Category: Economy, Markets and Macro Views

Goldman Sachs has upgraded Aban Offshore’s price target to Rs 3450 from Rs 2,900. Goldman believes potentially higher than expected contract renewal rates could be positive catalysts for Aban.

At 8.5X ’08E P/E & 6.9X EV/DACF, Aban’s valuation remains one of the most attractive in the sector. COSL stock is currently the most expensive among all the oil services stocks globally at 24.8X ’08E P/E & 15.9X EV/DACF. Goldman Sachs raises 12-m DCF-based TP on Aban to Rs 3,450 (from Rs2,900); keep Buy.

With weak international markets [US Housing Data was the dampener], Dalal Street Bears are in action. Within the first 5 minutes of Trading the BSE Sensex was down 350 points.

HDFC Bank, BHEL, Tata Motors, SBI and Reliance Energy are the top losers in the SENSEX. All the SENSES stocks are hammered and positions unwound. Accordint to Hitesh Chotalia’s analysis all the support levels for the day are broken and the SENSEX is currently at 15,450.

All the Indian Indices are in RED. A Blood Bath on the opening day of August Futures.

Nifty is down 110 Points
Nifty Jr is down 180 Points
Nifty Bank is down 170 Points
Midcap CNX is down 140 Points
IT CNX is down 101 Points

We wonder what will be the fate of IPOs like IVR Prime where extremely wise men invested because they couldn’t read the P/E and other financials of the company 🙂

Update at 12:00 Noon:
BSE SENSEX is down 500 Points. All the sensex stocks are in Red except ITC and Ranbaxy Labs. We recommended a BUY on ITC this morning. Is this is temporary correction ? Well depends on the US Data. If its just a temporary slump, its ok as Dow had also hit an all time high. However if you can see cracks appearing in the US Data, then money will flow out of Stocks. I am sure Wall Street Analysts are burning the midnight oil to analyze their course of action for Firday.

Tags: Invest India, Dalal Street, Stocks, India

Citigroup Research has upgraded the price target of Kotak Mahindra Bank to Rs 825 but a bit too late. Kotak has swiftly moved up from Rs 640 to Rs 730 on expectations of better results.

Kotak which is also into Retail Stock Trading business had made all its clients BUY their company Futures ahead of the results. This is a matter of great concern and SEBI should investigate this matter ?

Coming back to Citi’s analysis, 40% yoy profit growth, but 7% below their estimate. KTKM’s loan book is up 56% yoy (4% qoq) and remains diversified across consumer loan segments, with almost no asset stress. Margins remain 5%+ in the face of funding challenges, though broking volumes are only flat.

Target price of Rs825 is based on EVA methodology. KTKM’s relatively high share of securities fees suggests a valuation benchmark of an investment bank. Kotak is expected to report an EPS of Rs 19.92 for FY2008 and Rs 25.46 for FY2009.

In an exclusive report released just few minutes ago by Citigroup analysts on the Indian Hotels Sector, they continue to be bullish on Indian Hotels [Taj] and Hotel Leela Ventures and a HOLD on EIH India Ltd[Oberoi Hotels].

Indian Hotels Company Ltd [Taj]:
Indian Hotel (IHC) is the top pick with target price of Rs187 based on 21x Sept ’08E P/E (vs. 22x FY08E P/E) to factor in risk of increased room supply; but given scale, stronger earnings growth visibility, IHC’s pan-India presence, it is expected to trade at premium to the sector (16x).

Expansion Plans:
Plans to add six hotels (1,656 rooms) to the portfolio over FY08-10E – key being in Bangalore, Mumbai and Hyderabad. Besides this, IHC plans to increase number of ‘Ginger’ hotels to 30 by FY09-10E, up from eight now. Further tied up for management contracts in domestic (2,055 rooms) and international markets (584 rooms); all should be operational by FY08-11E.

Hotel Leela Ventures Ltd:
Stock Upgraded to BUY with 1M Rating [Medium Risk]
65% earnings growth, vs. 38% for the sector, in FY08E with additional rooms operational in Mumbai and Bangalore (ahead of supply in mid-2008); and 2) the stock’s 22% underperformance vs. the Sensex over the last three months. Our lower target price of Rs62 is set at 18x Sept 08 P/E, and offers 23% upside potential.

Expansion Plans:
Leela has capex of Rs19.5bn for building hotels over FY08E-11E, key locations being: Udaipur, Chennai, Pune, Hyderabad and South Delhi (recently acquired three acres at Rs6.1bn, this is a concern for ROCE, in our view).

The stock is currently trading at 15x Sept 08E P/E, at discount to sector’s 16x. With strong earnings growth momentum and the stock trading at lower end of its two-year historical P/E band of 16-25x.

EIH India Ltd [Oberoi Hotels]
Citi downgraded EIH to a Hold/Low Risk (2L). While earnings growth is still strong for FY08E, with stock up 13% over last 4-months, upside appears limited at 11% even at a price target of Rs.115 based on lower target multiple of 19x Sept’08E P/E, at 19% premium to sector valuations.

With the stock already trading at 17.5x Sept’08E P/E, at a premium to sector valuations of 16x, much of the 33% earnings growth of FY08E is priced in.

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Mukesh Ambani managed Reliance Industries Ltd [RIL] is planning to build the biggest greenfield fertilizer capacity in the country. The company has submitted a proposal to the fertiliser ministry to set up a manufacturing plant of global scale, up to four million tonnes.

RIL has proposed to use some of the Krishna-Godavari gas as feedstock bought at market prices. The company has been facing a huge backlash from fertiliser and power companies over the gas price it is offering them. Now, plans are afoot to take up the challenge by becoming a fertiliser player itself.

The scrip hit a high of Rs 1,932 today, 24 July 2007, also its all-time high.

Speculative Investors are crazy about this guy. An Insider of Rakesh Jhunjhunwala has leaked his portfolio holdings [Believed to be TRUE, We have not verified with his Demat Account or IT Filings etc]

We are listing the Name of Company and No. of Shares held.

Praj Industries – 9 Million
Titan Industries – 2.9 Million
Nagarjuna Constructions – 13.75 Million
CRISIL – 550,000
Lupin Labs – 2,817,000
Bilcare – 1,650,000
Pantaloon Retail – 2.3 Million
Karur Vysya Bank – 2.6 Million
Geojit Finance – 18 Million
Prime Focus – 882,550
Bhushan Steel – 1 Million
BEML – 538,767
Hind Oil Exploration – 3 Million
Viceroy Hotels – 3.75 Million
Aptech Ltd – 879,000
Infomedia India – 1.05 Million
HEG – 1.273 Million
Punj Lloyd -1 Million
Provogue India -480,000
Geometric Software – 2.175 Million

Stocks quoting at less than Rs 10 that Rakesh Jhunjhunwala is believed to be owning [Unconfirmed]
Century Extrusions – 7.82 Million
Orissa Industries – 2.35 Million
Yash Papers – 708,804