2007 | Dalal Street

Equity Research

Citi Maintains a BUY on Indraprastha Gas

June 7, 20071 min read

Citigroup in a research report released just a while ago has maintained a BUY on Indraprastha Gas with a price target of Rs 156. Indraprashta Gas is expected to record a 21% annual growth between 2006-09.

Citi projects growth in PNG penetration, with renewed focus as compliance-led skew toward CNG should moderate; (2) regulatory upside potential, with the Delhi government mandate for conversion of new LCVs to CNG; (3) geographical growth in the National Capital Region; and (4) discretionary demand growth.

Indraprastha Gas is expected to report an EPS of Rs 9.18 and Rs 11.06 for FY07 and FY08 respectively. On DCF model Citi recommends a BUY with a price target of Rs 156. Target price for IGL is also based on a Price/Cash Earnings of 11.1x FY07E.

Breaking Corporate India Earnings News

Suzlon Energy Powered by US Order

June 7, 20071 min read

US-based Suzlon Wind Energy Corporation, the step-down subsidiary of Suzlon Energy, has signed a contract for a total of 300 units of 630 mega watt (MW) of wind turbine capacity with Edison Mission Group of Irvine, California, the USA. The two phase contract calls for delivery of 315 MW of turbine capacity in 2008 and another 315 MW of capacity in 2009.

In May 2007, Suzlon Energy had acquired German wind turbine manufacturer REpower after the French nuclear energy group Areva decided to withdraw from the bidding contest. REpower is one of Germany’s biggest wind-turbine makers and one of the world’s leading companies in wind energy sector.

Suzlon Energy’s net profit rose 21.56% to Rs 437.82 crore in Q4 March 2007 (Rs 360.16 crore). Sales moved up 32.72% to Rs 2055.48 crore in Q4 March 2007 (Rs 1548.71 crore). The net profit rose 29.22% to Rs 1061.14 crore in FY 2007 (Rs 821.19 crore). Sales jumped 42.02% to Rs 5380.37 crore in FY 2007 (Rs 3788.46 crore).

From Rs 1187.65 on 30 April 2007, it had advanced to Rs 1,250.90 by 14 May 2007. But it slipped sharply to Rs 1,138.30 on 15 May 2007 after it reported poor results for Q4 March 2007 during trading hours that day. The scrip again moved up to Rs 1378 by 25 May 2007. It had settled at Rs 1310 on 6 June 2007.

Economy, Markets and Macro Views

Currency Coin Scam Hits India.

June 7, 20072 min read

You must have always noticed that whenever the Congress Government is in power, Indians have to face the wrath of a Financial Scam. Be it the Bofors Scam or the 1994 – Securities Scam or 2005 – SEZ Land Scam.

To your left you can see a Rs 2 coin made of Cupro-Nickel which weighs 6 gram and is 26 mm in diameter. Scamsters have been collecting coins of Rs 2 denomination and smuggling out of the country, mainly to Bangladesh where they are melted and re-minted to form statues and other metal articles. Why only coins of Rs 2 denomination ?

Because you get 6 gram of Cupro-Nickel. While in coins of Rs 5, the weight is only 9 gram, proportionately it should have been 15 gram but they aren’t because the coins of Rs 5 came into circulation when the prices of Cupro-Nickel had already appreciated and thus they have just 9 gram of Cupro-Nickel.

It is the duty of the Central Government of India to protect its currency. Instead the Government has asked RBI to pump 900 Million fresh pieces of coins in May-2007. I overheard some folks talking that for every Rs 100 of these Cupro-Nickel coins, their is a kingpin who is paying Rs 160 in Cash. Imagine the depth of the racket and our government doing nothing.

Tags: India, Scam, Currency, Coins

Breaking Corporate India Earnings News

PVR , BASF and Cyber Media India Results

June 6, 20072 min read

Net profit of PVR rose 93.05% to Rs 10.56 crore in the year ended March 2007 as against Rs 5.47 crore during the previous year ended March 2006. Sales rose 59.28% to Rs 164.09 crore in the year ended March 2007 as against Rs 103.02 crore during the previous year ended March 2006.

Net profit of BASF India declined 26.31% to Rs 3.67 crore in the quarter ended March 2007 as against Rs 4.98 crore during the previous quarter ended March 2006. Sales rose 10.68% to Rs 160.70 crore in the quarter ended March 2007 as against Rs 145.19 crore during the previous quarter ended March 2006. For the full year, net profit rose 10.31% to Rs 50.09 crore in the year ended March 2007 as against Rs 45.41 crore during the previous year ended March 2006. Sales rose 12.59% to Rs 768.53 crore in the year ended March 2007 as against Rs 682.57 crore during the previous year ended March 2006.

Net profit of Cyber Media (India) declined 74.22% to Rs 0.33 crore in the quarter ended March 2007 as against Rs 1.28 crore during the previous quarter ended March 2006. Sales rose 9.45% to Rs 16.56 crore in the quarter ended March 2007 as against Rs 15.13 crore during the previous quarter ended March 2006. For the full year, net profit declined 15.19% to Rs 4.30 crore in the year ended March 2007 as against Rs 5.07 crore during the previous year ended March 2006. Sales rose 22.54% to Rs 66.98 crore in the year ended March 2007 as against Rs 54.66 crore during the previous year ended March 2006.

Equity Research

Citi Recommends Telcos for demreged Tower Business

June 6, 20071 min read

Citigroup in its research report continues to be Bullish on the prospects of Bharti Airtel. Citi factors into its price targets the valuations of Telecom Towers these companeis have which are likely to be hived off as separate entities and may also be listed on NSE or BSE.

Bharti Airtel Leads the Pack:
Bharti’s towerco has a headstart given: 1) the highest tower market share (~40%), 2) unconditional rollout plans (30,000 towers in FY08), and, most importantly, 3) an MoU with Vodafone that imparts greater visibility on average tenancy and operating margins.

Citi has set a 12-month forward target price of Rs 960 is based on core DCF of Rs 800 and a towerco option value of Rs158.

Reliance Communications:
In the case of RCOM, however, Citi uses EV/EBITDA in the absence of a detailed balance sheet and lack of transperency from Management. 12-month target price of Rs510 is based on 9.6x FY09E EV/EBITDA, at a 15% discount to Bharti’s target multiple (ex- towerco) to reflect the uncertainty regarding the timing of GSM rollout and the associated challenges. Citi also maintains a Medium Risk rating on RCom.

Breaking Corporate India Earnings News

Clutch Auto shifts into higher gear

June 6, 20071 min read

Clutch Auto said after trading hours on Tuesday, 5 June 2007, JM Financial mutual fund, through its various schemes, has bought a further 0.64% stake in the company. The funds’ combined stake in Clutch Auto has thus risen to 5.5%, the company said.

On 4 April 2007, Clutch Auto confirmed the company was in advanced stage of negotiations with the US-based International Truck and Engine Corporation, manufacturers of Navistar brand of trucks.

Clutch Auto’s net profit jumped 72.68% to Rs 7.08 crore in Q4 March 2007 as against Rs 4.10 crore in Q4 March 2006. Sales moved up 84.32% to Rs 90.96 crore in Q4 March 2007 (Rs 49.35 crore). Net profit scaled up 71.47% to Rs 21.52 crore in the year ending March 2007 as against Rs 12.55 crore in FY 2006. Sales rose 56.75% to Rs 235.50 crore (Rs 150.24 crore).

Clutch Auto manufactures clutches, and components and spares for the automotive sector. Its clientele includes Tata Motors, Maruti Udyog, Escorts Tractors, Bharat Earth Movers and state transport undertakings.

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