Posts
>Satyam - Edelweiss - 29 12 08
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Satyam - Edelweiss - 29 12 08
Wednesday, December 31, 2008
Tuesday, December 30, 2008
>IMF
The current crisis, which started in the housing and financial sectors, has now led to a
strong fall in aggregate demand. There are indications that this fall could be larger than in
any period since the Great Depression. A successful policy package should address both the
financial crisis and the fall in aggregate demand, and thus, should have two components: one,
aimed at getting the financial system back to health; the other, aimed at increasing aggregate
demand. There are obvious interactions and synergies between the two. Financial measures,
from recapitalization to asset purchases, have important implications for credit flows and
aggregate demand. Measures to support aggregate demand, for example by helping
homeowners and improving the housing market, have clear implications for the health of
financial institutions. Nevertheless, our focus in this note will be primarily on measures
aimed at sustaining aggregate demand. (Financial measures have been, and will be, the
subject of other notes.)
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IMF
Monday, December 29, 2008
Sunday, December 28, 2008
> "Stock Idea" - Apollo Hospitals Enterprise Ltd. - BCCIR
Please find attached herewith the 'Stock Idea'. The stock covered this
week is "Apollo Hospitals Enterprise Limited".*
**
*This research report analyses the financials and business prospects of the
company and also collates the views of different analysts so that you can
take an informed decision. This news letter is published once in a week
preferably on every Saturday. We hope it will help you in identifying
fundamentally good stocks to invest for the long term.*
**
*Warm Regards,*
**
*TEAM BCCIR*
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Friday, December 26, 2008
Thursday, December 25, 2008
>Balkrishna Industries Ltd - SKP - 23 12 08
Balkrishna Industries Ltd (BIL), world's premier manufacturer of pneumatic tyres for special applications was incorporated on November 20, 1961. It focuses on the production of off-highway tyres that includes agricultural, industry, material handling, forestry, lawn and garden, construction and earth moving tyres. The company operates mainly in the business segment of tyres which by virtue becomes its core business. It's other businesses are fabric processing and paper manufacturing which has been transferred to its subsidiaries BKT Synthetic Ltd. and BKT Paper Mills Ltd.
At current market price of Rs. 174/-, the stock is trading at P/E 1.93x and EV/EBIDTA 2.30x of FY 11E earnings and EBIDTA respectively. We recommend accumulate rating at our target price of 237 (36% upside) in 18 months, it would trade at 2.6x FY11E earnings
To read full report Balkrishna Industries Ltd - SKP - 23 12 08
Wednesday, December 24, 2008
Tuesday, December 23, 2008
>Anagram's Eveninger & Bulk Deals 22/12/2008
Markets ended on a weak note dragged by selling in heavyweights and weak global cues. Sensex lost 171 points to close at 9928, while Nifty finished at 3039, down 38 points. Most of the Asian markets closed in red, while European markets too were trading down. After our markets closed China cut it's CRR by 50 bps and Lending and deposit rates by 27 bps. Rupee was trading at 48/dollar as against Friday's closing of 47.25.
Oil & Gas index was the top loser among the BSE sectoral indices, down 3%, followed by Bankex, which lost 2.5%. Consumer Durablex and FMCG indices were the top gainers, up 2.9% and 0.2% respectively. Among the sensex stocks, Tata Motors and DLF gained the most, up 4.9% and 2.7% respectively, while ICICI Bank and Reliance lost 5.5% and 4.8% respectively. BSE advance-decline ratio stood at 1.01:1.
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Anagram's Eveninger & Bulk Deals 22/12/2008
Monday, December 22, 2008
>The Global Financial Turmoil and Challenges for the Indian Economy
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The Global Financial Turmoil and Challenges for the Indian Economy
Saturday, December 20, 2008
Friday, December 19, 2008
>Monthly economy review - Sharekhan Special
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Monthly economy review - Sharekhan Special
Thursday, December 18, 2008
>Anagram's Eveninger & Bulk Deals 18/12/2008
Market cheered better than expected inflation numbers and surged nearly 3.5% in today's trade, the highest rise among all the Asian markets. Both Sensex and Nifty closed above key psychological levels of 10000 and 3000 respectively. Sensex closed at 10076, gaining 361 points, while Nifty put on 106 points to close at 3060. Inflation for the week ended December 6 came in at 6.84% as against 8% for the previous week and Bloomberg expectation of 7.49%. Chances of Rate cut have increased after such a sharp fall in inflation. Rupee touched 46.90 against the dollar and was headed for the highest close after 1st October 2008.
