ranbaxy's debt into account, the transaction is worth over USD 4 billion. The deal between the two companies, both rapped by the USFDA over quality issues, will create world's fifth-largest generic drugmaker entity. "Ranbaxy has a significant presence in the Indian pharma market and in the US where it offers a broad portfolio of ANDAs and first-to-file opportunities.

                       In high-growth emerging markets, it provides a strong platform which is highly complementary to Sun Pharma’s strengths," Dilip Shanghvi, Managing Director of Sun Pharma said in a release. Under the terms of the agreements, Ranbaxy shareholders will receive 0.8 share of Sun Pharma for each share of Ranbaxy. Daiichi Sankyo, the Japanese owner of India's biggest drugmaker by sales, will hold a stake of about 9 percent in Sun Pharmaceutical after the deal. The deal values Ranbaxy shares at Rs 457 apiece, representing an 18 percent premium to its 30-day volume-weighted average share price on April 4, 2014.

                     The combination of Sun Pharma and Ranbaxy will create the largest pharmaceutical company in India. Sun expects to realise revenue and operating synergies of USD 250 million by third year post closing of the transaction. The combined entity will have operations in 65 countries, 47 manufacturing facilities across 5 continents, and a significant platform of specialty and generic products marketed globally, including 629 ANDAs. "On a pro forma basis, the combined entity’s revenues are estimated at USD 4.2 billion with EBITDA of USD 1.2 billion for the twelve month period ended December 31, 2013.

                     The transaction value implies a revenue multiple of 2.2 based on 12 months ended December 31, 2013," Sun said in its release. CLSA Meanwhile, Arun Sahwney, managing director and chief executive officer of Ranbaxy said the company believed this transaction brings significant value to all Ranbaxy shareholders. "Sun Pharma has a proven track record of creating significant long-term shareholder value and successfully integrating acquisitions into its growing portfolio of assets," he added.

                     Sun Pharma said the proposed transaction has been unanimously approved by the boards of directors of Sun Pharma, Ranbaxy, and Ranbaxy’s controlling shareholder, Daiichi Sankyo. Ranbaxy’s board and Sun Pharma’s board have recommended approval of the transaction to their respective shareholders. While addressing conference call, Daiichi Sankyo, which holds 63.4 percent stake in Ranbaxy, said it has agreed to vote shares in Ranbaxy in favour of Sun Pharma's acquisition. "The transaction is expected to close by December 2014," it added. Upon closing, Daiichi Sankyo will become a significant shareholder of Sun Pharma and will have the right to nominate one director to Sun Pharma’s Board of Directors. Citi and Evercore are acting as financial advisors for the transaction to Sun Pharma while Ranbaxy’s financial advisor for the transaction is ICICI Securities.

                      In a separate statement, Ranbaxy Laboratories said United States Attorney's Office for the District of New Jersey has issued an administrative subpoena to company seeking information primarily related to the company's API Toansa manufacturing facility in India for which a Form 483 was issued by FDA culminating into import alert. The Toansa facility is subject to certain terms of Consent Decree entered against Ranbaxy in January 2012. Brokerare house Macquarie said the deal valuations are compelling for Sun Pharma and will not lead to earnings dilution for Sun Pharma. Ranbaxy Labs stock price On April 07, 2014, Ranbaxy Laboratories closed at Rs 445.20, down Rs 14.35, or 3.12 percent. The 52-week high of the share was Rs 505.00 and the 52-week low was Rs 253.95. The latest book value of the company is Rs 45.34 per share. At current value, the price-to-book value of the company was 9.82.

