Category: Economy, Markets and Macro Views

Satyam Computer posted 2.1% fall in net profit to Rs 389.14 crore in Q1 June 2007 over March 2007. Total income rose 6.5% to Rs 1820.93 crore over Q4 March 2007

Satyam Computer has cut FY 2008 EPS guidance in rupee terms. It has now projected a between 12.5% to 14% growth in EPS to between Rs 24.14 and Rs 24.46. It had earlier guided of 18% to 20% EPS growth in rupee terms for FY 2008.

It has, however, raised FY 2008 revenue guidance in rupee terms. It now expects 21.1% and 22.5% growth in revenue in rupee terms compared to earlier guidance of 20% to 22%.

The stock hit a low of Rs 471 and high of Rs 489.80 so far during the day

KPIT Cummins has declared results inline with expectations from Citigroup Research Analysts. Citi has recommended a BUY with a price-target of Rs 180. Prabhudas Liladhar had recommended a BUY on this stock last November.

KPIT has secured $55 Million, one of the largest BPO contracts in the offshore space. The company reported revenue of Rs.1.35bn –- 3.8% qoq growth (expectations of Rs.1.3bn) and net profit declined 10% qoq to Rs.127mn (exp. of Rs.122mn).

Revenue guidance was upwardly revised to US$145-148mn (from US$143-144mn earlier) due to better visibility while net profit guidance was downwardly revised to Rs.630-680mn (from Rs.700-730mn earlier) due to stronger INR.

KPIT is expected to report an EPS of Rs 7.91 and Rs 10.97 for FY08 and FY09, a growth of 39% for each year over its last year. 12-month target price is Rs180 based on 16x our FY09E EPS. Target multiple is derived by applying a ~15% discount to multiple for peer Satyam Computers.

Pyramid Saimira Theaters Ltd [PSTL] which hopes to be the largest Theater Chain operator in the world has set some ambitious plans with new business tactics to make the best use of its resources. PSTL operates 402 screens in 340 cities in India.
PSTL hopes to have 700,000 seats by the end of this year thus beating World’s Number One Theater chain, Regal which has 600,000 seats.

PSTL’s new Business Initiatives are as follows,

• Let teachers take private tuitions in their premises because until afternoon their are no shows scheduled. They expect students to BUY Coffee and Snacks which will aid their bottomline.
• Sell subscriptions instead of tickets. Instead of buying ticket per film, consumers can BUY monthly subscriptions – Rs 100 or so. They will be given a bio-metirc identity card which can be used in any PSTL theater. Ofcourse for peak hour shows you have to make a reservation calling their call center. PSTL will profile consumer habits and then will sell that database to Advertising and Marketing agencies.
• PSTL is in talks with a Match Making agency to setup retail outlets in its theaters.
• It is also exploring other retail initiatives on its premises.
• PSTL’s immediate goal is to eliminate the middlemen – distributors and establish their presence in both film production and exhibition.

Way to go PSTL. Now their are copycats in the Ambani camp who are all set to copy this idea and tune it to suit their business.

SBICAP Securities just a while ago have released a research report on the Ship Building industry in India. SBICAPs is bullish on the prospects of the same. You might recall that Citi had upgraded Bharti Shipyard and ABG Shipyard just last month.

SBICAPS research on these two companies is no different from Citigroups. SBI recommends a BUY on Bharti Shipyard and ABG Shipyard with target price of Rs 660 and Rs 570 respectively.

Bharti Shipyard Ltd:
The government has initiated an array of measures to promote the shipyard industry and make it internationally competitive. Bharati had a healthy order book of 38,500 mn as on July 8, 2007 which is one the highest amongst the private sector shipyards in India. The Company has undertaken a new Greenfield shipbuilding facility at Mangalore. The new yard will have a capacity to build ships with capacity of 60,000 DWT and facility to manufacture jack-up rigs. Offshore vessels (AHTS, PSVs and rigs) remain the mainstay of Bharati Shipyard limited – comprising about 70 % of the order book.

Going forward Bharati is likely to show a robust growth. The stock, at the current price of Rs 530 trades at a FY08 PER of 14x and at a FY09 PER of 10x. In terms of EV/EBIDTA it trades at 8.4x FY08E and 6.3 FY09E. At the target price of Rs 660, the stock would be trading at PER of 17x its FY08E, thus providing an upside potential of 24% from current levels.

ABG Shipyard Ltd:
ABG had a healthy order book of Rs 40740 mn as on June 25, 2007 which is the highest amongst the private sector shipyards in India. These orders are expected to be executed by, November 2011. Offshore vessels (AHTS, PSVs and rigs) remain the mainstay of ABG Shipyard limited – comprising about 70 % of the order book. Company’s Dahej facility is expected to be commissioned in FY09. The new facility will consist of two dry docks capable of accommodating eight bulk carriers up to a maximum weight of 120,000 DWT.

Going forward ABG is likely to show a robust growth. The stock, at the current price of Rs 450 trades at a FY08 PER of 14x and at a FY09 PER of 9. In terms of EV/EBIDTA it trades at 7x FY08E and 4.8 FY09E. At the target price of Rs 560, the stock would be trading at PER of 17x its FY08E, thus providing an upside potential of 24% from current levels.

In a research report released just a while ago, Citigroup has revised the target price for BHEL to Rs 1,923 from Rs 1,672.

India’s generation capacity additions are set to move from a 5GW/year over the last five years to a 14GW/year over the next five years. As the generation capacity addition opportunity grows in size, BHEL could make do with a 50–60% market share vis-a-vis the earlier 65 -70% market share to meet its growth target of 20% sales CAGR over the next five years.

BHEL is our top Indian electric equipment pick. Citi Increases target price to Rs1,923 (from Rs1,672 earlier) as we increase our target P/E multiple to 23x FY09E (20x FY09E earlier) on par with other Indian capital goods majors (L&T/ Suzlon). Our target multiple is well supported by EPS CAGR of 27% over FY07-10E with RoEs in the 25–30% range.

BHEL is expected to report a fully diluted EPS of Rs 66.33 and Rs 83.61 for FY2008 and FY2009 respectively.

Aban Offshore announced today, 12 July 2007, during market hours that Hardy Exploration & Production (India) Inc (HEPI) has extended the contract for utilization of floating production unit Tahara Japan for a further period of 2 years with effect from 28 July 2007. The revenues estimated during the extended period amounts to $63.875 million, the company said.

The scrip had hit a high of Rs 3135 and a low of Rs 3083 so far during the day. It touched an all time high of Rs 3144 on 2 July 2007. It had hit a 52-week low of Rs 854.25 on 24 July 2006.