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Monday, December 18, 2006

Ashish Chugh - Hidden Gems - DCM Shriram

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Ultra mega power projects under way: Sharekhan Special dated December 18, 2006

Ultra mega power projects under way

The bids for two ultra mega power projects (UMPPs) at Sasan and Mundra were opened today. A total of 16 bids were received for the two projects. Ten companies had bid for the Sasan project, which will be based on pithead coal, and six had bid for the Mundra project, which will be based on imported coal. The investment per project will be in the range of Rs16,000-20,000 crore.

Hyderabad-based Lanco Infratech, in association with the Singapore-based Globeleq, has won the bid for the country's first UMPP coming up at Sasan in Madhya Pradesh.

Lanco Infratech beat Tata Power, Reliance Energy and NTPC by offering a price of Rs1.19 per unit. The power ministry had set a benchmark of Rs1.60 per unit.

Tata Power with a development agreement with Siemens Project Ventures has emerged as the lowest bidder for the 4,000MW Mundra UMPP with a tariff of Rs2.26 per unit.

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Hutch-Reliance deal can alter market dynamics

The last few days have seen the stock of Reliance Communications (RCom) gain a good 15.7% on the bourses as compared to a mere 6.7% rise in Bharti Airtel’s share price.

The main reason is RCom’s anticipated bid for Hutchison Essar (HE), which its Hong Kong-based promoter Hutchison Telecommunications International (HTI; 66.99% holding) is believed to have put on the block. The Ruias of Essar are the other promoters.

Although RCom is not the only potential candidate (Maxis of Malaysia and even the Bhartis of Airtel could be in the race), the street is trying to stay a step ahead.
Equity analysts are already trying to figure out who will gain from this deal and by how much. And, how it will alter the stakes for various players in the telecom space. The answers though are not simple, and could mean different things for different players.

For instance, a takeover would mean a lot for Reliance Communications, the second largest mobile player (largely CDMA-based services). RCom is seeking to expand its presence in GSM-based technology in a big way and has reportedly earmarked an investment of over Rs 30,000 crore. This acquisition would help RCom achieve near market leadership in one step - something that could have taken the company three or more years to do the organic way. A Hutch deal offers RCom a ‘big’ and ‘profitable’ presence in the fast growing GSM space. It would also enhance its total wireless market share to over 35%, or 50% higher than Bharti’s share of 23.7%. Although the acquisition route would cost more than the organic route, the market feels it makes sense, unless the valuations cross the limits of prudence.

Importantly, unlike the case with CDMA, for most GSM-based players, including Hutchison Essar, the average revenues per user (ARPUs) are higher at over Rs 400-450 per month. Says an analyst: “Hutch also has premium clients, which is one key reason for higher ARPUs.” Adds Deepak Jasani, head of retail research, HDFC Securities: “In the case of RCom, lower ARPUs are the main reason for lower valuations as compared to Bharti. And if this acquisition happens, then the gap in valuation between the two could narrow down.”

Currently, RCom trades at a discount to Bharti. To put it in numbers, Bharti’s enterprise value works out to Rs 121,550 crore, whereas, even after the recent run-up, it’s about Rs 100,000 crore for RCom. An analyst said: “Technology and profitability are two key reasons for the gap in valuations.” In profitability, while margins are largely comparable, higher revenues have resulted in higher profits for Bharti (Rs 933.8 crore as against Rs 702 crore for RCom for the second quarter ended September, 2006). Secondly, in the case of CDMA, the payment of royalties to Qualcomm and the high cost of handsets have acted as deterrents. No wonder, RCom is keen to expand its GSM operations in a big way.

The acquisition will give the buyer - Bharti or RCom - higher clout in business and scope to extract operational synergies, both of which should lead to improved profitability. For example, companies can avoid duplication with regard to advertising, staffing, sharing of infrastructure and would also be better placed while negotiating with distributors, vendors, etc.

Lastly, for RCom, if it fails to buy Hutchison, it would obviously have to put in substantial efforts and money to increase its GSM share, which could also lead to a blood bath in the telecom space-not a good sign for any player.

On the other hand, it may not be as interesting a deal for Bharti Airtel (GSM-based services), which is the leader in the mobile space with a market share of 23.7% and growing at a fast clip. Marketmen also say that the Bharti group has a lot on its plate viz., investments to be made into retail, agriculture, insurance, etc and hence, may not be as keen as other players to buy Hutchison Essar.

Whenever the deal happens, it could trigger a consolidation in the telecom space and may not be as good for the customer. Says Jasani: “Consolidation is always welcome in any industry. But, how it will impact the consumers in the immediate term is not clear. The total mobile subscriber base is over 14 crore and there is still a lot of ground to be covered for players. However, one or two more consolidation moves could improve the pricing power of mobile service providers, which may not necessarily be good for consumers. Otherwise, three years down the line, when the growth rate declines, players could look at increasing mobile charges to push revenue growth.”

It effectively means higher profits for the larger players, if they manage to gobble up Hutchison Essar. Also, although the Tatas and Idea (Aditya Birla group) are growing fast, the top three players, including Bharti, RCom and BSNL, will end up controlling anywhere between 75-80% of the market, which is unlikely to be good for consumers.