All the BSE sectoral indices closed in green. Realty index and Bankex were the top gainers, up 7.3% and 7.1% respectively. DLF and JP Associate were the top gainers among the sensex stocks, surging 9.6% and 9.4% respectively. Grasim and Sterlite were the only losers among sensex stocks, down 0.3% and 0.1%. BSE advance-decline ratio stood at 1.5:1.
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Anagram's Eveninger & Bulk Deals 18/12/2008
>commercial vehicles-sector update-12.12.08
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commercial vehicles-sector update-12.12.08
> Anagram's Eveninger & Bulk Deals 17/12/2008
After opening higher, indices retreated sharply and closed deep in the red, under performing all the Asian markets. Sensex fell by 261 points to close at 9715, while Nifty shut shop at 2954, down 87 points. Satyam plunged 30% as investors took a negative view on the company's decision of acquiring 51% in Maytas Infra and then calling it off due to strong investor reaction and resultant plunge in it's ADR yesterday. U.S. stock futures were trading down by nearly 1.5%.
All the BSE sectoral indices finished in red. Realty and Teck indices were down the most, falling 7.4% and 5% respectively. ICICI Bank and HDFC Bank were the top gainers among the sensex stocks, up 2.4% and 1.8% respectively, while Satyam Computer was the top loser, plunging 30.2%, followed by Reliance Infra, which tumbled 13.7%. BSE advance-decline ratio stood at 1:1.6.
Read full report here
Wednesday, December 17, 2008
>HINDALCO(Merrill Lynch)
Downgrade to Underperform; PO cut to Rs40 (earlier Rs60)
Our global team has cut aluminum forecasts. This leads to a sharp cut to our EPS
forecasts – by 37-80% over FY09-11. Even though the stock has underperformed,
we believe there is further downside given its rich valuation – FY10E P/E of 37x
and P/B of 0.7x (excl goodwill for Novelis acquisition). Hence we downgrade our
rating from Neutral to Underperform. Our new PO of Rs40 (based on 50%
discount to DCF) suggests 24% downside and implies P/B (ex goodwill) of 0.5x, in
sync with other leveraged steel stocks in India.
Read full report here
HINDALCO(Merrill Lynch)
>FCCB Policy update - Reliance Money - 15 12 08
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FCCB Policy update - Reliance Money - 15 12 08
Tuesday, December 16, 2008
Monday, December 15, 2008
>Weekly fundamental & Technical (P-sec)
Fundamental
and
Technical report
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Weekly fundamental & Technical (P-sec)
Saturday, December 13, 2008
>Anagram's Weekly Watch : 13/12/2008
The US Senate failed to reach a consensus and rejected the $14 billion auto
rescue package. Though the Dow managed to keep its head above the water as
US government said it would assist the troubled automakers and was
also considering
tapping a $700 billion financial industry bailout fund to prevent a collapse
of ailing U.S. automakers, failure of whom would result in a further job
losses and problems for the already ailing economy.
Next week the Federal Reserve is expected to cut interest rates to a record
low after it concludes a two-day policy-setting meeting on Tuesday. The Wall
Street is expecting Fed to cut key federal funds rate by 50 basis points,
which would bring it down to an unprecedented 0.5 percent.
Stimulus Package by the government, which this time will focus on export
sector. Nifty gained 7.60% during the week and showed resilience to rise on
bad news and closed in green on Friday even on back of negative IIP number
of –0.40%, which we think is positive going forward.
To read full report
Anagram's Weekly Watch : 13/12/2008
Friday, December 12, 2008
> Anagram's Daily Call:12/12/2008
VIEW POINT: ALL EYES ON IIP NOW
The markets are likely to edge lower in the morning trade as some profit taking could creep-in as the package for the US Auto companies is still hanging fire in the Senate. The slide in the Dollar, however, will keep the embers hot for the commodities, though the related stocks may see some profit booking. But keep an eye on news channels, for that Auto package, which may be passed later today.
