August, 2007 | Dalal Street

Sobha Developers plans township project in Kerala

August 20, 20071 min read

Sobha Developers announced before the market hours today, 20 August 2007 that the company will be signing a memorandum of understanding (MoU) with the state government of Kerala today, 20 August 2007, for setting up the largest township development in Kerala, Sobha Hitech City. The draft of the MoU has already been approved by the state government.

Sobha Hitech City project will create an integrated city of world-class standards with a focus on research & development, knowledge dissemination, electronics, information technology and pure & applied sciences. It will involve an investment of Rs 5000 crore, the highest such development in the state and is expected to create 75,000 direct jobs. The project will come up near Maradu in Kochi in a land area of around 400 acres, out of which around 320 acres have already been acquired.

Infrastructure work will commence soon after the signing of the MoU. The project is expected to take 8 to 10 years for completion after receipt of necessary approvals.

Mutual Funds Review

HDFC Fund Portfolio Analysis

August 19, 20071 min read

Here is a real quick analysis on how our star fund manager realigned the folios of various funds.

In HDFC Equity fund, their were no major shuffles except that exposure to IT stocks was reduced. Punj Lloyd probably gave him a SELL warning when it crossed Rs 290 levels and hence reduced holdings in it. He also sold Bharti Airtel, probably he thinks in line with Kotak Analyst who say that QoQ growth has peaked and with Spectrum crunch and no 3G services in-sight, bottomlines will be under pressure. Taken Fresh positions in ITC.

In HDFC Top-200 fund, their were quite a few new additions to the folio, Bajaj Auto, NTPC and Asian Paints. One can BUY Asian Paints and Bajaj Auto on market corrections. NTPC is a fantastic PSU but we don’t recommend it is a long term play. IT Stocks Position was reduced. Exits made in Ranbaxy, Hindustan Unilever and Colgate Palmolive.

Under HDFC Prudence fund, we saw fresh positions in Page Industries and Grindwell Norton. Substantial quantity of Shanti Gears were purchased. Reduced exposure to IT stocks.

Equity Research

Reliance Industries – Outperformer by CLSA

August 17, 20071 min read

CLSA Asia Pacific Research has an outperform rating on Reliance Industries Ltd with a price target of Rs 1,875. The target is actually revised downwards from Rs 1,995 which CLSA had set on August-2nd of this year.

The analyst compares RIL with that of US peers. Concern E&P valuation for Reliance (which assumes that it discover 75-80tcfe of additional in-place resources) pegs asset value at $3.5/boe on recoverable resources. North American natural gas E&Ps discount $16/boe on 1P reserves but trade at a more modest $4.5/boe on recoverable resources. They also operate in a higher profitability regime given better realisations. Further, the 8x P/CF multiple that forms the basis of our going concern value is 55% higher than the 5-5.4x P/CF that these peer discount.

The sum of parts valuation is as below.
Reliance was upgraded to BUY by Deutsche Bank earlier this week with a price target of Rs 2,130.

Breaking Corporate India Earnings News

Tata Power exists PTC

August 17, 20071 min read

Tata Power has sold 4.2% in Power Trading Corporation [PTC] India in the open market for about Rs 50 crore since April 2007.

Tata Power held 10.47% till March 2007. The company diluted its holding marginally during the April-June 2007 quarter. Thereafter, it sold an additional 3.35% in the open market over the past six weeks, report suggests.

PTC’s net profit fell 1.1% to Rs 11.88 crore on a 12.2% increase in sales to Rs 1158.55 in Q1 June 2007 over Q1 June 2006.

Economy, Markets and Macro Views

Free Fall in Asian Markets

August 17, 20072 min read

American mortgage crisis has led to carnage in Asian markets. Hang Seng and Nikkei refused to recover – HangSeng is down 680 points and Nikkei is down 875 points.

Continuing its downward trend, the 30 share BSE SENSEX is down 500 points breaching all supports [Pity Technical analysts]. Infosys and Satyam from IT stable along with Bharti Airtel, RCOM, Tata Steel, NTPC and Maruti Udyog are all pulling the SENSEx down by more than 5%.

CNBC TV-18 polled some brokerage houses and just 25% of them dared to BUY at current levels [13,900].

IndiaBulls, Kotak Mahindra Bank, India Infoline and GE Shipping are all down by 10%. Amongst the real estate stocks, IndiaBulls Real Estate and Orbit Corp are the major losers.

The Indian rupee is now trading at Rs 41.50 against USD and inflation for the week is down to 4.05%. Dow Jones futures is down 154 points. London and Luxembourg indices are moving sideways.

Update at 3:30 PM
Indian markets recover from the days low but still close 225 points down at 14,131. Hang Seng recovered too but still closed down 285 points while Japanese stocks closed at their lowest, down 875 points.

Fund Managers are staying away from Realty and Metal stocks. ICICI’s Nilesh Shah advises that HNIs can start shopping stocks which are fundamentally good and are come off of their highs.

Breaking Corporate India Earnings News

Zylog System Lists at 25% Premium

August 17, 20071 min read

The IPO of Zylog Systems which was heavily subscribed and for which our IPO Analyst had a BUY recommendation listed on the bourses just a while ago at 25% premium. The stock is currently trading at Rs 450.

Book some profits at this level and make a total exit over Rs 500.

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