Dalal Street

The Indian Rupee has breached the 44 level and is weakening against the USD. The RBI is not really active in the market which is a blessing in disguise to the Exporters. Now, why is the RBI piling up USD ? Well, as an insurance cover 🙂

The March 08 international investment position tells that, US$297bn fx reserves not withstanding, India still owes US$100+bn. This is why, in Gov Reddy is so reluctant to use fx to appreciate against inflation – as some Delhi economists advise – or float a sovereign wealth fund – as another section proposes – to acquire strategic CIS gas fields. Recall he let the INR temporarily slip Rs46+/USD in mid-06 rather than run down fx reserves. This, of course, begs the question why we still expect the RBI to stem depreciation? Because this time’s different because of imported inflation.

You may also want to read the 50 factors that influence the value of USD.

There are six main reasons why investors love SBI over ICICI.

• CASA franchise of 42% provides comfort on margin sustainability for SBI.
• Asset-liability match of SBI is better
• Life Insurance: Cost ratios of SBI Life are better than ICICI Prudential Life due to its strong
  bancassurance model and better agency productivity.
• Asset quality risks persist for both banks, SBI’s loan book is well diversified across a variety of segments; ICICI’s loan book is still skewed towards retail. In the next 18 months the retail segment is likely to be more vulnerable
• SBI will continue to gain market share in both advances and deposits a ICICI’s expense due to the latter’s strategy of going slow.
• SBI is trading at 0.94x FY10E adjusted book, while ICICI is trading at 1.0x FY10E adjusted book

Infact we have never liked ICICI Bank. Maybe with the exit of Kalpana Morparia ICICI bank will see some improvement but the aggressive Kamath is still in the Driver’s seat and hence we will avoid it for now.

Ballarpur Industries (BILT) Q4FY08 and FY08 results were in line with expectations. 540 bps decline in EBITDA margins to 21.8% due to revenues from low margin timber sales and cost pressure at BPH due to rising fuel and pulp prices. BUY Company has recently taken price increase of ~10% in coated paper and ~5% in uncoated paper which is likely to improve EBITDA margins by ~150 bps to 26.5% by FY09E as per guidance given by the management.

FY08 net sales increased by 22.1% to Rs 28.3 bn and net profit increased by 17.2% to Rs 3 bn resulting in an EPS of Rs 4.8.

It’s expansion plan at unit Bhigwan to increase paper capacity by 190 thousand mtpa is expected to finish by Nov’08 and at unit Ballarpur to increase paper capacity by 155 thousand mtpa to complete by June’09. This is likely to result in volume growth of ~12%. For FY09 EPS growth is expected to be flat between Rs 4.6 to Rs 4.8

The subsidiary company of Unitech has received this allocation of 4.4 Mhz startup spectrum for GSM Operations in the Madhya Pradesh service area.With this, the Company have been allotted initial spectrum in six service areas out of total 22 service areas.

The government has revised the inflation figure for June 21, 2008 as 11.91% against 11.63%. The wholesale price index (WPI) based inflation rate on a week-on week basis calmed down slightly to 12.40% for week ended August 16, 2008, as compared to 12.63% in the previous week.

The inflation numbers declined significantly and went even lower than August 2, 2008 mark of 12.44%, but is still above the Reserve Bank of India’s (RBI) comfort level of 5% for the 27th consecutive week.

The government has revised the inflation figure for June 21, 2008 as 11.91% against 11.63%.