We have got the Basis of Allotment for Pipavav Shipyard Ltd. The issue was not a BIG Success and hence retail portion was OVERSUBSCRIBED by mere 2.7 times. Here is the complete chart. (more…)
Author: CP
Sell SENSEX on Better Earnings – BofA Merrill
BOFA- Merrill Lynch says that the earnings season for quarter ended Sept 30, 2009 will be good despite headline Sensex net profit showing a drop of 18%. Firstly, the metals companies distort growth. Ex-metals, the EBIDTA growth is near 20% and net profit growth 9.4%.
Earnings will surprise estimates and will see some upgrades. However, current stock prices seem to factor in lot of the positive surprises with valuations (more…)
Analysis – Grasim Samruddhi Cement Restructuring
Grasim Industries announced a 3-step process for consolidating its cement business with its 55% owned cement subsidiary Ultratech, which will create India’s largest cement company with capacity of 49 mtpa (FY10E). As part of this consolidation, Grasim will:
1) transfer its cement division to Samruddhi Cement, a wholly owned subsidiary.
2) Issue shares of Samruddhi Cement to the shareholders of Grasim in the ratio of 1:1. This would reduce Grasim’s stake in Samruddhi from 100% to 65%, with the balance owned by Grasim shareholders. Management expects Samruddhi to be listed by 4QFY10. (more…)
Inflation double digit WPI inflation by Mar ’10
For the week ending 19 Sep ’09, headline inflation (the wholesale price index, WPI) stood at 0.83%. Inflation for the week ending 25 Jul-09 was revised to -0.71% (from -1.58%).
In a shocking move, all major constituents of the WPI index – primary, fuel and manufacturing products – registered a w-o-w rise.
Government Blind Spectator to Food Inflation – Food inflation continues to move up. Price rises were noticeable for vegetables, egg, meat and fish. Food grains, pulses and fruit prices witnessed a w-o-w fall.
India’s monetary authorities face a quandary. On the one hand, signals for monetary tightening are everywhere: strong pick-up in WPI inflation, double digit CPI inflation and significant liquidity overhang. On the other, a subdued global growth outlook, lack of strong domestic growth and the government’s large market borrowing program point towards maintaining an easy monetary policy. While we expect the RBI to start tightening much ahead of the G-3 (Euro area, Japan and the US), the tightening is unlikely to start before late FY10. In the meanwhile, in a bid to manage inflationary expectations, the RBI’s communications are likely to turn increasingly hawkish
OIL India – Hold – Target Rs 1200 – Motilal Oswal
Oil India Limited (OIL), engaged in exploration, development, production and transportation of crude oil and natural gas in India listed on the exchange today and we had a SUBSCRIBE Recommendation for the IPO. OIL has 2P reserves of 974mmboe, with ~94% of these located in North East India. It has 26% stake in Numaligarh Refinery and 10% stake in the under-construction Assam Gas Cracker Project, Brahmaputra Cracker and Polymer Limited (BCPL).
The management has indicated annual growth of 4-5% in oil production (currently (more…)
Consolidation of Banks – Finance secretary
The issue of bank consolidation has figured once again with the government saying that public sector banks would need to merge into bigger entities in order to improve upon their competitive strength as the banking industry in the country is opened more liberally to the global banks.
Finance secretary Ashok Chawla said on the issue on Tuesday that subject to synergy and reasonable similarity in culture, public sector banks really needed to look at consolidation and merger over next 5-10 years. He added that in order to support the growth of the economy at 9-10% size was a very important factor.
A number of government committees including the committee on financial systems, whose recommendations laid down the foundations of financial reforms in the country, have earlier argued in favour of greater consolidation. As India opens up its financial system on a growing basis to foreign institutions, in line with commitments made at multilateral trade negotiations and general intentions of the government itself, it has been felt by various quarters that India should have larger domestic banks that can be comparable to global majors. Government of India, Indian Banking Association and Reserve Bank of India (RBI), have all from time to time batted for greater consolidation.
Recommending the consolidation, the finance secretary said, ‘Size is important in today’s world to achieve optimum economies of scale and therefore as a general prescription it would be good for the medium size banks to look at where there are synergies where there are cultural fits and carry forward the process of mergers and acquisition which is essential something which the banks and management have to take a call on.