2008 | Dalal Street

Mutual Funds Review

HDFC TaxSaver – Fund Manager Analysis

September 17, 20081 min read

We recommend investing by means of SIP in HDFC TaxSaver Fund [ELSS]. Here is a small analysis on how these fund managers adjust the folios to beat the benchmarks even when the markets under turmoil and thus crate wealth for discplined investors like us.

Assume your SIP is on the 15th of Every Month. The Market hit a bottom of 12,676 [BSE Sensex] on July-15th. NAV of this fund on that date is Rs 122.67. On Sept-15th, Sensex is at 13,531 and NAV of this fund is Rs 137.29.

The benchmark index has risen by 6.7% while the NAV of the fund has appreciated by 11.9% between the above two dates [15/7 and 15/9] So this is how with continuous monitoring and shuffling of portfolio the fund managers beat benchmarks. His job now is to fall slower than the markets and he is a winner 🙂

Equity Research

Cummins India – Softening Steel + Weak INR

September 17, 20081 min read

The softening of steel prices to benefit equipment makers like Cummins India. Raw material (mainly steel and cast iron) costs accounted for 64% of the revenues for Cummins India in FY08. In response to the sharp increase in material prices (Steel and Cast iron) in Jan-June 2008 period, Cummins had taken price hikes between 2-2.5% across its product categories in the first quarter. The full impact of these hikes is expected in current quarter. (more…)

Equity Research

Buy IDFC – Modest Valuations

September 17, 20081 min read

SBICap Securities has initiated coverage on IDFC with a BUY Rating due to High Quality and Low Leverage. IDFC is now a diversified financial institution with investment banking / stock broking under its hood by the acquisition of SSKI / Sharekhan and Standard Chartered Mutual Fund.

Infra Project Finance:
Project Finance continues to be the largest contributor in terms of volume and bottom line. Since this business is not a high RoE, valuations are pretty much on the lower side. (more…)

Breaking Corporate India Earnings News

RBI Support INR – NRE Deposit Rates Raised

September 17, 20081 min read

With the rupee weakening to a low of Rs46.8/US$1 and call money rates spiking to 16%, the RBI announced a host of measures late last evening to stem market volatility.

Reserve Bank will continue to sell foreign exchange (US dollar) through agent banks to augment supply in the domestic foreign exchange market or intervene directly to meet any demand-supply gaps.
Increase, with immediate effect, the interest rate ceiling on FCNR (B) deposits by 50 basis points, i.e., to Libor/Euribor/Swap rates minus 25 basis points.
Increase, with immediate effect, the interest rate ceiling on NR(E)RA deposits by 50 basis points, i.e., to Libor/Euribor/Swap rates plus 50 basis points.

Given the volatile market situation, near term rupee weakness is likely to continue and could trade in the Rs45-47 range. Although portfolio flows will likely remain negative, FDI remains buoyant and hence by March 09 INR is likely to be around Rs 43 levels to the USD.

Economy, Markets and Macro Views

ICICI Bank’s Exposure to Lehman Triggers Fresh Sell Off

September 16, 20082 min read

If you are a regular reader here, you may have noticed that we didn’t put out any recommendation to BUY in the past 15 days but had recommended to book profits on rally. Just when everybody thought the worst was over, Frean and Panic has gripped Global Markets with Lehman filing for bankruptcy.

ICICI Bank has exposure of about USD80mn to Lehman Brothers in form of senior debt. This has triggered a fresh round of SELL of in the Indian market though domestic Institutions are BUYING. As Lehman goes under liquidation and the (more…)

Breaking Corporate India Earnings News

Corporate Advance Tax for Q2-FY09

September 16, 20082 min read

We have obtained information about Advance Tax numbers by various corporates in India paid for Q2 of FY09. Here is the list [All figures in Rs Crore],

State Bank of India – 1,560 Vs 1,054
ICICI Bank pays Rs 250 Cr vs Rs 125 Cr
HDFC Bank pays Rs 250 Cr vs Rs 165 Cr
Bank Of India pays Rs 191 Cr vs Rs 150 Cr
Union Bank pays Rs 130 Cr vs Rs 100 Cr
Central Bank pays Rs 220 Cr vs Nil
Tata Steel pays Rs 300 Cr vs Rs 350 Cr
Tata Motors pays Rs 75 Cr vs Rs 190 Cr
TCS pays Rs 115 Cr vs Rs 20 Cr
MRPL pays Rs 100 Cr vs Rs 20 Cr
Indian Hotel pays Rs 44 Cr vs Rs 2 Cr
L&T pays Rs 170 Cr vs Rs 80 Cr
Videocon 25 Cr vs 20 Cr
Reliance 680 cr vs 650 cr
HDFC 290 Cr

Except Tata Steel and Tata Motors, rest have seen an increase in the numbers compared YoY basis.

Advance Tax Numbers for Q1- FY2009.

Update:
Macquarie analysis shows that advance taxes paid in a quarter by a company has no correlation. 75% of the time the advance tax paid in a particular quarter is different from the accounting tax by more than 25%. There is absolutely no pattern – not even a normal distribution, not even a systemic understatement.

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