Dalal Street

Dishman reported 3Q FY08 numbers with revenue up 18% YoY while margins declined 939bps to 20% due to losses at subsidiaries. As a result, recurring net income (excluding MTM gains on foreign currency debt) declined 12% to Rs216m. However, we continue to be positive on Dishman and believe that 3Q FY08 was a blip due to some one-off expenses.

1) Some sales were postponed to Q4 FY08. We note this is not unusual in contract manufacturing. 2) Losses at Dishman’s subsidiaries in Japan, the Netherlands and the Middle East – all of which are businesses in the nascent stage. Management expects these to be reversed in Q4. 3) Higher staff costs due to consolidation of the vitamins business and incentive payouts at Carbogen.

Expected Fully diluted EPS – Rs 14.44 [FY08] and Rs 19.59 [FY09].

SBI has reported a very strong quarter, combining high growth, improving profitability, and stable asset quality. It’s also a strong come-back from the previous quarter, in which growth was at the cost of profitability.

The strong P&L is a mix of a) 35% fee growth (excluding one-offs), driven by FX revenues and 19% core fees b) Rebounding margins – up about 20bps qoq (boosted by investment yields), though still low at 284bps – with some strains ahead and c) Moderate cost growth, strong trading gains, and strong asset write-backs. Exone- offs and trading gains, pre-provisioning profit growth of 48% yoy and 33%qoq.

SBI also continues to gain market share with 26% loan growth, has improved its under-pressure deposit mix over the last quarter, and importantly, maintained asset quality.

Ansal Properties & Infrastructure [ANSAL API] has entered into a tripartite agreement with Edu Infrastructure, a subsidiary of Educomp Solutions and Knowledge Tree Infrastructure – its associate company.

As per the agreement the company / its associate would construct / develop the school properties in the various residential townships of the company and lease it out to the school operators for operating and managing the schools. Edu shall have the right to take minority interest in the associate. The agreement is expected to enable the Company to leverage the experience of Educomp to emphasize the education in its residential colonies.