Aditya Birla Nuvo - Slower Growth Ahead
Thursday, October 30, 2008Aditya Birla Nuvo's 2Q FY09 net loss stood at Rs1.05bn, vs loss of Rs283mn in 1Q 09. going forward in FY09, the company is expected to report a Loss.
Pending promoter warrants imply ~Rs34bn (~50% of standalone FY08 capital employed) of potential cash infusion for the Co. The warrants are live until Aug '09 but we see low likelihood of subscription as the exercise price of Rs2007/sh is ~4-5x current sh. price. In the absence of promoter funding, we expect the capex & growth plans to be scaled back (partly factored into life-insurance assumptions).
ABNL has a 25% stake in Idea Cellular which yields to Rs 530 / share of ABNL pro-rated. ABNL's financial services business is valued at an enterprise value of Rs686/sh (down 30% vs earlier SoP). Enterprise value of ABNL's remaining businesses stands at Rs431/sh. Net Debt is at Rs 773 / share as we no longer expect the Birla Group management to subscribe to Warrants at 4 times the CMP.
Published by Komal M @ 8:44 AM IST.
Glenmark Pharma
Monday, October 27, 2008Glenmark's 2Q PAT (Rs1.18bn) came in 5% ahead of MLe driven by strong 50% topline growth and stable 30%+ EBITDA margin. US generics business grew sharply by 117% whereas Latam and RoW markets growth is back on track. Revise core earnings estimates by 8-9% to reflect lower margins.
With 35 products in market, US generics business grew 117% YoY (Rs1.76bn) leading to overall generics business growth of 86%. Impact of new launches (out of 40 ANDAs pending approval) is likely to reflect in the next few qtrs. Latam and SRM markets bounced back after a weak 1Q and are expected to show strong growth going forward. Domestic business growth is robust at 17% (vs industry grwth of 11% and guidance of 15%). Milestone guidance maintained for FY09E.
Fully Diluted EPS is expected to be Rs 30 for FY09.
Published by Komal M @ 7:28 AM IST.
Companies List with Stock Price Less Than Cash / Share on Books
Friday, October 24, 2008We are presenting to you the list of companies from BSE-500 which are quoting below the Cash Price / Share in the Books of Accounts.
Company Name Stock Price Cash/Share
Aftek Ltd. 16 32.43
Allahabad Bank 53.1 157.65
Alok Industries Ltd. 17.75 86.56
Andhra Bank 51.15 117.41
Bank Of Baroda 273.55 636.08
Bank Of India 256.45 338.95
Bank Of Maharashtra 27.35 98.16
Bharati Shipyard Ltd. 79.45 82.33
Canara Bank 174.05 442.04
Central Bank Of India 40.25 317.70
Corporation Bank 227.2 621.57
Federal Bank Ltd. 150.75 160.31
Gitanjali Gems Ltd. 105.3 132.02
Hinduja Ventures Ltd. 109.55 145.49
I C I C I Bank Ltd. 365.55 407.17
I D B I Bank Ltd. 68.3 121.26
I F C I Ltd. 22.95 45.67
I N G Vysya Bank Ltd. 180.65 310.66
I V R Prime Urban Developers Ltd. 47.25 56.10
Indiabulls Financial Services Ltd. 106.8 284.25
Indiabulls Securities Ltd. 26.05 42.90
Indian Bank 135.5 157.60
Mercator Lines Ltd. 33.3 36.15
Prithvi Information Solutions Ltd. 38.5 120.49
Punjab National Bank 473.1 609.82
Ruchi Soya Inds. Ltd. 40.75 50.82
State Bank Of India 1324.3 1,402.29
Syndicate Bank 60.1 223.33
Vijaya Bank 31.5 37.25
Published by Webmaster @ 1:17 PM IST.
ECB Norms revised yet again
Thursday, October 23, 2008In a bid to attract capital flows, policy makers have further relaxed norms for ECBs - this is the third time in the last few weeks. Key measures include:
- Permitting companies to bring back the entire US$500mn for rupee expenditure (this was earlier limited to US$100mn for infrastructure companies and US$50mn for corporates).
- Corporates who had already raised ECBs, but were prohibited by earlier guidelines to bring funds in for domestic use, can now bring these onshore. This may have some impact on near-term inflows.
- The minimum avg maturity period of 7 years for ECBs of over US$100mn for rupee expenditure by the infrastructure sector has been dispensed with.
- For telecom companies, payment to obtain licenses for 3G spectrum is now considered an eligible end-use norm for ECBs.
