■ Market size pegged at US$1.6bn with ample scope of growth
Mobile Value Added Services (VAS) has evolved in to a US$1.6bn ancillary industry to the Rs950bn a year Indian wireless market. Voice offerings such as Ring back tones and Voice portals are dominant in the domestic non-SMS space as against more data-centric VAS abroad. VAS accounts for 8-9% of wireless revenues which leaves ample scope of market expansion.
■ OnMobile dominates the market with 12.3% share.
OnMobile Global has emerged leader in a fragmented industry deal with a 12.3% market share in the non-SMS segment. It enjoys several early-mover advantages. Firstly, long-term relationships with major telecom operators are in place as its servers are embedded in the operators' core network.
■ OPM likely to stay in narrow band
Upfront content development costs and relatively fixed staff and other expenses have led to margin drop of over 14ppts over Fy07-09. However, as the company indicated in its Q4 earnings call,content costs, which have been edging higher in the past few quarters, which is likely to stablize at current levels. We forecast OPM to stay within a narrow band of 30-33% in the next two years.
■ Dominant status underpins EPS CAGR 32.3%; BUY
■ Mobile VAS has transformed in to ~US$1.6bn industry
To see full report: ONMOBILE
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вторник, 16 июня 2009 г.
четверг, 4 июня 2009 г.
>MOMENTUM PICKS (INDIA INFOLINE)
15 MOMENTUM PICKS
In this note, we review performance of the 15 stocks recommended by us post the favourable election outcome on the morning of May 18,2009. The 15 stocks have delivered an average return (assuming equal weights) of 50% against 26% by BSE 200 (comparable Benchmark) since May 15th. Even after computing from May 18th (more cogent as markets freezed on thin volumes on that day), the average return of recommended stocks stood superior at 23% as compared to 8% delivered by BSE 200.
For continued outperformance in the near term especially up till the budget, we thought of weeding out stocks where upside seems capped post recent run-up and replacing them with companies where fundamentals and technicals warrants significant upside from here. Jain Irrigation, ICICI Bank Punj Lloyd Birla Corp and Shree Cement are stocks in which profit booking is recommended. Companies that we advise to add are Everest Kanto, Genus Power, ICSA, Sintex and United Phosphorus. These have been identified on the basis of growth visibility, healthy return ratios, high beta values and valuation comfort.
Stock list, Return & Recommendations given in this report
To see full report: MOMENTUM PICKS
воскресенье, 31 мая 2009 г.
>CAIRN INDIA LIMITED (INDIA INFOLINE)
Sales plummet on account of lower realizations
Cairn India Ltd. (Cairn) registered a net sales fall of 42.5% yoy and 13.8% qoq to Rs1.8bn. The fall was on account of 53% yoy decline in crude oil realizations and 2% yoy lower gas realizations. Rupee depreciation helped offset the impact partially, Net working interest was down 12.2% yoy to 15,824 boepd as both Cambay and Ravva fields are on a natural decline. On a qoq basis, volumes were lower by 4.6%.
OPM declines 25ppts yoy but rises 266bps qoq.
During Q5 FY09, Cairn reported 62% yoy decline in operating profit and 25 ppts yoy decline in OPM. This was primarily on account of doubling of administration expense. As a percentage of sales, personnel costs and operating expenses also rose. Th fall in OPM was despite was despite 37% yoy fall in operating costs per barrel.
To see full report: CAIRN INDIA
Cairn India Ltd. (Cairn) registered a net sales fall of 42.5% yoy and 13.8% qoq to Rs1.8bn. The fall was on account of 53% yoy decline in crude oil realizations and 2% yoy lower gas realizations. Rupee depreciation helped offset the impact partially, Net working interest was down 12.2% yoy to 15,824 boepd as both Cambay and Ravva fields are on a natural decline. On a qoq basis, volumes were lower by 4.6%.
OPM declines 25ppts yoy but rises 266bps qoq.
During Q5 FY09, Cairn reported 62% yoy decline in operating profit and 25 ppts yoy decline in OPM. This was primarily on account of doubling of administration expense. As a percentage of sales, personnel costs and operating expenses also rose. Th fall in OPM was despite was despite 37% yoy fall in operating costs per barrel.
To see full report: CAIRN INDIA
четверг, 28 мая 2009 г.
>NTPC (INDIA INFOLINE)
HIGHLIGHTS
■ Generation at 57BU, higher by 6% yoy while average realizations were higher by only 0.7% yoy■ Gas plants registered PAF of 84% due to lack of availability of gas and forced outages.