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>Technical Recommendation and Commodity Outlook(Emkay)
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Technical Recommendation and Commodity Outlook(Emkay)
Thursday, December 11, 2008
> Anagram's Eveninger & Bulk Deals 10/12/2008
Indices surged more than 5% in today's trade aided by index heavyweights. Sensex rose 492 points to close at 9654, while Nifty shut shop at 2928, putting on 144 points. European markets were trading lower. US markets futures were trading in positive terrain ahead of rescue package for automakers.
All the BSE sectoral indices finished in green. Realty index surged 12.6% followed by Metal index, up 8.4%. DLF and M & M were the top gainers among the sensex stocks, up 18.9% and 15.5% respectively, while Ranbaxy was the sole loser, down 1.1%. BSE advance-decline ratio stood at 1.7:1.
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Wednesday, December 10, 2008
>INDIA Outlook(UBS)
Summary
We believe markets are close to historical trough valuations, with the Sensex
trading at 9.8x and 2.36x trailing PE and P/BV. However, we think markets are
unlikely to rally in the next six months due to the absence of positive triggers,
although we remain bullish on a medium-term view. We recommend the following
stock-picking strategies: 1) quality companies with reasonable valuation;
2) companies likely to generate free cash flow; 3) stocks trading at attractive levels
on a PVGO/PB basis.
What are the likely key themes for 2009?
We believe the election in India, to be held by May 2009, will be the key theme
investors are likely to focus on in H109. Indian markets have generally rallied preelection
and we expect a similar pattern in 2009. Other investment themes are
likely to revolve around the performance of perceived high quality versus low
quality companies, and whether outperformance of defensives will continue.
What may surprise on the upside or downside?
We believe the election, crude oil prices, inflation, global credit and economic
scenarios could be the key variables to watch out for as they could surprise either
way. Markets are likely to be more stable once there is more clarity on these issues.
Market valuation & targets and highlighted stocks
We factor in 5%/0% EPS growth for FY09/FY10E and assume a trailing 12-month
recovery PE of 15x to arrive at our Sensex target of 13,500. Our most preferred
stocks are Infosys, Bharti, Hero Honda, ICICI Bank, Punjab National Bank, and Idea,
each based on one of the investment strategies we recommend. Our least preferred
stocks are HCL Technologies, HDFC Bank, State Bank of India, Reliance Power,
and Tata Motors, and reflect our view of deteriorating fundamentals in 2009E.
To read full report INDIA Outlook(UBS)
>Tata Steel(UBS)
�� Q209 results better than UBSe
Tata Steel Q209 consolidated revenues grew 36% yoy to Rs442.0bn (UBSe
Rs331.9bn), despite flat volume growth driven by improved realizations (36% yoy)
and mix improvements. EBITDA grew 79% yoy to Rs82.5bn (UBSe Rs65.4bn)
and margins improved 450bps yoy to 18.7%. Net profit grew 42% yoy to Rs47.0bn
(UBSe Rs34.4bn). Tata Steel has achieved 124% of total consolidated FY09E PAT
in 1HFY09. Corus has achieved 99% of our FY09E EBITDA estimate in 1HFY09.
�� Key takeaways from the conference call
(1) Indian volumes in 2H09 to be higher than 1H09 (2) Capex expected to be
Rs10bn in 2H09 and Rs30bn in FY10E incl. Orissa and Jamshedpur expansions (3)
Working capital will decline in 2H09 as Tata Steel will not purchase raw material
and will liquidate its inventory. (4) Tata Steel is in compliance with all covenants
in India and UK.
�� Pension funds surplus at UK increases
Tata Steel UK pension fund surplus increased by £127mn during the quarter to
£819mn. Tata Steel has reduced its pension assets’ exposure in equity markets
marginally from 26% in Mar08 to 25% in Sep08, while increased its exposure to
bonds by 4% to 69%. We believe that pension surplus/deficits can be volatile; and
are not reflective of the underlying operations.
�� Valuation: Rate Neutral with a PT of Rs230
We rate Tata Steel Neutral with a DCF-based PT of Rs230 assuming WACC of
13.5%, medium term growth rate of 10.0% and terminal growth of 5.0%.