Published by Webmaster @ 12:45 PM IST.
Idea Cellular - Growth Disconnected
Monday, October 20, 2008Idea Cellular's revenue was up 5.8% qoq (47% yoy). EBITDA was down 16% qoq and 20% below estimate. Net income of Rs1.44bn (EPS: Rs0.50) was down 35% yoy and came in 44% below estimate.
ARPU dropped 6% qoq (3% in 1Q) to Rs266 as MOU/subscriber slid 3.5% (+4.1% in 1Q). We suspect this reflects: weaker quality of new subs and seasonality - reduced roaming during the monsoons. ARPM was down 3.6% qoq to Rs0.63/minute.
EBITDA margin collapsed 673bps as network and S&M costs soared 19.4% and 33.8%, respectively. Excluding Mumbai, the margin was down 520bps, which reflects rapid network expansion and brand building costs.
Published by Webmaster @ 5:53 PM IST.
HDFC - Disbursement slips marginally
Sunday, October 19, 2008HDFC - India's largst Housing Finance company reported net profit of Rs5.34bn (higher than our estimate), a ~32% yoy growth on a pre-exceptional basis (17% yoy de-growth including exceptionals). As anticipated, there is some moderation in disbursement growth to ~23% in Q2FY09 from ~26% in FY08 in the context of high interest rates, however approvals have continued to grow at ~26% yoy to ~Rs141.8bn.
Growth in the retail segment continues unabated with individual disbursements up 30%+ yoy. Despite sustained loan growth and elevated property prices & interest rates, HDFC has witnessed an improvement in asset quality in Q2FY09. Gross NPAs and Net NPAs have declined in absolute and percentage terms on a yoy and qoq basis.
Break-up of HDFC's loan book:
Individuals - 54,726 crore
Corporate - 24,509 crore
Others - 1,959 crore
Financing for Realty Projects - 755 crore
Published by Webmaster @ 6:31 PM IST.
Chambal Fertilisers and Chemicals
Chambal Fertilisers and Chemicals' (Chambal's) adjusted PAT of Q2FY09 was better than expectation on the back of a sharp jump in the trading sales, resulting in an addition to the bottom-line. Chambal has shown a YoY growth of 130.2% in the adjusted PAT to Rs985.7m. The company has provided MTM losses of approx. Rs510m on trading creditor of US$170m, payable in July 2009. Hence, the reported PAT was Rs475.7m. Chambal's Q2FY09 has declared a result which is standalone, while our annual estimates are consolidated.
Chambal has shown a YoY growth of 133.5% in sales to Rs17,451.3m, on the back of higher trading sales and fertilizer subsidy due to rising input costs. The company has added three ships in H1FY09 that resulted in a YoY growth of 45.4% in the shipping business to Rs1051.7m in Q2FY09. In Q2FY09, Chambal has charged the interest of capitalized new ships in the profit and loss account, instead of the cost of ships as done earlier. Hence, the interest cost jumped by 112.4% to Rs416.3m. Chambal has received entire outstanding fertiliser subsidies till August 2008.
The stock yields good dividend around 9% if bought sub Rs 40 levels. Investors looking for dividend yield can look at the stock.
Published by Webmaster @ 11:26 AM IST.
Container Corp. of India - Volumes Down - Profits Up
Friday, October 17, 2008In 2QFY09, Concor's sales growth was a moderate 10% yoy due to a 9% improvement in realizations despite 1% volume growth. According to management, Exim volume grew only 3% due to a global slowdown, while domestic volume fell 8.8%. Domestic volume was hit by lower petrochemical volumes and ban on some commodity exports. The PAT for 1FH-Y09 was Rs 425.7 crore
Cost rationalization helped EBITDA grow 26.6% yoy, expanding margin by 383bps to 29.8%. Deployment of new equipment in ICDs and route rationalization helped Concor reduce costs.
Being zero debt and cash rich, Concor has maintained its capex plans despite the slowdown and liquidity crunch. According to management, this approach should help them once demand picks up.
Expect Concor to report an EPS in the range of Rs 67.50 to Rs 68.30 for full year FY09.
Published by Webmaster @ 8:45 AM IST.
NDTV Cash Burn Continues
NDTV Ltd (NDTV) declared Q2FY09 standalone revenues of Rs 739mn (9% YoY), EBITDA loss of Rs 124mn (vs EBITDA profit of Rs 2mn in Q2FY08) & adjusted net loss of Rs 130mn (vs. loss of Rs 40mn in Q2FY08). Losses were due to higher selling & marketing expenses, primarily carriage fees. NDTV recorded consolidated revenues of Rs 1.2bn (68% YoY due to NDTV Imagine's launch in Jan 08), EBITDA loss of Rs 1.1bn (loss of Rs 192mn in Q2FY08) and adjusted PAT loss of Rs 1.2bn (loss of Rs 243mn in Q2FY08).