■ Revenues higher by 14% yoy to Rs 114bn against Rs 100bn in the corresponding period last year, due to higher fuel cost.
■ Adjusted PAT de-grows 32% yoy to Rs17bn against Rs25bn last year
■ Commissioned 1GW during the year and plan to commission 3.3GW during Fy10
■ Most expensive utility, trades at 2.8x FY10E book, re-iterate SELL with an increased target price of Rs181/share, representing 15% downside.
To see full report: NTPC
суббота, 23 мая 2009 г.
>PUNJAB NATIONAL BANK (INDIA INFOLINE)
■ Strong growth momentum continues in Q4 FY09; Fy09 loan growth at 29.5% yoy.
■ NIM correct by 30 bps qoq, in-line with expectations.
■ Other income remains elevated; spike in C/I ratio hurts profit growth
■ Significant reduction in NPA levels; capital adequacy improves
■ Bank taregts 23-35% loan growth and ~3.5% NIM in FY10
■ Downgrade to MP with target Rs 700; valuations have become fair post recent rally
To see full report: PNB
■ NIM correct by 30 bps qoq, in-line with expectations.
■ Other income remains elevated; spike in C/I ratio hurts profit growth
■ Significant reduction in NPA levels; capital adequacy improves
■ Bank taregts 23-35% loan growth and ~3.5% NIM in FY10
■ Downgrade to MP with target Rs 700; valuations have become fair post recent rally
To see full report: PNB
среда, 13 мая 2009 г.
>AUTOMOBILE SECTOR (INDIA INFOLINE)
Maruti: Growth across categories except M800
Maruti reported a 8.9% yoy rise in domestic volumes, driven by growth across all categories except for Maruti 800 which registered a fall 0f 47.4% yoy. A3 category lead the growth with 68.8% yoy jump in volumes drven by strong response to Swift DZire. Our channel checks have indicated at 1.5-2 months waiting period for petrol variants of the model. A2 category, which account for about 73% of volumes, reported 8.6% yoy growth owing to continued success of Swift model and pick up in volumes of A-Star Exports jumped 146% backed by robust volumes for A-Star in the European market.
Mahindra & Mahindra: UV volumes remain strong
M&M registered 14.8% yoy growth in total automative volumes during April 2009. The growth was lead by 36% jump UV volumes owing to sales of 3,509 units of its new model XYLO. 3-wheeler volumes fell 11.1% yoy. Volumes of Mahindra Logan continue to fall precpitously and were at 550 units in April'09 as against 1,713 units in April'08. LCV and export volumes declined by 16.5% yoy and 39.3% yoy respectively.
Tata Motors: Domestic volumes rise yoy after 7 months
Tata Motors reported 4.5% yoy rise in its total domestic volumes. On a yoy basis, volumes plunged across all categories except for passenger cars and LCV. While passenger car volumes increased 10.8% yoy, LCV volumes jumped 51.7% yoy. Its M&HCV volumes nosedived by 28.4% yoy, whereas exports and UVs plummeted 45.3% and 39.5% yoy respectively.
Two-Wheelers : Hero Honda continues to rule
Amongst the two wheelers, Hero Honda continued with its dominance with a 29.5% yoy increase in volumes in comparison to 2.9% yoy growth for TVS Motors and 23.8% yoy fall for Bajaj Auto. On a mom basis, Hero Honda reported a 4.9% yoy growth in volumes.
To see full report: AUTOMOBILE SECTOR
Maruti reported a 8.9% yoy rise in domestic volumes, driven by growth across all categories except for Maruti 800 which registered a fall 0f 47.4% yoy. A3 category lead the growth with 68.8% yoy jump in volumes drven by strong response to Swift DZire. Our channel checks have indicated at 1.5-2 months waiting period for petrol variants of the model. A2 category, which account for about 73% of volumes, reported 8.6% yoy growth owing to continued success of Swift model and pick up in volumes of A-Star Exports jumped 146% backed by robust volumes for A-Star in the European market.
Mahindra & Mahindra: UV volumes remain strong
M&M registered 14.8% yoy growth in total automative volumes during April 2009. The growth was lead by 36% jump UV volumes owing to sales of 3,509 units of its new model XYLO. 3-wheeler volumes fell 11.1% yoy. Volumes of Mahindra Logan continue to fall precpitously and were at 550 units in April'09 as against 1,713 units in April'08. LCV and export volumes declined by 16.5% yoy and 39.3% yoy respectively.