Read full report here Tata Steel(UBS)
Tuesday, December 9, 2008
>Indian Banks(Citi Group)
Asset quality pulls and pressures — India’s economic outlook has continued to
deteriorate, raising further questions on banks' asset quality, given that a)
industrial production growth has slowed sharply; b) corporates face a funding
crunch (especially off-shore); c) credit spreads have moved up (though rates have
started coming off); and d) loan growth has been consistently high (25%+) for 3-4
years. Where could this lead us on asset quality; we seek history as a guide.
What does history tell us? — a) Still far from peak NPLs (25%, current 2%), and
slippages (6.7%, current 2%); b) deterioration correlates more with IIP than
GDP/loan growth; c)1-3 yr lag between economic slowdown, and NPLs peaking; d)
lending rates matter (peak 19%, current 14%), but impact limited; e) credit costs
are back-ended, they rise even after the economy bottoms; f) stocks underperform
with rising deterioration; appear better correlated to slippages than credit costs.
Is history relevant? — It always is; but there are caveats: a) Data - limited
availability, distortions (accounting, classification, structural changes); b) BS/P&L
changes -Large bond gains, supporting NPL clean-ups; c) Structural changes -
loan mix, capital and corporate health; d) Starting point – very high base NPLs as
standardized asset quality norms and reporting introduced only in early 1990's.
History usually repeats itself, but scale and form often vary — We believe asset
quality will hurt; though jury is probably still out on pace and extent of pain. Key
determinants: a) Severity of economic slowdown; b) Scale and timing of domestic
fiscal, monetary actions; c) Global credit and growth environment; and d) Bank
management response to environment; collectively and specifically.
To read full report Indian Banks(Citi Group)
>Reliance Industries(Morgan Stanley)
Quick Comment – What’s New: The Ministry of
Petroleum and Natural Gas released a press note on the
Govt. of India’s decision regarding Pricing and
Commercial Utilization of Natural Gas produced from
NELP blocks. Key highlights of the release are as follows:
1. The First 40mmsmd of gas from the KG-D6 fields
will be supplied to the priority sector at a gas price of
US$4.2/mmbtu (excluding the transportation tariff and
taxes) and will be applicable to all consumers.
2. The pricing of gas is linked to the crude oil (WTI) price
and is capped at US$4.2/mmbtu for a crude oil price of
US$60/bbl or above. The govt. will await the ruling on a
court case for gas pricing and sale of gas to NTPC.
Implications of First 40mmscmd being sold at
US$4.2/mmbtu: Since the GoI has allowed RELI to sell
the first 40mmscmd of gas at US$4.2/mmbtu instead of
US$2.52/mmbtu ( to NTPC and RNRL) as per our
assumptions, the weighted avg. price of gas increases
to US$4.2/mmbtu (from US$2.52) and US$4.0/mmbtu
(from US$2.71) for F09 and F10, respectively.
Implications At Crude Oil Price of US$45/bbl: There
are two impacts if oil is at US$45/bbl: 1) At US$ 45/bbl of
crude oil based on the formula, the gas price, as per
GoIs formula would reduce from US$4.2/mmbtu to
US$4.067/mmbtu; 2) The assumption of MA1 field oil
goes from US$65/bbl to 45/bbl. The impact on RELI’s
EPS, purely due this change in gas pricing is +1%,
+12% and -1% for F09, F10 and F11E, respectively.
The overall impact including the crude oil pricing
would lower earnings by 1% in F09, increase
earnings by 6% by F10 and lower earnings by 6% in
F11E as shown in Exhibit 1. The dollar assumption here
is Rs51; if the dollar fluctuates by Rs1, our EPS changes
by 3.7%.
To read full report Reliance Industries(Morgan Stanley)
Sunday, December 7, 2008
>RBI growth stimulus(RBI)
The global economic outlook has deteriorated sharply over the last two months. In its World
Economic Outlook, published in early October, the International Monetary Fund (IMF) forecast global growth of 3.9 per cent in 2008, and of 3.0 per cent in 2009. The IMF has since revised its forecast for global growth downwards to 3.7 per cent for 2008, and 2.2 per cent for 2009. Many economists are now predicting the worst global recession since the 1970s. Several countries, notably the United States, the UK,the euro area and Japan are all officially in recession. More worryingly, current indications are that the recession will be deeper and the recovery longer than earlier anticipated.
