Dalal Street

The winning bidder for Satyam takes a 31% stake, via newly issued shares, and then makes a public offer for 20% of the enhanced capital at same price. Post close of the public offer, if an investor has <51% stake, it has option to subscribe to additional new shares, such that they will not have more than a 51% stake. Press reports suggest that Larsen & Toubro (L&T) is a serious contender in the fray.

L&T has Rs45.5bn of resources to bid for Satyam. In the event of a winning bid it may have to spend between Rs15bn (Rs30/share of Satyam) to Rs45bn (Rs90/share of Satyam). (more…)

Nomura of Japan has initiated coverage of the Indian banks sector with a NEUTRAL view. Key drivers of bank earnings – loan growth, interest rates (bond yields) and asset quality – have turned negative in 4QFY09 and are likely to deteriorate further in FY10E. Nomura expects earnings growth of Indian banks to drop 6% in FY10 after a robust CAGR of 21% over FY05-08. While banks are faced with these challenges, there is some comfort in state-owned banks’ valuations, which are trading at below book values, and fast-growing private banks, which are trading at 1-2x FY10E P/BV.

Nomura initiates a BUY on (more…)

The recent sharp 33% qoq drop in zinc metal prices has led to a sharp cut-back in zinc mining output and led to a spate of mine closures. Cumulative reported mine closures have been to the order of 1.6 mn tons so far, which represent about 15% of global output. Zinc prices are expected to remain subdued in the near term owing to current surpluses and high inventories, we believe swift supply side response would help restore market equilibrium. (more…)