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Why Investors like SBI over ICICI ?

Saturday, August 30, 2008

There are six main reasons why investors love SBI over ICICI.
Infact we have never liked ICICI Bank. Maybe with the exit of Kalpana Morparia ICICI bank will see some improvement but the aggressive Kamath is still in the Driver's seat and hence we will avoid it for now.

Published by Webmaster @ 12:20 PM IST.


Ballarpur Industries Results

Friday, August 29, 2008

Ballarpur Industries (BILT) Q4FY08 and FY08 results were in line with expectations. 540 bps decline in EBITDA margins to 21.8% due to revenues from low margin timber sales and cost pressure at BPH due to rising fuel and pulp prices. BUY Company has recently taken price increase of ~10% in coated paper and ~5% in uncoated paper which is likely to improve EBITDA margins by ~150 bps to 26.5% by FY09E as per guidance given by the management.

FY08 net sales increased by 22.1% to Rs 28.3 bn and net profit increased by 17.2% to Rs 3 bn resulting in an EPS of Rs 4.8.

It's expansion plan at unit Bhigwan to increase paper capacity by 190 thousand mtpa is expected to finish by Nov'08 and at unit Ballarpur to increase paper capacity by 155 thousand mtpa to complete by June'09. This is likely to result in volume growth of ~12%. For FY09 EPS growth is expected to be flat between Rs 4.6 to Rs 4.8

Published by Komal M @ 9:11 PM IST.


Unitech Spectrum + Inflation at 12.40

The subsidiary company of Unitech has received this allocation of 4.4 Mhz startup spectrum for GSM Operations in the Madhya Pradesh service area.With this, the Company have been allotted initial spectrum in six service areas out of total 22 service areas.

The government has revised the inflation figure for June 21, 2008 as 11.91% against 11.63%. The wholesale price index (WPI) based inflation rate on a week-on week basis calmed down slightly to 12.40% for week ended August 16, 2008, as compared to 12.63% in the previous week.

The inflation numbers declined significantly and went even lower than August 2, 2008 mark of 12.44%, but is still above the Reserve Bank of India's (RBI) comfort level of 5% for the 27th consecutive week.

The government has revised the inflation figure for June 21, 2008 as 11.91% against 11.63%.

Published by Webmaster @ 1:11 PM IST.


TTK Prestige - Undervalued + Delisting Plans

Wednesday, August 27, 2008

TTK Prestige has enviable Real Estate Holdings - Property on Old Madras Rd, Bangalore is right opposite to the upcoming Metro station and is valued at Rs.80cr to Rs. 120cr. The company also has factory properties at Coimbatore and Hosur (apart from Uttaranchal). The Hosur property is huge and production is being shifted to tax free Uttaranchal as well as to less expensive Coimbatore.

Retail Foray: The company operates 180 odd stores which have been opened in the past 12 to 24 months. In retail the new stores start giving top line and bottom line results in 18 months. So the PAT level should move up from the current Rs. 20cr PA levels to an annualised Rs. 35 cr or more in another one or two quarters.

Based on above thesis, the company should be valued at :
Real Estate: Rs. 100cr
Retail Ops: Rs. 350cr (35crX 10PE)
Total: Rs. 450cr

Against this the company is currently valued at Rs. 140cr or so. Market operators say, not to sell away this GEM. The company price should be atleast 2x the current price, ie around Rs. 225 to Rs. 260 per Share.

Published by Webmaster @ 12:14 PM IST.


ONGC Videsh - Imperial Acquisition

ONGC Videsh Ltd has announced an agreement to acquire Imperial Energy for all-cash consideration of £1.4bn (US$2.8bn) (subject to regulatory clearance). Imperial is an E&P company with assets primarily in Russia. Imputed EV/boe of US$3.1/boe (2P) makes the acquisition appear positive, though high tax structure hampers NAV. Also, Imperial has been trading at a discount to NAV because of political risk, which could be materially addressed given ONGC's presence in Russia.

Imperial earns below int'l prices for its crude sales. Under the Russian taxation regime, crude exports are taxed at beyond US$15/bbl Urals US$49,712M.

The offer leaves room open for a competing bid (at >10% higher than current bid of £12.50/share). According to press reports (Reuters), Sinopec is planning to make a competing bid, though ONGC is reportedly willing to up its offer to £15/share in such a scenario. Any aggressive bidding war could make the acquisition NAV neutral at best.