To read full report RBI growth stimulus(RBI)
Saturday, December 6, 2008
>Godrej Consumer Products Limited(SBIcap Securities)
Future Sales growth to remain buoyant – In line with other
FMCG companies, GCPL too has not witnessed any slow down
in demand for its products namely, soaps, hair colours and
toiletries, till September 2008 quarter. The management does not
foresee any slow down in demand for its products going
forward also due to the sheer inelastic nature of its products.
To read full report Godrej Consumer Products Limited(SBIcap Securities)
Friday, December 5, 2008
>Indian Hotels(Sharekhan)
Mumbai has seen the fiercest of terrorist attacks in the last two days. The two
hotels—Taj Mahal Palace (with 565 rooms) and Oberoi-Trident—have been the centre
of terrorist activity since the evening of November 26, 2008. We believe the tragic
event has severe consequences for the hotel industry in general and Indian Hotels in
particular.
Read full report here Indian Hotels(Sharekhan)
Thursday, December 4, 2008
>Indian Banking(IIFL)
An expected spike in loan delinquencies is presently the biggest concern for the banking system. But how bad
could the situation get? We present two scenarios: moderate and bearish. In the moderate case, assuming
NPLs rise by 60% this year and the next, aggregate profit growth for all banks can slowdown to 10% in FY09
and decline by 16% in FY10. In the bearish case, assuming NPLs rise by 100% in each year, profit growth can
only creep up at 3% in FY09 and drop by 36% next year. While a profit decline is possible next year, banks’
books are expected to remain intact with healthy CAR. The BSE Bankex has corrected by 60%YTD, reflecting
some of these concerns, but any upside is likely to be capped by the negative news flow. Six major banks
presently trade at their 10-yr average PB valuation of 1.2x. Government banks appear safer than private ones.
Read full report Indian Banking(IIFL)
could the situation get? We present two scenarios: moderate and bearish. In the moderate case, assuming
NPLs rise by 60% this year and the next, aggregate profit growth for all banks can slowdown to 10% in FY09
and decline by 16% in FY10. In the bearish case, assuming NPLs rise by 100% in each year, profit growth can
only creep up at 3% in FY09 and drop by 36% next year. While a profit decline is possible next year, banks’
books are expected to remain intact with healthy CAR. The BSE Bankex has corrected by 60%YTD, reflecting
some of these concerns, but any upside is likely to be capped by the negative news flow. Six major banks
presently trade at their 10-yr average PB valuation of 1.2x. Government banks appear safer than private ones.
Read full report Indian Banking(IIFL)
>Hindalco Industries(Macquarie Research)
Aluminium outlook weakens: Our commodity team believes that aluminium
inventory build-up is happening due to a lack of demand in spite of production
cuts; this will limit any increase in aluminium prices from current levels. We
are reducing our target price by 34% to Rs73 to factor in changes to our
commodities price forecast.
To read full report Hindalco Industries(Macquarie Research)
>Indian construction sector(FIRST GLOBAL)
To read full report
Indian construction sector(FIRST GLOBAL)
Wednesday, December 3, 2008
>Tata steel(RBS)
Tata Steel posted a strong 1HFY09 performance, with operating profits up 73% yoy.
However, we expect the rapid price deterioration in the past few months to lead to a
severe earnings decline from 2HFY09. Maintain Sell with new target price Rs115
To read full report Tata steel(RBS)
Tuesday, December 2, 2008
>MTNL(BNP PARIBAS)
We initiate coverage on Mahanagar Telephone Nigam (MTNL), a
government-owned telecom operator, with a REDUCE rating and TP of
INR55 based on a cash per share of INR39 and a core business
valuation of INR16 at 2.5x FY09 EBITDA. Historically MTNL traded close
to its book value but the valuation is now converging towards its cash
per share as its ROE has declined to 3.3%, well below its cost of capital,
and one-fourth of its book value is amount recoverable from Department
of Telecom, which is unconfirmed and outstanding for several years.