NDTV De-merger:
NDTV's Board has approved the de-merger of the news business into a separate company. The activities will be split into two groups of companies which will carry out 1) News & other businesses and 2) Entertainment & specified allied businesses.
For one share (face value: Rs 4) held in NDTV, the shareholders will receive one share (face value: Rs 4) of the entity that acquires the news business and continue to hold their current shares.
Published by Webmaster @ 7:39 AM IST.
HCL Technologies - Below Expectations
Thursday, October 16, 2008HCL Tech reported sub 20% YoY growth in U$ revenues to US$ 505 mn (+0.2% QoQ), Rs 23.7 bn (+9.2% QoQ, +38.6% YoY), lower than expectations despite inorganic revenue contribution of ~US$ 7 mn during the quarter.
Operating margins declined by 70 bps QoQ to 21.6%. Net profits (adjusted for ESOP charge) came in at Rs 3.3 bn (+186% QoQ, +18.1% YoY) driven by lower forex losses and higher other income. Revenues from top 5/top 10 clients declined by ~2% QoQ. Onsite Software revenue productivity was down by ~4.5% sequentially.
HCL Tech reported a muted 1% QoQ volume growth in Core S/w (marking the lowest sequential growth in volumes ever). Revenues in Core S/w declining by 0.7% QoQ despite ramp up in a recently awarded telecom deal. For FY09 the company is expected to report an EPS of Rs 21.20 to Rs 21.60.
Published by Webmaster @ 9:34 AM IST.
Capital Expenditure Overrun for Corporates
Wednesday, October 15, 2008Credit Suisse studied some 34 of the large CAPEX projects by various Indian companies and found that the projects are expected to be 19-months behind schedule with 30% cost esclation.
The time overrun is the highest for greenfield steel projects as they are stuck in land acquisition or mine allotment. Excluding them, the average delay is 18 months and cost overrun is 15%. These delays increase the investment getting shelved which in turn adversely affects new capex announcements. India's project execution history in the last 12 years suggests that shelved investment was more than the completed investment and almost a sixth of the announced capex.
Reasons for delay of projects:
- 50% Land Acquisition
- 20% Input Shortage
- 13% Finance problems
- 11% Scope change
- 11% Implementation delays
Going forward expect financing problems to ground or snail's-pace progress of most projects.
Published by Komal M @ 6:34 PM IST.
Larsen & Toubro PAT Up 32.47%
India's leading EPC company Larsen and Toubro - L&T reported a rise of 32.47% in its PAT for Q2FY09 at Rs 461 crore as against Rs 348 in same quarter of last year.
Net sales stood at Rs 7682.20 crore versus Rs 5499.94 crore. The company's E&C revenues stood at Rs 5,989.63 crore versus Rs 4,259.92 crore, Electrical & Electronics revenues stood at Rs 760.48 crore Vs Rs 671.73 crore.
Net Margins declined to 8.8% Vs 10.7% [YoY]. More details will be updated soon.
Published by Webmaster @ 12:51 PM IST.
Axis Bank - Rock Solid Performance
Tuesday, October 14, 2008
Axis Bank reported Rs4.0bn of net profit for Q2FY09. The robust earnings has been driven by better than expected NII and other income. The NII has grown by 55.2%yoy, while other income grew by 81.4%yoy. The operating profit grew 88.9%yoy to Rs8.7bn led by robust growth in the operating income.The liability profile remained strong with CASA maintained at 40% of the deposits. While the assets saw some slippages, as the GNPA increased by Rs700mn over Q1FY09, the provision cover remained strong at 52.6%. The provisions for the quarter were higher at Rs2.6bn driven by a sharp increase in NPA provisioning. The NPA provisioning increased 110.5% to Rs2.4bn in Q2FY09.
Axis Bank is expected to report full year EPS of Rs 41.2 for FY09.
Published by Webmaster @ 1:37 AM IST.
