Morgan Stanley Downgrades Cement Industry

Morgan Stanley has downgraded the Indian cement sector. Jeez! the downgrade has been very severe and the sector is likely to underperform in short-medium term.

ACC:
The report said government intervention has rendered the pricing power meaningless. They further downgraded the stock from Overweight to Underweight and set a new price target of Rs 598, implies a downside of 23%.

Gujarat Ambuja Cement:
Same reason as above and stock downgraded to Underweight with a price target of Rs 84.

Grasim Industries:
Same reason and stock downgraded to Underweight with a price target of Rs 1,783.

Ultratech Cement:
This is the worst hit company and the stock has been downgraded to Underweight with a target price of Rs 554.

Companies Declare Dividend to escape Tax

Many companies in India are declaring dividends to escape the higher dividend distribution tax that comes into effect from April-1st.

As man as 15 companies declared dividends today which include but not restricted to,

  • Reliance Industries Ltd
  • Hindalco
  • Kansai Nerola Paints
  • Himatsingka Seide
  • Bajaj Electricals

It will be interesting to see the dividend distribution patterns in PSU enterprises such as ONGC, NTPC and Banks which pay hefty dividends back to the Government. So far none of the PSUs have opted to play this game to escape from tax.

Punj Lloyd advances on bagging project overseas

The 300 KTPA plant, due to start up in the first quarter of 2010, is to be built at Saudi Kayan Petrochemical Company’s petrochemical complex at Al-Jubail Industrial City, Kingdom of Saudi Arabia, and will incorporate technology from Basell GmbH.

The letter of intent is on the basis of a fixed price for contractor’s services and a conversion to a lump sum Engineering, Procurement, Construction (EPC) price, once detailed engineering is sufficiently defined.

Simon Carves is a petrochemical giant with as many as 125 years of experience in successfully delivering plants safely, on time and within budget, to international customers. This project is the 39th high pressure polyethylene plant of to be executed by Simon Carves, Punj Lloyd’s subsidiary.

Recently, Punj Lloyd, along with its offshore engineering arm, PT Sempec Indonesia, a wholly-owned subsidiary, secured an offshore platform project – Heera Redevelopment Project – on an engineering, procurement, construction (EPC) basis from ONGC. The Heera field is located about 80 km west of Mumbai, in the Arabian Sea. The project is scheduled to be completed within 16 months.

The order backlog for the group stands at Rs 11,201.74 crore, and is representative of unexecuted orders till 30 September 2006, as well as all new orders received till date. The company was also awarded a letter of intent for 2,66,000 cb phase III expansion of the bulk liquid products terminals by Horizon Terminals, UAE. The value of the project is Singapore $ 49.65 million.

Punj Lloyd had fixed 6 April 2007 as a record date for splitting the existing shares of Rs 10 each into five equity shares of Rs 2 each.

Punj Lloyd also set up a new engineering services outsourcing firm, Simon Carves India, as a wholly-owned subsidiary. It will initially cater to the group’s engineering requirements. Gradually, the subsidiary will also compete for outsourcing contracts from other companies. Engineering Services Outsourcing (ESO) holds tremendous potential because of robust growth across Europe, Asia and US, leading to significant development in the engineering services sector, the company said.

Reports indicate that India has the potential to garner around 25% of the global ESO pie, worth around $50 billion by 2020. Currently, the ESO market is worth around $15 billion, with India garnering a healthy 12% share, the report added. We have a BUY rating on Punj Lloyd with a price target of Rs 1,400.

Ambani brothers sudden interest in Media

You already know about Anil Ambani’s media ventures from the past one year. His journey began by acquiring controlling stake in AdLabs. Additionally, Anil Ambani bought Rs 1,000 crore worth of SHARES OF TV BROADCASTERS – 10% IN AAJ TAK[TV Today Network] and 6% stake in CNN-IBN shortly after listing.

Today, Mukesh Ambani announced his plans to invest $300 Million in setting up 8-10 TV channels under the leadership of former Star TV CEO, Peter Mukerjea.

It makes strategic sense for Anil Ambani being in the communications business and will very soon step into Dish TV offering. But why is Mukesh Ambani interested in the Media business is every body’s guess and both the brothers no longer care for the Non Compete Agreement they signed ?

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Idea and MindTree – Post IPO

Idea Cellular listed just a while ago around Rs 89, 18% premium to issue price. Considering the recent blood bath on Dalal Street, Investors are recommended to exit atleast half of their holdings in Idea Cellular. Going forward, Idea will have a tough time to battle Airtel and other GSM operators because of Birla Groups involvement in too many capital intensive businesses – Retail and Commodities. Idea will not enjoy the same premium as Airtel and RCom.

MindTree listed around Rs 650 and is trading at Rs 615. Long Term investors[18+ Months] can add more around Rs 550 levels while short term investors can sell off as you have mere 15 shares allotted and consider BUYING TCS at lower levels – Rs 1125.