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Equity Research

ILFS Puts a REDUCE Recommendation on Patni Computers

November 1, 20061 min read

IL&FS has initiated coverage on Patni Computer System Ltd with a REDUCE recommendation. It is another way to SELL and Exit. ILFS in its research reported stated,
Therefore we maintain our ÂReduceÂ rating on the stock and recommend a shift from Patni to other large players like Infosys and Satyam. Also note that the management guidance for the next quarter is 0.2% growth in revenues for QoQ and 8% sequential FALL in net profits. Patni’s problems are evident from this blog posting where one of the professors on the board of Patni is not so bullish on India. These are Patnspecificic problems only.

However, DalalStreet.Biz is not very bullish on Satyam with a one year target price of Rs495 which leaves limited upsidpotentialal on your investments and DalalStreet.Biz recommends a BUY on HCL-Technologies with a price target of Rs750 in a year.

The entire report by ILFS on Patni can be accessed here.[PDF]

Economy, Markets and Macro Views

Reliance Money brokerages are Lowest in India

November 1, 20062 min read

A fortnight ago, we first broke the news of Reliance Capital Ltd entering brokerage services through their arm Reliance Money and not RTrade or Reliance Trade as reported by section of the press.

Reliance Capital Limited promoted Reliance Money’s brokerage structures are available with us. Reliance Money is offering a brokerage charge of 7.4 paise on every Rs 100 worth of delivery based trades, and 2 paise on non-delivery trades (a.k.a Intra Day) which rival brokers admit is the lowest in the industry so far.

Reliance Money will offer a common platform for investors to invest in all equity products, commodities, forex, IPOs, insurance and other financial products.

Retail brokerage houses fear that Reliance Money may rewrite the rules of the broking business, distorting business dynamics in the short term. This move will have a direct impact on the bottomline of speculative company like Indiabulls Financial Services Limited and India Infoline Limited.

Reliance Money is offering prepaid cards of value Rs 500, Rs 1,350 and Rs 2,500. An insider has tipped that a Kolkatta based brokerage house is coming with flat fee unlimited trades package. I will get you the details soon. Reliance has also launched a Credit Card in association with CitiBank.

For Details Contact: Jaya @ 98675- 70030. Tell her you were referred by DalalStreet.Biz WEBSITE to get an attractive offer.

Tags: Dalal Street, Invest India, IPO India, Reliance Capital

Equity Research

RBI Raises Interests Rates in India

October 31, 20061 min read

The Indian centarl Bank, RBI, just a while ago has raised the Reverse Repo Rate by 25 bps. This is likely to have a direct impact on Real Estate as well as Equity Market lending. Banks. who have been aggressive in the market are likely to be hit in the short term.

Equity Research

BSE India goes local in Hindi

October 30, 20061 min read

We finally notice that Indians have realized the value of vernacular localization after MSN by developing the Mumbai Stock Exchange’s website in Hindi. You can visit the website here. MSN has Kannada, Tamil and Telugu versions of their portal for Indians. When will DalalStreet.Biz go in Hindi 😉

Economy, Markets and Macro Views

Retail Investors can AVOID Info Edge India IPO

October 30, 20061 min read

As promised, I looked into the finer details of draft RHP of Info Edge India Limited. I feel it’s very risky to apply and hence recommending all small investors to avoid. You can read the details about this in our IPO section.

India IPO Reviews and Updates

Avoid Info Edge Limited IPO

October 30, 20062 min read

Info Edge India Limited IPO opened for subscription today. We feel the company is a little bit shady in disclosures. Requests for past quarterly results and second quarter results went unanswered.

Info Edge is a pure Dot Com Classifieds play. It generates 90% of it’s revenues from Naukri.Com and is a leader with upto 50% market share. Business World in its estimate expects the online job search market and online matrimony market to grow at 35% YoY. Also with poor internet penetration in India, don’t expect exponential growth.

Earnings Analysis:
According to our analysis, annualizing the first quarter PAT, we expect an EPS of Rs 7.64 for FY2007.
FY2004 – Income=9.076 EPS=1.12
FY2005 – Income=19.472 EPS=0.15
FY2006 – Income=84.057 ESP=6.08
FY2007 – Income=117.2 EPS=7.64 (Expected)

The Hindu Business Line Analysis says,
Investors with a high-risk appetite can consider taking an exposure in the book-built initial public offering of Info Edge (India).

DalalStreet.Biz recommends a AVOID recommendation on Info Edge India Limited. Why ?

The revenues of Dot Coms are highly unpredictable. In 1999-2000, companies like Yahoo!, eBay and Amazon made waves, because they had a sound business model and that’s why they are still leaders today. Pure classifieds is a risky business as tomorrow social networking sites will come up with targeted classifieds which will be more effective. Also note that Info edge India Limited issued shares in September-2006, to Sherpalo Ventures and Murugan Capital, VCs from the Valley at just Rs245. If the VCs had confidence in the management why aren’t they picking stake at Rs 290 to Rs 320 per share ?

Worldwide, any Dot Com that is a leader is only because of innovation and the Patents it holds. Info Edge, unfortunately doesn’t hold any patent. Free classifieds like kijiji have gained lot of momentum in India which can threaten the whole revenue model of Info Edge. Considering all this background and the pricing which comes at price-earnings multiple at the lower- and upper-end of the price band works out to 43-50 times its consolidated 2005-06 per share earnings on its existing equity base and, the company’s price/revenues at 7-8 times are higher than the mid-cap software industry average. Instead buy any of the other IT companies available at attractive valuations.

We recommend investors not to subscribe to the IPO of Info Edge India Limited.
Disclosure: We are not applying.

Tags:IPO India, Invest India ,Info Edge India

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