Category: Economy, Markets and Macro Views

Net profit of Asian Hotels rose 50.83% to Rs 34.42 crore in the quarter ended March 2007 as against Rs 22.82 crore during the previous quarter ended March 2006. Sales rose 27.24% to Rs 132.41 crore in the quarter ended March 2007 as against Rs 104.06 crore during the previous quarter ended March 2006.

For the full year, net profit rose 61.38% to Rs 91.50 crore in the year ended March 2007 as against Rs 56.70 crore during the previous year ended March 2006. Sales rose 25.85% to Rs 413.42 crore in the year ended March 2007 as against Rs 328.49 crore during the previous year ended March 2006.

ICICI is making Follow on Public Offer after Offer every year. Its Peer IDBI is still struggling to make a comeback. The issue of bonds will fund IDBI’s future expansion and acquisition purposes, reports sugget. It would be a medium-term programme and the money would be raised in different tranches, including perpetual Tier I and Tier II capital.

The funds would also used for carrying out operations of overseas branches proposed to be opened during FY 2008.

The net profit of Industrial Development Bank of India (IDBI) rose 6.11% to Rs 213.54 crore in Q4 March 2007 as against Rs 201.24 crore in Q4 March 2006. Total income rose 12.41% to Rs 2185.35 crore in Q4 March 2007 as against Rs 1944.16 crore in Q4 March 2006.

The net profit rose 12.38% to Rs 630.31 crore in the year ended March 2007 (FY 2007) as against Rs 560.89 crore in the year ended FY 2006. Total income rose 10.68% to Rs 7372.60 crore in FY 2007 as against Rs 6661.17 crore in the FY 2006.

IDBI’s principal activities are to provide commercial banking services which include merchant banking, direct finance, infrastructure finance, rehabilitation assistance, venture capital fund, advisory, trusteeship, forex, treasury and other related financial services.

The stock hit a low of Rs 97.40 and high of Rs 99.40 so far during the day.

The scrip gained from Rs 92 on 10 May 2007 to a high of Rs 104.10 on 21 May 2007. The Rs 100 level was breached later due to continuous profit booking and scrip fell to Rs 92.55 by 30 May 2007. The scrip, again bounced back to trade at Rs 101.25 by 7 June 2007, but fell soon to Rs 96.55 by 12 June 2007.

Crompton Greaves’ fourth quarter numbers are better than estimates. Kotak Securities maintains BUY with a target price of Rs 280.

• Margin gains were led by higher volumes and material price hedging
• Standalone order backlogs were up 41% to Rs.20.6 bn
• The stock has risen 22% since our last upgrade to a BUY. Earnings growth is likely to remain strong, given a healthy order backlog and good demand conditions in Europe.

Crompton Greaves’ standalone order book stands at Rs.20.6 bn up 41%, thereby indicating that current year revenue growth should also be robust.

The investment theme in CGL over the last two years has been that of a strong domestic business environment coupled with synergistic acquisitions in large overseas markets. Apart from access to larger markets, these acquisitions have also helped CGL plus gaps in technology. It has succeeded in turning around the operations at Pauwels and given the favorable demand conditions in Europe aims to replicate the same with Ganz and Microsol.

CGL is currently trading at a P/E ratio of 22.1x and 17.5x FY08 and FY09 earnings (consolidated EPS of Rs.11 and Rs.13.9 per share in FY08 and FY09, respectively)

Citigroup currency analysts forecasts the Indian Rupee to stabilize around Rs 40.00 against the US Dollar over the next 3 quarters.

The Rupee forecast against US Dollar for the next few quarters is as follows,

Q3-2007 – Rs 40.30
Q4-2007 – Rs 40.10
Q1-2008 – Rs 40.00

So IT exporters will be under tremendous pressure to re-negotiate billing rates or revise the earnings guidance lower.

With every hour passing by, hectic lobbying and meetings are underway in the financial streets of Dalal Street, Mumbai.

