Indian Equity Research and Investment Strategy
Indian Stock Market have over the last 10 years (and over 1995-2010 too) had a fairly robust correlation with MSCI- India real ROE. India Inc’s ROE (Morgan Capital Index-India) in FY11 will be 16.7%; lower than its 18-year average, meager when adjusted for Cost of Equity (ROE-COE: 3%).
India’s ROE swings have been driven primarily by changes in asset turn: profit margins, leverage, tax rates, and the cost of (more…)
Reliance Capital’s 4QFY10 net profit at Rs645mn, down 79% yoy on lower capital gains booked during the quarter. Also, we saw consolidation of market share across businesses and cost rationalization. But core earnings have consistently grown during last few quarters (at Rs470mn vs. loss of Rs20 mn in 4QFY09). In particular, life insurance and AMC, (more…)
HDFC Ltd reported net profit of Rs9.3B, up 26% y/y, higher than our and consensus estimates. The earnings surprise arose mainly from higher loan growth and better-than-expected margins (spreads improved from 50bp y/y to ~3.5%). For full year FY10, net profit increased by 24% y/y to Rs28.2B.
Margins even adjusted for the sale of loans to HDFC Bank improved by 20bp to 3.3%. The dual rate loan re-introduced recently would (more…)
The battle for scarce Natural Resource – Gas between RIL’s Mukesh Ambani and RNRL’s Anil Ambani is expected to end with the verdict of APEX Court in the next few days. Lets look into the impact for both the companies.
Favorable result for RNRL – immediate gas as at US$2.34/mmBtu. Assuming RNRL wins a direct verdict (more…)
JP Associates Group Company Jaypee Infratech is open for subscription in $500 mn IPO. JP Associates is the ~100% Promoter of Jaypee Infratech. The company holds the concession from the Yamuna Expressway Industrial Development Authority (YEA) to develop, operate and maintain the Yamuna Expressway in Uttar Pradesh, connecting Noida and Agra (165km). The concession also provides for the right to develop 25 million square metre (approximately 6,175 acres) of land along the Yamuna Expressway at five locations for residential, commercial, amusement, industrial and institutional purposes.
The Yammuna Expressway is expected to be complete by 2011 (more…)
SJVN, a hydro electric utility, is tapping the equity market with the Government of India being a 75% stake holder and Government of Himachal Pradesh will continue to own ~25%. The current offer is Offer for Sale by the Government, that means the company will not get any Money.
Company has experience in the development, execution and management of mega-hydroelectric projects in difficult terrains, which will help the company in developing future projects. SJVN commissioned India’s largest hydro project, the 1,500 MW Naphtha Jhakri (more…)