Category: Economy, Markets and Macro Views

Citigroup in a its research report releases just a while ago is negative on the prospects of two wheeler manufacturers – Bajaj Auto, Hero Honda and TVS Motors.

Citi sees declining price points at the lower end of the motorcycle market, do not augur well for the sector as a whole. With over 93% of the motorcycle industry consolidated among the top three players, further market share gains among them as a group are capped.

Citi downgraded Bajaj Auto’s price target from Rs 2,600 to Rs 2,275 with a Hold recommendation. EPS estimates for current year is Rs 136.36.

Citi reiterates Sell recommendation on Hero Honda (Rs655 target price) and TVS Motors (Rs56 target price). We also maintain our Hold recommendation on Bajaj Auto (Rs 2275 target price)

Infrastructure Development Finance Company (IDFC) is planning to shortly raise about $500 million through a qualified institutional placement.

Earlier on 25 April 2007, the board of directors of the company had approved a plan to raise capital through issue of equity or quasi-equity instruments up to $ 500 million subject to the approval of the shareholders.

The scrip hit a high of Rs 135.80 today, which is a lifetime high for the scrip. It hit a low of Rs 132.2 so far during the day. It had touched a 52 week low of Rs 43.35 on 24 July 2006.

Infrastructure Development Finance Company (IDFC) scrip had declined 16.07% over the last one month to 2 July 2007 compared to the Sensex’s return of 0.64%. The scrip outperformed the market over the past quarter, gaining 71.17% compared to the Sensex’s rise of 16.16%.

Most Indian companies will report their earnings for the first quarter ended June-30th in the next few weeks. This is also the quarter where corporate India will measure the impact of rate hikes in the past few months.

According to Citi research, the top 3 sectors to outperform on basis EBITDA margins are Media, Cement and Telecom. The worst 3 sectors are Sugar, Metals and Textiles.

Autos:
One of the worst hit sectors from top-line deceleration due to base effect, higher interest rates and tighter liquidity. Despite INR appreciation, auto ancillary
exporters expected to do well due to exposure to non-USD markets like Europe.

Banks:
Loan growth slowed, but should still be healthy for the quarter at around 27%

Capital Goods:
Continued strong order flow and order execution momentum to keep earnings growth robust here.

Cement:
Despite government intervention in pricing, average prices should still be up 10-11% yoy, driving better margins and strong profits.

Consumer:
Steady top-line growth. Margin pressure in home and personal care segment.

IT Services:
Currency appreciation of 6.4% during the quarter and wage hikes for many companies will weigh on margins.

Metals:
Aluminum saw lower domestic prices yoy due to currency appreciation. Steel Profitability better this quarter due to 10-11% higher prices.

Telecom:
Strong momentum on subscriber addition sustained at 6.1m/month. Margins will expand a bit further on scale economies and operating leverage. Another sector with significant foreign exchange gain on INR appreciation due to forex debt with companies.

Net profit of Indian Petrochemicals Corporation declined 92.77% to Rs 18.00 crore in the quarter ended March 2007 as against Rs 249.00 crore during the previous quarter ended March 2006. Sales rose 30.85% to Rs 3007.00 crore in the quarter ended March 2007 as against Rs 2298.00 crore during the previous quarter ended March 2006.

For the full year, net profit declined 11.34% to Rs 1032.00 crore in the year ended March 2007 as against Rs 1164.00 crore during the previous year ended March 2006. Sales rose 11.05% to Rs 12129.00 crore in the year ended March 2007 as against Rs 10922.00 crore during the previous year ended March 2006. IPCL is managed by RIL Chairman Mukesh Ambani.

Net profit of Aurobindo Pharma rose 108.13% to Rs 78.11 crore in the quarter ended March 2007 as against Rs 37.53 crore during the previous quarter ended March 2006. Sales rose 15.06% to Rs 532.76 crore in the quarter ended March 2007 as against Rs 463.04 crore during the previous quarter ended March 2006.

For the full year, net profit rose 230.23% to Rs 229.08 crore in the year ended March 2007 as against Rs 69.37 crore during the previous year ended March 2006. Sales rose 34.47% to Rs 1979.72 crore in the year ended March 2007 as against Rs 1472.20 crore during the previous year ended March 2006.

Sun TV Network has announced the launching of its FM Radio Station in Bhubaneshwar under the brand 93.5 S FM from 28 June 2007 through its subsidiary South Asia FM.

This station can be heard at 93.5 MHz frequency in Bhubaneshwar and Cuttack.

With this, the total FM stations of the company’s group operational goes up to 8. The company hold licences for 45 FM Radio Stations across India, and will be one of the largest radio broadcasters in India when all the remaining 37 stations becomes operational.