Anil seeks divine help

Anil Ambani’s Reliance Communications may be among the top hopefuls for Hutchison Essar, but there’s no reason why God cannot be roped in along with private equity to give the bid a leg up.

On Sunday, Ambani dashed off to the Tirupati temple along with his mother Kokilaben to seek the blessings of Lord Balaji. He didn’t tell waiting newsmen anything. The speculation was on whether he had come for the Lord’s blessings or thank him for being reckoned as a frontrunner. The Reliance bid has already been sent to the right quarters with Hutch reported to have appointed Goldman Sachs as the merchant banker for the deal.

BPL lowers Hutch margins

The fourth largest player in India, Hutichson Essar reported a 50.9% rise in revenues to HK$ 7.085 billion (1 HK $ = Rs 5.7) and a 46.7% rise in earnings before interest, depreciation, tax and amortisation (Ebidta) to HK$ 2.316 billion for the six months ended June, 2006.

The fall in profitability can be attributed to the merger of relatively lower-profitable BPL (three telecom circles; revenues of HK$ 570 million and Ebidta of HK$ 82 million) with Hutchison Essar in January, 2006. Excluding BPL, its Ebidta margins moved up to 34.3% as compared to 32.4% for June, 2005.

In short, on an annualised basis, it works out to over Rs 8,000 crore in revenues and over Rs 2,600 crore in Ebidta.

These numbers will only rise as Hutchison Essar recently received permission to start services in six new circles, which would enhance its presence to 22 Indian states.

IDBI Capital - Jindal Saw

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Motilal Oswal - Bombay Dyeing

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Close: A seesaw today but the close brought some comfort !

Market had a firm start on the back of no negative cues but selling enveloped all buying and selling pressure made dragged the markets in red. Howevr value buying brought in a smart recovery and then there was the momentum which helped markets in a positive close. Buying was being witnessed in select auto, pharma and steel stocks and while selling pressure was in some of the telecom, FMCG and energy stocks. Asian markets ended in firm note, while Europe markets were trading mixed.

Sensex closed up 117 points at 13731.09. was helped up by gains in ONGC (854.6,+5 percent), Ranbaxy (391.15,+4 percent), Tata Motors (888.8,+4 percent), Wipro (581.9,+3 percent) and RIL (1289.15,+3 percent). Restricting the gains were BHEL (2391.25,-4 percent), NTPC (140.7,-2 percent), Rel Energy (533.25,-1 percent), Hindalco (176.35,-1 percent) and Bajaj Auto (2557.3,-1 percent).

Auto stocks closed mixed today. As per a leading business daily, Tata Motors plans in THailand which is the worlds largest pick up truck brought in the buyers. The company is banking on the success of its small truck, Ace and the yet-to-be launched Rs 1 lakh car (expected to be launched by FY08) for the acceleration in sales. Tata Motors is also planning to increase the capacity of its overseas assembly units, including those in Korea and Casablanca. On the domestic front, the company's new plant in Uttaranchal (with a capacity of 250,000 units of Ace) would start production by March 2007. While Tata Motors (up 3.64%) and Maruti (up 1%) closed firm, TVS Motor (down 1%) was at the receiving end.

The financial bids for the two ultra mega power projects at Sasan (Madhya Pradesh) and Mundra (Gujarat) were opened today. India's largest power plants of 4,000 Mw each were at stake. In the fray wer Tata Power, L&T, Reliance Energy, Essar Power and Sterlite Industries, which bid for both the projects. The other bidders for Sasan were NTPC, Torrent Power, Jindal Steel & Power, Jaiprakash Associates and Lanco (with British partner Globeleq). Power stocks saw action as Tata power bagged the Mundra ultra mega power project with a bid of Rs 2.26/unit. Lanco Infratech ltd however emerged lower bidder for PFC's Sasan Ultra Mega Power Plant by winning 4000 MW MP power project. Tata Power closed up by 5.97%. Bhel on the other hand was smashed. Siemens and ABB recorded some gains.

The FII numbers came in mildly positive for Friday which is not suprising but they were exceptionally negative for MOnday as per the provisional numbers. This should have some impact tomorrow. SBI saw some gains as the SBI Bill was tabled in parliament. The momentum seems to be back but there is an air of caution. We are about 3 weeks away from the results season. It is better to wait as we expect a cash crunch to impact markets. The money sucked out of the system because of IPOs, CRR hike and also the advance tax we believe will have its impact.

Market recoups lost ground in late buying

The Sensex witnessed a steep fall of about 200 points in early trades and plunged to the day's low of 13416. The market trimmed its losses as the trading progressed and forayed for some time into positive territory in late morning trades before taking a dip on renewed selling pressure. However, the index shrugged off the bearish trend towards the close and surged to an intra-day high of 13744 on healthy buying in oil & gas, pharma, banking and auto stocks. The Sensex finally closed with gains of 117 points at 13731, while the Nifty gained 40 points to close at 3929.