Published by Webmaster @ 9:10 AM IST.


Crop Outlook Concerns Loom Large on India Inc

Tuesday, August 26, 2008

Cumulative rainfall was 2% above normal up to August 20 as per India Meteorological Department - IMD compared with 1% below normal up to August 6. On an un-weighted basis, cumulative rainfall was near stable (0%) up to August 20 compared with 5% below normal rainfall received up to August 6. Aggregate countrywide rainfall was 48% above normal during the week ended August 13 and 1% below normal during the week ended August 20 respectively.

Crop area under cultivation remains weak: Overall crop area under cultivation was 3.1% lower YoY as of August 22 similar to 3.2% lower YoY as of August 17. Area under cultivation tends to be good indicator of the volume growth in summer crop. With about 95% of season's sowing has already been completed, there is now a very low possibility of achieving normal crop output growth.

Published by Webmaster @ 6:58 PM IST.


Sobha Developers - Rights Issue

Bangalore based realty major Sobha Developers has convened an extraordinary general meeting (EGM) on September 22, 2008, to get shareholders' nod for its proposed rights issue. The company hopes to mop up Rs 350 crore through the exercise.

The funds will be used for general corporate purposes, including working capital, acquiring land and other needs, the company stated.

Published by Webmaster @ 1:36 PM IST.


NALCO - End of Commodity Boom ?

Thursday, August 21, 2008

National Aluminium Company Limited (NALCO)'s net sales jumped 25.9% yoy to Rs. 14.7 bn on the back of higher realisations and increased sales volumes. Adj. net profit increased 17.6% yoy to Rs. 5.3 bn, restricted by higher employee expenses and power & fuel costs. EBITDA increased 19.5% yoy to Rs. 7.4 bn. The increase in EBITDA was restricted by a 27.2% increase in power & fuel costs, primarily due to the shortage of coal being witnessed by the Company.

The Company is already operating at 100% capacity utilization for alumina and 104% for aluminum. Thus, with no additional capacity expected in FY09, we expect volume growth to be marginal. Volume growth for FY09 is expected to be 1.7%. In FY10, the management expects volumes to increase 15% yoy on the back of new capacity expected to be commissioned by the end of FY09.

NALCO is expected to report an EPS of Rs 27.3 for FY09.

Published by Webmaster @ 10:03 AM IST.


GDP Projections - RBI + Merill + Citi + Others

Wednesday, August 20, 2008

After turbulent times in the Indian market, here is India's Real GDP growth projections for FY 2009 by various Financial Institutions and Govt Organizations. [Figs in Percentage]
Hopefully we will maintain at least 7.5% with rising interest rates and global financial turmoil.

Published by Komal M @ 1:21 PM IST.


GMR Energy offload stake to private equity investors

GMR Energy, belonging to the GMR Group, is considering offloading 5-10% stake in favour of private equity investors as part of plan to mop up Rs 2,600 crore. The funds raised would be used to complete its ongoing power projects. The funds raised would be used to complete its ongoing power projects. The decision to offload the stake gathers weight after the company deferred its earlier initial public offering (IPO) plan following dismal market conditions.

GMR, which has 800 MW power capacity under construction, is setting up a 1,050 MW coal-fired plant each at Kamalanga, Orissa, and Chattisgarh and a 300 MW hydel project in Uttaranchal. Its 160 MW and 180 MW hydel projects are under construction up at Talong in Arunachal Pradesh and Bajoli Holi in Himachal Pradesh, respectively. In Nepal, the company is building 550 MW hydel capacity, the report added.

The company has already chalked out investments of Rs 13,000 crore for building about 3,300 MW power generation capacity in the country. Of this, about 80% of the investment will be funded via debt while the rest will come through private placement of 5-10% equity, the report stated.

Published by Webmaster @ 10:40 AM IST.


Lupin + Forest Labs - AeroChamber Plus Products

Tuesday, August 19, 2008

Pharmaceutical major Lupin Laboratories has entered into a multi-year promotion and marketing agreement for the AeroChamber Plus line of products with Forest Laboratories. The company will be promoting and marketing the AeroChamber Plus line of products

Under the terms of the agreement, Lupin Pharmaceuticals Inc, USA, will use its 50-person sales force to promote the product to pediatricians.

