According to Morgan Stanley, India has the worst macro among Asian countries right now – implying significant probability of tightening. This move is clearly bad for banks – the question is how bad. In Morgan’s view, it’s very bad – don’t be surprised if banks correct by another 25-30% from current levels, even after they have declined 30-50% YTD. (more…)
Month: June 2008
GMR’s Acquisition in Intergen
GMR Infrastructure has acquired 50% stake in Intergen, a power utility with assets in UK, Mexico, Netherlands, Australia and Phillipines, for US$1.1 B. Intergen has an operating capacity of 7,658MW, while its attributable capacity is 6200MW. 85% of Intergen’s capacity is natural gas based, while the rest is coal-based. GMRI has purchased the stake from AIG, while Ontario Teachers’ Fund holds the balance 50%.
Intergen clocked revenue of US$1.6B, EBITDA of US$613M, PAT of US$105M, FCF of US$330M and distributed US$140M dividend in 2007. It appears highly leveraged with gross debt of US$4.3B as against equity of US$600M, but we believe this is not unusual amongst utilities, as it is within the prescribed DSCR of 1.4.
GMR’s Modus Operandi behind Intergen Investment:
GMR has funded its US$1.1B investment via domestic bridge loans at 10.5%. Interest payment should negate US$50 mn of GMR’s estimated share of Intergen’s profits (based on 2007 data). Intergen’s generous dividend payout will go towards debt servicing at least through 2010, in our estimate. Refinancing the loan via forex loans and equity injection would enhance contribution at the net level.
Reliance Power – JPM Initiates Coverage
Finally, we have a brave soul [JP Morgan] initiating coverage on Anil Ambani’s yet to take off shell company – Reliance Power Ltd [RPL]. (more…)
How to Calculate SENSEX Earnings / EPS ?
Many have always wondered how to calculate the Earnings / EPS of Bombay Stock Exchange’s 30 stocks benchmark Index – the SENSEX. It is a very easy and the process is highlighted below. (more…)
Parsvnath Developers – Modest Quarter. Slowdown Ahead
Parsvnath Developers Ltd – PDL reported F4Q08 consol results – sales up 25.5% to Rs5 bn, OPM compressed by 190 bps to 32.8%, which together resulted in 19% fall in net profits to Rs1.07 bn. Full year profits for F08 were Rs4.2 bn (up 45%), versus our estimate of Rs4.4 bn, 5% below consensus estimates.
PDL’s net debt has risen to Rs14 bn (74% net gearing) versus Rs12.8 bn (71%) in F3Q08. Receivables continue to rise – Rs12.8 bn (Rs10.8 bn in F3Q08) – implying incrementally 37% of sales (43% previous qtr).
Land bank is 211 msf (210 msf in F3Q08), area under construction moves up to 77 msf (75.8 msf in F3Q08) and pre-sales moves up to 40 msf (32.8 msf earlier). Ongoing projects include 24 msf of plotted development. The company grossed Rs50 mn in rental income in F08, which it expects to rise to Rs250-300 mn in F09.
Hindalco Industries 1:3 Rights Issue
Hindalco Industries Ltd has informed us that the Company at its meeting held on June 20, 2008, has approved the issue of Equity Shares for an amount not exceeding Rs 5000 Crores to the existing Shareholders on rights basis (“Rights Issue”) to part finance the acquisition of Novelis Inc. The Share Ratio for the Rights issue will be 1:3, i.e. one right of Re 1 each for every three equity shares of Re 1 each held by the shareholder as on the Record Date to be announced later. The price per share for the Rights Issue would be decided by the Board and announced at a later date.