The market breadth was positive. Of the 2,617 stocks traded on the BSE 1,320 stocks advanced, 1,223 stocks declined and 74 stocks ended unchanged. Among the sectorial indices the BSE Oil & Gas index surged 2.97% at 6151, the BSE Auto index jumped 1.03% at 5137, the BSE Health Care index added 1.01% at 3739 and the BSE Bankex was up 0.89% at 7057. However, the BSE CD index shed over 1%.

Several index heavyweights logged significant gains on fresh buying support. Among the major gainers ONGC soared 4.69% at Rs855, Ranbaxy surged 4.28% at Rs391, Tata Motors jumped 3.61% at Rs889, Wipro added 3.12% at Rs582, RIL gained 2.84% at Rs1,289, Hero Honda advanced 2.70% at Rs750 and TCS was up 2.22% at Rs1,182. Tata Steel at Rs467, ICICI Bank at Rs885, and Maruti at Rs920 were up 1% each. L&T, Grasim, HDFC Bank, Satyam, HDFC, SBI, Reliance Communication, Bharti Airtel and Dr Reddy's ended the day in positive territory. However, select counters came under selling pressure and ended in the red. BHEL tanked 4.21% at Rs2,391, NTPC declined 1.68% at Rs141, REL dropped 1.25% at Rs533, and Hindalco was down 1% at Rs176. Bajaj Auto, ACC, Infosys, Gujarat Ambuja Cements, ITC and Cipla ended with marginal losses.

Among the non-Sensex stocks oil & gas counters rallied sharply. GAIL soared 4.21% at Rs257 and Aban Offshore jumped 2.61% at Rs1,107. Essar Oil, IOC and BPCL were up around 1% each.

Over 54.50 lakh Tele Data shares changed hands on the BSE followed by LT Overseas (54.13 lakh shares), Zee Telefilms (34.47 lakh shares), Sterling Biotech (26.69 lakh shares) and Lanco Infra (26.55 lakh shares).

Value-wise i-flex registered a turnover of Rs128.66 crore on the BSE followed by Reliance Communication (Rs119.75 crore), SBI (Rs105.88 crore), RIL (Rs102.81 crore) and Tech Mahindra (Rs92.11 crore).

Fourth straight day of gains

Market extended its rally for the fourth straight day today, as buying momentum continued.

The BSE Sensex staged a smart recovery after plunging to an intra-day low of 13416.40, on strong buying demand for index pivotals, especially index heavyweight Reliance Industries (RIL). The buying interest intensified during the later half of the day’s trading session, taking the Sensex to a fresh intra-day high of 13744.17.

The 30-shares BSE Sensex settled 116.57 points higher at 13,731.09. It had opened 81.08 points higher at 13,695.60 as buying continued following 127-point rally on Friday (15 December).

The S&P CNX Nifty rose 40.10 points (1.03%) to 3928.75

The total turnover on BSE amounted to Rs 3772 crore compared to Friday’s Rs 4174 crore.

Market breadth turned positive, after initial weakness, as buying resumed for small-cap and mid-cap stocks. On BSE, 1321 shares advanced as compared to 1213 that declined. 79 shares remained unchanged. The BSE Small-Cap index closed 38 points higher (0.60%) to 6,706.62 while the BSE Mid-Cap index ended flat at 5,664.23.

The BSE Sensex has gained 736 points (5.66%) in four trading sessions from 12995.02 on 12 December as buying resumed after a sharp fall.

Among the Sensex pack, 19 advanced while the rest declined.

PSU oil exploration major ONGC was the top gainer, up 4.44% to Rs 852.60 on high volumes of 9.30 lakh shares, following reports that it has made a huge gas find in the Bay of Bengal, with initial estimates suggesting reserves of about 21 trillion cubic feet. The stock had surged to a high of Rs 867.70 in early trade.

Pharma major Ranbaxy Laboratories advanced 4.27% to Rs 390.80 on 7.03 lakh shares. Ranbaxy Laboratories entered into a collaborative agreement with the Department of Science & Technology (DST), Government of India, New Delhi, in the area of New Drug Discovery Research (NDDR). Under the agreement, DST will provide financial support by way of soft loans to the company, to undertake NDDR activity.

Tata Motors gained 3.74% to Rs 889.90 after it said on Monday it had entered a joint venture with Thailand's Thonburi to make pick-up trucks. The joint venture will go on stream in a year's time. The joint venture will facilitate it to access the Thailand market, which is the 2nd largest pickup market in the world after the US. Both partners will jointly manage the operation.

Wipro (up 3.85% to Rs 586), TCS (up 2.41% to Rs 1184) and Hero Honda (up 1.74% to Rs 743.30) advanced.

PSU engineering major Bhel was the top loser, down 4.54% to Rs 2383 on 2.07 lakh shares. It moved in a broad range of Rs 2374–Rs 2523.

Reliance Energy (down 1.30% to Rs 533), ACC (down 0.83% to Rs 1050) and NTPC (down 1.82% to Rs 140.50) edged lower.

Index heavyweight Reliance Industries (RIL) surged 3.29% to Rs 1294.80 on 8.10 lakh shares. It had surged to a high of Rs 1297. It has paid advance tax of Rs 444 crore for the third installment taking its total remittance this fiscal to Rs 1102 crore compared to Rs 848 crore paid in the same period last year. There are reports that RIL is talking to Russian government officials to enter the country’s downstream oil sector by investing in the refinery and petrochemical industry. There are also unconfirmed reports that it had acquired Orient Craft, which is a leading garment exporter.