AeroChamber Plus is a Valved Holding Chamber (VHC) device that is used with metered dose inhalers to improve the delivery of medication to the lungs in the treatment of asthma and COPD. It also reduces the deposition of medication in the mouth and throat and makes metered dose inhalers easier for patients to use by reducing the need to coordinate actuation of the inhaler with inhalation.

Published by Webmaster @ 1:57 PM IST.


Telcos, ISPs on cross roads with net telephony

Fearing decline in revenue, telecom companies are set to oppose TRAI's recommendation on net telephony within India.

Telecom regulator TRAI's recommendation regarding allowing the net telephony has brought the ISPs and telcos on a battle field. Cellular Operator's Association of India (COAI) has said that the telecom companies have paid hefty amounts to get telecom licenses and some of the new players are waiting for allocation of spectrum to roll out their services. In such wake it will be unfair to allow ISPs to start net telephony without paying any fees. COAI has further said that the assumption of little effect on account of low penetration of broadband is faulty. It fears that as the broadband users will increase, the concept of level playing field will become even bigger issue.

However, countering the arguments of COAI, the ISPs association has said that level playing field should not be used as an agreement to prevent technological advancement. The association further said that instead of taking ISPs as competitors, telecom companies should see it as an opportunity to cash in on untapped areas as the ISPs will depend on telcos for interconnectivity.

TRAI has also rubbished the resentment of telecom companies, saying that telcos have not provided net telephony in spite of having the license to do so. Therefore the move of allowing ISPs to offer the same was essential to provide consumers with advantages of latest technology.

Published by Webmaster @ 12:54 PM IST.


Reliance faces flack from public city gas companies

Monday, August 18, 2008

Public city gas companies protest the expression of interest by RIL in cities where the government companies have interests.

Government-controlled city gas companies including Indraprastha Gas, Avantika Gas and Maharashtra Natural Gas have protested against the expression of interest submitted by Reliance Industries (RIL) for cities where these companies have interest (EOI). These include Gurgaon, Noida, Indore, Faridabad, Gwalior, and Pune.

RIL had earlier submitted EOI for 54 cities including the above mentioned. The public sector gas companies are now demanding that they should be given exclusivity of operations in these cities.

Indraprastha Gas for example, has been providing piped natural gas in Delhi since 1999. The company has been expanding its operations into the national capital region. As such, it has asked the Petroleum and Natural Gas Regulatory Board to stop its proceedings towards inviting private companies for Noida, Gurgaon and Faridabad. Indraprastha feels that it has been given the right to supply piped gas exclusively in the region by the oil ministry.

Published by Webmaster @ 12:02 PM IST.


EIH Oberoi Hotels - Results

Wednesday, August 13, 2008

EIH, the owner of India's second most popular and oldest brand of Oberoi Hotels reported a topline growth of 10%, which is in line with the industry. The 15% rise in salary cost has been the primary reason for lower operating margin of 30%. Q1 FY09 PAT was at Rs 380 mn a 4% growth YoY.

Mumbai continue to be healthy. We expect revenues to get a boost once the Trident, BKC at Mumbai starts operations by the beginning of Q4FY09. The opening of the Trident BKC will be the primary trigger for the company as nearly Rs. 8 bn has been spent as capex on this 440 key property.

For the full year, EIH is expected to report an EPS of Rs 5.8 almost flat growth compared to previous year.

Published by Webmaster @ 12:39 PM IST.


Will Govt accept Chaturvedi's Oil Recommendations ?

Tuesday, August 12, 2008

The Chaturvedi committee has recommended a transparent mechanism for dealing with losses of state-owned oil marketing companies (OMCs) via monthly review of auto fuel prices to bring them to par with export parity prices in phases and funding LPG/Kerosene subsidies through a special oil tax.

The proposals are most positive for ONGC, if ad-hoc subsidies are indeed scrapped in favour of the transparent "special oil tax". No tax on pure refiners is positive for RIL, while Cairn is not impacted by the proposals.

It has been more than 14 years since India has been forming committees to review Energy Prices and needs but the successive Governments have lacked the will to implement any recommendation. Here is the laughing stock of committees appointed by Various Indian Governments to review Oil & Energy situation in the past 14 years.

