2008 | Dalal Street

Equity Research

Ruchi Soya Industries – Review

December 5, 20082 min read

Ruchi Soya and Industries Ltd. (RSIL) is largest producer and supplier of vegetable oil and soya foods in India with an annual seed crushing capacity of over 2.9 million MT. RSIL is also a largest player in branded edible oil category accounting for ~19% of Indian market (Nutrela, the biggest Soya foods brand in the country, enjoys more than 50% of the market share).

The branded category of edible oil for the company has grown over 30 percent CAGR since last 8 years from Rs500 crore to over Rs3000 crore in FY08 whereas the share of branded sale to total sales has increased from 19 percent in FY01 to 30 percent (more…)

Breaking Corporate India Earnings News

What Falling Crude Prices means to India ?

December 5, 20081 min read

Crude prices tumbled US$20/bbl in November 2008 led by concerns of a deep and lasting global recession resulting in weakening global demand and strengthening of the US Dollar. The following chart shows 14 year historical Crude Oil prices in USD / barrel.
Refining margins have declined sharply and plunged into negative territory in November 2008 led by demand weakness and sharp contraction in product (naphtha and gasoline) cracks. We could see a short-term rebound from current very low levels but expect refining margins to remain under pressure.

For December 2008, the marketing margin for gasoline at Rs10.9/liter (versus Rs1.3/liter in November and -Rs6.6/liter YTD), the marketing margin for diesel at Rs4.6/liter (versus -Rs0.1/liter in November and -Rs11.8/liter YTD). Subsidy losses on LPG and kerosene were at Rs72/cylinder and Rs16.3/liter for December 2008 compared to Rs217/cylinder and s20.9/liter in November 2008. Since current retail prices result in very high marketing margins, expect the Government to cut prices of diesel and gasoline over the next few days.

Equity Research

Tata Steel – Good Times behind us

December 4, 20082 min read

The Tata Steel group delivered strong results in 1HFY09, due to stronger price realizations across all geographies, higher volumes in India and Southeast Asia, and performance improvements. Tata Steel consolidated PAT for 2QFY09 was Rs48bn. Adjusting for extraordinary items, PAT would be Rs51bn, +180% yoy. EBITDA margins rose 440bps to 18.9% and EBITDA grew 78% to Rs83bn. 2Q also benefited from a 40% decline in interest expense and strong operational performance across regions. Group total volumes were flat yoy at 7.9m tonnes.

From their peaks in July 2008, global steel prices have corrected as much as 50%, with much of the decline occurring in the past two months. Prices have fallen (more…)

Breaking Corporate India Earnings News

Food Price still High – WPI Down

December 4, 20081 min read

For the week ending 22 Nov ’08, headline (wholesale price index, WPI) inflation fell to 8.40% from 8.84% last week.

Contrary to softening of WPI, CPI continued the ascent for the third successive month in Oct’08 and crossed 10% mark first time in almost ten years. Primary food articles grew 10.48% y-o-y. Food grains, cereals, pulses, vegetable, egg, meat and fish are the main drivers of this rise.

Fuel index continues to fall on the back of non-administered fuel components. Manufactured products mostly edible oil, rubber and plastic products and basic metals have witnessed a continuous fall in the recent weeks.

Inflation falling will provide more comfort to RBI to ease the monetary policy and we expect further repo, reverse-repo and CRR cuts.

Economy, Markets and Macro Views

Jagran Prakashan – Newsprint Sales Strong

December 3, 20082 min read

Despite the slowing economy, Jagran Prakashan has demonstrated benefits of market leadership and conservative management in a downturn by posting 18% YoY revenue growth in 2Q.

Jagran reported Q2 FY09 revenue growth of 18%YoY to Rs2.1bn as a 25% growth in local advertising helped it counter slowing growth in national advertising. Company has also said that October was the strongest month on record. (more…)

Equity Research

JP Associates – Wins Profitable Power Project

December 3, 20082 min read

Jaiprakash Associates [JP] has emerged as the lowest bidder for 1.32GW Karchana project with tariff of Rs2.97/kWh beating Adani Power by just 1 paise. JP’s levelised tariff is healthy – Rs2.97 (plus tax) v/s two earlier lowest bids rejected by the UPPCL in April (Lanco Rs2.83) and Jun ’08 (Reliance 2.64).

As the project is won through competitive bidding under case-2 guidelines of the Govt. of India, Sangam Thermal Power Project (STPP) at Karchana will have support to secure land, environment and water clearances. STPP has secured low cost coal (US$26/tn) linkage of 4.68MTPA for 1.32GW (more…)

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