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Negative election result may drag rupee to 68.8/$: BofA

The rupee is currently in a sunny spot thanks to the impressive capital that Foreign Institutional Investors (FIIs) are parking into India. While the street believes Reserve Bank won't allow the currency to appreciatie beyond 59, the possibility of it depreciating to as low as 68.8 to a dollar in the event of negative election outcome cannot be ruled out, says Jayesh Mehta, Bank of America. Speaking to CNBC-TV18’s Mitali Mukherjee and Udayan Mukherjee, Mehta says the market and the currency faces a threat of negative election result that may lead to relatively weak government. Also read: Week ahead: Rupee seen capped; bonds could falter “Then, there would a flight of outflow from the equity market. I would not put it beyond radar to test the previous low of 68.81/USD if we see a big outflow coming from equity post elections,” highlights Mehta. The rupee posted a gain of 3.1 percent in the quarter ended March this year. On Friday, the rupee closed at 60.08/dollar, down 0.14 percent. Below is the edited transcript of the interview. Mitali: Tremendous rally for the rupee. What do you guys hear anecdotally about what kind of debt flows one can expect and what kind of levels traders are talking about for the currency now? A: The currency is purely following the equity momentum at this juncture and we expect that momentum to reflect the equity markets in a parallel manner. So, if one really looks at it, yes elections are around and if we get the right government, then equity market inflows could continue. There maybe some correction but then there’s the broader trend of rupee appreciating. At this juncture, it has appreciated with the inflows in last one month or so. May be Friday was a little bit of a correction which was required or which has just moved in one direction. With everything looking good both on equity and election front, the biggest risk is we get negative election results and not the right government. Then, there would a flight of outflow on the equity market which will really damage UPA in a big way. I would not put it beyond radar to test the previous low of 68.81/USD if we see a big outflow coming from equity post elections. Udayan: For the moment though what is the rupee capped at in terms of appreciation, do you think 59-60 is it for the moment or do you think it can go up in the run-up to the election result to 57-58/USD? A: Till the election results, maybe the rupee can see 59 against the USD. It purely depends on flows. We had pretty good equity flow of almost USD 3.5 billion in March and if we continue seeing some large flows from now to May 16, then that could really break 59/USD. Apart from that what has also happened is a lot of exporters who had year-end pressure to sell currencies, they are really at this juncture out of the market. Some profit booking is also happening and again people are feeling that may be RBI may not let it breach below a certain level and therefore would try to cap it at around 59/USD. As it goes towards 59 per dollar it becomes difficult to sustain at that level.

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Week ahead: Rupee seen capped; bonds could falter

The rupee's recent rally to an 8-month high could be capped as the RBI is expected to step up dollar purchases whenever the currency strengthens above 60 to the dollar. Heavy foreign fund inflows had sent the rupee to as high as 59.5950 on April 2, its strongest since July 30, although the currency retreated towards the end of the week. Latest data showed foreign exchange reserves rose by $5.04 billion to $303.67 billion in the week to March 28. However, shares could start to weaken with caution setting in as India kicks off a five-week election process on Monday. The start of the week will be marked by global reaction to the U.S. jobs data due later on Friday. Sentiment for debt markets is much weaker, however, with benchmark 10-year bond posting their biggest weekly losses since the week ended on November 8. Caution remains as India has resumed weekly debt auctions at a time when the RBI is seen as reluctant to buy bonds via OMOs, which in the past had helped markets absorb the supply. Benchmark 10-year bond yield are seen trading in a 8.95-9.10 percent range after on Friday rising to as high as 9.07, its highest since December 6.

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Weekly wrap: Indices end flat; investors book profits post record highs