Zee Telefilms, settled at Rs 272.40 on volumes of 34.41 lakh shares. It listed on BSE after its restructuring at Rs 249. It moved in a broad range of Rs 249 – 297.80. It was last traded at Rs 341 on Friday (15 December). There are reports that Zee plans to raise Rs 900 crore via equity sale in Dish TV, WWIL once they are listed. According to the scheme of demerger approved by Bombay High Court, Zee Telefilms has demerged its cable undertaking into Wire & Wireless India (WWIL) and the regional and news broadcasting undertaking into Zee News (ZNL). Shareholders of ZTL would receive 45 shares of ZNL and 50 shares of WWIL for every 100 shares held in ZTL. Both companies would be listed independently. The listing is likely to take place in January 2007.

L.T. Overseas settled at slight discount at Rs 55 on high volumes of 54.13 lakh shares, compared to its IPO price of Rs 56 per share. The stock listed on BSE at 7.14% premium at Rs 60 and hit an intra-day high of Rs 62.90. Its intra-day low was Rs 51

The BSE Oil and Gas Index advanced 3% to settle at 6,151.24. GAIL (up 4.70% to Rs 258.65), IOC (up 1.08% to Rs 440.10) and BPCL (up 1.06% to Rs 328.70) advanced.

Tata Power Company jumped 6.73% to Rs 595.25 after reports that it had won a bid for building a 4,000 megawatt coal-fired plant at Mundra in western India.

Lanco Infratech added nearly 7% to Rs 261.70 following reports it had won the bid for a 4,000-megawatt power plant at Sasan in central India.

Glenmark Pharmaceuticals rose 2.89% to Rs 599.10 following reports it had received 25 million euros in up-front payment from Germany's Merck KGaA for development of a diabetes drug.

Ashok Leyland rose 1.55% to Rs 42.65 after it signed an agreement with Australia's Brehon Energy Plc for technology for use of hythane gas in its compressed natural gas engines. The technology would enable Ashok Leyland, to operate its 6-cylinder 'H' series of engines on hythane, a prepared blend of hydrogen and natural gas which cuts emissions further than CNG.

Hindustan Zinc lost 4.69% to Rs 852 after it cut zinc and lead prices by 0.35% and 0.22% respectively.

ABG Shipyard gained 2.74% to Rs 230.40 after the company bagged a Rs 100 crore order from Vroon Offshore for construction of a diving support vessel from Vroon Offshore B.V., With the latest order win, the company’s total order book has risen to about Rs 2400 crore, the company said.

UltraTech Cement jumped 5.20% to Rs 1075 on reports it had paid advance tax of Rs 96 crore for the third installment of 15 December 2006. The company’s tax provision in Q3 December 2005 was just Rs 20.35 crore.

Yokogawa India surged 7.24% to Rs 408, even as its Japanese parent said it is ready to offer a maximum Rs 380 per shares for its delisting. Yokogawa Electric Corp. Japan has 83.19% stake in Yokogawa India. On 16 December 2006, the board of Yokogawa India agreed the proposal received from the Japanese parent to delist its shares from the stock exchanges. The floor price for reverse book building is set at Rs 320 which is the average price of past 26 weeks.

Most Asian markets were little moved on Monday as traders awaited a Bank of Japan policy decision for clearer signals on the direction of Japanese interest rates. The central bank is expected to leave its key interest rate unchanged at 0.25%, so the focus will be on clues on future policy direction. The Bank of Japan's two-day meeting that ends on Tuesday.

Japan's Nikkei gained 0.28% or 47.80 points at 16,962.11 with investors buying exporters such as Honda Motor Co. Ltd. on a softer yen.

The Hang Seng index gained 0.43% or 81.70 points to 19,192.35

As per provisional figures, FIIs were net buyers to the tune of Rs 374 crore on Friday 15 December, the day when Sensex had risen 127 points.

FIIs were net buyers to the tune of Rs 128 crore in index-based futures and Rs 175 crore in individual stock futures on 15 December.

Meanwhile, RBI on 15 December came out with new capital market exposure norms for banks which would come into force from April 2007. In terms of the new guidelines, the exposure of a bank to the capital market cannot exceed 40% of its net worth as on 31 March of the previous year.

US stocks rose in heavy volume on Friday, pushing the Dow to a record as tame consumer prices reassured investors inflation was under control and economic growth was still strong enough to support profits. The Dow Jones industrial average gained 28.76 points, or 0.23%, to end at 12,445.52. The Standard & Poor's 500 Index added 1.60 points, or 0.11%, to finish at 1,427.09. The Nasdaq Composite Index rose 3.35 points, or 0.14%, to close at 2,457.20.

Oil prices fell in Asian trade on profit-taking after significant gains last week following OPEC's move to cut production further. New York's main contract, light sweet crude for January delivery, was down 26 cents to $63.17 a barrel from $63.43 in the United States on Friday.