To read full report MTNL(BNP PARIBAS)
>HDFC(ICICI Direct)
Housing Development Finance Company (HDFC) is among the better diversified
plays on financial services in India given its leadership in the under-penetrated
mortgage market and strong growth in other financial services (life insurance,
asset management and banking via HDFC Bank). We believe that HDFC’s flexible
funding franchise, efficient operating performance and consistent earnings
momentum in a tough operating environment will be key stock catalysts. Potential
divestment in subsidiaries could be a long-term trigger. At the current market
price, the stock trades at FY10E P/BV of 2.3x (unadjusted) and 1.4x after adjusting
for investments in subsidiaries and associates. We initiate coverage on HDFC
with BUY and sum-of-the-parts (SOTP) price target of Rs1,940/share.
To read full report HDFC(ICICI Direct)
Monday, December 1, 2008
>JP Associates(Citi)
Impressive big picture, as in the next 10 years JPA could be — 1) One of the
top three Indian cement companies; 2) Power portfolio of 7,515MW (3) Inhouse
EPC with a backlog of ~ Rs420bn; 4) One of the largest real estate
developers in India; and 5) Have 1,212km of expressways with tolling rights.
However, getting there will be extremely tough — The success of JPA’s asset
heavy business is pinned on easy access to capital. On the capital side we
believe Yamuna Expressway needs an incremental ~ Rs36.6bn of funding,
mobilizing ~ Rs450bn for the Ganga Expressway. This is going to be a
Herculean task and financially closing all power projects will be extremely
difficult. Further the poor demand outlook for real estate and cement makes
the situation that much tougher for the company.
Cutting target price to Rs87 (from 300 earlier) to factor in — 1) 21-22%
earnings cut; 2) Cut in construction EV/EBITDA 7x (12x); 3) Cut in cement
EV/ton to US$75 (US$120); 4) Cut in power assets value to Rs35bn (Rs69bn);
5) Cut in Jaypee Greens value to Rs5.4bn (Rs11.7bn); 6) Cut in Jaypee Hotels
value to Rs1.5bn (Rs4.9bn) and 7) Cut in Jaypee Infratech value.
But we still maintain a Buy because — 1) Underlying parent businesses will
still generate Rs8-10bn average annual CFO; 2) Stock looks attractive as the
parent (cement, EPC and Jaypee Greens) business trades at adjusted P/E
multiples of 4.9x FY09E, which we believe is extremely cheap; and 3) Most of
the value in our new target price of Rs87 comes from cement, power and
construction, and not real estate.
To read full report JP Associate(Citi)
>Wipro(Citi)
Management view: Short-term uncertain but medium-term positive — Deal
pipeline remains strong and while ramp-ups are happening, there are certain
ramp-downs as well. Management is positive over the medium term – believes
that this environment throws up opportunities for Wipro. Our view –
Uncertainty/delay in decision making will impact near-term outlook.
Focus on "just in time" hiring — Wipro has made ~8,000 campus offers till
Sep-end (compared to ~14,000 last year till Dec-end). Wipro is focusing on
optimizing the employee supply chain, improving productivity and growing
revenues without a proportionate increase in headcount. Our view – Lower
hiring partially reflects lower visibility and partly easing supply scenario.
Initiatives to drive higher growth — 1) Customer centricity; 2) Integrated multiservice
offering; 3) Consulting to proactively help clients cut costs; 4) Taking
existing services to new areas; and 5) “Hunting” for new customers and
focusing on emerging markets. Our view – Wipro’s strength across multiple
service lines and emerging markets should help drive better growth rates.
To read full report Wipro(Citi)
>Sail(JP Morgan)
Sharply lower earnings likely over the next two to three quarters, but
building in gradual recovery from H2FY10E: We expect sharp earnings
erosion over the next two to three quarters, driven by lower volumes and
higher coking coal costs. We expect H2FY09E earnings decline of 79% y/y.
However, we expect earnings to improve from June-09 as lower coking coal
kicks in. We cut our EPS estimates sharply over FY09E-11E (13-43%).
• Domestic demand recovery critical: Given the dependence on imported
coking coal, we believe most of India's steel companies are less competitive
in the export market compared to CIS/Chinese steel exports, and therefore
we believe demand recovery in the domestic market is critical to earnings
recovery in H2FY10E. However, we project extremely weak steel demand
over the next few months, and we cut our India steel demand growth
estimates to 4.5% for FY10E.
To read full report Sail(JP Morgan)
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