September, 2007 | Dalal Street

Diamond Cables + Harita Seating

September 13, 20071 min read

Diamond Cables has announced the receipt of orders for 2750 transformers, out of which 1350 transformers are for 63 KVA, and 1400 transformers for 16 and 10 KVA. These orders are to be executed by company’s wholly owned subsidiary Diamond Power Transformers (western transformers) before 31 March 2008. The company’s wholly owned subsidiary order booking position exceeds Rs 70 crore and the capacity is totally booked till 30 June 2008.

Harita Seating Systems, a leading seat manufacturer for tractors, passenger busers etc in the country has announced issue of bonus shares in the ratio of [1:1] one equity share of Rs 10 each for every one-equity share of Rs 10 each held.

Breaking Corporate India Earnings News

Banco Products + Batliboi Stock Split

September 13, 20071 min read

Banco Products India has scheduled a meeting of the board of directors to on 26 September 2007 to consider sub-division of the face value of the equity shares.

Recently the company had issued bonus shares in the ratio 1:1.

Batliboi announced during the market hours today, 13 September 2007 that it has fixed 4 October 2007 as the record date for the purpose of stock split from the present face value of Rs 10 to Rs 5 each.

Net profit of Batliboi rose 39.90% to Rs 2.77 crore on a 24.98% rise in sales to Rs 30.52 crore in Q1 June 2007 over Q1 June 2006.

Equity Research

Satyam Computers an Outperformer

September 13, 20071 min read

Kotak Securities is bullish on the prospects of Satyam Computers and maintains an Outperformer rating on the Stock with a price target of Rs 570.

Satyam to deliver significant outperformance on its FY2008 revenue (40% versus its guidance of 35.5% for FY2008) and EPS guidance (Rs25.3 versus guidance of Rs24.5). Expect Satyam to significantly outperform its Sep ’07 quarter guidance of 6% qoq revenue growth. Satyam will deliver the highest revenue growth rate for Satyam in Tier 1 coverage list.

Satyam’s SAP practice has been a major contributor to its strong growth (CQGR of 12% over the past four quarters in the package implementation area—SAP has grown faster than the overall PI business). Satyam’s Engineering Services practice has been among the fastest growing service lines for the company (a CQGR of 14.3% over the past four quarters vs. company average of 9.3%) over the past 12 months.

Kotak values Satyam at Rs570 on absolute DCF valuation methodology. This translates into 22.5XFY2008E and 18.1XFY2009E earnings. Satyam is currently trading at 16.9XFY2008E and 13.6XFY2009E EPS, a 25% discount to Infosys and 15% lower than its historical average.

In a separate development, Sr. Fund Manager, Prashant Jain has totally sold TCS and Wipro in HDFC Equity Fund.

Breaking Corporate India Earnings News

Lupin wins product patent challenge

September 13, 20071 min read

Lupin Labs has announced that the court of appeals for the federal circuit on 11 September 2007 reversed a district court decision on Ramipril in its favor, finding the Aventis patent on Ramipril invalid. Aventis owns the 722 patent in question and king pharmaceuticals markets Altace.

Ramipril is one of the ACE inhibitors, which are useful for treating high blood pressure and Altace revenues were over US $ 900 million in the US (IMS MAT Jun 2007).

Dr Reddys Laboratories has announced that the U.S. Food and Drug Administration (USFDA) has granted final approval for the company’s Abbreviated New Drug Application (ANDA) for Ranitidine (Zantac) 150mg tablet (over-the-counter). The company is the only generic manufacturer to receive FDA approval for this product following the expiry of innovator’s patents. This is the first approval for the company’s U.S. OTC business unit following an announcement in mid-May, to launch a store brand OTC division in the U.S.

Equity Research

Buy Numeric Power Systems

September 12, 20071 min read

In FY07, Numeric Power Systems Ltd [NPSL] added 45 sales and service centers, thereby taking the total tally to 201 by March 2007. The company has a highly efficient service team, all of whom are personally trained by NPSL. They provide 24×7 technical support to all important customers/projects. The company has over 600 factory-trained engineers for this important function of customer care.

NPSL has developed partnerships with three major professional IT, sales and distribution companies. The sales through the entire network channel have grown 60% over last year. The revenues of Numeric to grow at 17.6% CAGR for the next two years. More importantly, the net profit is expected to grow at 33.2% CAGR for the next two years, that is, from FY07 to FY09E.

NPSL is expected it to report an EPS of Rs.58.1 in FY08E, moving up to Rs.71.6 in FY09E. The current market price of Rs 440 discounts FY09E earnings at 6.1, which is very attractive due to the clear growth prospects of the company, going forward. We remain positive and maintain BUY on Numeric Power Systems with target price of Rs.615, which provides an upside potential of 40%.

Economy, Markets and Macro Views

Bajaj Auto Riding Strong on XCD-125CC

September 12, 20071 min read

Bajaj Auto launched 125-cc ‘XCD’ at a price of Rs 41,000.The product is aimed at upgrading entry-level segment customers to 125-cc bikes from existing 100-cc bikes. Bajaj plans to manufacture 20,000 units of the new product, ramping it upto 50,000 units by November 2007. Bajaj Auto has a margin of Rs 3,000 / bike. Hero Honda’s Super Splendor is the only bike in this segment and is priced at Rs 44,000.

The launch of ‘XCD 125’ to stem the decline in Bajaj’s motorcycle volumes and
improve market share for Bajaj. We had reported that Bajaj recorded a 22% yoy decline in domestic motorcycle sales on a year-to-date basis.The success of the bike is critical to Bajaj as it shifts its focus towards high-end bikes.

Kotak retains outperform rating on the company with a price target of Rs 2,750.

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