Category: Equity Research

In a daring report published by Goldman Analyst has come forward and still recommnds a SELL on Reliance Power. Goldman believes financial risk has been mitigated to some extent, we think risks relating to fuel, land and offtake of output still exist for several RPWR key projects. Retain Sell with 22% potential downside, as valuations do not reflect risks for its key projects, in our view. (more…)

Power Grid Corporation of India Ltd – PGCIL is the main beneficiary of India’s Power generation capacity growth. Goldman’s negative view on PGCIL comes mainly from the back of – few options PGCIL has to improve its ROE beyond 13%; potential delays in generation capacity impacting its planned capex. Expect PGCIL’s planned capex to fall 25% short of its target of US$12bn for the 11th Five-Year Plan; insufficient internal accruals, which could lead to equity dilution or pushing of capex to 12th Five-Year Plan. (more…)

Income tax benefit on Colgate’s manufacturing unit at Baddi is set to reduce from 100% to 30% from FY11 onwards. The management has clarified that no further investments would be made to restore these benefits. We expect the company’s effective tax rate to move up to 25% from 16% currently and cut earnings estimates by 7-9% over FY11-12CL.

Colgate’s conservative pricing strategy (realisation growth was only 2% in FY09) has been a key growth driver in FY09. While the softening in key inputs has helped the company, management expects a sequential rise in prices of key inputs viz. Sorbitol, packaging (tubes) in the coming quarters. (more…)

Once again Research is following the Stock prices, and now this time it is in the iT Services segment 🙂 IT spending indices continue to build a bottom from which we expect to see more significant improvement in readings ahead.

A greater majority of our panel of IT managers now expect normal or better than normal seasonal spending trends for the second half of the year relative to prior reading. Another early inquiry into 2010 spending expectations also reveals sturdier (more…)

Resumption of capital flows has reduced stress on asset quality. Moreover, core revenue momentum should pick up strongly in F2H10. Given valuations, analysts believe that SOE banks are the best way to play this theme and are likely to outperform their private sector peers. We continue to like wholesale funded institutions as well.

Bond yields are moving up and there are expectations of tightening. SOE banks are now relatively immune from MTM losses, unless yields spike up more than 200 bps. Moreover, the 5 year trend of contracting spread on bond portfolios is behind us – (more…)

Since the Ground realities in the IT sector warrant caution, Morgan Stanley has downgraded Infosys Technologies from Equal-weight to Underweight.

Valuations for Infosys appear rich and near-term risk reward is turning unfavorable. Lack of visibility on ramp-ups from existing clients remains the single biggest headache for managements across IT companies. (more…)