Month: August 2008

TTK Prestige has enviable Real Estate Holdings – Property on Old Madras Rd, Bangalore is right opposite to the upcoming Metro station and is valued at Rs.80cr to Rs. 120cr. The company also has factory properties at Coimbatore and Hosur (apart from Uttaranchal). The Hosur property is huge and production is being shifted to tax free Uttaranchal as well as to less expensive Coimbatore.

Retail Foray: The company operates 180 odd stores which have been opened in the past 12 to 24 months. In retail the new stores start giving top line and bottom line results in 18 months. So the PAT level should move up from the current Rs. 20cr PA levels to an annualised Rs. 35 cr or more in another one or two quarters.

Based on above thesis, the company should be valued at :
Real Estate: Rs. 100cr
Retail Ops: Rs. 350cr (35crX 10PE)
Total: Rs. 450cr

Against this the company is currently valued at Rs. 140cr or so. Market operators say, not to sell away this GEM. The company price should be atleast 2x the current price, ie around Rs. 225 to Rs. 260 per Share.

ONGC Videsh Ltd has announced an agreement to acquire Imperial Energy for all-cash consideration of £1.4bn (US$2.8bn) (subject to regulatory clearance). Imperial is an E&P company with assets primarily in Russia. Imputed EV/boe of US$3.1/boe (2P) makes the acquisition appear positive, though high tax structure hampers NAV. Also, Imperial has been trading at a discount to NAV because of political risk, which could be materially addressed given ONGC’s presence in Russia.

Imperial earns below int’l prices for its crude sales. Under the Russian taxation regime, crude exports are taxed at beyond US$15/bbl Urals US$49,712M.

The offer leaves room open for a competing bid (at >10% higher than current bid of £12.50/share). According to press reports (Reuters), Sinopec is planning to make a competing bid, though ONGC is reportedly willing to up its offer to £15/share in such a scenario. Any aggressive bidding war could make the acquisition NAV neutral at best.

Cumulative rainfall was 2% above normal up to August 20 as per India Meteorological Department – IMD compared with 1% below normal up to August 6. On an un-weighted basis, cumulative rainfall was near stable (0%) up to August 20 compared with 5% below normal rainfall received up to August 6. Aggregate countrywide rainfall was 48% above normal during the week ended August 13 and 1% below normal during the week ended August 20 respectively.

Crop area under cultivation remains weak: Overall crop area under cultivation was 3.1% lower YoY as of August 22 similar to 3.2% lower YoY as of August 17. Area under cultivation tends to be good indicator of the volume growth in summer crop. With about 95% of season’s sowing has already been completed, there is now a very low possibility of achieving normal crop output growth.

Bangalore based realty major Sobha Developers has convened an extraordinary general meeting (EGM) on September 22, 2008, to get shareholders’ nod for its proposed rights issue. The company hopes to mop up Rs 350 crore through the exercise.

The funds will be used for general corporate purposes, including working capital, acquiring land and other needs, the company stated.