At one end of the spectrum is Reliance – Mukesh Ambani who is rumored to be all determined to derail the IPO of DLF Realty. On the other end is Rajeev Singh who wants his father to be the Richest Indian by listing their flagship Real Estate company – DLF.

Corporate Rivalry is nothing new to Reliance and Mukesh Ambani. It dates back to the days of Bombay Dyeing Vs Sr. Ambani in 1980s.

Then in early 1990s, a stock broker by name Harshad Mehta unseated India’s leading industrialist, Dhirubhai Ambani to become the Richest Indian and the Highest Tax Payer. Result – Ambani’s 3rd son, now chief of Reliance SEZ, Anand Jain engineered a trap for Harshad Mehta in Stock Market. When Harshad came to compromise with Dhirubhai, he was the only Indian to drive a Toyota Lexus which caught Anil Ambani’s attention and Harshad readily handed over the keys to Anil Ambani saying “It’s all yours”. [Read The Polyester Price – HOUSEKEEPING SECRETS Page 239]

Then in 2000, Dot Com Boom, it is rumored that Reliance group engineered the fall in Wipro stock which had made Azim Premji the richest Indian and 5th Richest person in the world.

Dec-2006: It is rumored that Reliance- Mukesh Ambani led the debacle of Cairn India IPO. Cairn is a global energy giant. Their was a last minute withdrawal of few large blocks of bidding in the Cairn IPO and underwriters had to make up for it. Cairn directly competes with Reliance Oil and Gas.

June-2007: Rajeev Singh son of DLF’s founder Kushpal Singh is all determined to list his father’s company and crown him the richest Indian. DLF directly competes with MukeshAmbani’s dream project in Haryana – Reliance SEZ. Also Mukesh being an industrialist and wealth creator doesn’t want a land lord to take his crown of being the richest Indian.

DLF is going out of the way to pay hefty commission to greedy Stock Brokers to make their clients apply for the issue. While several brokerage houses have come out with report that DLF issue is expensive. [Silent Operator on Dalal Street is believed to be a close confident of Mukesh Ambani and their firm is amongst the top 3 BRLMs in India. However, for DLF IPO they gave up because of the differences in pricing. ]

Updating:
After the Issue, DLF is likely to float a JV with some foreign company for Real Estate Investment Trust [REIT], which will give DLF the bargaining power and also Billions of Dollars in cash. This will push Mukesh Ambani at the receiving end in SEZ and Real Estate projects. But Mukesh is not a guy who will sit quiet, We’ll keep you informed as we get more information.

You are reading this first here…
Citirgroup Analyst, Venkatesh Bala, in a report released just few seconds ago has upgraded Punj Lloyd Ltd to a BUY with a price target of Rs 305. Our Dalal Street Research Analyst had recommended Punj Lloyd in December-06 with a price target of Rs 300 [Post-split] So you notice the difference between our quality research and research coming from world’s top brokerage house ? We were the first one to do it 🙂

Citi in its report has also upgraded the stock from Risky- SELL to Low Risk – BUY. Punj is now pre-qualified for larger/more complex projects. Indications of this scale-up are already visible (average order is up from US$30mn to US$100mn in FY07 and likely to go up to US$200mn).

At the end of FY07 Punj Lloyd had the third largest order backlog of Rs159bn in Engineering & Construction sectors after BHEL (Rs550bn) and L&T (Rs369bn).

Earnings revisions of 20% in FY08E and 21% in FY09E. A rolling forward of our target P/E multiple to 23x FY09E, from 23x FY08E earlier. This is well supported by an earnings CAGR of 38% over FY07-10E with RoEs expanding from 17% in FY08E to 25% in FY10E.

Despite L&T being a more diversified and established player with a market cap which is ~ 10x that of Punj Lloyd, Citi uses a similar multiple for both companies given Punj Lloyd’s superior earnings CAGR of 38% over FY07-10E coming off a smaller base vis-a-vis 31% for L&T.