Dalal Street :: India Equity Research, Investment Analysis

Vishal Retail Oversubscribed 69.08 times

June 13, 20071 min read

The IPO of Vishal Retail for which we had a Blind Subscribe recommendation is oversubscribed by 69 times according to NSE Release. Here are the final subscription figures.

PAN a Must for Investors in Mutual Fund

June 13, 20071 min read

This July [2007], officials in the Finance Ministry have made it mandatory for investors taking the mutual fund route to furnish their PAN – Permanent Account Number for even a investment as low as Rs 50. Most of the investment these days is coming from smaller cities and towns where people are taking the SIP route to build their nest.

So what happens now ? After July-2007, deadline your fresh investments will be subject to providing PAN. Few months later, even investors with inactive folios where they hold Mutual Fund units will also have to furnish PAN or else their units will be frozen. Recall what happened to DEMAT accounts where PAN was not furnished.

India currently has 3% of it its investors in Mutual Funds, i.e 30 Million or 3 crore.

Economy, Markets and Macro Views

Kotak Bullish on Crompton Greaves

June 13, 20071 min read

Crompton Greaves’ fourth quarter numbers are better than estimates. Kotak Securities maintains BUY with a target price of Rs 280.

Margin gains were led by higher volumes and material price hedging
Standalone order backlogs were up 41% to Rs.20.6 bn
The stock has risen 22% since our last upgrade to a BUY. Earnings growth is likely to remain strong, given a healthy order backlog and good demand conditions in Europe.

Crompton Greaves’ standalone order book stands at Rs.20.6 bn up 41%, thereby indicating that current year revenue growth should also be robust.

The investment theme in CGL over the last two years has been that of a strong domestic business environment coupled with synergistic acquisitions in large overseas markets. Apart from access to larger markets, these acquisitions have also helped CGL plus gaps in technology. It has succeeded in turning around the operations at Pauwels and given the favorable demand conditions in Europe aims to replicate the same with Ganz and Microsol.

CGL is currently trading at a P/E ratio of 22.1x and 17.5x FY08 and FY09 earnings (consolidated EPS of Rs.11 and Rs.13.9 per share in FY08 and FY09, respectively)

Breaking Corporate India Earnings News

Praj Industries signs joint venture with Aker Kvaerner

June 13, 20071 min read

Praj Industries and Aker Kvaerner, global provider of engineering and construction services finalised an agreement to form a joint venture company in Europe that will be called BioCnergy Europe B.V.

The company holds 60 percent in BioCnergy, while Aker Kvaerner holds 40 percent of the shareholding.

The joint venture will provide the technology package, engineering services, equipment and systems, project management services, construction and erection services, and commissioning, as well as turnkey biofuel plant.

Equity Research

Citi Upgrades Reliance and Ups Target Price

June 13, 20071 min read

In a significant investment update, Citigroup analyst, Rahul singh and Saurabh Handa have upgraded Reliance Industries Ltd to Buy/Low Risk from Hold/Low Risk with a new Target price of Rs 2,005 from Rs 1,450.

They cite the following reasons for the change in Rating. Exploration success leading to switch to traditional multiples for the E&P business. Sustained refining cycle leading to core earnings upgrade (17-19% for FY08-09E) and higher contribution from RPL.

In absence of new refineries in the Middle East, due to cost inflation, which bodes well for RIL’s margins in FY08-09E. Besides, RIL’s differentials over benchmarks have expanded to US$5-8/bbl over the past five quarters, the primary driver of earnings upgrade.

The Sum of Parts Valuation of Reliance Industries Ltd is as follows.

IPCL Rs 29
Reliance Petroleum Rs 243
E&P Assets Rs 631
Organised Retail Rs 125
Total value of investments & other assets Rs 1,027
EV of businesses Rs 826
Net Debt adjusted for key investments Rs (934)
Value of Treasury stock Rs 245

Breaking Corporate India Earnings News

Larsen & Toubro bags Rs 877 crore order

June 12, 20071 min read

Oil & Natural Gas Corporation has awarded Rs 877 crore turnkey project order to Larsen & Toubro for the NQ re-construction (NQRC) project in Mumbai High North fields.
This Project is the largest brownfield project of its kind awarded in the offshore oil & gas sector in India.

The company bagged the prestigious order on the strength of its proven track record in meeting several stringent requirements, including a tight project schedule.

The Project will be executed on a lump sum turnkey basis with the completion scheduled by 08 May 2009.

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Vishal Retail Oversubscribed 69.08 times

PAN a Must for Investors in Mutual Fund

Kotak Bullish on Crompton Greaves

Praj Industries signs joint venture with Aker Kvaerner

Citi Upgrades Reliance and Ups Target Price

Larsen & Toubro bags Rs 877 crore order