Equity benchmarks closed flat for the week as investors decided to take some cash off the table after a prolonged winning streak. The 30-share BSE Sensex gained 19.53 points to 22359.50 while the 50-share NSE Nifty fell 1.55 points to 6694.35. Both benchmarks saw record highs during the week - 22620.65 on Sensex and 6776.75 on Nifty. Market players now expect the market to consolidate a bit even as the mood remains positive. Many still feel the Nifty could surpass 7000 before the election results in mid-May, amid intermittent corrections. They see every correction till the poll results as a buying opportunity. Expectations of a reformist government post elections and an impending economic recovery have been the key drivers of the current rally. "The market does not move in straight line and there would be volatility as we go along. But I believe the overall sentiment remains positive and the market would remain in a buoyant mood in the near-term,” Prabodh Agarwal of IIFL said. According to him, India may see a disproportionately higher share of FII inflows this year. In March alone, foreign funds net bought Rs 22,351.70 crore of equities . For the calendar so far, they have been net buyers of Rs 27,000 crore.
                      The big event of the week was the monetary policy announced by the Reserve Bank of India. As widely expected, the RBI kept policy rates unchanged and hinted that further hikes were unlikely in the near future. However, market is still worried about inflation; reasons being a possible el-nino effect on food inflation, increase in minimum support prices, changes in administered prices of fuel, fertilisers, etc, and the geopolitical tensions.“If some of these factors play out, interest rate reductions will likely be further delayed. Although the policy rates are unlikely to come down in current fiscal, we are hopeful that the need for raising rates wouldn’t arise as well,” Dipen Shah, Head- Private Client Group Research, Kotak Securities said. Monthly auto sales numbers did not give much cause for cheer. Commercial vehicle sales of the companies like Tata Motors and Ashok Leyland continued to be subdued but there was slight improvement in car sales due to excise cut and better growth in two-wheeler sales.
                     After a long wait, the RBI gave in-principle nod for banking license to IDFC and Bandhan Financial Services after getting go ahead from Election Commission. This in-principle bank license approval is valid for 18 months. The companies, which did not get bank license in this round, can reapply, the RBI said. LIC Housing Finance, IFCI, L&T Finance Holdings, Reliance Capital, Shriram Capital etc were among the 25 applicants. L&T Finance and IFCI fell 6 percent. India March HSBC Services PMI fell to three-month low at 47.5 as against 48.8 in previous month, pointing to a weakening in activity and businesses flows in the month gone by. In the corporate developments, GMR Infrastructure said its subsidiary GMR Energy has filed draft red herring prospectus with Sebi on March 28 for IPO.
                    Top telecom operator Bharti Airtel said it became the second largest operator in Nigeria by subscribers’ base that was 2.629 crore in February. Agrochemical company UPL has sold entire 50 percent stake in Brazil JV Sipcam UPL for Rs 351 crore. Oil marketing company IOC has cut petrol prices by 75 paise per litre excluding taxes. In sectoral indices, Bank Nifty fell more than 1.5 percent on profit booking. BSE FMCG Index was down 2 percent and Capital Goods fell over a percent but Realty Index hogged the limelight, rising nearly 7 percent followed by Metals with 4.4 percent and Pharma 3.2 percent. Among gainers, Jindal Steel & Power topped the buying list with 6.7 percent gains. Tata Steel, Hindalco Industries, Cipla, Bank of Baroda, Lupin, M&M, Reliance Industries, Cairn India, HDFC and Tata Motors were up 2-5 percent. Sesa Sterlite gained nearly 4 percent. Rating agency Moody's has raised Vedanta Resources rating outlook to stable from negative. However, BHEL was the top loser, falling 8 percent. GAIL, ITC, Tata Power, BPCL, Kotak Mahindra Bank, HDFC Bank and Axis Bank were prominent losers with 2-5 percent decline.
                The broader markets outperformed benchmarks with the CNX Midcap rising 1.5 percent and BSE Small Cap Index 3.8 percent. Among midcaps, HDIL surged 29 percent as Kotak Securities bought 2.13 million shares of the company at Rs 51.56 apiece on March 27. India’s largest turbine maker Suzlon Energy gained 27 percent as reports suggest that the company is looking raise about 600 million euros (USD 822 million) through an initial public offering of its German unit Senvion. Realty major Unitech was up 26 percent as sources told CNBC-TV18 that the company and UK company Unitech Corporate Parks will sell six Indian assets for upto Rs 12,500 crore. Ranbaxy Labs gained 26.3 percent followed by HCL Infosystems with 20 percent and Indiabulls Real Estate 15 percent. Bajaj Hindusthan climbed 20 percent. Sugar prices have risen 24 percent in three weeks. Analysts said concerns over el-nino effect going ahead and increase in buying by stockists maybe triggering the upmove. For the week ahead, Lok Sabha elections will begin next week. Polls will be held in six constituencies in two states - Assam and Tripura.

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