Tata Motors: Domestic volumes rise yoy after 7 months
Tata Motors reported 4.5% yoy rise in its total domestic volumes. On a yoy basis, volumes plunged across all categories except for passenger cars and LCV. While passenger car volumes increased 10.8% yoy, LCV volumes jumped 51.7% yoy. Its M&HCV volumes nosedived by 28.4% yoy, whereas exports and UVs plummeted 45.3% and 39.5% yoy respectively.
Two-Wheelers : Hero Honda continues to rule
Amongst the two wheelers, Hero Honda continued with its dominance with a 29.5% yoy increase in volumes in comparison to 2.9% yoy growth for TVS Motors and 23.8% yoy fall for Bajaj Auto. On a mom basis, Hero Honda reported a 4.9% yoy growth in volumes.
To see full report: AUTOMOBILE SECTOR
воскресенье, 10 мая 2009 г.
>Reliance Communications (INDIA INFOLINE)
Revenue growth below estimates on weak wireless showing
Rcom Q4 FY09 revenues increased 2.2% qoq, lower than our expectations, on a weak wireless performance. Mobile revenues increased 2% over the previos quarter, much below our estimate for a 5.6% rise, However global segment made up for a relatively subdued wireless showing with a robust 12% jump in revenues. The company attributed this to ongoing synergies on integration of VANCO and Yipes Inc. Most of the growth came from data business with negligible contribution from voice.
ARPU fall worse than expected; MOU disppoints
ARPUs declined 10.8% qoq, worse than our expectations and also that for peers like Bharti. MOU at 372mins was disappointing especially since free minutes offered as part of GSM launch in 14 circles.
OPM increase in-line; staff, SG&A expenses decline
Rcom reported OPM of 38.2% in-line with our estimate. Although network opex and access charges increased, these were cushioned by decline in staff and SG&A costs. PAT growth came in above our expectations on higher interest and other income.
Capex intensity to decline; Maintain BUY
Rcom has incurred capex of Rs190bn in FY09, about 24% lower as against a revised guidance of Rs250bn, partly owing to network optimization. Wireless capex is likely to be completed by Sep'09 and the company has guided for a spending of Rs100bn in the current fiscal. It expects the incremental revenues from GSM subscribers to accrue from the current quarter. We project revenue CAGR of 19.5% over Fy09-11 while PAT growth would trail revenues due to net interest expenses from current year. Maintain BUY with a revised price revised target of Rs 252 from Rs213 earlier.
To see full report: RELIANCE COMMUNICATIONS
Rcom Q4 FY09 revenues increased 2.2% qoq, lower than our expectations, on a weak wireless performance. Mobile revenues increased 2% over the previos quarter, much below our estimate for a 5.6% rise, However global segment made up for a relatively subdued wireless showing with a robust 12% jump in revenues. The company attributed this to ongoing synergies on integration of VANCO and Yipes Inc. Most of the growth came from data business with negligible contribution from voice.
ARPU fall worse than expected; MOU disppoints
ARPUs declined 10.8% qoq, worse than our expectations and also that for peers like Bharti. MOU at 372mins was disappointing especially since free minutes offered as part of GSM launch in 14 circles.
OPM increase in-line; staff, SG&A expenses decline
Rcom reported OPM of 38.2% in-line with our estimate. Although network opex and access charges increased, these were cushioned by decline in staff and SG&A costs. PAT growth came in above our expectations on higher interest and other income.
Capex intensity to decline; Maintain BUY
Rcom has incurred capex of Rs190bn in FY09, about 24% lower as against a revised guidance of Rs250bn, partly owing to network optimization. Wireless capex is likely to be completed by Sep'09 and the company has guided for a spending of Rs100bn in the current fiscal. It expects the incremental revenues from GSM subscribers to accrue from the current quarter. We project revenue CAGR of 19.5% over Fy09-11 while PAT growth would trail revenues due to net interest expenses from current year. Maintain BUY with a revised price revised target of Rs 252 from Rs213 earlier.
To see full report: RELIANCE COMMUNICATIONS
суббота, 9 мая 2009 г.
>Bharti Airtel (INDIA INFOLINE)
■ Revenues increase 6.1% qoq in-line with estimate driven by 9.7% rise in subscriber base.
■ MOU falls 4% qoq on fewer number of days in the quarter and free minutes offered by RCOM in its GSM launch.
■ PAT growth better than expected on lower interest expense; Maiden dividend of 20% signals tapering off in capex cycle, lower phase of growth.
■ Notwithstanding wireless leadership and superior return ratios, we downgrade the stock to Market Performer with a revised price target of Rs776.
To see full report: BHARTI AIRTEL
■ MOU falls 4% qoq on fewer number of days in the quarter and free minutes offered by RCOM in its GSM launch.
