The long awaited revision to the WPI series was finally effected today with the release of the August inflation numbers. What’s changed ? At the top level – Primary articles 20.1%, Fuel 14.9% and Manufactured Products 65%. The key changes visible are – Increase in number of items from 435 to 676 items (2) 62% of the index comprises new items with
the manufacturing component seeing the maximum change (3) Increase in the number of price quotations from 1918 to 5482. All of these changes are positive and will help in making the WPI more broad-based and representative of the (more…)
Month: September 2010
India Road Sector – Contracts Rise- Execution to Catch Pace
Roads – The Most Basic Infrastructure which India Lacks today will be different few years from now. Following lackluster award activity over the past decade and modest improvement seen in FY10, award activity saw significant uptick in April- July 2010, at about 2,800 Kms, averaging 23.5 Kms/day (vs about 3,000 Kms in FY10). Although execution has been slow (averaging 4.9 Kms/day over the same period), we believe it will pick up substantially in the post monsoon season given current low bottlenecks on financing and construction.
Driven by regulatory and policy changes for the roads (more…)
L&T IDPL to slow project adds
Post L&T IDPL analyst meet we reiterate that Hyd. Metrorail (HMR) project may generate equity IRRs of 14-17% as a 24% hike in its project cost compensate for higher traffic / realty estimate. IDPL made a good pitch to improve visibility esp. of HMR. With Infra portfolio of Rs400bn IDPL intends to focus on execution v/s wins. A two year EPS CAGR of 27%, creation of growth vehicles in power (more…)
Kotak Mahindra Bank- Review
Kotak looks set for ~40% loan growth in the medium term, given its small base and deposit traction. We see its niche franchises keeping NIMs > 5%, with operating leverage the other major earnings driver. Comparisons with the histories of India’s three biggest private sector banks also indicate an inflection point.
The signs are that the worst is probably over for flow businesses. It’s unlikely to be the game-changer, but the positive surprise could act as a near-term catalyst. Kotak’s integrated bank-broking approach, we believe, gives it a competitive edge on customer (more…)
What are Indians Doing With Their Savings ?
Data from a large FII suggests that Households have essentially shifted out of low yielding bank deposits, fixed income funds in 2010, and put their cash into a variety of higher yielding assets. Indians have been buying small savings schemes (up 200%), property
(+144%), gold (+90%), equities (up seven fold albeit from a low base), and new insurance schemes (+37%) in the first half of 2010 compared to the same period in 2009.
Risk appetite seems quite good if the increase in flows (more…)
Indians Obsessed with Gold Despite Lower Long Term Returns
Indian’s Obsession towards Gold has increased in the past 5 years despite rising prices. Data suggests that demand for Gold has been secular and is not linked to either inflation or alternative investment opportunities.
IN the last 4 years, Gold has performed largely in line with Sensex and has delivered a better risk-adjusted-return, suggesting that the relationship could endure for some time to come. (more…)