Category: Economy, Markets and Macro Views

Godawari Power and Ispat Ltd [GPIL] completed its second phase of expansion. With this the company increased its capacity of sponge iron to 495,000 tpa (110%yoy), steel billets to 400,000 tpa (60%yoy) and HB wire rod to 120,000 tpa (90%yoy). With demand expected to remain strong in the next two years, expect GPIL’s output to register 66.1% CAGR for sponge iron, 30.5% CAGR for billets, 26.7% CAGR for HB wires and 17.5% CAGR for ferro alloys over FY07-09. (more…)

Maharashtra Seamless (MHS) has announced the acquisition of a 0.2MT seamless pipe plant in Romania. The company plans to bring the mill to India, although the finer details are still being worked out. The total transaction size is estimated to be Rs2.5B, which would be funded through internal accruals.

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Indian speculators god, Rakesh Jhunjunwala is just a pawn when compared to the biggest ever Bull Dalal Street had in its history. Presenting, Sanjiv Duggal, Sr. Fund Manager, CIO and Director of HSBC Holdings Plc overlooking US $ 11 Billion of investments, the World’s largest holding of Indian equities.

Here is what Sanjiv Duggal has to say about the future course of investing in Indian markets, (more…)

Saregama India Ltd (SIL) reported disappointing results for Q2FY2008. While the operating revenues fell by 2.7% year on year (yoy) to Rs33.8 crore, the operating profit declined by 57.9% to Rs2.7 crore. Consequently the net profit before extraordinary items decreased by 44.7% yoy to Rs2.6 crore.

SIL’s share in acquiring new music rights declined to 9-10% from about 30% in the past. With competition setting in, the cost of acquiring these rights has gone up substantially. The current scenario wherein music rights are awarded on minimum guarantee as against revenue sharing in the past has increased the risk for music companies. (more…)

Lehman Brothers equity research has initiated coverage on Goldmines of the Indian Capital Market, PSU banks. Lehman has a OVERWEIGHT rating on Punjab National Bank, Canara Bank, Bank of Baroda, United Bank of India and Indian Overseas Bank.
Expect a positive delta in operating metrics vis-a-vis the trend seen in the past three years, supported by a benign operating environment. These banks are currently trading at a material discount to SBI, which we think is unjustified. Note that this valuation gap has emerged only since April 2007. These Public sector banks are trading at an unjustified discount to private sector banks which is unjustified.
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Here is a Model Portfolio and weight ages across different scrips and sectors. Both Merill Lynch and Morgan Stanley have slightly different views when it comes to Industrials / Cement. Merill Lynch is more bullish on the segment than Morgan Stanley [MSCI]. Rest of the sectors both have comparable views. (more…)