■ PAT growth better than expected on lower interest expense; Maiden dividend of 20% signals tapering off in capex cycle, lower phase of growth.
■ Notwithstanding wireless leadership and superior return ratios, we downgrade the stock to Market Performer with a revised price target of Rs776.
To see full report: BHARTI AIRTEL
пятница, 8 мая 2009 г.
>CESC - MP (INDIA INFOLINE)
■ Revenues higher by 15% yoy to Rs7.5bn, as overall PLF and average realizations improve.
■ PAT stood at Rs 940mn, higher by 9% yoy, higher than our estimate.
■ Budge Budge II progressing well, expected to commercialize by September-09.
■ Spencer's estimated loss for FY09 stands at ~Rs2.5bn, higher than our estimate.
Buy - Absolute return over +10%
Market Performer - Absolute return between -10% to +10%
Sell - Absolute return below -10%
To see full report: CESC
■ PAT stood at Rs 940mn, higher by 9% yoy, higher than our estimate.
■ Budge Budge II progressing well, expected to commercialize by September-09.
■ Spencer's estimated loss for FY09 stands at ~Rs2.5bn, higher than our estimate.
Recommendation parameters for fundamental reports:
Buy - Absolute return over +10%
Market Performer - Absolute return between -10% to +10%
Sell - Absolute return below -10%
To see full report: CESC
понедельник, 27 апреля 2009 г.
>IDFC (INDIA INFOLINE)
Life above 200-DMA....
IDFC is doing a balancing act around the 200-DMA. Technically, the 200-DMA is a critical level above which the bulls take charge and below which, bears look to take advantage. Reamrkably, the stock is testing its 200-DMA after May 2008.
On the daily chart (as shown in this report), the stock has been trading in a rising channel from a low of Rs44 in early March 2009, thus indicating strong build up in the stock. In fact, a detailed study of the daily chart suggests that stock has given a breakout past its 6-month resistance line with heavy volumes. In the same period, the stock made three attempts to break the resistance but failed. On Tuesday, it finally broke the crucial level with highest volumes in April 2009. Even if it declines from the current level, the short-term moving averages should act as a strong support for the stock.
IDFC was listed on the bourses in August 2005 at Rs 60, 76% premium to its issue price. Thereafter, it fell to a low of Rs44 in July 2006. Between July 2006 and January 2008, the stock saw a rally up to the levels of Rs229. A worldwide fall out in global financial markets brought IDFC back to the levels of Rs45 in October 2008. Since then, the stock has bounced back at several occassions from the critical support levels.
We believe the stock has formed a nottom at Rs44-45 levels. Rebound from here is in progress and further upside cannot be ruled out. Technical charts are appearing interesting from a long term view. The longer term target for the stock is above Rs 100, and corrections should be used as entry points. The near-term support is at Rs 56. We recommend traders to buy the stock in the range of Rs70-78 for a target of Rs 100 and Rs 105.
To see full report: IDFC
IDFC is doing a balancing act around the 200-DMA. Technically, the 200-DMA is a critical level above which the bulls take charge and below which, bears look to take advantage. Reamrkably, the stock is testing its 200-DMA after May 2008.
On the daily chart (as shown in this report), the stock has been trading in a rising channel from a low of Rs44 in early March 2009, thus indicating strong build up in the stock. In fact, a detailed study of the daily chart suggests that stock has given a breakout past its 6-month resistance line with heavy volumes. In the same period, the stock made three attempts to break the resistance but failed. On Tuesday, it finally broke the crucial level with highest volumes in April 2009. Even if it declines from the current level, the short-term moving averages should act as a strong support for the stock.
IDFC was listed on the bourses in August 2005 at Rs 60, 76% premium to its issue price. Thereafter, it fell to a low of Rs44 in July 2006. Between July 2006 and January 2008, the stock saw a rally up to the levels of Rs229. A worldwide fall out in global financial markets brought IDFC back to the levels of Rs45 in October 2008. Since then, the stock has bounced back at several occassions from the critical support levels.
We believe the stock has formed a nottom at Rs44-45 levels. Rebound from here is in progress and further upside cannot be ruled out. Technical charts are appearing interesting from a long term view. The longer term target for the stock is above Rs 100, and corrections should be used as entry points. The near-term support is at Rs 56. We recommend traders to buy the stock in the range of Rs70-78 for a target of Rs 100 and Rs 105.
To see full report: IDFC
вторник, 21 апреля 2009 г.
>Hotels Q4 FY09 (INDIA INFOLINE)
Weakness likely to persist in Q4 FY09.