Kotak - Allsec Technologies

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Thanks Dunbaka

Sharekhan Commodities Buzz dated December 18, 2006

Wheat: Duty-free imports till February
The Indian government has extended duty-free imports of wheat for two months through February 28, 2007. Punjab is expected to release around 240,000 quintal of wheat through the public distribution system at a lower rate. The supply to south Indian states would be adequate in the coming days, which could affect the prices in the north.

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Sharekhan Highnoon dated December 18, 2006

The Nifty has corrected towards its initial target pegged at the 3850 level...

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5 Intra-day Stock Ideas

NIFTY (3888) SUP 3876 RES 3920

SL 132 T 142, 144

SL 204 T 218, 220

SL 204 T 217, 220

SL 2175 T 2230, 2235

@ 235 SL 239 T 225, 222


No Monday morning blues for bulls!

When somebody buys a stock it's because they think it's going to go up and the person who sold it to them thinks it's going to go down. Somebody's wrong.

Don't get caught on the wrong foot especially on Monday morning when everything seems bright for a change. Remain alert as there could be further downside to the market (not necessarily today). For today,, we see a positive opening on the back of the firm trend in global markets. However, things could get choppy as the day wears on.

The softening in FII inflows has probably allowed a few operators to play around with the market. According to reports, last week's sudden crash was part of a suspected manipulation. The CRR hike and the lower-than-expected IIP numbers were just triggers for pulling down the market. All of a sudden the bulls seem to be under pressure notwithstanding the bounce back in the last three days last week. The F&O cues are not encouraging either with Nifty Futures trading at 20 points discount to the Spot Nifty and open interest going down. Oil has rebounded above the $63 per barrel mark, after the OPEC proposed a cut in output in February.

All eyes will now be on the results for the October to December quarter and the Budget. The advance tax numbers are out and point to another quarter of strong earnings growth for India Inc. Reports suggest that SBI has paid much higher tax than last year. HPCL and BPCL have also paid tax versus nil last year. The final numbers will be available by tomorrow. The street will be keenly following this data. Still, one will have to wait for the actual quarterly results and guidance for an outlook on the health of India Inc. The recent fluctuations in the foreign capital inflows won't make matters easy.

FIIs were net buyers of Rs3.74bn (provisional) in the cash segment on Friday. In the F&O segment, they pumped in Rs2.51bn.

i-flex could gain amid reports that it is buying Indian and Asia-Pacific operations of US-based Capco. Zee Telefilms will surely be one of the most sought after stock as it starts trading as the demerged entity. New F&O contracts will also be introduced for Zee today. LT Overseas shares will get listed on the bourses today. BHEL is looking at a couple of domestic acquisitions, aside from its proposal to seek global M&As. ONGC is also likely to rise amid reports that it has struck huge gas reserves in the Bay of Bengal. Hindustan Zinc is likely to be under pressure as it is to cut prices from today. Infosys will get inducted in the Nasdaq 100 index from today.

US stocks gained last week as the latest economic reports seemed to add weight to a growing view that inflation is falling in the world's largest economy amid a slowdown in growth. And, though the Federal Reserve maintained status quo on interest rates and reiterated inflation risks, investors are still betting on a rate cut next year.

Both the Dow and the S&P 500 had their steepest weekly advance since Nov. 17, with the former closing at a new record. The Dow added 1.1% on the week to shut shop at 12,445.52, while the S&P 500 finished 1.2% higher at 1427.09, its highest since Nov 2000. The Nasdaq rose 0.8% to 2457.20.

European shares closed in the green on Friday. The German DAX Xetra 30 closed up 0.6% at 6,588.83, the French CAC-40 increased 0.6% to 5,541.62 and the UK-based FTSE 100 advanced 0.5% to 6,260. The pan-European Dow Jones Stoxx 600 index rose 0.5% to 366.10.

Asian exporter stocks rose on Monday after a report showed that US consumer prices were unchanged last month, raising speculation that the Fed will cut interest rates next year. Sony and Samsung Electronics gained.

The Morgan Stanley Capital International Asia-Pacific Index gained 0.2% to 138.54 as of 10:45 a.m. in Tokyo, rising for the fifth day in a row. Stock indices in New Zealand and the Philippines were little changed, while elsewhere in the region they rose.

Japan's Nikkei added 42 points to 16,956, while the Hang Seng in Hong Kong fell by 33 points to 19,077.

The Bank of Japan will probably keep interest rates unchanged tomorrow as it is looking for more evidence that world's second-largest the economy is recovering after being stagnant for several years.

Major Bulk Deals:
Prudential ICICI MF has bought Clariant Chemicals while Templeton MF has sold it; Macquarie Bank has picked up Federal-Mogul; Citigroup has purchased Gayatri Projects; ABN AMRO Bank has bought GVK Power; Deutsche MF has sold JHS Svenguard; Bear Stearns has bought RPG Transmission; Citicorp Finance has sold Suzlon; ABN AMRO Bank has sold Zee Telefilms.

Insider Trades:
Orient Abrasives Limited: Rajendra Kumar Rajgarhia, Chairman has purchased from open market 20000 equity shares of Orient Abrasives Limited on 13th December, 2006.

