June, 2007 | Dalal Street

Equity Research

Buy JSW Steel – ShareKhan and HDFC

June 15, 20071 min read

Their are BUY reports coming from HDFC Securities and Sharekhan on JSW Steel. The company has lined up a 2.6x jump in capacity over FY06-10 to 10mtpa, which would arguably make it the second largest steel manufacturer in India.

JSWS embarks on a Rs170bn expansion over the next few years, Sharekhan does not expect debt-equity ratio to cross 1.1x. JSWS has a track record of strong project execution and has also been able to bring down specific investment cost per tonne with each phase of expansion.

At 5.5x FY08E earnings, we see room for further appreciation in the stock price. Notably, JSWS offers significant volume growth over the next few years, and hence is not a pure leverage story on steel prices. However, considering the scale and growth visibility, SSKI analyst believes that the stock deserves to trade at a premium to peers. SSKI / Sharekhan initiates coverage on JSWS with a price target of Rs 729 per share.

JSW Steel is expected to report an EPS of Rs 103.3 for FY08 and Rs 112.5 for FY09.

Note from Dalal Street Business:
JSW Steel is at the top of Holding List of Sr. Fund Manager, Sunil Singhania @ Reliance Fund.

Breaking Corporate India Earnings News

Indiabulls Real Estate rides on European tieup

June 15, 20071 min read

Indiabulls Real Estate announced before market hours today, 15 June 2007, that the company and Strabag Group’s Zublin International GmbH have entered into a memorandum of understanding to consolidate their resources and experience and jointly work on large infrastructure development projects. They have also agreed to set up a special purpose vehicle (SPV) to execute these projects.

Strabag Group is one of Europe’s leading construction groups with nearly 53,000 employees and a turnover of more than 10 billion euros in 2006.

Indiabulls Real Estate reported net profit of Rs 6.01 crore on total income of Rs 14.39 crore in the quarter ended March 2007. It reported a net profit of Rs 13.12 crore on total income of Rs 27.06 crore in the year ended March 2007 (FY 2007).

The Indiabulls Real Estate share price had declined from Rs 401.85 on 1 June 2007 to Rs 347.15 on 12 June 2007. It recovered over the next two trading sessions to Rs 358.25 on 14 June 2007

Economy, Markets and Macro Views

Citi Upgrades Suzlon Energy to BUY

June 15, 20071 min read

Citigroup Research which had a SELL recommendation on Suzlon Energy with a price target of Rs 1,137 has upgraded it to BUY with a price target of Rs 1,700. The new price target is based on P/E multiple of 23x Suzlon’e FY09 estimated earnings which is well supported by EPS CAGR of 44% and RoEs in the 30-40% range over FY07-10E.

The fact that Suzlon will stagger the payment of 1.2bn punds for REPower over three years implies that it would be EPS accretive from CY08E/FY09E onwards. REPower is a good strategic fit for Suzlon as it provides: (1) Immediate access to Europe, the largest WTG market over the next 5 years; (2) REPower’s low margins (as it is basically an assembler) imply there is plenty of room for volume and margin growth; (3) REPower’s product portfolio is complementary to Suzlon and would be helpful to make inroads into Europe.

India IPO Reviews and Updates

DLF Limited Subscribed 3.47 times

June 14, 20071 min read

The DLF IPO managed to subscribe 3.47 times with most of the demand coming from Institutional Investors. High Networth Individuals and Retail investors participation was very very low. Here are the final figures that National abd Mumbai Stock exchange compiled and sent to us in a fax message.

Asian Hotels net profit rises 50.83%

June 14, 20071 min read

Net profit of Asian Hotels rose 50.83% to Rs 34.42 crore in the quarter ended March 2007 as against Rs 22.82 crore during the previous quarter ended March 2006. Sales rose 27.24% to Rs 132.41 crore in the quarter ended March 2007 as against Rs 104.06 crore during the previous quarter ended March 2006.

For the full year, net profit rose 61.38% to Rs 91.50 crore in the year ended March 2007 as against Rs 56.70 crore during the previous year ended March 2006. Sales rose 25.85% to Rs 413.42 crore in the year ended March 2007 as against Rs 328.49 crore during the previous year ended March 2006.

Breaking Corporate India Earnings News

HFCL Infotel reports net loss of Rs 37.89 crore in the March 2007 quarter

June 14, 20071 min read

HFCL Infotel reported net loss of Rs 37.89 crore in the quarter ended March 2007 as against net loss of Rs 42.83 crore during the previous quarter ended March 2006. Sales declined 18.86% to Rs 60.16 crore in the quarter ended March 2007 as against Rs 74.14 crore during the previous quarter ended March 2006.

For the full year, net loss reported at Rs 116.32 crore in the year ended March 2007 as against net loss of Rs 113.04 crore during the previous year ended March 2006. Sales declined 5.48% to Rs 275.90 crore in the year ended March 2007 as against Rs 291.89 crore during the previous year ended March 2006.

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