Category: Economy, Markets and Macro Views

Angel Broking has carried out an excellent analysis on RNRL‘s Business Model.

This is the First Part of a Two Post Series.

RNRL’s main business is likely to be sourcing gas from RIL and supplying the same to the group’s gas-based power generation projects. That apart, the RNRL-led Consortium has also won 4 blocks under CBM-III and is the second largest player in terms of CBM acreage in India. Currently, RNRL is engaged in coal supply for which it has entered into freight contracts for transportation of coal from Korba to the Dahanu Thermal power station. (more…)

Goldman Sachs believes RIL’s Bonus announcement of 1:1 has come as a surprise to the Street, bonus share issuance is more of a positive technical trigger for the RIL stock, based on higher stock liquidity at lower ex-bonus share price and possibly some tax benefits from booking notional capital loss on ex-bonus price. (more…)

BOFA- Merrill Lynch says that the earnings season for quarter ended Sept 30, 2009 will be good despite headline Sensex net profit showing a drop of 18%. Firstly, the metals companies distort growth. Ex-metals, the EBIDTA growth is near 20% and net profit growth 9.4%.

Earnings will surprise estimates and will see some upgrades. However, current stock prices seem to factor in lot of the positive surprises with valuations (more…)

Grasim Industries announced a 3-step process for consolidating its cement business with its 55% owned cement subsidiary Ultratech, which will create India’s largest cement company with capacity of 49 mtpa (FY10E). As part of this consolidation, Grasim will:
1) transfer its cement division to Samruddhi Cement, a wholly owned subsidiary.
2) Issue shares of Samruddhi Cement to the shareholders of Grasim in the ratio of 1:1. This would reduce Grasim’s stake in Samruddhi from 100% to 65%, with the balance owned by Grasim shareholders. Management expects Samruddhi to be listed by 4QFY10. (more…)

Prefer growth investing over value style; better valuation and superior earnings
growth create a compelling proposition. Growth stocks are trading at a relative valuation that is lower than their historical level. The growth index is currently at a 12-month forward PE of 20.4x, while the value index is at 15.8x. The valuation premium of growth stocks, at 1.3x, is in fact one standard deviation below its five-year average.

From March 1997 to June 2009, the EPS of growth stocks grew at a CAGR of 13.5% compared to 7.8% in the case of (more…)

UBS – leading financial institution and also the holder of Swiss Private Banking accounts continues to be bullish on India calling it a Tiger 🙂

India’s economy could be entering a golden period – we expect real GDP growth of 8-9% pa for the next 10-20 years. The stock market is relatively liquid (US$5bn average traded value) with several diversified sectors. Penetration levels for most products and (more…)