Asian Paints Limited: Ashwin S Dani, Vice Chairman & Managing Director has sold 109500 equity shares of Asian Paints Limited on 14th December, 2006.

Dwarikesh Sugar Industries Limited: Gautam R. Morarka, Chairman & Managing Director has purchased from open market 10000 equity shares of Dwarikesh Sugar Industries Limited on 13th December 2006.

Mahindra & Mahindra Ltd: Bharat N. Doshi, Director has sold in open market 4000 equity shares of Mahindra & Mahindra Ltd on 13th December 2006.

Market Volumes:
The turnover on NSE was up by 7.8% to Rs87.27bn. BSE Metal index was the gainer and gained by 3.94%. BSE Consumer Durable index (up 1.96%), BSE Bank index (up 1.38%), BSE Technology index (up 1.27%) and BSE Auto index (up 0.80%) were among the other major gainers.

Volume Toppers:
R Com, TTML, IFCI, India Cements, Tata Steel, Gujarat Ambuja, HLL, Satyam Computer, Century Textile, Hindalco, Bank of India, Hindustan Motors, Polaris, IVRCL Infrastructures, Gitanjali Gems, Bajaj Hindustan and Suzlon Energy.

Upper Circuit Filters:
BPL, Ltd, Flex Industries, Sonata Software, Atlanta and Nesco.

Delivery Delight:
APIL, Apollo Tyres, Aurobindo Pharma, Bajaj Auto, Bajaj Hindustan, BEML, Bharti Airtel, Crompton Greaves, Cummins, Educomp Solutions, Federal Bank, Gitanjali Gems, Glenmark, Godrej Industries, Grasim Industries, GTC Industries, Hindalco, India Cements, India Infoline, Infosys, M&M, McDowell & Co, ONGC, Reliance Capital, R Com, Satyam, Tata Motors and Titan.

Brokers Recommendations:
Tata Steel - Outperformer from Enam
Cipla - Outperform from Credit Suisse

Long Term Investment:
Satyam Computers

Major News Headlines:
Hindustan Zinc cuts prices of the non-ferrous metal by Rs800 a ton
SBI buys 76% in PT Bank IndoMonex, Indonesia
Infosys to invest Rs 4bn for expansion
Wipro to build core business application for ITV
Marico to buy personal care co in Bangladesh: reports
BPCL Board to meet on Dec 26 to consider dividend
Pantaloon will sell shares at a 5.7% discount to QIBs

From Research Desk - Opto Circuits (India) Limited

Opto Circuits (India) Ltd (OCIL), an established player in a niche segment of medical electronic devices and medical monitoring products is expected to witness revenue CAGR of 63% to Rs3.7bn over FY06-08. While the core business is expected to record 30% plus revenue CAGR to Rs2bn over FY06-08 driven by continuous demand for its products, EuroCor (OCIL’s 100% subsidiary) is on track to expand its geographical coverage of stents to 36 countries by end 2006 and contribute at least 30% to profitability by FY08. However, net margins for EuroCor may be subdued in the short term on account of heavy advertising and promotional expenditure. OCIL’s products have started gaining preference with cardiologists who have attended various seminars, conferences and live workshops conducted by the company. Appointment of Dr. O’Neill on board is likely to expedite the process for USFDA approval, but it is still 18-24 months away.

OCIL’s proposed acquisition of a European company is likely to be a good strategic fit for the company. OCIL is likely to acquire this company which is into design and manufacturing of a wide range of balloon catheter assemblies and related products for coronary, renal and other applications for a consideration of Rs0.72bn. The target company is likely to generate revenue of Rs0.8-1bn for 2007. While we await further details about the acquisition, which is likely to be closed over the next 4-6 weeks, the acquisition enables EuroCor to achieve backward integration, which would cut costs. These savings can then be passed on to the customer, which would increase penetration. In addition, OCIL is also looking at conducting certain low-end manufacturing operations for EuroCor in India, which will not only cut costs but boost net margins as OCIL is under 100% EOU till 2009-10.

We are confident that the company is on track to witness earnings CAGR of 61.1% to Rs1bn over FY06-08 excluding the potential from the proposed acquisition. At Rs305, the stock is trading at 28.8x FY07E EPS of Rs10.4 and 18.4x FY08E EPS of Rs16.3. We maintain BUY with a target price of Rs326. Closure of the proposed acquisition and disclosure of financial details by the management may lend further upsides to the stock.

How Market Fared

Bears loosen grip

The bulls had yet another day of joy as the emerging markets went steady to firm. It played an important role in firming the sentiments of investors on the domestic bourses. The key indices extended their gains for third straight day as sustained buying in the index heavy weights like Tata Steel, SBI, ACC, ONGC and Infosys aided the markets to recover smartly last couple of days. The bulls rode smoothly on Metal and banking stocks managing to recoup over 600 points putting up a good fight. Finally, the BSE benchmark Sensex added 127 points to close at 13614. NSE Nifty gained 45 points to close at 3888.

Ranbaxy gained 1% to Rs375 after the company received US approval to sell Bristol-Myers Cefzil version. The scrip touched an intra-day high of Rs400 and a low of Rs374 and recorded volumes of over 4,00,000shares on NSE.