Q4 FY08 had seen record quarterly revenues for the three hotel companies under our coverage. However, the slowdown in Revenue Per Available Room (RevPar) growth worked its way through 9M FY09 with Q3 FY09 bearing the burnt of recession and terror attacks in Mumbai. Dec'08 has proved a 'wipe-out' month for the indudtry as luxury market ARRs fell 15% yoy. The weakness in room rates and occupancies is likely to persist in Q4 FY09. We expect revenue declines ranging from 16-25% yoy, partly owing to the high-base effect of the last year.
Margin pressure may contiue unbated.
We expect margin pressure to continue unbated as revenues come under pressure yoy. Relatively fixed expenses such as fuel and staff are likely to impact operating margin. Indian hotels and EIH are expected to report more than 10 ppts drop in OPM.
Occupancies may improve qoq for Indian Hotels.
In the aftermath of terror attacks and holiday season, occupancies in business hotels dropped to ~50% in Dec'08, a sharp fall of over 24ppts yoy. However, we expect larger players such as Indian hotels to witness improvement in occupancy rate qoq from the Dec'08 trough. On the other hand, ARRs are likely to remain weak, due to ongoing economic weakness, especially in cities such as Bangalore where we estimate room rate decline of about 7-8% yoy and occupancies of about 63-68% in the quarter.
To see full report: HOTELS Q4 FY09
Q4 FY08 had seen record quarterly revenues for the three hotel companies under our coverage. However, the slowdown in Revenue Per Available Room (RevPar) growth worked its way through 9M FY09 with Q3 FY09 bearing the burnt of recession and terror attacks in Mumbai. Dec'08 has proved a 'wipe-out' month for the indudtry as luxury market ARRs fell 15% yoy. The weakness in room rates and occupancies is likely to persist in Q4 FY09. We expect revenue declines ranging from 16-25% yoy, partly owing to the high-base effect of the last year.
Margin pressure may contiue unbated.
We expect margin pressure to continue unbated as revenues come under pressure yoy. Relatively fixed expenses such as fuel and staff are likely to impact operating margin. Indian hotels and EIH are expected to report more than 10 ppts drop in OPM.
Occupancies may improve qoq for Indian Hotels.
In the aftermath of terror attacks and holiday season, occupancies in business hotels dropped to ~50% in Dec'08, a sharp fall of over 24ppts yoy. However, we expect larger players such as Indian hotels to witness improvement in occupancy rate qoq from the Dec'08 trough. On the other hand, ARRs are likely to remain weak, due to ongoing economic weakness, especially in cities such as Bangalore where we estimate room rate decline of about 7-8% yoy and occupancies of about 63-68% in the quarter.
To see full report: HOTELS Q4 FY09
суббота, 11 апреля 2009 г.
>Tata Communications Ltd. (INDIA INFOLINE)
Pricing pressure to dampen wholesale voice growth
Wholesale voice (ILD & NLD) business is likely to face continued challenges as realizations declines and operators fight for voice volumes. Tata communications experienced nearly 20% yoy fall in gross revenvue/min in FY08 and we expect as annual 5-7% drop over yje next two years.
Leverage, uncertainty in land disposal remain key concerns
The company has incurred ~US$500mn capex in the current financial year and plans to spend a similar amount in FY10. Since operations may not be FCF positive, debt would fund as estimated capex of ~US$1.5bn over FY09-11. Thsi could push debt burden to 1.1x in FY10. Separately, the company owns 773 acres of valuable land in major cities, which we value at Rs 113/share. However, the uncertain timing of any potential transaction is a concern, especially since crash from land sale could be used to repay debt.
Data business revenue CAGR seen above 20%
Enterprise & Carrier data is expected to witness a health 20% + CAGR in revenues over FY09-11 on the back of capacity addition in cable network. We have factored in a higher revenue growth as compared to that for Bharti and Rcom's enterprise business is given the larger scale of asset ownership and expansion is managed data centre services.
To see full report: TATA COMMUNICATIONS
Wholesale voice (ILD & NLD) business is likely to face continued challenges as realizations declines and operators fight for voice volumes. Tata communications experienced nearly 20% yoy fall in gross revenvue/min in FY08 and we expect as annual 5-7% drop over yje next two years.
Leverage, uncertainty in land disposal remain key concerns
The company has incurred ~US$500mn capex in the current financial year and plans to spend a similar amount in FY10. Since operations may not be FCF positive, debt would fund as estimated capex of ~US$1.5bn over FY09-11. Thsi could push debt burden to 1.1x in FY10. Separately, the company owns 773 acres of valuable land in major cities, which we value at Rs 113/share. However, the uncertain timing of any potential transaction is a concern, especially since crash from land sale could be used to repay debt.