Jaiprakash Associates Warrants - Daredevil Promoters
Monday, October 13, 2008The Gaur family of Jaiprakash Associates can be best categorized as Daredevil promoters in Corporate India, since they went ahead and exercised the 10 million warrants out of the first tranche (of 50 million warrants) at Rs397 per share (more than 400% premium to current market price Rs 80). The promoters had already brought in Rs3.97 billion on 50 million warrants earlier this year, while the minimum they were required to bring in was Rs1.99 billion. The excess brought in has been adjusted against the exercise of the 10 million warrants resulting in the inflow into the company from the holding company of ~ Rs1.6 billion.
We believe that the warrant conversion is a statement by the promoters of their level of confidence in the company. The cash infusion also indicates that the promoters could, over the next 18 months, convert further warrants (40 million warrants at Rs397 convertible by July 2009 and 120 million warrants at Rs249 convertible by January 2010). Any inflow on this account should reduce market concerns on funding issues for Jaiprakash Associates.
Related Reading:
JP Associates Research Note
How Anil Ambani Looted Indian Public Money in Reliance Power IPO
Published by Webmaster @ 12:57 PM IST.
Industrial Production 1.3% - A Shock
Saturday, October 11, 2008Aug 08 India Industrial Production slows to 1.3% significantly lower than expectations and the lowest level seen since Oct 98. While growth was expected to come in lower due to the high base (Aug 07 @ 10.9%), the 1.3% number was a shock. On a sectoral basis, mining did relatively well at 4%, while growth in manufacturing and electricity was 1.1% and 0.8%, respectively. Cumulatively, growth during Apr-Aug slowed to 4.9% vs. 10% last year.
Capital goods was up 2.3% vs. the high base of 30.8% last Aug; Consumer goods held up at 5% but aided by the flat growth last year. What is worrying is the contraction in intermediate goods at -6.2% - the lowest level seen over 13 years. Primary components of intermediate goods include
cotton yarns, filaments, pipes, auto ancillaries, LPG and natural gas, and polyester fibers, paints and varnishes.
Published by Komal M @ 3:42 AM IST.
RBI Cuts CRR BY 1.5%
Friday, October 10, 2008The RBI has cut the CRR by 1.5% with effect from tomorrow. The move is likely to inject more than Rs 50,000 crore liquidity into the Indian Banking system. More details awaited.
Published by Webmaster @ 10:14 AM IST.
Infosys Q2 at 1390 Crore
Infosys Technologies has reported a net profit of Rs 1390 crore for the September 2008 quarter, as against Rs 1074 crore during the year-ago period.
The company's total income has moved up from Rs 4005 crore for the September 2007 quarter to Rs 5143 crore for the September 2008 quarter.
Infosys Stock is currently trading down 11% at Rs 1,116. More details will be updated soon.
Update:
On a consolidated basis, the Infosys' net sales for the quarter ended on Sep-30 rose 11.64 per cent to Rs 5,418 crore from Rs 4,854 crore in the Apr-Jun quarter. Net profit rose 9.98 per cent to Rs 1,432 crore against Rs 1,302 crore in the previous quarter.
Infosys Guidance:
The Management has given a guidance of mere 13 to 13.5% growth for FY-2009, downward revision from 20%.
Published by Webmaster @ 9:58 AM IST.
Slowdown Across The Board - Goldman
Thursday, October 09, 2008Goldman Sachs - GS covers 105 stocks across 15 sectors in India. The research house expects slowdown across the board.
A modest deceleration in sales growth for stocks under GS coverage from 32% in 1Q FY09 to 28% this quarter. EBIT margins to compress from 22.5% in 2Q FY08 to 21.0% in 2Q FY09E (expect FY09E to be the second consecutive year when EBIT margins contract). These factors, combined with higher interest costs, are likely to result in a sharper slowdown to net income. As a result, expect net income to grow by 8% this quarter, versus 21% growth in 1Q FY09.
Sector specfic, expect metals, financials and cement to see a decline in net income this quarter. Utilities, oil & gas, healthcare, real estate and agriculture will see slower growth than last quarter. One-year forward multiples for GS coverage group have compressed sharply since markets peaked in January 2008. This does not mean that GS coverage group is oversold, since static multiples cannot adequately capture a slowing growth dynamic.
Published by Webmaster @ 12:13 AM IST.
CRR Cut + P-Note Restriction Analysis
Tuesday, October 07, 2008Reserve Bank of India (RBI) announced a cut in the cash reserve ratio requirement (CRR) for banks by 50 bp today to be effective from October 11, 2008. The cut is expected to infuse liquidity in the domestic money market which has seen a sharp squeeze as reflected in the overnight interest rates in the money market and high recourse to the RBI by the banks for liquidity recently. Going further, expect the RBI to relax CRR and statutory liquidity ratio (SLR) in order to manage liquidity if global conditions continue to deteriorate and expects the central bank to cut interest rate in 1Q2009.
