Category: Economy, Markets and Macro Views

Manappuram General Finance & Leasing is mainly involved in Loans against Gold. Almost 85% of its folio.The combined size of the loan portfolio (of MAGFIL and Manappuram Finance (Tamil Nadu) Pvt Ltd) could be Rs. 750 cr., (inclusive of off-balance sheet items) as of March 2008. As per the method of accounting followed by MAGFIL, Interest received/accrued on account of gold loan receivables assigned to its institutional lenders is credited to interest account net of interest paid /credited to these lenders on accrual basis. This portfolio size could increase by 30%+ in the coming year i.e. FY09.The average cost of funds for advancing gold loans is close to 12% and the average interest earned is around 21% – 23%. This leads to a healthy spread of 9% – 11%. (more…)

In several research notes on the Indian 2 Wheeler industry, it is observed that the sector will underperform in the near term. In Q3FY08 the environment for the two wheelers was negative. Banks had tightened the credit norms and increased the down payment requirement, which has rendered a large number of potential two wheeler buyers ineligible for obtaining loans. The competitive intensity in the industry has also increased.Total vehicle sales during the quarter are expected to increase by 2.6%.

Bajaja Auto is the only market performer and that to due to the de-merger of Bajaj Allianz Insurance / Finance company. TVS and hero Honda are market underperformers.
(more…)

Mercator Lines Ltd [MLL] is in the business of dry and liquid bulk cargo. MLL derives 70% of its revenues from long term contracts of 3 to 7 years. MLL recently raised $140 million and listed itself on the Singapore Stock Exchange.

NLL has a fleet size of 24 of which 11 are operated by its subsidiary in Singapore. (more…)

Royal Orchid Hotels Ltd, ROHL acquired Multi Hotels, Tanzania, which owns 30 acres of prime beachfront land worth $2 Mn. The company would further spend $25 Mn (to be funded 60% thru equity) to build a 200-room resort (EV/room ~ Rs 5Mn). The project is expected to commence work in next 4 months and then require 20 months for completion. The debt/equity is a meager 0.16 (FY07) and hence the expansion would impact debt equity only marginally.

ROHL through its subsidiary M/s Icon Hospitality Pvt Ltd, acquired Royal Orchid Central (earlier only managed) for a consideration of Rs 820 Mn (EV/Room ~ Rs 6.3Mn). The hotel is in the heart of Bangalore and is clocking ARRs of Rs 5,500.
(more…)

We would like to share the Economic Indicators that we have been mining over several years. We will cover, GDP growth,WPI, Exchange Rate, Fiscal Data, Money Supply, Balance of Payment and Foreign Debt and Reserves.

India GDP Growth:
India’s GDP in %ge was languishing at 3.8% in 2002 and saw a remarkable jump to 8.5% in 2003 with the beginning of Golden Quadrilateral and other reforms set on fire by then Government under Atal B. Vajpayee.
GDP growth in 2004 – 7.5%
GDP growth in 2005 – 9.0%
GDP growth in 2006 – 9.4%
GDP growth in 2007 – 9.0%
GDP growth in 2008 – 8.5% [Expected]
GDP growth in 2009 – 8.81% [Expected]
(more…)

The recent rally in stock prices seems to be building in near best-case scenario on cane prices, for which there is still no certainty. Expect sugar price cycle to start turning up from FY09E, margin expansion will still depend on FY09E cane prices, on which there is little visibility given the current policy uncertainty. Further, cane price increases in FY09E could outpace sugar price increases, which would squeeze margins in FY09E. Bajaj Hindustan and Balrampur chini are downgraded to SELL. (more…)