Data business revenue CAGR seen above 20%
Enterprise & Carrier data is expected to witness a health 20% + CAGR in revenues over FY09-11 on the back of capacity addition in cable network. We have factored in a higher revenue growth as compared to that for Bharti and Rcom's enterprise business is given the larger scale of asset ownership and expansion is managed data centre services.
To see full report: TATA COMMUNICATIONS
Seamless Cylinders – ‘The CNG Drive’ (INDIA INFOLINE)
Environmental benefits: a key driver for CNG demand growth
Robust economic growth, at a global cycle, over the last few years, has lead to a strong growth in primary energy consumption. With lack of availability of technology to tap renewable resources, consumption of fossil fuels has gathered significant momentum. Contribution of coal and crude oil to global primary energy basket stands at 64%.
Emerging economies: demand growth centres
Majority of the growth in natural gas vehicles (NGVs) has been driven by emerging economies. Most of these economies have subsidized petrol and diesel pricing, which has led to sustenance of CNG's cost advantage in the current fall in crude oil prices. With energy security being at the top of mind for many of these economies, shifting to CNG would be a key strategy.
Everest Kanto Cylinders: A global growth story
With EKC setting up footprints in Dubail, China and Kandle SEZ (India), it is well poised to serve economies witnessing robust growth for CNG cylinders. Its total capacity is slated to increase from the current 1mn cylinders to 1.5mn cylinders in FY10. We believe current valuations do not factor EKC's future growth prospects adequately, Recomment BUY.
To see full report: SEAMLESS CYLINDERS
Robust economic growth, at a global cycle, over the last few years, has lead to a strong growth in primary energy consumption. With lack of availability of technology to tap renewable resources, consumption of fossil fuels has gathered significant momentum. Contribution of coal and crude oil to global primary energy basket stands at 64%.
Emerging economies: demand growth centres
Majority of the growth in natural gas vehicles (NGVs) has been driven by emerging economies. Most of these economies have subsidized petrol and diesel pricing, which has led to sustenance of CNG's cost advantage in the current fall in crude oil prices. With energy security being at the top of mind for many of these economies, shifting to CNG would be a key strategy.
Everest Kanto Cylinders: A global growth story
With EKC setting up footprints in Dubail, China and Kandle SEZ (India), it is well poised to serve economies witnessing robust growth for CNG cylinders. Its total capacity is slated to increase from the current 1mn cylinders to 1.5mn cylinders in FY10. We believe current valuations do not factor EKC's future growth prospects adequately, Recomment BUY.
To see full report: SEAMLESS CYLINDERS
четверг, 9 апреля 2009 г.
>ITC - Ltd. (INDIA INFOLINE)
Strong resilience in cigarette volumes
ITC has managed to register stable earnings growth with a marginal decline in volumes despite heavy tax burden and regulatory restrictions on cigarettes. With its strong brand recognition and product portfolio. ITC has always been well-placed to pass on any tax burden to consumers. The pictorial warnings and smoking ban are not likely to have a major impact on the segment due to impmlementation issues,
Major beneficiary from shift in demand to filter cigarettes.
The government has levied additional excise duty on the non-filter cigarettes mainly to bring them on par with filter cigarettes. ITC exited from it post excise hike as it had a very small presence. The demand uptrade from non-filter to filter and premium filter cigarettes (post excise duty hike) is expected to be almost over 75%. ITC being the market leader in the filter cigarettes category will be the major beneficiary from this shift in demand.
Diversified into various lucrative segments
ITC over the years has been investing cash flows from its cigarette business into various lucrative segments like foods, personal care, hotels and paper. With the paperboard division coming out of a major capex cycle and a reduction in losses from FMCG- others divison from FY10E, we expect the non-cigarette businesses to become self-sufficient. The agri division continues to provide a strong support as an excellent raw material sourcing base.
To see full report: ITC
ITC has managed to register stable earnings growth with a marginal decline in volumes despite heavy tax burden and regulatory restrictions on cigarettes. With its strong brand recognition and product portfolio. ITC has always been well-placed to pass on any tax burden to consumers. The pictorial warnings and smoking ban are not likely to have a major impact on the segment due to impmlementation issues,
Major beneficiary from shift in demand to filter cigarettes.
The government has levied additional excise duty on the non-filter cigarettes mainly to bring them on par with filter cigarettes. ITC exited from it post excise hike as it had a very small presence. The demand uptrade from non-filter to filter and premium filter cigarettes (post excise duty hike) is expected to be almost over 75%. ITC being the market leader in the filter cigarettes category will be the major beneficiary from this shift in demand.
