>WIPRO (BONANZA)

Company Background
Wipro started out as Edible Oil Company before entering FMCG and IT businesses. Currently Wipro is the third largest software exporter from India.

Investment Rationale
Second Largest player in the Indian IT domain behind IBM: ‐ Wipro is the second largest IT service vendor in the Indian Market behind IBM. We expect the company to leverage its strong presence in India and continue to bag multiple contracts in the coming months, which would aid Wipro in reporting incremental revenues in the coming years. The company has bagged following contracts in the recent months:‐

■ Six and a Half year contract worth Rs 1182 Cr from Employee State Insurance Corporation.

■ Order worth Rs 200 CR from LIC.

■ Company bagged order from Unitech wireless executable over a period of Nine years for an undisclosed sum. In its analyst meet, the management had conceded that Q1 and Q2 of FY10 would be tough for the industry as a whole however the company has stated that it had witnessed a pick up in order placement in Feb‐ March months in FY09. Going ahead the company has stated a build up in order book pipeline as clients that were apprehensive about IT budget and new order placement are expected to go ahead with orders placement. The management stated that offshore spending by customers would increase as they look to reduce cost at their end.

■ Company has reported a growth of more than 28% in its topline for FY09. Going ahead, with orders form Indian Sector improving and Clients in US and Europe also seeking a reduction in cost and opting for out sourcing Company’s topline is expected to improve in the coming years and expansion of profit margins can also not be ruled out.

■ The company has cash and bank balance of Rs 4912 Cr on its books that translates to Rs 33.5 per share.

To see full report: WIPRO

>Oracle Financial Services Software Ltd. (BONANZA)

Company Background
Oracle Financial Services Software Ltd (OFSS) is a world leader in providing products and services industry. The company has a host of products that offer a gambit of solutions and services for the BFSI segment

Investment Rationale
Growth in Turbulent economic condition: ‐ OFSS would witness growth of nearly 60% in FY09 over the topline of FY08. The company, which is a leader in financial services software, has been able to maintain a robust growth despite a slowdown in the industry that is its chief client. The increase in revenue vindicates company’s software solution prowess for financial institutions.

Strong product pipeline: ‐ Company has a strong product pipeline that commands premium in the BFSI industry. OFSS’s Flexcube suite of product is a market leader and its products have more than 320 clients world over. Its other products such as Reveleues and Mantas are also well received in the industry. Going forward, we expect the company’s new products such as daybreak etc would rake in more revenues for the company.

Growth from key area of software products robust: ‐ The Company has witnessed a robust growth in its product business, which includes product licensing. The products business, which is a high margin business and adds significantly to the bottom line, has witnessed good growth. The company has witnessed 33.3%.

To see full report: OFSS

>SAIL (BONANZA)

Company Background
Steel Authority of India Limited (SAIL) is the leading steel‐making company in India. The company is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power, railway, automotive and defence industries and for sale in export markets.

Investment Rationale

· Expansion Of Capacity‐ The company has plans to almost double its production capacity to 26 million tonnes of steel per annum from the present capacity of 15 million tonne per annum by 2010‐11 with the capex of Rs.54, 000.

· Expansion of Subsidiaries‐ The work relating to expansion and modernization of IISCO and Salem Steel Plant is progressing and contracts are being finalized.

· Steel Processing Units‐ The company in the process of setting up 11 Steel Processing Units (SPU) in 7 states where it does not have any production facility. The SPU will cost Rs 85 crore and will have an installed capacity of 1 lakh tonnes per annum. The SPUs will use products like hot rolled coils, billets and TMT bars produced by SAIL's main integrated steel plants to manufacture a wide variety of steel items
that can be utilised by the common man.

· Target for FY 10‐ The company has set the target to produce around 12 million tonnes of saleable steel and sales turnover of over Rs. 40,000 crore during financial year 2009‐10. We have however considered a lower turnover for the FY 10.

· Investment In Mining‐ The company has made the investment of Rs. 4000 Cr for mining projects in Orissa. This is part of the capex of Rs.54, 000.

· Joint Venture For Acquiring Coal Properties‐ International Coal Ventures (ICVL), the special purpose vehicle (SPV) is formed by five large public sector NTPC, SAIL, RINL, NMDC and CIL for acquiring coal mines abroad. This may improve the availability of coal for the company.

