Dalal Street

Late last evening, the government raised retail prices of petrol by 9% (Rs4/ltr) and diesel by 6% (Rs2/ltr). Although this is still less than current international prices (petrol and diesel would need to be raised by an additional Rs2.5/ltr as margins are negative, the hike is positive, bodes well for the reform process and is a step towards fiscal consolidation.

Given that petrol and diesel have a weight of 2.9% in the WPI, the fuel price hike would have a ~30bps impact on inflation. We expect inflation to cross 4% levels by year end. On rates, we expect bond yields are likely to stay in the 6%-7% range due to the RBI’s continued participation in the borrowing program. We maintain our view that
RBI will reverse its easy money policy next year.

Q4FY09 has been extremely lacklustre for Anantraj Industries (Anantraj) as it did not sell any property during the period. The company reported revenues of Rs153.2m, a decline of 92.9% YoY. Revenues for the quarter consisted of sales from its ceramic division as well as rental income. The company’s rental income increased from Rs33.5m in Q3FY09 to Rs50m. This was primarily an account of its Karol Bagh mall property. Other income for the company was quite robust at Rs216m on account of its large cash balance of Rs7.4bn.

Anantraj’s balance sheet position is strong as cash on its books (as on March 2009) stands at Rs7.4bn. The company’s debt stands at Rs1.21bn. This gives the company greater scope to utilize its cash and further leverage its balance sheet for acquisition of land and property at attractive values.

Anantraj is currently working on its Manesar project which has already started accruing rentals. The Karol Bagh project is also complete and has started contributing to rentals. Besides these two projects, the company has been focusing on certain hotel projects