2007 | Dalal Street

L&T Order + Tata Motors Hike prices

October 10, 20071 min read

Larsen & Toubro has received engineering and procurement (E&P) order for setting up high technology methyl amines & dimethyl formamide plants for Methanol Chemical Company (Chemanol). L&T will also provide the technical services for erection and commissioning of the plant.

Chemanol is a private sector enterprise, operating grass roots, second-generation petrochemical complex located in the Al Jubail Industry city, Saudi Arabia, which manufactures formaldehyde and its derivative products.

Tata Motors has hiked the prices of its vehicles to offset the higher input costs and because of costs related to meeting stricter safety norms.

Breaking Corporate India Earnings News

iGate’s Q2 Results

October 10, 20071 min read

iGate Global Solutions’ net profit surged 124.33% to Rs 23.78 crore on 0.25% rise in sales to Rs 187.86 crore in Q2 September 2007 over Q2 September 2006.

iGate is a subsidiary of iGate Corp, a Nasdaq-listed company. Its services include consulting, enterprise data management and data warehousing, business intelligence and analytics, design, development, system integration, package evaluation and implementation, re-engineering and maintenance.

The scrip had underperformed the market in the one-month to 8 October 2007, adding 5.66% as against the Sensex’s 12.19% gain. It had also underperformed the market in the past three months, declining 11.01% against the Sensex’s 16.53% rise.

The small-cap software firm has an equity capital of Rs 12.66 crore. Face value per share is Rs 4.

Equity Research

TCI + Deccan Chronicle Reports

October 10, 20072 min read

ICICI Securities in a research report has put a BUY recommendation on Transport Corporation of India Ltd and a SELL on Deccan Chronicle.

Transport Corporation of India [TCI]:
TCI is one of the largest players in the domestic logistics industry, has transformed itself from a transportation company to an integrated logistics solution provider. The company has a presence across the entire logistics value chain and is enhancing its role in the high-value supply chain solution (SCS) business.

TCI is the largest integrated player having a 15% market share of the organised logistics industry. Apart from transportation, it operates one of the largest warehousing facilities of about 6.5 million sq. ft. The company has lined up an aggressive Rs 340 crore capex to scale up its business in order to meet increased demand.It plans to increase its warehousing space, buy new trucks, invest in cold chains, and boost its ship fleet strength over the next three years.

At the current price of Rs 115, the stock discounts its FY09E EPS of Rs 7.11 by 16.1x. Given TCI’s leadership position in the organised logistics sector, and transformation to an integrated player, the stock can be valued at 22x its FY09E earnings. Rate the stock an OUTPERFORMER with a target price of Rs 155, an upside potential of 35% from current levels.

Deccan Chronicle Holdings Ltd [DCHL]:
With the entry of Times of India in Chennai, ICICI has downgraded DCHL to SELL from BUY. DCHL would be faced with tough competition in both Chennai and Bangalore from the Times of India (ToI), which is set to foray into the Chennai market in Q4FY08; ToI is the leader in print in India. DCHL’s success strategy of low cover pricing and increasing colour inventory in Chennai is likely to be challenged in Bangalore, which is currently a two-player market post ToI acquiring Vijay Times and Deccan Herald.

ICICI downgrades DCHL from Buy to Sell with a target price of Rs.182 and believe any rise in stock should be used to liquidate positions given the looming aggressive competitive scenario.

Economy, Markets and Macro Views

Indian Indices Hit Record High; Its Raining Money

October 9, 20071 min read

Insance Foreign Institutional Investors are pouring money into Dalal Street as if their is no tomorrow. The Indian Indices BSE SENSEX and NSE Nifty have hit a record high. Currently the SENSEX is up whopping 800 points at 18,293.

It took 8 trading sessions for the Sensex to reach 18,000 from 17,000 after it had first hit 17,000 on 26 September 2007. It had taken just 5 trading sessions to reach 17,000 from 16,000

In a separate development, Ansal Properties & Infrastructure has successfully diversified in the new business of power by establishing & commissioning wind mills with a capacity of 12 MW, at Kutch, Gujarat.

Equity Research

ICICI Bank Retail Expansion – BUY

October 9, 20071 min read

Just a while ago ICICI bank (ICBK) received permission from the Reserve Bank of India to add 400 branches and 2500 ATMs to its current network of 950 branches and 3500 ATMs.

Deposit mix has been inferior to peers among new banks with the proportion of savings bank deposits being about half the average of its peers. This seems to correlate with the slow expansion of branches. At end of March 2007 only 12.5% of the aggregate deposits of ICICI Bank were low-cost savings bank deposits. This proportion changed very little after FY2003 and was substantially below that of peers such as HDFC Bank and Axis Bank. In the four year period ended March 2007 the CAGR in ICICI’s branches was only 14% compared with 31% for the other two.

ICICI Bank is expected to report a fully diluted EPS of Rs 35.54 and 45.15 for FY08 and FY09 respectively.

Fund Manager Recommendations on ICICI Bank:
Sharekhan has a Price Target of Rs 1,175 with a BUY recommendation.
HSBC Has a price Target of Rs 1,084 with NEUTRAL recommendation.

Breaking Corporate India Earnings News

Kavveri Telecom acquires Til-Tek and DCI

October 9, 20071 min read

Kaveri Telecom Products has acquired Til-Tek and DCI, two US companies during the last one year. Til-Tek is a leader in antennas and DCI in RF products and filters. The company has now acquired technology, intellectual property rights (IPR) and patents for base station antennas of erstwhile Sigma wireless, Ireland from PCTEL, Chicago, USA. With this acquisition, the company now has the capability to manufacture base station antennas incorporating the latest technologies on par with the best in the world. Both Indian and global customers would be addressed by the company in this area. This acquisition also gives the company access to customers and vendors of Sigma wireless in Europe. The acquisition also brings into the company’s fold seven international patents.

The company is poised for a 100% growth over last year and has already started building infrastructure in line with the projected growth over the next three years.

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