To see full report: SAIL

>GIPCL (BONANZA)

HIGHLIGHTS

• There is long term visibility in Power sector in India. Country is likely to remain power deficit for next few years.

• Gujarat, the most industrialized state also has continuously rising demand for power.

• GIPCL is a small Gujarat Govt.PSU with capacity of 557 MW presently, to be expanded to 807 MW by Q2 FY10.

• The company trades at market cap of less than Rs.700 Crore, whereas the average cost of setting 1 MW ranges Rs.3.8 Crore to Rs.5 Crore (i.e. the company of 800MW about Rs.4000 Crore)

• There is easier availability of gas from Domestic suppliers like Reliance and also from international markets.

• The company was earlier lagging in capacity additions, its last capacity addition was in 1999, now it has laid down plans for capacity additions at regular intervals. By FY 2012,it has targeted to achieve capacity of 1350MW.

• Company has healthy debt/Equity ratio of 0.6 times. Power compnies can have Debt/Equity ratio of 70:30, with current Networth of Rs.1140 Crore and Debt. Of Rs.680 Crore, it can easily raise Debt. Of additional Rs. 1980 Crore.

• The company is a regular dividend payer. It paid Rs.2.5/Share dividend in FY08. At CMP Rs.45 it offers Dividend Yield of about 6%

• It has price to Book value of 0.6.

• Company is likely to show fall in bottom line in FY09, compared to FY08, however, once the new capacity starts in next 4months, a sharp jump in results can be seen in FY10. Currently, it is trading at very attractive Market cap/Sales ratio of 0.6 times.

• It is highly under valued compared to peers.

To see full report: GIPCL

>Bank of Maharashtra (BONANZA)

Highlights

• BoM is a small PSU Bank, mainly concentrated in Western India. It has deeply penetrated underbanked areas of among the most industrialized states of the country like Maharashtra, Gujarat, Karnataka etc.

• It is an excellent take over candidate as M&A begins in PSU Banks (already started within SBI group).

• Bank has controlled its NPA very well. Its NPA levels are at 0.82%.

• At CMP Rs.22, Bank is trading at about 47% of its Book Value of Rs.41,.

• At CMP Rs.21, it offers dividend yield of 9.5%. Dividend in FY 08 was Rs 2/share. It has been paying dividend consistently.

• Government shareholding is very high at 76%, which makes further fund raising easy. Also, BoM is attractive to potential acquirer in M&A, specially banks with Govt. holding near 51%.

• PSU Banks have huge exposure to G-Sec. The prices of these Govt. securities have sharply risen in past few months and yields have fallen. With softer interest economy, Bonds yield can fall more. Thus dividend yield of the safe PSU Banks stocks are much higher than the Bond Yields (10-Year 6.05% G-Sec yield is about 7.1% presently)

• The bank enjoys high CASA of about 38%.

To see full report: BANK OF MAHARASHTRA

>South Indian Bank (BONANZA)

Company Background
Thrissur (Kerala) based South Indian Bank (SIB) is one of the earliest banks in South India, came into being during the Swadeshi movement in 1928. It is mainly a strong regional player in South India. The Bank has grown gradually steadly. Presently, it has a branch network of 537 branches (including 17 extension counters), all with CBS technology.

Highlights
• The bank has shown decent performance. Its profits have grown very well, from Rs.8.7 Crore in FY 2005 to Rs.153.39 Crore in FY 2008, a growth of 260% compounded. It has also shown very good improvement in Assets quality. Its Net NPA stand at 0.4% presently, down from 3.81% in FY 2005.

• SIB has been paying dividend regularly. At current price the dividend yield works out to be 6.5%, if dividend payout of Rs.3/Share is maintained.

• Bank gave 1 for 4 Bonus in Q3 FY 09.

• Bank has maintained its PLR at 16%. This should improve the net interest income for the bank.

• The bank has high capital adequacy ratio of 14.62%.

• SIB has good market share of large South India based NRIs and their families in India. It serves the niche market due to its decades old relations in specific regions. About 24% of bank’s business is from NRI market.

• SIB is a very good M&A target, due to no dominant promoter group and strong presence in South Indian market.