Diversified into various lucrative segments
ITC over the years has been investing cash flows from its cigarette business into various lucrative segments like foods, personal care, hotels and paper. With the paperboard division coming out of a major capex cycle and a reduction in losses from FMCG- others divison from FY10E, we expect the non-cigarette businesses to become self-sufficient. The agri division continues to provide a strong support as an excellent raw material sourcing base.
To see full report: ITC
понедельник, 6 апреля 2009 г.
>Suzlon Energy – MP (INDIA INFOLINE)
· Lower earnings visibility from shrinking order book
Suzlon's order book fell by 43% since the blade cracking issue surfaced in Q4 FY08. It has been unable to bag large orders from either
Weak market environment will force Suzlon to 1) offload additional stake in either Hansen or Suzlon, 2) raise fresh debt or 3) contract working capital cycle. The management is already working towards contracting its working capital cycle. Any delays will result in Suzlon having to resort to bridge loans. During Q3 FY09, higher inventory and debtor days inflated its working capital cycle. We expect the company ot offload a minority stake in either Suzlon or Hansen to fund its Rs 13.5 bn REpower acquisition.
With the commisioning of its castings and firgings unit and the acquisition of Hansen Transmission, Suzlon has become an end to end solutions provider in the wind industry. Hansen helps in filling the supply chain gap of gearboxes - which presently is a key of bottleneck. Hansen is in the process of enhancing its capacity to 14.3GW from 7.3GW FY13. It will set up capacities in
>Punjab Nastional Bank (INDIA INFOLINE)
· Significant expansion in loan book over Q4 FY08- Q3 FY09
In the past four quarters, PNB's loan loan book has grown by 40% implying a CQGR of 8.7%. In 9m FY09, bank's advances have grown by 18.5% YTD impying an annualized growth of 25% yoy. This is in startk contrast to a material slowdown in the loan growth for the system. Key drivers behind PNB's brisk loan loan growth are 1) multiple lending constraints faced by large private sector banks 2) large corporate borrowers have been shifting to the large PSBs 3) extensive branch network and rural presence.
Over Q1-Q3 FY09, PNB's NIm has improved by 60 bps to 3.9%. The margin improvement was driven by more than commensurate increase in lending rate by the bank in response to an increase in cost of funds due to tight liquidity conditions between July-October 2008. Due to extensive branch network and strong brand, PNB was amongst, PNB was amongst the least affected banks during the liquidity crunch. However, PNB's NIM is expected to decline by 20-40 bps qoq in Q4 FY09 due to significant reduction in BPLR in the past four months. In FY10E and FY11E, we expect reported NIM to hover near 3.5%.
Traditionally, PNB has witnessed higher GNPL% than most of the other PSBs due to its more aggressive lending strategy, which focuses on earning high NIMs. Though the asset quality could rapidly deteriorate in future due to worsening macro conditions, we believe that it would remain within bank's tolerance levels. We estimate Gross NPLs to incorease 2.5x and reach 4.2% of advances while net NPLs would jump 5x and represent 2% of advances by FY11
To see full report: PUNJAB NATIONAL BANK
пятница, 13 марта 2009 г.
>Weekly Review (INDIA INFOLINE)
● Key Indian stock indices advanced in a truncated trading week, tracking strong gains acroos the globe. The lowest rate of inflation in six and a half years (2.34%) also aided the recovery of Dalal Street. Finally, the BSE 30-shares Sensex surged 5.2% to close at 8,757. The NSE Nifty climbed 3.8% to shut shop at 2,719 shrugging off negative IIP data for January at -0.5% and continuous selling by the FIIs.
● Metal stocks surged, led by gains in Tata Steel Following statements by Chinese premier Wen Jiabao that the government will allocate money for stimulating demand. Also, firm steel prices on LME lifted the steel stocks back home. Auto stocks like Hero Honda, Maruti and Tata Motors clocked impressive gains amid hope that the worst for the sector is over. Banking and IT stocks were among the other prominent gainers.
● Financial and banking stocks led the reversal across major equity indices. Citigroup, JP Morgan and Bank of America said the banks were profitable in the first two months of the year. Bank of America CEO also said that the bank will not need further federal government capital. In Asia, both the Nikkei and the Hang Seng indices surged over 5%. The Chinese market fell due to poor economic reports.
