2007 | Dalal Street

Subscribe to Vishal Retail – Review

June 11, 20072 min read

Investors willing to take exposure in the booming Retail Sector in India, can subscribe at “Cut-Off” to the IPO of Vishal Megamart.

Vishal Retail focuses on value retailing in tier-II and tier-III cities. 43 of its 50 stores are located in these cities. Sure their is enough potential for retailing in these cities as well. Through backward integration, in-house design and manufacture of
apparels, the Company substantially controls cost of production and pass on the cost benefits to customers.

Financials:
Over the past 3 years, the company has reported a top line growth of 100% YoY. For they ear ended March-31st 2007, the company had total income of Rs 771 crore and a Net Profit of Rs 24.9 crore. ICICI in its research report expects the Vishal Retail to report a Net Profit of Rs 45.6 crore for year ending March-2008.

IPO Offer:
Offer: Rs 110 crore worth of shares in the price band of Rs 230 to Rs 270.
Fully Diluted Equity Post-IPO: 22.4 crore
Expected EPS assuming Vishal Retail reports a net profit of Rs 45 crore = Rs 20.4

So in the current IPO the shares are offered at a forward P/E of mere 13.5 compared to 30+ for other retailers. Blindly subscribe to the issue. Retail Individual Investors category of the issue is just Rs 33 crore, so allotment will be LOTTERY for even Rs 1.0 lakh application.

Post-Listing Strategy:
The company has no immediate threat and is a good investment bet in the medium term. Vishal Retail will benefit from low real estate prices and staff costs in tier II and tier III cities. However, on strong listing, you are requested to book profits.

Breaking Corporate India Earnings News

Asian CERC and Ashtavinayak Cine Vision Results

June 11, 20071 min read

Net profit of Asian CERC Information Technology rose 239.13% to Rs 0.78 crore in the quarter ended March 2007 as against Rs 0.23 crore during the previous quarter ended March 2006. Sales rose 74.90% to Rs 4.18 crore in the quarter ended March 2007 as against Rs 2.39 crore during the previous quarter ended March 2006.

For the full year, net profit rose 52.60% to Rs 2.64 crore in the year ended March 2007 as against Rs 1.73 crore during the previous year ended March 2006. Sales rose 57.03% to Rs 13.96 crore in the year ended March 2007 as against Rs 8.89 crore during the previous year ended March 2006.

Shree Ashtavinayak Cine Vision reported net profit of Rs 5.46 crore in the quarter ended March 2007. Sales reported at Rs 8.40 crore in the quarter ended March 2007.
For the full year, net profit rose 89.56% to Rs 14.16 crore in the year ended March 2007 as against Rs 7.47 crore during the previous year ended March 2006. Sales rose 59.21% to Rs 96.07 crore in the year ended March 2007 as against Rs 60.34 crore during the previous year ended March 2006

Breaking Corporate India Earnings News

Ansal’s Haryana township project welcomed

June 11, 20071 min read

AHCL announced during market hours today, 11 June 2007, that the director, town & country planning, Chandigarh, Haryana, had issued licence for development of approximately 100 acres of residential project of the company at sector 19, Rewari, Haryana. [Ansal Housing is different from Ansal Properties and Infrastructure Ltd]

The integrated township is strategically located close to the Delhi-Jaipur highway. It has an excellent business potential and is in the neighborhood of Gurgaon, one of the prominent IT cities of India. The integrated township is to be named Ansal Town.

The Ansal Town will have in-house amenities like schools, hospitals, clubs and multiplexes. The company will undertake all the development and marketing work of the project. The project is expected to have a turnover of about Rs 150 crore over the next 2-3 years with sizeable profit, the company said.

AHCL’s net profit soared 94.8% to Rs 13.07 crore in Q3 December 2006 compared to Rs 6.71 crore in Q3 December 2005. Sales surged 61.4% to Rs 56.15 crore in Q3 December 2006 (Rs 34.78 crore).

Real-estate development is the main business of AHCL,with focus on low and medium range residential property. It concentrates on the area in and around Delhi with special focus on Noida and Ghaziabad regions of UP.