Sundararajan Committee for Pricing reforms in 1994 (Chaired by Mr. U. Sundararajan)
Restructuring Committee in 1996 (Chaired by Mr. Vijay Kelkar)
Gas pricing committee in 1997 (Chaired by Mr. T. L Sankar)
Expert Technical Group or Nirmal Singh Committee in 1997 on Petroleum product pricing
Nitish Sengupta Committee on Oil Infrastructure in 1998/99
Synergy for Energy Committee in 2005 (Chaired by V. Krishnamurthy)
Committee on Petroleum product pricing in 2005/06 (Chaired by Mr. Rangarajan)

Published by Webmaster @ 12:15 PM IST.


Ambuja Cements under high cost pressure

Monday, August 11, 2008

Ambuja Cements Ltd (ACL) Q208 sales increased 8.2% yoy; however, EBITDA margin slumped 755 bps yoy and adjusted net profit declined 19.8% yoy as the Company could not shield its margins and profits from the rising cost pressures. Power and fuel costs per tonne shot up 34% yoy as domestic and imported coal prices rose 35% yoy and 85% yoy, respectively.

Analysts expect ACL's EBITDA margin to fall 557 bps yoy in CY08E to 30.8%, compared with 36.3% in CY07. ACL is working at a high capacity utilization rate of 90% and has already increased its blending ratio to a high level of 1.45. Expect revenues to grow at 9.9% in CY08E, compared with 32.2% in CY07. EPS is expected to remain flat or go down to Rs 8.4 from Rs 8.7 in previous year.

Published by Webmaster @ 9:59 PM IST.


Deepak Fertilisers - Q1 net profit doubles

The Q1FY2009 net profit of Deepak Fertilisers & Petrochemicals Corporation Ltd (DFPCL) stood at Rs44.9 crore, almost double compared with Rs22.6 crore for the corresponding quarter of the last year.

The net sales increased by 49.1% year on year (yoy) to Rs327.6 crore in Q1FY2009 on the back of a robust growth in both the chemical and the fertiliser segments due to the availability of additional gas during the quarter. DFPCL's operating profit during the quarter grew by 64.5% yoy to Rs63.6 crore with the operating profit margin (OPM) increasing by 180 basis points to 19.4%.

Chemical segment: The revenues from the chemical segment increased by 52.1% yoy to Rs231.3 crore as compared with Rs152.0 crore in the corresponding quarter of the last year. The robust growth in the revenues during the quarter was achieved on the back of improved capacity utilisation.

Fertiliser segment: The revenues from the fertiliser segment were up by 44.1% yoy to Rs98.9 crore from Rs68.6 crore in Q1FY2008 due to an increase in the manufacturing activity.

Realty segment: The company's specialty mall for interiors and exteriors, Ishanya Mall, registered revenues of Rs3.1 crore during the quarter.

The company is expected to report an EPS of Rs 13.5 and Rs 17.7 for FY09 and Fy10 respectively.

Published by Webmaster @ 9:42 PM IST.


Bilpower Ltd - Results Review

During Q1FY09 Bilpower, net sales rose 73.02% to Rs.1036 mn over the corresponding period of the previous year. EBITDA margin has declined by 264bps to 9.93% on account of rise in raw material cost, which jumped by 94.56% to Rs.946.12 mn. Raw material as a percentage of sales reached to 91.32% as compared to corresponding period of the last year where it was only 81.21%.

The company has been in expansion mode from last two years. Capital expenditure planned in FY08 is progressing as per the schedules. The company is expected to report an EPS of Rs 29 for FY09. Here is over coverage on Bilpower and Lakshmi Energy Foods.

Published by Webmaster @ 8:41 AM IST.


35% Growth in Credit Card Business - HDFC Bank

Wednesday, August 06, 2008

HDFC Bank's Credit Card division is upbeat on the Credit Card Business and expects to log a growth of 35% this year despite difficult macro environment in the banking industry.

HDFC Bank's Credit Card is the second largest issuer of Credit Cards [Visa + Mastercard] in India. HDFC has followed a unique business model and has 70% of its customers from its own Bank. It has issued 4.2 million credit cards [ Visa + Mastercard in Gold, Platinum and Signature Series]

Mr. Rao, head of Credit Cards said,
We are number one currently on an incremental basis in the issue of new credit cards and are very positive about this segment growth over the next 24 months.
The bank is treating credit card as an entry level product after savings account and has still managed to have the lowest NPAs in the division and as a bank as whole as well.