To see full report: WEEKLY REVIEW 13-03-09
● Metal stocks surged, led by gains in Tata Steel Following statements by Chinese premier Wen Jiabao that the government will allocate money for stimulating demand. Also, firm steel prices on LME lifted the steel stocks back home. Auto stocks like Hero Honda, Maruti and Tata Motors clocked impressive gains amid hope that the worst for the sector is over. Banking and IT stocks were among the other prominent gainers.
● Financial and banking stocks led the reversal across major equity indices. Citigroup, JP Morgan and Bank of America said the banks were profitable in the first two months of the year. Bank of America CEO also said that the bank will not need further federal government capital. In Asia, both the Nikkei and the Hang Seng indices surged over 5%. The Chinese market fell due to poor economic reports.
To see full report: WEEKLY REVIEW 13-03-09
пятница, 6 марта 2009 г.
>Weekly Review (INDIA INFOLINE)
WEEKLY REVIEW MARCH 06, 2009
Key indices continued to trudge lower this week, shrugging off lower infaltion and rate cuts. The RBI reduced short-term rates by 50 bps in its continuing bid to nudge banks to lower borrowing costs. The BSE 30-share Sensex lost 6.4% to 8,326 and the NSE Nifty lost 5.2% to 2620. The rupee's sharp depreciation against the dollar also continued to make matters worse for Indian stocks, leading to acceleration in selling by the FII's.Banking stocks tumbled, even after the RBI cut rates to bolster lending. Fears of rising defaults in a weakening economy kept banking stocks under pressure. FMCG stocks succumbed to heavy selling pressure, led by HUL, ITC and Colgate-Palmolive. Real estate stocks fell on apprehension that falling interest rates will fail to revive housing demand.
World economy continues to be in a bad shape in the wake of the unprecedented finacial crisis. Over the week, Dow Jones and S&P 500 slipped to new 12-years lows. Corporate picture got worst after GM warned it may soon have to seek bankruptcy protection. Similar concerns saw Citigroup's stock fall below $1. ECB slashed its GDP forecast as well. Meanwhile, Chinese stock market surged by over 5% on reports that the government would announce another stimulus package to steer the economy. However Prime Minister Wen Jiabao didnt make any statements on extra spending.
To see full report: Weekly Review
понедельник, 2 марта 2009 г.
>BHEL (INDIA INFOLINE)
COMPANY REPORT
BHEL - BUY
CMP Rs1,402, Target RS1,610
BHEL - BUY
CMP Rs1,402, Target RS1,610
Rs 1.1 trn order book provides strong visibility
Robust investments in the power sector coupled with BHEL's dominance in the power equipment space translated into a robust order book. BHEL's otder book of Rs 1.1 trn, grew by 3.5x over the past five years, is 5.3x FY08 gross revenues provide strong revenue visibility. In order to avoid delays, it is doubling capacity to 20,000 MW by FY 12. Since majority of the orders are from the Government and NTPC, BHEL insulated from lower payment risk and order cancellations. We believe BHEL's order book will continue to grow as fresh investments are announced in the power sector.
Lower commodity prices will positively impact margin
In order to overcome supply chain issues, BHEL stocks its key raw materials for a period of four-six months. For the 9M FY09 steel prices were higher by ~48% yoy. thus negatively impacting margins for the year. However with prices correcting by 51% over the past 7 months and BHEL consuming its high cost inventory in Q4 FY09, we expect its margin to improve in FY10. Also its staff cost will increase marginally as the full impact of sixth pay commission will be accounted for in FY09.
To see full report: BHEL
пятница, 27 февраля 2009 г.
>Weekly Review (INDIA INFOLINE)
WEEKLY REVIEW
* In a highly eventful week, the bulls managed to hold their own, thanks largely to the latest tax cuts announced by the government to spur demand. The Government also announced fresh measures for recession-hit export sectors. Expectations of interest rate cuts escalated after inflation hit a 14-month low of 3.36%. This helped the BSE-30 Sensex to post marginal gain of 0.5% to 8.892. The NSE Nifty added 1% to shut shop at 2,764. The bulls shrugged off weak Q3 GDP data, which missed market expectations.
* Auto stocks rallied this week, after the Government announced a 2% cut in excise duty and service tax. IT stocks also managed to notch up some gains after the Indian Rupee fell to a new record low below Rs 51 against the US Dollar. At the same time, banking and realty stocks ended up on the losing side for the week.
* Economic reports from across the globe continued to haunt the major equity markets. Top companies like GM and RBS announced massive losses, Japan's trade deficit reached a record level and its industrial production dropped 10%. Sales of existing US homes fell 5.3% to 12 year low. The Chinese stock market tumbled 7.9% snapping its rally.
To see full report: Weekly Review 27-02-2009
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