CP | Dalal Street

Rural Electrification Corporation – REC – Subscribe

February 19, 20082 min read

Rural Electrification Corporation – REC is a public sector financial institution and a non-banking financial company (NBFC) providing fund and non-fund based services to clients engaged in various aspects of generation, transmission & distribution and related activities in power sector in India.

The company was founded with the sole objective of extending finance to and promoting power projects and related activities in India. The company occupies a key position in the government’s plans for the growth and development of the Indian power sector, especially in rural areas. It has played and will continue to play a key role in the implementation of government policies and programmes. (more…)

Economy, Markets and Macro Views

Goldman Sachs Underweight on India

February 19, 20082 min read

In a report released just a while ago, Goldman Sachs [GS] has maintained UNDERWEIGHT on India stating – India has sold down but other markets have corrected as much or more. The growth /inflation /rate /currency tradeoff is less favorable now than it was in 3Q07, when the market began its last bull move. Earnings growth, while good, is not likely to surprise positively.

Goldman Sachs estimates valuation support at 15x P/E, which equates to 20% downside or a range-bound market to end-2008. (more…)

Equity Research

Siemens Premium Unjustified – Reduce

February 18, 20082 min read

Siemens India’s Annual Report clearly highlights shift of revenue mix to project execution higher proportion of bought out items, also explain lower margins. Projects are being executed with high proportion of bought out components reflecting in lower margins that Siemens has reported in the y/e September 2007 (particularly in the power segment where execution of Qatar orders contributed to strong revenue growth).

Siemens’ annual report highlights that it maintains significant net sell position through forward contracts in US Dollar and Qatari Riyal to hedge its likely exports revenues in these two currencies. (more…)

Mutual Funds Review

HSBC Emerging Markets Fund

February 18, 20081 min read

With the Indian Government opening gates for Indian investors to invest in securities abroad, we have seen AMCs hitting the market with International Opportunities Fund, Emerging market Funds etc.

HSBC Emerging Markets Fund (HEMF) is an open-ended scheme seeking to provide long-term capital growth by investing in emerging economies the world over. The fund would invest both within and outside India, in equity and equity related instruments, share classes and units/securities issued by overseas mutual funds or unit trusts. Outside India, the fund would focus on emerging economies such as Brazil, South Africa, China, Russia, etc.

Diversification across various emerging markets sounds like a great idea. However, you need to take the SIP route for maximum benefit and I am wondering how can you manage several SIPs ? If you can spare at least an additional Rs 3,000 / month, then we recommend you to go for it else, focus on existing SIPs.

NFO – Open. Closes on 25th February
Initial Min. Investment – Rs 10,000
SIP – Available and Recommended. Opt for Growth.

The fund is not for short-term nor medium-term investors with a horizon of less than 5 years.

Breaking Corporate India Earnings News

UTV Software – Disney Hikes Stake – Analysis

February 18, 20081 min read

The Walt Disney Company Limited (Disney) has increased its stake in UTV to 32.1% through a preferential share allotment of shares (9.4m) for US$203m at Rs860.8/share. UTV promoters will be issued 4.5m warrants at Rs860.8/share. Disney and UTV will be equal partners, each with a 32.1% stake with Ronnie Screwvala retaining management control.

Induction of a technically and financially strong partner like Disney is likely to bring significant synergies and value to UTV’s existing businesses. The deal dampener, however, is the pricing, which is significantly below the market expectation. We are also surprised by the extent of funds raised, which is considerably above past requirements stated by management.

Synergies with Disney will definitely flow through, although the extent and timing remains uncertain at this point in time.

Breaking Corporate India Earnings News

Reliance Power Bonus Issue on Feb-24

February 17, 20081 min read

In an effort to live up to the expectations of small investors, Anil Ambani along with his core team in Reliance Power Ltd met just a while ago and have decided to convene a board meeting to issue Bonus shares to IPO investors excluding the promoter group.

Our analysts are quick to point out that the Bonus shares may get locked-in or may come with some clause to make the investor hold the shares for long-term. Lets not take the route American economy has taken for FREE and EASY Lunch. Let Anil Ambani strive, build and make Rel Power operational in record time to win the hearts of our rigid analysts.

Consider this as Tina Ambani’s gift for Reliance Power shareholders and also to save the ADAG group brand name which took a severe beating ahead of Reliance Infratel IPO.

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