Published by Webmaster @ 2:45 PM IST.


Madhucon projects - Embedded Assets and Projects

Tuesday, August 05, 2008

Madhucon Projects Ltd (MPL) reported 1QFY09 results at Rs148mn (+60.8% yoy), ahead of estimates (Rs130mn), led mainly by higher revenues and margins. Revenues grew by 67.2% yoy to Rs2.4bn driven by a strong order backlog of Rs47bn as on 30th June 2008 (6.4x FY08 revenues) and scale up in execution of the company's BOT projects.

Operating margins fell by 50bps to 14% due to the impact of higher material costs in the company's fixed price captive BOT contracts. Interest expenses jumped 137.6% led by higher debt for equipment financing. Consequently, PAT increased by 60.8% yoy to Rs148mn.

MPL's coal mine in Indonesia are progressing is an hidden asset to the company. MPL has an outstanding order position of approximately Rs4,850cr. The order book comprises Roads (35%) - mainly Highways and Flyovers - Irrigation (31%), Power (19%) and Real Estate (15%). The company is expected to report a fully diluted EPs of Rs 16 to Rs 18 for FY09.

Published by Webmaster @ 1:05 PM IST.


Vishal Retail - Slowdown or consoldation ahead ?

Monday, August 04, 2008

Vishal Retail's Q1FY09 net sales grew 18.26% to Rs 396.09 crore in Q1FY09 as compared to Rs 318.42 crore in Q4FY09 due to 10% higher footfalls. The operating profit stood at Rs 49.09 crore with a margin of 12.37% as against 10.88% in Q4FY08. This improvement in operating profit margin was on account of the enhanced contribution of private labels to 13.2% from 10% of sales in Q4FY08. Also, there was a marginal growth of 1.5% in sales per sq ft to Rs 1788 in Q1FY09 from Rs 1762 in Q4FY08. The net profit grew 36.5% to Rs 14 crore in Q1FY09 from Rs 10.4 crore in Q4FY08.

On the flip side, as per mgt, inventory position at the end of 1Q has worsened to Rs2800/sq ft (Rs6.5bn) vs Rs2580/sq ft (Rs5.6bn) as of FY08 end. Further, debt has gone up from Rs5.3bn to Rs6.5bn, pushing the debt-equity ratio beyond 2x.

DSP Merill expects the company to report an EPS of Rs 19 for FY09 while ICICI Sec expects the company to report an EPS of Rs 35. We find ICICI's expectations are really aggressive to meet in this market.

Published by Komal M @ 12:50 AM IST.


Ranbaxy Labs + Glaxosmithkline Pharma

Ranbaxy Labs: Ranbaxy's 2Q PAT (adjusted for forex impact) of Rs1.6bn was on the back of 13% revenue growth and modest margin improvement (17.8% vs 16.4% in 1QCY07). Reported PAT at Rs229mn was largely shadowed by Rs1.93bn forex translational loss. As a result, forecasts are lowered by 12-19% and we now model 34% CAGR in core profits (CY08-10E) and impact of FTF opportunities till 2010.

Timelines on Daiichi Sankyo's open offer remain intact (August 8th-27th). Management reiterates guidance of 20% top-line growth and 17-18% EBITDA margin. W.Europe markets continue to face pressures while growth outlook on RoW markets is robust. Complying with USFDA, to send necessary documents relating to district court motion on Poanta Sahib case by August 3rd, 2008. Ranbaxy is expected to report an EPS of Rs 16 to Rs 17 for year ending Dec-2008.

Glaxo Smithkline Pharma: GSK's revenues (net of excise) grew 11% YoY on a comparable basis; reported growth (6.3% YoY) is lower due to sale of the fine chemicals business. This was driven by healthy growth rates in priority products and vaccines.

GSK continues with its efforts to boost revenues. It launched Tykerb in 2Q and has entered into an in licensing deal with Astellas. It has entered into a co-promotion agreement with Daiichi Sankyo India for the antihypertensive drug Olmesartan Medoxomil and its combination products.

Gross margins improved 176bps YoY on the back of improving product mix (no fine chemicals; higher share of priority products within pharma). At the same time, strong control over costs translated into a 207bps YoY improvement in EBIDTA margins. GSK is expected to report an EPS of Rs 55 for FY08 ending in Dec-08.

Published by Webmaster @ 12:37 AM IST.