April, 2007 | Dalal Street

Holcim hikes stake in Gujarat Ambuja Cements

April 24, 20071 min read

Holcim, the world’s second-biggest cement maker, has raised its stake in Gujarat Ambuja Cements (GACL) to nearly 30% in a deal worth approximately Rs 322 crore. Around 27.96 million GACL shares, constituting roughly 1.8% of its equity, was traded in a block deal on the Bombay Stock Exchange at a price of Rs 115 per share on Monday (23 April 2007).

Holcim owns nearly 28 per cent in Ambuja Cements and this stake would rise to nearly 30 per cent after the latest deal.

In another development, Matsushita Electrics of Japan has bought an 80% stake in Anchor Eelectricals for more than Rs 2,000 crore. Anchor shouldn’t have sold their stake and taken the IPO route because India will witness organised retailing of Electrical products with the construction boom in the next 2 decades. What Matsushita paid Anchor is priceless.

Breaking Corporate India Earnings News

Titan Industries Q4 – Flop Show

April 23, 20072 min read

Titan Industries has reported a 18.50% decline in its net profit in the March 2007 quarter at Rs 30.32 crore (Rs 37.21 crore). Net sales surged 39.5% to Rs 605.83 crore from Rs 434.15 crore.

The stock of Titan Industries gained momentum, when in late-March the company forayed into the optical eye-wear business by launching a retail chain, Titan Eye+, in Bangalore. The company will offer products, including its own brands, in the fashion eye-wear category besides other licensed brands.

Meanwhile, the world of Titan’s network has increased to 250 from 170 last year and we have plans to increase that to 275 by the end of this fiscal. The company, which has a manufacturing facility in Hosur, Tamil Nadu, and an assembly unit in Dehradun, produces about 10 million watches currently.

Titan has also expanded its range in the sports wear category by introducing the Aviator series of watches. The new series, inspired from World War II fighter aircraft is targeted at the upmarket, global Indian and is priced between Rs 4000 and Rs 7000.

Titan is the only listed player in organised retailing of jewellery with a pan-India network. It markets the jewellery under the ‘Tanishq’ brand. Tanishq commands around 70% share in the branded jewellery market.

Titan Industries also manufactures watches marketed under the Titan and Sonata brand names. It enjoys over 25% share of the total domestic watch market.

Equity Research

Citi Downgrades Shoppers Strop

April 22, 20072 min read

Citigroup in its research report released just a while ago has downgraded Shoppers Stop to SELL with a price target of Rs 412, potential downside of 33%. This downgrade comes after we reported of the first Retail Downgrades in India coming from Merill Lynch on March-29th.

Shoppers Stop growth story is leveraged to rapidly growing high-end urban consumption. However, at 43x FY08E P/E valuations are steep and seem to be building unfeasible expectations from HyperCity. As such, the stock has underperformed the Sensex by 9% and Citi expects valuation roadblocks to continue. Shoppers Stops positioning has also been at the premium end, with a strategy focusing on product assortment and quality, rather than discounts, driving sales. It is also expanding in the specialty format, focusing on food, cosmetics, books and apparel.

Sum of Parts Valuation:
Sum of parts valuations returns a target price of Rs421 per share, valuing the parent company at Rs376 and the HyperCity stake at Rs45 per share. Citi values the parent Shoppers Stop based on 27x FY08E P/E, for a target price of Rs376. Shoppers Stop could trade at 10% premium to its regional peers given its superior earnings growth profile. We expect two-year EPS CAGR of 36% vs. a 30% CAGR for our Asian retail universe. A 10% valuation discount for Shopper’s Stop to our Pantaloon target valuation, due to limited growth opportunities. Shoppers Stop is expected to report an EPS of RS 13.9 for FY2008.

Breaking Corporate India Earnings News

Infomedia India Shifted Trade to Trade Segment

April 21, 20071 min read

The counter of Infomedia India saw sporadic buying activity coupled with huge volumes in the past few days. From Rs 140.80 on 5 April 2007, the stock surged to Rs 198.45 by 19 April 2007. The sharp spurt in the stock came after a renowned investor, Rakesh Jhunjhunwala, mopped up 4.50 lakh shares of the company at Rs 163 per share. Rakesh Jhunjhunwala along with other persons acting in concert already hold 4.23% stake in the company.

Shares from the T2T group are to be delivered, and as a result trading is not possible in such counters. As a result, the daily traded volumes on such scrips decline.

Infomedia India, a special interest publications company, provides commercial information in the form of business directories, popularly called Infomedia Yellow Pages. Infomedia India also publishes at least 10 Indian and international B2B titles.

Equity Research

Merill Lynch Bullish on UTI Bank

April 21, 20071 min read

UTI Bank posted better than expected results during Q4 of FY07. UTI Bank’s 4QFY07 net income grew 40%yoy to Rs2.1bn, higher than estimates, led by strong operating profit growth (+63%yoy). Top line grew 48%yoy as loan growth sustained at +65%yoy led by corporate credit demand. Key highlights of results were a) margin expansion of 6bps qoq to 3.06% driven by increasing share of CASA and b) 59%yoy growth in fee income led by both retail (distribution of life insurance products, credit cards and rising client base) and corporate fees.

Merill Lynch forecasts earnings growth at 30% CAGR through FY09 (changed by <1%). Hence one year from now it could trade at 3.3x FY09E adj book, underpinning our PO of Rs600.

Fully Diluted EPS estimates for FY2008 and FY2009 are Rs 31.16 and Rs 39.90.

Breaking Corporate India Earnings News

Satyam Upbeat on Q4 results and Guidance

April 20, 20071 min read

Satyam Computer Services reported a net profit of Rs 394 crore in fourth quarter ended March 2007 compared to Rs 337.23 crore in the third quarter ended December 2006, a sequential growth of 16.92%. Its revenues increased 7.09% to Rs 1779 crore from Rs 1,661.12 crore.

For FY-2007, Satyam’s net profit jumped 40.12% to Rs 1375.93 crore from Rs 981.93 crore in the previous year. Its revenues rose 35.31% to Rs 6484 crore (Rs 4792.59 crore).

For the year ended March 2007, the group posted a net income of $ 298.4 million compared to $ 249.4 million for the year ended March 2006. Revenues have increased from $ 1096.3 million for the year ended March 2006 to $ 1461.4 million for the year ended March 2007.

Satyam Computer Services has given revenue growth guidance of 20.1 – 22% to Rs 7793 – Rs 7916 crore for FY-2008, and EPS growth of 19.26 – 21.1% to Rs 25.32 – Rs 25.73.

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