To see full report: SOUTH INDIAN BANK

>KEC International Ltd. (BONANZA)

Mumbai based KEC International was started in 1945 as Kamani Engg. Corp, it was taken over by RPG Group in 1982 and renamed KEC International. RPG Transmission & National Information Technologies were merged into KEC in FY08. Rs.11000 Crore (US$ 2.2 Billion) RPG group is diversified conglomerate with interests in Powe (Generation Transmission & Distribution), IT, Entertainment, Tyres, Retail, Plantation, Carbon Black etc. KEC is among the Leading Transmission line EPC companies. It has strong global footprint with client base spread over 40 countries, and is currently executing orders in 15 countries. It has strong presence in India, South Asia, Middle East, Africa & Central Asia. The company has Experience of supplying transmission line towers to developed markets like USA, Canada.

KEC has successfully executed projects in diverse terrains:
• Deserts: UAE, Algeria, Egypt, India, Saudi Arabia (40°C)
• Mountains: India, Lebanon, Malaysia, Mozambique
• Frosty Conditions: Kashmir, Afghanistan, Kazakhstan
• Rivers: Brahmaputra, Nile, Ganges, Rihand
Challenging locations: Afghanistan, Iraq etc

It is 9001 14001 OHSAS 18001 certified to give world class manufacturing quality. It has 3 manufacturing plants at Jabalpur, Jaipur and Nagpur for transmission & telecom towers. It has total Manufacturing Capacity of 140,000 MT.

To see full report: KEC INTERNATIONAL

>Bata (BONANZA)

Company Background: Kolkata based Bata India was started in 1931. It is the largest company for the Bata Shoe Organization in terms of sales pairs and the second largest in terms of revenues. With 1250 stores across the country, it also has the widest retail network within the Bata Shoe Organization. Czechoslovakia (now Czeck Republic) based Bata was started in 1894. It has a worldwide reach, with operations across 5 continents.

Highlights

• Indian Branded footwear market is estimated to be around Rs.10000 Crore. Bata commands nearly 10% of the market.
• The growth drivers are growing Indian population and higher per capita income.
• Bata has wide range of footwear solutions‐Shoes, Slippers, Socks, Shoe Polish etc.
• Its product range starts from Rs.5 and goes as high as Rs.4000. Thus it addresses a wide segment of the population.
• Company has pan India wide distribution network of 1250 stores. Its customers are from diverse categories. Bata products are for newly born infant to school going kids, College student to office going professionals, Businessmen to Farmers, Young Girls to Old Ladies.
• Company is increasing the number of outlets at regular period.
• Some of the popular footwear brands from Bata stable include‐ Hush Puppies, School Mate, Bubble Gummers, Sandak, Marie Clarie, Haute Couture, Evalite, Ambassador, North Star, Power, Weinbrenner etc.
• Company has good backward integration, besides own manufacturing plants, it has own leather
processing tannery. Further, Czeck based parents provide good product designing support.
• It has started selling goods from other makers also, like school bags, children apparels, sports goods etc.
• Company has improved its financial position over the years. Interest costs have been falling.

To see full report: BATA

>RIL (BONANZA)

• Post merger Reliance Industries will issue 1 share for every 16 shares of RPL.
• Reliance Industries will issue 6.92 crore new shares thereby increasing the equity capital to 1643 crore. Consequently the promoter holding in RIL will reduce from 49% to 47%.
• The merger will be effective from 1st April 2008.
• The combined capacity post merger will be 1.24 million barrels per day
• The Reliance will emerge as the world’s 5th largest producer of the Polypropelene with the addition of 0.9 million tonnes of RPL.

Recent developments
• The recent developments may cause a pressure on RIL in the short run. The deepening economic crisis in Europe would keep the refining margins capped, delay in production of gas from earlier schedule and merger of RPL would add to the expenses in the initial period.

• Delay in production of gas from KG Basin‐ The Company is ready to start gas production from its eastern offshore KG‐D6 fields by April 2009. Previously the company had planned to start it from February 2009. The production of gas in the basin will be scaled up to 40 mmscmd by end 2009 and to 80 mmscmd by end‐2010. The selling price approved by the government is $4.2 though this price is currently is the matter of litigation.

• Rupee Devaluation‐ Due to rupee devaluation the loan liability has increased as the project cost estimated at Rs.27000 Cr had increased.

To see full report: RIL