P-Note Ban and Lifting the same Saga:
SEBI banned P-Notes few months ago and was speaking loud about the know-your-investor etc. However, it has lifted the same in view of the current market conditions to boost inflows into the market. I guess it is time for all the good men to come to the aid of poorly managed affairs in the Government.
Published by Webmaster @ 1:08 PM IST.
Reliance promoters Shareholding - Update
Monday, October 06, 2008Reliance Industries (RIL) has issued 120m shares to its promoters at Rs1,402/share. The shares were issued on the exercise of options attached to the 120m warrants issued preferentially to the promoters in April 2007.
Prior to exercising the warrants, RIL management did some book adjustments on transferring shares held by various group companies as treasury stocks without any voting rights. [Some analysts are unhappy by the way RIL has done this adjustment - price at which group companies benefited the shares etc]
RIL's outstanding shares are up to 1,574m shares. The promoter's stake in RIL is now up to 42.4% from 37.6% after issue of 120m shares. Another 12.6% of treasury shares are controlled by RIL management and held for benefit of all shareholders. Including treasury shares the stake controlled by promoters is up to 54.99% from 51.28% before issue of 120m shares
Published by Komal M @ 11:08 AM IST.
Soft Landing of Economy - Very Likely
Friday, October 03, 2008Amidst Global Financial Crisis, the Indian Economy is likely to end up with a Soft Landing after 5 years of growth. In a report, Merill states that the soft landing is possible only due to lower crude oil prices which will cool of the double digit inflation but the bad news is growth cycle is irretrievably past peak with the return of capacity exhaustion.
Merrill has cut FY10E inflation forecast to 5.5% (from 6%) to price in lower oil
prices, in-line with RBI expectations of 5%. RBI to ease the money market to reverse repo mode (at a higher 6.5% LAF reverse repo rate) from the present repo mode (at the 9% LAF repo rate).
US$90/bbl will likely ease pressure on the government to hike prices drastically. The current account deficit will likely slip to 2.7% of GDP in FY09 (from 3%) and 1.9% in FY10 (from 2.3%). This will put the macro numbers in better shape.
Published by Webmaster @ 12:20 PM IST.
Mixed Auto Sales in September
Thursday, October 02, 2008
Dealer dispatches were again mixed this month with strong dispatches in two wheelers (especially Hero Honda) and relatively weaker trends were visible in the passenger car segment. Two-wheeler dispatches appear strong, aided by strong rural demand, whereas in cars, retail demand continues to be very weak.Hero Honda, Bajaj Auto & TVs Motors:
Hero Honda dealer dispatches were up 23% YoY. Bajaj's domestic sales declined 4% YoY, whilst TVS' domestic sales were very strong up 17% YoY. Hero Honda continues to build inventory levels ahead of the festive season to match demand
Maruti Suzuki:
Domestic sales were up 3% Y/Y driven by strong sales of Swift and Dezire volumes and increase in inventory levels at the dealer end ahead of the festive season in Oct-Nov. Swift sales were up 31% Y/Y. A2 segment declined by 8% Y/Y. Maruti is waiting for the India Babus to get their accumulated Pay Check on Hand so that they can re-launch their Wheels of India marketing campaign again.
Mahindra & Mahindra:
Sept sales rose 17% YoY; driven by strong Utility Vehicles sales (+31% YoY) aided by strong sales of Non-Scorpio segment (+46% Y/Y) which offset weak Scorpio sales (-13% Y/Y). Tractor sales declined by 7% Y/Y.
Published by Webmaster @ 12:40 PM IST.
ECBs Disappointing - BOP as Expected.
Wednesday, October 01, 2008India's 1QFY09 balance of payments played out, more or less, on expected lines. The current account deficit, at US$10.7bn. Notwithstanding a higher trade deficit and FII outflows, other flows continue to be strong. Beyond a robust FDI, invisibles actually surprised on the upside.
The disappointing news is that corporate external commercial borrowings slipped to a paltry US$1.6bn during 1QFY09 from US$7bn during 1QFY08. This reflected, in our view, the double whammy of tight credit conditions. Given that India lacks a local source of project finance, ECBs are critical to financing investment plans. External debt stagnated at US$221bn during the June 08 quarter.
Finally, expect the INR to regain ground in 2HFY09 with most of the adverse factors – risk aversion, oil, and USD strength - likely playing themselves out.
Published by Webmaster @ 12:48 PM IST.
