Era Infra bags four major orders

Era Infra Engineering has bagged four major projects in the areas of Calicut, Delhi and Punjab.

The first project involves the construction of a mega hostel at NIIT from National Institute of Technology, Calicut. The deal is worth Rs 88.78 crore. The scope of work includes civil works, plumbing and sanitary wares, electrical installation work, fire hydrant and alarm works.

The second order worth Rs 73.74 crore is for the construction of a 200 bed hospital at Kokiwala Bagh in Delhi. The work includes construction of OD, wards, services, hostel building for nurses and RMO including internal water supply and sanitary installation and electrical works.

Another order worth Rs 71.36 crore awarded by the Punjab government involves the setting up the Guru Gobind Singh medical college, senate campus and academic campus for Baba Farid University of health sciences.

The fourth order is for the development of an athletics training venue for Commonwealth Games to be held in 2010 at Chhatrasal Stadium in New Delhi. The deal valued at Rs 60.26 crore and includes civil works, fire fighting and public address system, fire alarms, internal and external electrical works, lifts and HVAC.

In a related development, FreePress is reporting that Government may soon announce a Rs 100,000 crore Infrastructure development rescue package to boost the sagging economy.

Inflation Continues to Slide – 6.38%

Inflation for the week ended December 20, 2008 stood at 6.38% as compared to 6.61% reported in the last week as the WPI continued to slide.

The prices of primary articles decreased to 12.07% for week ended December 20, 2008 as compared to 12.15% for the preceding week. The prices of fuel items declined by 0.66% for the week as compared to an decrease of 0.18% in the preceding week driven by fall in administered as well as non administered fuel prices.

The inflation for manufactured products stood at a lower 6.84% for the week, as compare to 7.0% for the preceding week. Amongst the manufactured articles, the prices of metal products, textile products and wood & wood products rose the most, by 12.35% yoy, 10.66% yoy and 9.77% yoy respectively.

On Wipro’s Citi Technology Acquisition – Analysis

Wipro has acquired Citi Tech Services (CITOS), Citigroup’s India-based captive, for an all-cash deal of US$127m. CITOS has CY08 projected revenue of US$80m.

According to our estimates, Citi would, through CITOS, provide Wipro with revenue of at least US$500m over the next six-year period. The acquisition is expected to close in Mar-09. [The same way like TCS – Citi BPO Deal that happened in October-08]

Operations of CITOS:
CITOS provides Technology Infrastructure Services (TIS) and application services. It has about 2,050 people (1,650 employees and 400 on contract) and development facilities in four locations – two each in Mumbai and Chennai. CITOS gets business from Citi entities worldwide.

On a TTM basis, CITOS has an EBIDTA margin and NPM of ~38% and ~42%, respectively, assuming an annual run-rate of US$80m in revenue.

JP Associates Mergers – Impact Analysis

Jai Prakash Associates [JPA] proposes to merge the following companies with itself wef April 1, 2008.

Jaypee Hotels Ltd (existing 72% stake, owns Jaypee Palace Hotel (Agra), Jaypee Vasant Continental and Jaypee Siddharth Hotel (New Delhi))

Jaypee Cement Ltd (existing 100% stake)

Gujarat Anjan Cement Ltd (existing 100% stake, setting up ~ 2.4 mtpa cement capacity in Gujarat by FY10)

Jaiprakash Enterprises Ltd (owns 15% stake in Jaypee Power Ventures. Jaypee Power Ventures in turn owns power assets of Vishnuprayag hydro, Siddhie and Karcham Wangtoo (55%)). (Outstanding share capital and stake held by JPA is not known)

The impact of merging three subsidiaries Jaypee Hotels, Jaypee Cements and Gujarat Anjan Cement with JPA is negligible. Equity share capital is diluted by 1.3%, JPA’s standalone PAT increases by 0.8%. We await details of the outstanding share capital and stake held by JPA in Jaiprakash Enterprises to assess its impact on JPA.

Morgan Stanley Upgrades to Equal Weight

Morgan Stanley recommendations are following the Indian market but not lading it ;-). Morgan has upgraded India to Equal weight from Underweight.

India’s quant model ranking has improved from #19 to #13 making it the biggest gainer in rank on the month. India has had a major jump in its relative EPS growth (#6 to #2) indicating a less severe deterioration on these metrics over the last month than other EM markets. On the trailing P/E (#17 to #11) and P/CE metrics (#13 to #10) India has also improved significantly.

However, India remains locked at the bottom of the asset class on the dividend yield metric. The market’s technical ranking has also improved (#14 to #9).

You can recall, Morgan Stanley has got many forecasts about India wrong. Former Morgan Analyst Andy Xie had told India will slip into Bear Phase in 2006 but it made an all time high in Jan-08.

Inflation Tanks to 6.84%

For the week ending 6 Dec ’08, headline (wholesale price index, WPI) inflation fell to 6.84%, beating our and street estimates by large margins.

For the first time, Primary prices fell, backed by easing in food articles (food grains, fruits, vegetables and condiment and spices). Non-food articles also witnessed a fall. We expect the current trend to continue, further easing primary price inflation.

Except food products, all the major components witnessed a fall. Basic metals, alloy, chemicals and transport equipment fell. The week under review saw cuts in the administered fuel (petrol and diesel) as well as non-administered fuel.

Going forward, Inflation is softening ahead of our expectations. The cut in cenvat, a stronger rupee and the pass-through of falling international commodity prices now indicate that India might slide into a technical deflation much sooner than our earlier forecast.

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