Indian Equity Research and Investment Strategy
Yesterday we covered Global Fund Managers views on the Indian Macro. Today we will cover directly on the equity markets, which is probably more interesting to you. Major drivers for Indian equity markets in FY10 would be liquidity flows and change in earnings.
A majority of the fund managers [65%] feel that the markets are fairly valued at the current levels. 20% rated Indian markets as Overvalued however, there are some other 15% who said that they are undervalued. (more…)
Panacea Biotec sales from vaccines stood at Rs1050.4mn which is a growth of 15.5% YoY and a 13.1% QoQ decline. Despite delays due to programmatic changes in Global Polio Eradication Initiative (GPEI), supplies have begun and the inventory at the company’s end is being reduced. Expect contribution from vaccines segment to increase substantially by Q4, as Pbio shall begin servicing its new UNICEF order for its Pentavalent EasyFive vaccine worth $222.4mn for supplies over 2010-12 from January 2010.
The management re-iterates that a vaccine to combat Swine flu is the offing and could be ready by the end of the current fiscal. In India, only 2 other company besides Pbio, viz Serum Institute and Bharat Biotec have received the virus strain for H1N1 flu from the UK-based National Institute for Biological Standards and Control, for development of the vaccine.
The company has a huge debt of debt of about Rs7.4bn weighing on the stock price.
In the past 18 months, we have already told you that Analysts & Fund Managers views have always followed markets but not lead them. However, with signs of stability if not growth, fund managers views become important. In the light of these developments, we have refined few dozen reports and here is what these wealth managers are of the opinion of Indian Macro Environment.
We will cover the opinion of all the Billion Dollar Fund Managers View on Equity Markets (more…)
GPIL’s adjusted net profit was lower-than-expectations at Rs24.9mn, declining 92.7% YoY and 80.7% QoQ. This was primarily on account of (1) lower price realizations from power which dropped almost 50% QoQ to Rs3.5 per unit, (2) 10% QoQ decline in power generation to 70.9mn units (3) 13% QoQ decline in production volumes of sponge iron to 60680 tonnes.
Net Sales was reported at Rs1531.1mn, declining 53.8% YoY.
However, analysts expect a significant improvement in earnings only from Q4FY10. GPIL’s 600,000 tpa pellet plant and an additional 20MW power plant are expected to get commissioned in Dec’09. This along with ramp up in iron ore mining is likely to significantly expand GPIL’s margins and earnings from Q4FY10.
In FY11, increased utilisation of its captive raw material assets (iron ore mines and pellet plant) and increased power generation are expected to not only lead to significant growth in GPIL’s earnings but also reduce the past cyclicality in its earnings. GPIL is expected to earn an EPS of Rs 18 and Rs 40 for fy10 and fy11 respectively.
IRB Infra could largely benefit from the road infra-layout of the Government if it continues to exercise restrain and focus on bagging high RoEs orders only. The company is embarking on a new strategy that could give it additional management bandwidth for execution.
NHAI appears to be on course to award road projects at a run-rate of 4,000-6,000 kms per year for the next five years. With a market share of ~8% for projects awarded so far, IRB could largely benefit from the increase in road projects.
2QFY10 results were ahead of estimates primarily on better than expected margins. Construction margin at 20.7% recorded an improvement of 230bps QoQ.
EPS estimates of IRB Infra:
Nomura – 10 and 13 for fy10 and fy11 respectively
Deutsche Bank – 12 and 17 for fy10 and fy11 respectively
UBS – 11 and 13 for fy10 and fy11
Kotak – 11 and 14 for fy10 and fy11 respectively
It appears to be slightly higher at 240 levels.
GVKPIL announced that its board approved acquisition of a 12% stake in Bangalore International Airport Ltd for consideration of ~Rs4.846bn from Flughafen Zuerich AG. GVK intends to fund the acquisition via debt. The company has also recently raised ~$150mn through the QIP route.
Bangalore airport is the 4th largest airport in India in terms of passenger traffic handled – it handled 9.2mn passengers in 2008. The airport is spread over 4,000 acres of land; with 215 acres of land earmarked for commercial development. (more…)