Maruti edged higher 0.3% to Rs905 as reports state that the company would raise Car prices in January. The scrip touched an intra-day high of Rs917 and a low of Rs901 and recorded volumes of over 3,00,000 shares on NSE.

ACC surged by over 3% to Rs1060 as its Board approved a capex of about Rs14.8bn for augmenting the capacity at New Wadi plant by about 3mn tonnes Per Annum. The scrip touched an intra-day high of Rs1072 and a low of Rs1036 and recorded volumes of over 7,00,000 shares on NSE.

Bajaj Hind has gained 1.1% to Rs234 after the company announced its plans to double Sugar output and boost ethanol sales. The scrip touched an intra-day high of Rs239 and a low of Rs232 and recorded volumes of over 22,00,000 shares on NSE.

The Metal stocks were shinning brightly on back of firm metal prices on LME. SAIL urged over 3.6% to Rs82, Tisco spurred 3.55 to Rs451, Hindalco advanced 2.5% to Rs175 and National Aluminum added 2%to Rs207.

The Capital Good stocks recorded smart gains. BHEL advanced by over 2% to Rs2512, Punj Lloyd surged 3% to Rs1046, Siemens gained 1% to rs1149 and L&T added 1.2% to Rs1470.

Banking stocks again ended with smart gains. Index heavy weight SBI and HDFC bank were among the major gainers. Among the Mid-Cap stocks Bank of India surged over 4% to Rs192, Canara Bank spurred 5.4% to Rs280 and Bank of Baroda jumped 4.8% to Rs246.

Telecom stocks were hogging the limelight. Reliance Communication surged over 4% to Rs466, VSNL spurred over 3% to Rs411 and Bharti Airtel gained 1% to Rs615.

Auto stocks also ended with gains. Two-Wheeler major, Hero Honda, M&M, Maruti and Bajaj Auto were among the major gainers.

Market may extend gains

The market is likely to extend last three days gains today with Dow hitting a record high for the second day in a row on Friday. Asian markets were mostly in the green.

Regarding advance tax, State Bank of India (SBI) has paid Rs 2069 crore so far including Rs 850 crore remitted in the third installment. Tata Steel has paid advance tax of Rs 780 crore for the third installment, taking its total advance tax payment for this fiscal to 1410 crore compared to Rs 1443 crore in the same period last year.

Reliance Industries (RIL) paid advance tax of Rs 444 crore for the third installment taking its total remittance this fiscal to Rs 1102 crore compared to Rs 848 crore paid in the same period last year. Tata Motors has paid Rs 135 crore in third installment taking its total remittance this fiscal to Rs 265 crore. The company’s tax outgo in the fiscal last year was about Rs 360 crore.

As per provisional figures, FIIs were net buyers to the tune of Rs 374 crore on Friday 15 December, the day when Sensex had risen 127 points.

FIIs were net buyers to the tune of Rs 128 crore in index-based futures and Rs 175 crore in individual stock futures on 15 December.

Meanwhile, RBI on 15 December came out with new capital market exposure norms for banks which would come into force from April 2007. In terms of the new guidelines, the exposure of a bank to the capital market cannot exceed 40% of its net worth as on 31 March of the previous year.

US stocks rose in heavy volume on Friday, pushing the Dow to a record as tame consumer prices reassured investors inflation was under control and economic growth was still strong enough to support profits. The Dow Jones industrial average gained 28.76 points, or 0.23%, to end at 12,445.52. The Standard & Poor's 500 Index added 1.60 points, or 0.11%, to finish at 1,427.09. The Nasdaq Composite Index rose 3.35 points, or 0.14%, to close at 2,457.20.

Asian markets were mostly in the green on Monday. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were up by between 0.01% to 1.3%.

Action may continue

A look at how the indices fared at their closes: Sensex 13614.52 (+0.94%); Nifty 3888.65(+1.19%); Nasdaq 2457.20 (+0.14%); Dow 12445.52 (+0.23%).

After gaining over 127 points on friday, the market may show more exuberance and advance further on the back of bullish sentiment amongst investors. On Friday the Sensex closed at 13615 amid buying in several heavyweight and sectoral stocks. Also the positive opening in the Asian indices like Nikkei and Kospi coupled with overnight gains in US & European indices may help the market to move in positive territory. On the technical side, the Nifty could test upper levels at 3908 and 3950 should find support in the 3850-3820 range, while the Sensex may face resistance at 13670 and test lower levels at 13545.

US indices registered decent gains on Friday with the Dow Jones gaining 28 points at 12446 and the Nasdaq ending three points higher at 2457.

Barring few, most of the Indian ADRs traded firm on the US bourses. VSNL led the pack with gained over 4% while ICICI Bank, HDFC Bank, Satyam, Wipro and Patni Computers jumped over 1-2% each. Among the laggards Rediff and Infosys were down around 1% each and Dr Reddy's ended with marginal losses.

Crude oil prices in the US market ended on positive note, with the Nymex Light Crude oil for January delivery gaining $0.92 to close at $63.43 a barrel. However, in the commodity space, the Comex gold for February series declined $11.80 to settle at $619.10 an ounce.