Equity Research

Citi downgrades Infosys Technologies

June 11, 20071 min read

Citigroup Research analysts have downgraded Infosys Technologies Target price from Rs 2,580 to Rs 2,400. Citi analysts have discussed with the management of Infosys who see robust demand but rising rupee is a concern. Infosys is likely to report an EPS of Rs 80.20, Rs 97.48 and Rs 110.64 for FY2007, FY2008 and FY2009. Thus Citi analyst have revised the target price downwards to Rs 2,400.

In an earlier report released early this morning, Citi analysts see the Indian Rupee stronger against US Dollar which will hurt companies like Infosys and TCS.

Economy, Markets and Macro Views

Indian Rupee seen at Rs 40 aganist USD

June 11, 20071 min read

Citigroup currency analysts forecasts the Indian Rupee to stabilize around Rs 40.00 against the US Dollar over the next 3 quarters.

The Rupee forecast against US Dollar for the next few quarters is as follows,

Q3-2007 – Rs 40.30
Q4-2007 – Rs 40.10
Q1-2008 – Rs 40.00

So IT exporters will be under tremendous pressure to re-negotiate billing rates or revise the earnings guidance lower.

Economy, Markets and Macro Views

Reliance Ambani Vs DLF Singh – Corporate War

June 9, 20073 min read

With every hour passing by, hectic lobbying and meetings are underway in the financial streets of Dalal Street, Mumbai.

At one end of the spectrum is Reliance – Mukesh Ambani who is rumored to be all determined to derail the IPO of DLF Realty. On the other end is Rajeev Singh who wants his father to be the Richest Indian by listing their flagship Real Estate company – DLF.

Corporate Rivalry is nothing new to Reliance and Mukesh Ambani. It dates back to the days of Bombay Dyeing Vs Sr. Ambani in 1980s.

Then in early 1990s, a stock broker by name Harshad Mehta unseated India’s leading industrialist, Dhirubhai Ambani to become the Richest Indian and the Highest Tax Payer. Result – Ambani’s 3rd son, now chief of Reliance SEZ, Anand Jain engineered a trap for Harshad Mehta in Stock Market. When Harshad came to compromise with Dhirubhai, he was the only Indian to drive a Toyota Lexus which caught Anil Ambani’s attention and Harshad readily handed over the keys to Anil Ambani saying “It’s all yours”. [Read The Polyester Price – HOUSEKEEPING SECRETS Page 239]

Then in 2000, Dot Com Boom, it is rumored that Reliance group engineered the fall in Wipro stock which had made Azim Premji the richest Indian and 5th Richest person in the world.

Dec-2006: It is rumored that Reliance- Mukesh Ambani led the debacle of Cairn India IPO. Cairn is a global energy giant. Their was a last minute withdrawal of few large blocks of bidding in the Cairn IPO and underwriters had to make up for it. Cairn directly competes with Reliance Oil and Gas.

June-2007: Rajeev Singh son of DLF’s founder Kushpal Singh is all determined to list his father’s company and crown him the richest Indian. DLF directly competes with MukeshAmbani’s dream project in Haryana – Reliance SEZ. Also Mukesh being an industrialist and wealth creator doesn’t want a land lord to take his crown of being the richest Indian.

DLF is going out of the way to pay hefty commission to greedy Stock Brokers to make their clients apply for the issue. While several brokerage houses have come out with report that DLF issue is expensive. [Silent Operator on Dalal Street is believed to be a close confident of Mukesh Ambani and their firm is amongst the top 3 BRLMs in India. However, for DLF IPO they gave up because of the differences in pricing. ]

Updating:
After the Issue, DLF is likely to float a JV with some foreign company for Real Estate Investment Trust [REIT], which will give DLF the bargaining power and also Billions of Dollars in cash. This will push Mukesh Ambani at the receiving end in SEZ and Real Estate projects. But Mukesh is not a guy who will sit quiet, We’ll keep you informed as we get more information.

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