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Year: 2007

Equity Research

Lehman Overweight on Redington India

2 min read

Lehman Brothers equity research which was the first to boldly come out and downgrade the Indian IT Outsourcing companies is overweight on the prospects of Redington India Ltd. Redington is the second-largest IT distributor in India and the largest IT distributor in the Middle East. It has a very good Supply Chain expertise.

The company is poised to exploit the strong and secular growth of IT industry in India and Middle-East. Robust systems and stable management team have led to impressive track record in operating performance. Inventory write-downs have been only 0.03-0.04% for last couple of years whereas bad debts have averaged only 0.08% of sales in last five years. PC market in India is witnessing faster growth of branded computers. High value segments like storage & networking equipments are growing faster (47% growth in FY07) than the industry average (19% growth in FY07). The services business with much higher margins (OPM of around 15%) will continue to gradually increase its share of revenues.

The company has opportunities (more…)

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Breaking Corporate India Earnings News

HDFC Divests 26% stake to Ergo International

1 min read

Housing Development Finance Corporation (HDFC) has agreed to sell 3,25,00,000 equity shares of Rs 10 each of HDFC General Insurance Company (HGICL) representing 26% of the paid-up equity capital to Ergo International Ag. Consequent to the said sale, the corporation would hold 74% of the total paid-up equity capital of HGICL.

The new partnership enables HDFC to successfully grow their existing general insurance operations and further leverage their outstanding brand and distribution strength. Entering the joint venture with HDFC underlines the ERGO Insurance.

Group’s international expansion strategy and offers a direct entry into the Indian general insurance market. Andreas Kleiner, Member of Board of ERGO International AG responsible for Asia, expects a very successful and longstanding cooperation with HDFC.

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Breaking Corporate India Earnings News

HDFC slips after Q2 results

1 min read

HDFC posted 75.60% rise on net profit to Rs 646.39 crore on 51.50% rise in total income to Rs 2205.75 crore in Q2 September 2007 over Q2 September 2007. The Q2 September 2007 net profit was boosted by an exceptional item in the form of Rs 313-crore profit from sale of entire stake in BPO arm Intelenet Global Services.

Loan disbursements rose 27% to Rs 14,275 crore in Q2 September 2007 over Q2 September 2006. The loan portfolio, including loan outstandings and investments in debentures and inter-corporate deposits for financing real estate related projects rose 24% to Rs 63,446 crore in Q2 September 2007 over Q2 September 2006.

At the current price of Rs 2760, the scrip trades at a PE multiple of 29.30, based on Q2 September 2007 annualised EPS of Rs 95.21.

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Economy, Markets and Macro Views

Accumulate Voltas – Cooling business – Hot results

1 min read

Voltas’ strong performance for the second quarter in a row came in as a positive surprise, after soft performance for most of last fiscal. Revenue growth, at ~35% Y-o-Y (to INR 7 bn), on the back of a 30% plus growth across segments. EBIT margins improved in excess of 500bps for both electromechanical projects (EMPS) and engineering agency and services (EAS) segments, tripling the EBITDA to INR 636 mn. Earnings was up 79% Y-o-Y on improved margins of 6% at the net level, to INR 431 mn.

Voltas current order backlog of Rs27bn (up 37%YoY) improves visibility going forward. Voltas won 3 international orders worth Rs7bn in Q208. Management has indicated (more…)

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