Category: Breaking Corporate India Earnings News

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%.

TTK Prestige has enviable Real Estate Holdings – Property on Old Madras Rd, Bangalore is right opposite to the upcoming Metro station and is valued at Rs.80cr to Rs. 120cr. The company also has factory properties at Coimbatore and Hosur (apart from Uttaranchal). The Hosur property is huge and production is being shifted to tax free Uttaranchal as well as to less expensive Coimbatore.

Retail Foray: The company operates 180 odd stores which have been opened in the past 12 to 24 months. In retail the new stores start giving top line and bottom line results in 18 months. So the PAT level should move up from the current Rs. 20cr PA levels to an annualised Rs. 35 cr or more in another one or two quarters.

Based on above thesis, the company should be valued at :
Real Estate: Rs. 100cr
Retail Ops: Rs. 350cr (35crX 10PE)
Total: Rs. 450cr

Against this the company is currently valued at Rs. 140cr or so. Market operators say, not to sell away this GEM. The company price should be atleast 2x the current price, ie around Rs. 225 to Rs. 260 per Share.

ONGC Videsh Ltd has announced an agreement to acquire Imperial Energy for all-cash consideration of £1.4bn (US$2.8bn) (subject to regulatory clearance). Imperial is an E&P company with assets primarily in Russia. Imputed EV/boe of US$3.1/boe (2P) makes the acquisition appear positive, though high tax structure hampers NAV. Also, Imperial has been trading at a discount to NAV because of political risk, which could be materially addressed given ONGC’s presence in Russia.

Imperial earns below int’l prices for its crude sales. Under the Russian taxation regime, crude exports are taxed at beyond US$15/bbl Urals US$49,712M.

The offer leaves room open for a competing bid (at >10% higher than current bid of £12.50/share). According to press reports (Reuters), Sinopec is planning to make a competing bid, though ONGC is reportedly willing to up its offer to £15/share in such a scenario. Any aggressive bidding war could make the acquisition NAV neutral at best.

Cumulative rainfall was 2% above normal up to August 20 as per India Meteorological Department – IMD compared with 1% below normal up to August 6. On an un-weighted basis, cumulative rainfall was near stable (0%) up to August 20 compared with 5% below normal rainfall received up to August 6. Aggregate countrywide rainfall was 48% above normal during the week ended August 13 and 1% below normal during the week ended August 20 respectively.

Crop area under cultivation remains weak: Overall crop area under cultivation was 3.1% lower YoY as of August 22 similar to 3.2% lower YoY as of August 17. Area under cultivation tends to be good indicator of the volume growth in summer crop. With about 95% of season’s sowing has already been completed, there is now a very low possibility of achieving normal crop output growth.