OnMobile Global - Global contracts to drive growth
Wednesday, May 20, 2009
Vodafone Group has announced that they have chosen OnMobile Global to provide its ring-back tone (RBT) service in emerging markets ex-India. This deal highlights OnMobile's ability to convince international telecom operators to shift to a revenue share model for Mobile Value-added Services (MVAS), which is different from the one-time licensing model prevalent in international markets. We believe that this deal could be a precursor to more global contract wins for OnMobile.
The recent regulation from the telecom regulator to ask for explicit confirmation from the customer before activating mobile value added services could weigh on rate of adoption of CRBT in India. Industry sources cite ongoing discussions between MVAS providers and the regulator to find an effective workaround without hampering adoption. We are conservatively modelling a flat CRBT penetration of about 20% in India. Initial responses from our checks related to Ad-RBT in India show promise, which could possibly push RBT penetration in the mid-20's.
OnMobile is expected to report an EPS of Rs 19.34 for FY10 and Rs 25.05 for FY11 a CAGR of 30%. Analysts are bullish on the prospects of the company and expect it to reach the IPO price of Rs 450 within 6 months.
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Published by Webmaster @ 9:48 AM IST.
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Morgan Upgrades Financial Services
Monday, May 18, 2009
With strong election results for UPA, in our opinion, reduces the tail risk of sharply higher NPLs. Morgan's economist has upgraded his GDP forecast for India. In an improving economy, banks are less likely to underperform. Morgan has raised its industry view to In-Line.
The negative view on Indian banks has been premised on a weak outlook for revenues and a likely increase in non-performing loans (NPLs). This view still holds. However, with the general elections sending the strongest government since the early 1990s, the outlook for reform has increased – implying potential pickup in capital flows. In such a scenario, we believe that the tail risk of sharply higher NPLs due to lack of capital has subsided.
The bank stocks that will be most positively affected are IDFC, HDFC and State owned banks (PSU Banks). For IDFC, loan growth should improve if the government focuses
on infrastructure spending.
M&A of PSU Banks ?
Clearly among the most inefficient in the region, for a variety of reasons – e.g.,
a huge employee base and overlap in operations. Since it now does not depend on the Left parties, the government may allow banks to right-size the employee base.
Indian bank's underlying earnings were much lower than reported as revenues were under pressure and underlying asset quality was weakening. Now capital flows may improve in India, thereby reducing some pressure on asset quality. Nonetheless, not everything is back to F2007-F2008 levels. The global economy still faces problems, which will put some pressure on Indian bank earnings.
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Published by Webmaster @ 9:40 AM IST.
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JSW Steel - Results Cracking - SELL
Saturday, May 09, 2009
JSW Steel Sales rose 5% yoy to 1.06m tonnes. FY09 adj PAT fell 44% yoy to Rs9.3bn. JSTL reported standalone PAT of Rs492m. Adjusting for the FCCB buyback & forex gains, net loss for 4Q was Rs258m vs profit of Rs4.4bn in 4QFY08.
4Q EBITDA/t fell to $67 vs $188 last year and $122 in 3QFY09. Even though JSTL had contracted coking coal at $175/t for most of its 4Q off-take (vs $305/t for FY09), the quarter was impacted by significant high-cost opening inventory. ~8% of coking coal contracted at $305/t in FY09 is yet to be lifted and JSTL is in negotiations to spread it over the next 2-3 yrs.
The US plate/pipe mills are operating at 10-15% utilization and reported a 4Q loss of $61m and a $37m loss for FY09.
Analysts differ from the the guidance for FY2010 for salable steel sales volumes of 6.1 mn tons compared to 3.43 mn in FY2009 is very aggressive given the fact the new 2.8 mn ton blast furnace has been commissioned as recently as April 2009.
Recommendations:
Citi expects JSW to report an EPS of Rs 43 for FY10 while Merill expects it to be Rs 37. Kotak has a still more conservative EPS estimate of mere Rs 25 for FY10. We expect it to be around Rs 37 with most of the demand picking up in the latter half of FY10.
The stock has risen a bit too fast in the recent rally and investors can book profits on the same.
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Published by Webmaster @ 8:32 AM IST.
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Ranbaxy Labs Nitrofurantoin recall poses additional setback
Sunday, May 03, 2009
Over the weekend, Ranbaxy announced the voluntary recall of Nitrofurantoin capsules (Sales of US$4.1 mn and TRx of 0.56 mn units in 2008) from the US market. Ranbaxy believes the recalled drug (an antibiotic for the treatment of urinary tract infections) is "unlikely to produce any serious adverse health effects" implying a Class III FDA classification.
Ranbaxy's recall of Nitrofurantoin capsules is the second product recall, following the Gabapentin recall in November 2007. In this instance, Ranbaxy has stated that few lots of Nitrofurantoin were not in conformity with approved lab specifications. It says that the recalled product is unlikely to produce any serious adverse effects.
Recall costs vary depending on the extent of the recall and the recall points in the distribution chain. In this instance, Ranbaxy has decided to recall all the lots and we estimate Nitrofurantoin to have progressed into the US retail chain.
Goldman Sachs has a SELL rating on the stock with a 12-m Target Price of Rs118 (based on 9X 2010E base).
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Published by Webmaster @ 8:50 AM IST.
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DLF Misses Analyst Expectations - Suspends Buy Back
Saturday, May 02, 2009
DLF reported FY2009 net income of Rs46.3 bn, which was down 41% yoy, and 7% below street estimates. EBITDA margin for FY2009 was down to 60% from 69% in FY08. reflecting a fall in DLF Assets Limited (DAL) margins. Profit-before-tax margin for DAL stood at 57% for FY09 compared with 72% in FY08. In 4QFY2009, DLF took a one time charge of Rs3 bn on account of price resets and various customer schemes.
DLF's EPS for FY-09 was Rs 27.17 42% lower than Rs 46.90 reported in FY-08.
DLF stock is up 31% in the past month vs. the Sensex up 15%, while results indicate that the backdrop remains challenging. DLF has indicated that it will focus on affordable housing, which we believe is the right strategy in the current difficult environment. The stock may remain on the sidelines until management is able to lower obligations to DAL [Promoters privately Held Company]related debtors (DAL owes about Rs49 bn to DLF as at March 31 2009). Although the response to some middle income housing launches has been encouraging, margins are lower and commercial lease volumes remain negligible.
DLF has withdrawn from 326mn sq ft of land resources, which includes Dankuni and Bidadi townships. DLF has also suspended its over hyped share buy back program.
DLF is expected to Report an EPS between Rs 16 to Rs 24 according to various estimates [Goldman Sachs - Rs 15, Kotak Rs 19 and Citi Rs 24] NAV / Share is expected to be Rs 260.
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Published by Webmaster @ 8:56 AM IST.
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