CP | Dalal Street

India-consumption story continues

September 12, 20091 min read

Industrial growth in July-09 at 6.8% continues to surprise us on the upside. The strong growth in Jul-09 took place despite softening of growth in the core sector and continued strong contraction in India’s exports.

In step with our expectations, growth in consumer goods (8.8%), both durables (19.8%) and non-durables (5%), has strongly accelerated. At the same time, growth in basic goods (4.8%) decelerated and capital goods (2%) retained low growth.

Analysts have raised our FY10 industrial production growth target last month from 5.4% to 6.5%. To achieve this target, industrial growth for the rest of FY10 needs be 7.4%.

Economy, Markets and Macro Views

GMR Infra – Fund raising post QIP failure a surprise

September 12, 20091 min read

GMR Infra shared its vision to grow at a rapid pace and with a hurdle rate of 16-18% IRR from new projects. The management believes dividends from InterGen would be sufficient to pay off acquisition debt.

GMR Infra revealed plans to raise a whopping INR75bn over FY10-12 even as medium-term requirement for projects under development is only INR28.5bn as per GMRI’s estimates. (more…)

India IPO Reviews and Updates

Divestment agenda – NTPC next on radar

September 10, 20092 min read

Keeping its agenda of disinvestment rolling on, the government is in full speed to finalise stake sale proposals. After power major NHPC and petroleum PSU OIL, the government is now getting ready the plans to dilute 5% stake in the power PSU NTPC. Current holding of the government in the company stands at 89.5% and its plans to bring the same down to 84.5%.

The power ministry is understood to have already completed the formalities relating to due diligence procedures and (more…)

Economy, Markets and Macro Views

Allahabad Bank – Re-rating in th offing – Reliance Equities

September 10, 20092 min read

After Quick Gun Murugun’s recommendation on Oriental Bank, yesterday its time to review Allahabad Bank today.

In the last few quarters, Balance-sheet restructuring both on the liabilities and the asset side will aid margin improvement. Fee income is set to gather traction, given the thrust on fee income and implementation of the bank’s core banking solution (80% business is currently under CBS). The bank’s conservative approach of putting cyclical treasury gains to good use, shoring up the provisioning buffer and wage revisions should hold it in good stead.

After a subdued FY09, when earnings declined 21%, Analysts expect (more…)

Economy, Markets and Macro Views

Oriental Bank of Commerce – Quick Gun Morgan’s Recommndation

September 9, 20092 min read

Quick Gun Morgan, the Leading Researcher for other Western Financial institutions, has started its coverage on the long forgotten Oriental Bank of Commerce – OBC. In a report released just minutes ago, Murugun emphasizes on OBC’s net interest margin (1.8% in QE-Jun 09) is the lowest in their coverage universe. Its margins have declined by two percentage points since F2004 primarily due to a collapse in bond spreads.This trend is (more…)

Equity Research

Colgate Palmolive – Tax issues hit on EPS

September 8, 20091 min read

Income tax benefit on Colgate’s manufacturing unit at Baddi is set to reduce from 100% to 30% from FY11 onwards. The management has clarified that no further investments would be made to restore these benefits. We expect the company’s effective tax rate to move up to 25% from 16% currently and cut earnings estimates by 7-9% over FY11-12CL.

Colgate’s conservative pricing strategy (realisation growth was only 2% in FY09) has been a key growth driver in FY09. While the softening in key inputs has helped the company, management expects a sequential rise in prices of key inputs viz. Sorbitol, packaging (tubes) in the coming quarters. (more…)

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