Punj Lloyd – Recurring PAT 41% + Strong Order Book

Punj Lloyd’s 1QFY10 PAT at Rs1272mn up 30% YoY was 41% ahead of CIRA estimates of Rs902mn on better-than-expected margin expansion of 188bps v/s CIRA expectations of +51bps.

The company booked Rs99.4bn of orders in 1QFY10 taking the order backlog to Rs279bn up 38% YoY v/s CIRA expectations of Rs275bn. Execution was in line with expectations with sales of Rs29.5bn, which was more or less in line with CIRA expectations of Rs29.1bn (more…)

Canara Robeco F.O.R.C.E Fund

Canara Robeco Mutual Fund launched Canara Robeco F.O.R.C.E Fund – an open ended equity fund. The new fund offer (NFO) is open for subscription from 20th July 2009 to 18th August 2009. The scheme will re-open for continuous sale and repurchase within 30 days from the date of closure of NFO.

The scheme will be benchmarked against S&P CNX Nifty. The NFO price for the fund is Rs.10 per unit.

The feature of the fund is to provide long-term capital appreciation by primarily investing in equity and equity related securities of companies in the finance, retail and entertainment sectors. (more…)

Bank of baroda – High Profits, Modest Quality

While BOB’s 1QFY10 profits were up 85% YoY, well ahead of our 48% expectation, they did disappoint. The primary drivers of the beat were trading gains (pretty common in the quarter) and equity/offshore portfolio write-back (less common in the quarter). The
profit camouflages core P&L pain, whereas a simple reading of the results does
not. The BS does feel a bit of strain too, but did a little better than expectations.

Margins for the sector have suffered a little ahead of expectations. BOB’s are down almost 32bps YoY (48 bps QoQ) and it appears to be among those that have suffered most. Fee incomes have also been relatively wobbly, culminating in pre-provisioning operating profits falling 24% QoQ (up only 7% YoY). This is disappointing, and while management expects a reversal in the rest of the year, it will likely be of modest means relative to the quarters hit.

With management suggesting a relatively cautious outlook, the stock only looking moderately attractive on valuation, and no real big directional upside/downside.

Adani Power – Dirty Energy – Avoid

Adani Power Ltd (APL) is a power project development company and plans to add 6,600MW power generation capacity by FY12 with total capital cost of Rs284bn.

Adani Global, a wholly owned subsidiary of AEL, has entered into agreements with holders of long-term exploitation licences to exclusively mine coal in Bunyu Island, Indonesia.

All of Adani’s Power plants will be COAL based which is globally considered as Dirty Energy. The Indian Government is mere spectator with its flawed energy policy by not encouraging renewable energy and dancing to the tunes of Dirty Energy producers. Worldwide, dirty energy plants are forced to shutdown and Wind Power Mills are established and Suzlon is cashing on the same. (more…)

Direct tax growth plunges to 3.65%

Showing the impact of economic slowdown, the net direct tax collections during first three months of the fiscal registered a marginal growth of 3.65%. The government said in a statement that collections in the April-June period stood at Rs.59,465 crore, up from Rs.57,373 crore in the same period last fiscal.

At the disaggregate level, growth in Corporate Taxes was 3.31% (Rs.35,709 crore as against Rs.34,566 crore), while Personal Income Tax (including FBT and STT) grew at 4.38% (Rs.24,564 crore as against Rs.22,782 crore).

Lower growth in net tax collection was mainly on account of higher tax refund outgo of 52.01% at Rs.17,600 crore in the present quarter as against Rs.11,578 crore in the first quarter last fiscal, according to the government.

Fringe Benefit Tax (FBT) recorded a negative growth of 7.56% (Rs.1,031 crore as against Rs.1,115 crore) and Securities Transaction Tax (STT) declined by 9.90% (Rs.1,462 crore as against Rs.1,623 crore) compared to the corresponding period last fiscal.

During the month of June, net collection during stood at Rs.35,307 crore compared to net collection of Rs.34,533 crore during June 2008. Growth in Corporate TDS was 12.1% (Rs.19,584 crore against Rs.17,477 crore last year) and non-government PIT TDS growth was 12.4% (Rs.21,188 crore against Rs.18,849 crore last year) over the month of June.

Buy the Dips – Target 17,000 Morgan Stanley

FII ownership is coming off a 5½ year low and is well off the peak. Mutual
cash balances have reduced over the past three months, but FIIs still have substantial cash in their portfolios. In the meanwhile, the rising equity supply could cause a problem for the market if it gets bunched up, as we saw recently. Sensex is trading at 17.7x and 15x F2010 and F2011 earnings, respectively.

The prospective bottoming out of the growth cycle, reasonable policy momentum, the coming recovery in earnings growth, strong corporate balance sheets, stable (more…)