During Feb 07, Nagarjuna Construction allotted 2.5m warrants to promoters (M/s. A V S R Holdings Private Ltd), with option to convert into equity shares at Rs217/share, within 18 months, entailing cash inflow of Rs543m. As the promoters have not paid the amount within stipulated time frame,warrants have lapsed and this comes as a negative surprise to us. NCC had received 10% upfront payment of Rs54m, which will now be forfeited. (more…)
Category: Equity Research
Indian Equity Research and Stock Recommendation
Hamara Bajaj Auto to Surive Bumpy Ride – Credit Suisse
The 2-wheeler industry demand in India is set to grow from FY09E (+8.5% pa in FY08-11E), after having declined -7.9% in FY08. Pricing power is back; discounts are the lowest in many years. In motorcycles, while Bajaj has lost market share in the recent past, it has rationalised its portfolio and is set to grow volume in the domestic market from 4QFY09E (+7.3% pa in FY08-11E). [Bajaj is no more into the nostalgic scooter business]
Two-wheeler demand has bounced back from a low base as 2 wheelers suffered from tightening credit more than a year ago. Only 30% of 2-wheelers are financed now, against 55% two years ago. We expect the domestic 2-wheeler industry to grow 8.5% pa in FY08-11E (7.9% decline in FY08). (more…)
RPL + ACC + Maruti – Out of Favor
According to a report by Merrill, Reliance Petroleum, ACC and Maruti are out of favor stocks.
RPL:
RPL’s refinery achieved 94% overall progress by end-June 2008. The main bureaucrat in the Indian petroleum ministry has been quoted as saying that it will start in September 2008. The first 3-4 months of operations (at least two months according to management), when the refinery uses light and sweet crude, are likely to be treated as trial production. Consequently it is likely that RPL will report only three months of commercial operations in FY09E. (more…)
Stock Price Valuation – Double Whammy
Parak Parikh, CEO of PPFAS one of the well known Portfolio Management Advisers and relatively conservative broking house has beautifully written why stock price targets have been cut by as much as 50-60%. This is what he terms as the “double whammy” / double edged sword of lower profits and lower valuation. (more…)
Power Sector – A Ray of Hope
You have already that Foreign Institutions are bullish on the Indian Power sector. In this post, I am going to briefly touch upon the reforms [excluding Nuclear Power] and developments in the Global Energy that will impact the bottom-line of Indian companies. The following post will cover outlook of Individual power producing companies.
The big producers of Power are NTPC, Tata Power, CESC, Neyveli Lignite, Reliance Energy, Gujarat Industries Power and state owned electricity corporations. The Ministry of Power has issued LoI to 64 different companies to meet the additional production target of 68,539 MW. Most of these are less than 1,000 MW in capacity powered by Coal [Ya I know its dirty energy, but we can’t help it]. Tata, Reliance and NTPC are developing ultra mega power projects (more…)
Infosys’ Axon Bid for Stronger Bottomline
Infosys plans to acquire UK-based SAP consulting co. Axon Group plc (LSE:AXO) for US$753.1m at 19% premium to last closing price. Based on last 5yrs reported PATg of 68% & 08 consensus forecast EPS g 29%, deal likely fair at 15x CY08 consensus EPS. Axon could add 10% to Infy revs, take up Europe to ~30% of revs from 27% today & grow consulting /enterprise solutions to 30% from 24% today. (more…)