CP | Dalal Street

IP Growth Declines MoM but Remains Strong YoY

December 12, 20091 min read

Industrial production (IP) growth declined by 1% MoM sequentially on a seasonally adjusted basis, but remained strong at 10.3%YoY in October: This compares with growth of 9.6%YoY (revised upwards from 9.1% earlier) in September and 11.0%YoY in August 2009. The sequential retracement in IP growth in the month of October was largely in line with expectations on account of seasonal factors like the Diwali festival holidays. However, the growth in October was below market expectations (as per
Bloomberg survey) of 12%YoY.

Growth in the electricity segment decelerated to 4.7%YoY in October, compared with 7.9%YoY registered in the previous month. Growth in the mining and manufacturing segments accelerated to 8.2%YoY and 11.1%YoY, respectively. Growth in consumer and intermediate goods was up, while basic and capital goods growth was moderate.

The overall trend in IP growth should remain strong in the coming months. The early indicators for November are showing an accelerating trend – viz automobile sales.

India IPO Reviews and Updates

D B Corp Ltd – Subscribe for Medium Term

December 11, 20093 min read

D B Corp is a leading print media company in India with 7 newspaper, 48 newspaper editions and 128 sub editions in 3 languages (Hindi, Gujarati and English) in 11 sates in India. They have 2 subsidiaries, Synergy Media Entertainment [radio business] under the brand name MY FM and I Media Corp for internet and SMS portals.

D B Corp – Dainik Bhaskar and Divya Bhaskar have Strong brand recognition and wide geographical reach in Hindi Heartland – North, Central and Western India.

Print Media in India:
Readership and circulation is directly correlated with literacy levels that have increased from 62.5% in 2002 to over 73% in 2007. Moreover, 69% of India’s (more…)

Economy, Markets and Macro Views

Valuations Still Attractive for Longterm Investors – Morgan

December 10, 2009April 18, 20203 min read

The biggest debate is about India’s multiple and whether it deserves to trade at a P/E premium to emerging markets. What is the sustainable premium for Indian equities, if any, and whether the current market multiple makes the market vulnerable to relative underperformance ?

On the long-term relative multiple, Morgan’s opinion is Indian equities deserve to trade at a premium (of around 25-30% versus the historical average of 8%) driven by the factors listed below. [This explains their optimistic target in the past.]

India is likely to add around 10 million new workers to its workforce on an annual basis. As the workforce grows, so will the savings and hence the growth rate. This will be the key driver to profit growth (more…)

Equity Research

Cadila’s Healthy Business – Worth a Look

December 9, 20093 min read

Cadila Healthcare has created multiple platforms to ensure stable growth over the medium term. It is one of the largest companies in domestic formulations (3.6% market share) with expanding presence across a number of international markets.

Revenues: CDH is targeting revenues of US$1 bn in FY2011E versus revenues of US$620 mn reported in FY2009. To achieve its sales target, CDH needs to grow revenues at a CAGR of 18% in Rupee terms over FY2009-11E. Expect domestic segment (c.60% of revenues) to grow steadily, export formulations will grow at an (more…)

Economy, Markets and Macro Views

Essar Oil – Focus on Integrated Play

December 9, 20092 min read

Like its enviable neighbor in Gujarat, Essar Oil Ltd too is emerging as an integrated player across the energy chain with value-creation options in refining and upstream.

Essar is upgrading its 10.5mmtpa refinery to 16mmtpa, adding significant secondary processing capacities. The expansion would give ESOIL significant advantages in: complexity allowing ESOIL to process a tougher crude diet (API 24.8), enabling better GRMs; and (2) competitive cost structure. (more…)

India IPO Reviews and Updates

Godrej Properties IPO – Richly Priced

December 9, 2009April 19, 20202 min read

Godrej Properties (GP) is the real estate arm of Godrej Group that has presence in FMCG, industrial engineering, appliances etc. The group reaches to almost 400 mn Indians every day and enjoys a strong brand recall.

Realty Business Model:
It works on an asset-light model by entering into joint development agreements with land owners, sharing its revenues/profits with them in lieu of bringing their land under development. The company has a land bank of 391 acres spread across 10 cities, with more than 50% in Ahmedabad [Previous Mill Land] (more…)

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