CP | Dalal Street

Tata Communications Sale of undersea cable assets unlikely

June 17, 20091 min read

Tata Communications is looking for strategic investors for undersea cable assets, as reported by Moneycontrol.com. This is attributed to the limited options the company has available to raise incremental debt or issue further equity. TCOM had purchased Tyco Global in 2005 for cUSD130m which connects the continents of Asia, North America and Europe. The company so far has invested cUSD600m in its cable assets (HSBC estimates). As per our analysis, the replacement cost of its present undersea cable assets is estimated at cUSD1.3bn.

Undersea cable assets are integral to TCOM’s core business and the distressed purchase of Tyco allowed the company to benefit from significant commercial advantages and scale. Moreover, the company has ramped up managed services capabilities in the recent past, which allow it to leverage its investments in undersea cable assets and drive margin expansion. An undersea cable asset is similar to spectrum (and not tower assets) with mobile service providers (which is the raw material for the mobile business), hence we believe the possibility of sale of undersea cable assets is remote.

India IPO Reviews and Updates

Coal India on disinvestment radar of the govt

June 17, 20091 min read

Riding on its ambitious plan of disvestment of PSUs, the coal ministry is toying with a proposal to disinvest 5-10% stake in navratna PSU Coal India in order to pave the way for listing of the coal giant on the bourses. The coal ministry has informed the finance minister about the development. CIL shares would be allotted to people whose land is acquired for mining purposes and also to the employees of the company.

For the purpose of divestment, the coal ministry is required to introduce a bill to amend the Coal Mines Nationalisation Act in order to facilitate divesting of government’s equity in the company for listing of the entity. (more…)

Economy, Markets and Macro Views

Setback to Reliance Industries in Gas Case

June 16, 20091 min read

The Bombay High Court today gave its judgment on the RIL-RNRL dispute on KG gas and directed RIL to supply 28 mmscmd to RNRL for 17 years at a price of US$2.34/mmbtu. This is lower than the gas price realization of US$4.2/mmbtu as per our current estimates.

Following this decision, this E&P value could reduce to Rs544/share assuming that RIL begins its supply of 28mmscmd of gas FY11E onwards (which is clearly a worst-case scenario given ADAG’s non-readiness of power plants to intake gas). The FY11E EPS could decline to Rs151 in this case from our base case of Rs165. (more…)

Equity Research

Changing Coverage Patern – Your Views ?

June 15, 20092 min read

In the past 3 years you have read us covering about individual companies from various Research entities. Since 2008, research reports have followed the markets, the fall and then the rise. Hence, we got together and have come with a new idea on presenting the coverage that will be more helpful to Investors / Readers. We now propose to overhaul the entire reporting pattern so that Investors can take informed decision and invest wisely.

Here are some tips on how we will be shaping future coverage, (more…)

India IPO Reviews and Updates

Full money upfront mandatory for QIPs in IPOs – SEBI

June 15, 20091 min read

In a bid to make a level playing field in favour of retail investors, the Securities and Exchange Board of India (SEBI) has finally geared to make full payments upfront mandatory for qualified institutional investors (QIPs) when they apply for shares in initial public offers (IPOs). On the other hand, retail investors are required to pay the full amount with their applications. As of now, QIPs are required to pay only 10% of the amount required for the shares for which they apply upfront.

SEBI has focused on a better price discovery since retail investors are inclined to be influenced by QIP participation. The proposal was on the back seat for a year due to the crunch in the IPO market. (more…)

Economy, Markets and Macro Views

Industrial activity reviving April IP

June 14, 20092 min read

India’s industrial production (IP) increased 1.4% YoY, well above the Bloomberg survey of -0.1% but slightly below our estimate of 2.0%. It is quite likely that revised data (due next month) will show the April IP growth at around 2.0%.

The March outcome was revised significantly to show a much smaller decline of 0.8% YoY, compared to the -2.3% announced previously. This means that along with other revised data, the recently announced GDP growth for FY3/09 could revised to be closer to 7.0% from 6.7%. (more…)

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