L&T posts strong set of Q4 numbers. Buy from short to medium term perspective.
Larsen & Toubros(L&T) sales during Q4FY14 increased by 11%YoY to ~Rs.200.8bn while its operating profit jumped 36% YoY to ~Rs 29.1bn. Company’s Adjusted PAT jumped 41% YoY to ~Rs.22.4bn (reported Rs.27.2bn). The company’s operating margin improved by 269bps YoY to 14.4% on account of stable commodity prices and lower other operating expenses. The company’s also plans to raise capital via stake sale in some of its subsidiaries. Overall the company posted strong set of results beating street estimates and the guidance for the next year is strong as well. We recommend investors to “Buy” the stock from short to medium term perspective.
National Economy News
RBI removes restrictions on foreign exchange proprietary trades
A stronger rupee has paved the way for high-street banks to have a greater play in the currency market, with last year’s unnerving choppiness suddenly looking like a thing of the past. RBI recently told several large lenders that they are free to carry out foreign exchange proprietary trades in which bank treasuries bet on the dollar-rupee movement. The move will deepen the currency market and offer finer foreign exchange rates to customers, particularly large corporates with regular exports, imports and dollar borrowings.
World Economy News
Japan Manufacturing PMI Continues To Fall In May
Japan’s manufacturing output declined for the second consecutive month in May, though at a slower rate. The manufacturing PMI came in at 49.9 in May, following the 49.4 figure in April. A broad stabilization in business conditions in the manufacturing sector was seen in May. The decline in manufacturing output was attributed to a decline in demand due to an increase in sales tax. New orders continued to fall in May, though at a slower rate, moving closer to the no-change mark and new export orders declined marginally.
IMF Approves $4.6 Bln Aid For Greece
The International Monetary Fund approved $4.64 billion bailout payment to Greece after the completion of fifth review. Dy. MD of IMF, Naoyuki Shinohara said the Greek authorities have made significant progress in consolidating the fiscal position and rebalancing the economy. The disbursements were delayed for a year amid questions over whether Greece continue its structural reforms. The lender approved the authorities’ request for rephasing three disbursements evenly over the remaining reviews in 2014.
Moody’s Lowers Rating Outlook On 82 EU Banks
Moody’s Investors Service lowered the rating outlook on 82 European banks to ‘negative’ as a new rule to reduce the risk of taxpayers in case of bank failure could make stakeholders more vulnerable to losses. At the same time, the rating agency affirmed long-term ratings of 109 European financial institutions and upgraded one. It downgraded the outlook to ‘stable’ from ‘positive’ on two long-term ratings.