Category: Breaking Corporate India Earnings News

Laid back Modis who failed to turn around a company in 10 years have finally sold out of Spice Communications [Holds license in Karnataka and Punjab with Spectrum in 900MHz band] to Idea Cellular in a share swap ratio of 100:49. [49 Idea Shares for every 100 Spice]. Going forward what does the future look like for Idea Cellular ?

From the structure of Idea’s deal it appears that TMI [Telekom Malaysia] is keen to partner a larger player in the Indian Mobile growth story. TMI will acquire 14.99% equity (pre-Spice merger) in Idea at ~Rs157/share as a cash infusion implying post-merger valuation of Idea at ~13x FY10E-EV/EBITDA.

Additionally, TMI holds ~39.2% stake in Spice that will be swapped for a 4% stake in Idea post-merger. Eventually, TMI will hold one board seat in Idea & own between 18.5-20% stake in Idea depending on its participation in the open offer for Spice. The AV Birla group will hold ~46% stake post deal vs ~58% currently.

If P. Chidambaram stakes claim for India’s growth story and record tax collection, he should not hesitate to paint himself in black for the co-lateral damage he has caused to 80%+ of India’s population by doubling the Inflation during his tenure and making it reach a new 13 year high of 11.42% [Higher than the highest rate of Interest offered by Bank’s Certificate / Fixed Deposits]

Rising global oil prices with record Inflation has put the Indian markets into PANIC selling mode by Institutional Investors. Until yesterday, Net FIIs selling in the Indian market for the month of June is Rs 9,500 crore [$2 bn].

Update:
Looking at the components, primary articles were up 10.96%; manufactured products were up 9.74% while the fuel price index was up 16.37%. Similar to trends seen since March this year, the uptrend is due to edible oils classified under non-food articles, fuel (with market determined fuels up 30%-50%), basic metals up 21.3% and iron-ore up 42.6%.

Upward revisions to the index continue with the April 19 data being revised up from 7.57% to 8.23%. Of the headline 11.42% WPI number, 2.49% is attributed to primary articles, 5.42% to manufacturing and 3.54% to the fuel index.

JK Paper reported Q3FY08 results. Net revenues increased by 17.8% YoY / 7.1% QoQ to Rs 2.2 bn. EBITDA margins declined sharply by 530 bps YoY / 240 bps to 15.2%, as against consensus expectations of 18%.

Increase in raw material by 54.9% YoY and 60.2%YoY increase in power and fuel cost put pressure on margins. Raw material as percentage of sales for the quarter was 27.1% (20.6% previous year) and power and fuel was 10.7% (7.9% previous year). As a result, EBITDA was down by 12.4%YoY / -7.6% QoQ to Rs 336 mn (we expected Rs 383 mn). Higher other income of Rs 52 mn as against mere Rs 2 mn previous year supported financials. Commissioning of new packaging plant led to increase in depreciation and interest charge. Depreciation increased by 35.7% YoY to Rs 170 mn while interest increased by 83.8% to Rs 143 mn. As a result PBT declined by 58.3% to Rs 76 mn.

Company on fully diluted basis reported EPS of Rs 2.0 as against Rs 1.5 previous year.

GMR Infrastructure has acquired 50% stake in Intergen, a power utility with assets in UK, Mexico, Netherlands, Australia and Phillipines, for US$1.1 B. Intergen has an operating capacity of 7,658MW, while its attributable capacity is 6200MW. 85% of Intergen’s capacity is natural gas based, while the rest is coal-based. GMRI has purchased the stake from AIG, while Ontario Teachers’ Fund holds the balance 50%.

Intergen clocked revenue of US$1.6B, EBITDA of US$613M, PAT of US$105M, FCF of US$330M and distributed US$140M dividend in 2007. It appears highly leveraged with gross debt of US$4.3B as against equity of US$600M, but we believe this is not unusual amongst utilities, as it is within the prescribed DSCR of 1.4.

GMR’s Modus Operandi behind Intergen Investment:
GMR has funded its US$1.1B investment via domestic bridge loans at 10.5%. Interest payment should negate US$50 mn of GMR’s estimated share of Intergen’s profits (based on 2007 data). Intergen’s generous dividend payout will go towards debt servicing at least through 2010, in our estimate. Refinancing the loan via forex loans and equity injection would enhance contribution at the net level.

Parsvnath Developers Ltd – PDL reported F4Q08 consol results – sales up 25.5% to Rs5 bn, OPM compressed by 190 bps to 32.8%, which together resulted in 19% fall in net profits to Rs1.07 bn. Full year profits for F08 were Rs4.2 bn (up 45%), versus our estimate of Rs4.4 bn, 5% below consensus estimates.

PDL’s net debt has risen to Rs14 bn (74% net gearing) versus Rs12.8 bn (71%) in F3Q08. Receivables continue to rise – Rs12.8 bn (Rs10.8 bn in F3Q08) – implying incrementally 37% of sales (43% previous qtr).

Land bank is 211 msf (210 msf in F3Q08), area under construction moves up to 77 msf (75.8 msf in F3Q08) and pre-sales moves up to 40 msf (32.8 msf earlier). Ongoing projects include 24 msf of plotted development. The company grossed Rs50 mn in rental income in F08, which it expects to rise to Rs250-300 mn in F09.

Hindalco Industries Ltd has informed us that the Company at its meeting held on June 20, 2008, has approved the issue of Equity Shares for an amount not exceeding Rs 5000 Crores to the existing Shareholders on rights basis (“Rights Issue”) to part finance the acquisition of Novelis Inc. The Share Ratio for the Rights issue will be 1:3, i.e. one right of Re 1 each for every three equity shares of Re 1 each held by the shareholder as on the Record Date to be announced later. The price per share for the Rights Issue would be decided by the Board and announced at a later date.