Category: Economy, Markets and Macro Views

The IFCI stock surged to Rs 50 in intra-day trade, a 52-week high for the counter.

On the back of recoveries and sale of investments, the Industrial Finance Corporation of India (IFCI) reported a net profit of Rs 644.12 crore for the fourth quarter ended March 2007, against a loss of Rs 105.11 crore, in the corresponding period a year ago.

For the fiscal ended March 2007, IFCI’s net profit stood at Rs 898 crore compared to a loss of Rs 74 crore, a year ago.

While operational income for the quarter ended March 2007 rose by 40% to Rs 1052.62 crore (Rs 748.68 crore), other income for the quarter increased by 40% to Rs 41.47 crore (Rs 29.61 crore). The financial institution (FI) saw a huge dip in total expenditure from Rs 883.32 crore to Rs 86.82 crore on the back of reversal of provisioning.

The FI earned around Rs 730 crore through the sale of its stake in the National Stock Exchange and another Rs 60 crore through the sale of stake in ICRA. IFCI still has a 5.5% stake in NSE, which is valued at Rs 550 crore. The book value of its investments is at around Rs 1000 crore while the market value of these investments are more than Rs 2000 crore.

IFCI chief executive officer RM Malla said, “We have focused our attention on recoveries, reducing the cost of our borrowings and unlocking the value of our investments. The net NPAs have now been reduced to zero, while gross NPAs are now at Rs 6500 crore. All future recoveries will go straight to the bottomline. The accumulated losses eased from Rs 4800 crore to Rs 800 crore. This financial year, there was NPA resolution of over Rs 1000 crore. The state-run financial instituion also paid back liabilities of Rs 900 crore in the year, reducing them to Rs 13,000 crore.”

In three separate block deals on the NSE, about 3.88 crore IFCI shares were purchased by Clean Finance & Investment, Jaypee Capital Services and Latin Manharlal Securities, respectively. About 10.76 crore shares changed hands on NSE’s counter on that day.

Tech Mahindra(1588) Buy for target of 1640,1678, 1700

Divis Lab(3681) Buy for a targt of 3850 in short term. Stop Loss 3610

Tera Software(78) Buy with Stop Loss of 76.5

Pratibha Ind(198) Tgt of 209..Stop Loss 194

Ashok Leyland May-31st Call Option. Buy around 0.45 Paise.

ABN Amro research has put a HOLD on Glenmark Pharma. Glenmark’s Q4 results were in expectations but thinks the FY08 guidance as aggressive.

ABN Amro says the stock is fairly valued and stocks to a price target of Rs 656. Glenmark is expected to report an EPS of Rs 29.3 for FY08 and Rs 37.3 for FY09. Glenmark derives 40% of its income from India.

Glenmark has gudied for 80% increase in revenue growth from the US market for FY08. This seems too ambitious with the recent erosion of prices in the US generics market. Glenmark has been into the US for little over a year and adding to its woes is the appreciation of Indian Rupee against USD.

ABN Amro has raised its SOTP based target price from Rs 603 to 656. The stocks is fairly valued at 18x core earnings with a valuation of USD 1 Billion for out licensing deals.

For the first time, RBI is out of the Forex market and the Dollar had a free fall against Rupee. This is surely going to hurt the exporters. Merill Lynch in a report released just a while ago states that global commodities and software sectors are the worst hit.

Global Commodities majors such as Reliance [RIL] Hindalco, Tisco will be the worst hit until the rupee recovers. Patni Sasken and Infosys are the worst hit in Software sector because of no forward hedge. Tech Mahindra and is the least hit because major sources of its revenues are from Europe.

Other losers include Cairn, pharma stocks like Dr Reddys, Divi’s Lab and textile names (Welspun and Gokaldas).

Tags: Invest India, Dalal Street, Forex, Dollar

After sliding from late-February to early-March 2007, the Reliance Industries (RIL) stock had staged a solid rebound and the pre-results rally took the stock to a record high above Rs 1600, at Rs 1624.80, on Thursday (26 April).

The pre-results’ surge was mainly due to a huge build of positions in the stock in the derivatives segment. From Rs 1313.50 on 2 April 2007, the stock had risen 21.8% to a record closing high of Rs 1599.85 on Wednesday (25 April 2007). RIL is currently trading at Rs 1550 and the BSE Sensex down 250 points.

RIL reported a lacklustre 14% growth in net profit in Q4 March 2007 at Rs 2853 crore compared to Rs 2520 crore in Q4 March 2006, on the back of strong refining margins. Net sales rose mere 5.5% to Rs 25895 crore from Rs 24542 crore.

RIL posted a net profit of 10908 crore for FY 2007, compared with a net profit of Rs 9069 crore in FY 2006. Net sales rose to Rs 105363.30 crore from Rs 81211 crore. The company’s earnings per share (EPS) rose to Rs 78.3 in FY 2007 from Rs 65.10 in FY 2006.

RIL is targeting sales of more than $24 billion by 2011 from the retail business. The company has set up 135 retail stores in 16 cities during FY-2007, the company said on Thursday.

Eicher Motors has paid a total consideration of $ 3.5 million to acquire 100% equity from the shareholders of Hoff and Associates. Hoff & Associates had reported a consolidated turnover of $ 5.2 million for the year ended 31 December 2006.

Eicher Motors recently forayed into heavy commercial vehicles (HCVs) about three years back. Demand in this segment has increased due to a Supreme Court ban on overloading of trucks.

Eicher Motors also launched tipper, Terra 16, which was well received by the market. The company claims that the product is extremely suitable for mining, construction and other off-road applications. Eicher Motors has the best CNG technology in the world.

Besides commercial vehicles, Eicher Motors is also into auto components and engineering services. The auto components business mainly manufactures gears. In July 2006, Eicher Motors acquired a Detroit-based engineering services provider, Design Intent Engineering, for $2.5 million. The acquired firm brings expertise in surface design engineering, and design software for Eicher Motors.

Eicher Motors for the quarter ended December 2006 reported 26.50% rise in net sales to Rs 493.82 crore and a net profit of Rs 17.79 crore.

Reliance Mutual Fund has acquired 7% stake in Eicher motors.