Emkay Morning Notes + Subros

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Stocks you can pick up this week

Reliance Industries
Research:Enam Broking
Rating: Outperformer
CMP: Rs 1,254 (Face Value Rs 10)
12-Month Price Target: Rs 1,500

Reliance Industries’ revised field development plan for KGD-6 asset reasserts that its E&P business remains grossly undervalued. The FDP submitted factors in cumulative production of 11 TCF gas over 14.5 years (or a recovery rate of 22% over a 3 P reserves + resource base of 50 TCF).

As the consortium (RIL and Niko) intends to scale up gas-handling infrastructure capacity by almost 50% (to 120 mmscmd), it will lead to a significant increase in gas production. Netting of the ‘best case’ E&P valuations and investment portfolio from the current valuations translates into a payback of ~3.5 years for RIL’s core operations.

Niko expects production from MA-1 field to begin by ’08. A plateau production rate of 60 kbpd for 20 years could translate into 2 P reserves of ~1.4 billion bbl. Thus, the enterprise value of the oil field could be estimated at $7.5bn (or Rs 245/share), based on ONGC’s EV/BoE multiple.

At current valuations, assuming the ‘best case’ valuation scenario of E&P portfolio and market value of investment portfolio, RIL effectively trades at 3.5x FY07E EV/EBIDTA. This translates into a payback of ~3.5 years for the refining and petrochem assets, which are delivering value.

Gujarat Ambuja Cements
Rating: Buy
CMP: Rs 140 (Face Value Rs 2)
12-Month Price Target: Rs 142

Gujarat Ambuja plans to increase its capacity from 16 million mt currently to 21.5 million mt by December ’08 through a combination of greenfield expansions and blending of fly ash across seven locations. Increase in the ash content will account for 25% of capacity expansion.

Since conclusion of the monsoon, cement prices have moved up by Rs 6- 8 per bag (3-4%) at the retail level and the news flow on this front will remain positive. Holcim has recently bought the stock from the market at about Rs 139 per share.

As per a recent press interview with one of Holcim's directors, there are indications that the company may buy more stock. Gujarat Ambuja is the only large-cap cement stock without FII limit and remains one of CLSA's favourite picks in the sector.

IL&FS Investsmart
Research: Citigroup
Rating: Sell
CMP: Rs 207(Face Value Rs 10)
12-Month Price Target: Rs 161

The regulatory ban on opening new depository accounts has been lifted, but it has hit Investsmart hard. Management changes and transition to E*Trade suggests that the core businesses may remain in flux over the near term.

A fall in earnings reflects lower market volumes and market share, a shrunk margin book and slower investment banking. The worst is probably over, but the company does not appear positioned to benefit from any upswing yet.

E*Trade, which has raised its stake to 38% and is offering to buy another 20%, now appears positioned as a dominant shareholder. Over the medium term, this may drive strategy, positioning and growth.

But in the immediate term, this suggests transition. Citigroup believes the fundamental value is lower than the current price; supported by the expected open offer price of Rs 210. It recommends that investors should exit at the current price or during the offer period.

Tata Consultancy Service
Research: Ask-Raymond James
Recommendation: Buy
CMP: Rs 1,156 (Face Value Rs 1)
12-Month Price Target: Rs 1,350

Tata Consultancy Services (TCS) has been on a deal-winning spree. It has closed $500-million deals in 40 days. The management had mentioned in its Q2 FY07 earnings call that the deal pipeline looked robust, with the company pursuing five contracts above $50 million and another five worth about $100 million.

TCS is also in the final stages of five contracts above $50 million. Within a fiercely competitive environment, the company seems to have emerged as a winner in the large deals space. ASK-Raymond believes that there has been a structural change in the IT industry, with a marked polarisation towards larger players.

The stock trades at 29.1 times FY07E earnings and 22.1 times FY08E earnings. ASK-Raymond is revising its target price upwards to Rs 1,350 (25x FY08E earnings), from its earlier target price of Rs 1,240 (24x FY08E earnings).

Bombay Dyeing
Research: Motilal Oswal
Recommendation: Buy
CMP: Rs 725 (Face Value Rs 10)
12-Month Price Target: Rs 850

Motilal Oswal is upgrading price target for Bombay Dyeing to Rs 850, based on positive developments with respect to unlocking of hidden value from its two plants at Dadar and Lower Parel, Mumbai. There has been a significant increase in expected value accretion in its real estate at Dadar and Lower Parel.

Substantial changes in planned development have allowed the company to increase its developable area from 3.7 million sq ft at both its plants to 4.3 million sq ft — an increase of 16%.

Bombay Contrary to its earlier plans of selling a majority of its developable area outright, the company now plans to sell only 0.4 million sq ft at Dadar, while commercially leasing the remaining 3.9 million sq ft. This will be more value-accretive for the company.

Based on the SOTP valuations, Motilal Oswal arrives at the target price of Rs 850 per share, valuing the real estate rental business at Rs 615 per share, PV from sale of the Dadar property at Rs 101 share and its traditional businesses at Rs 134 per share.

Nucleus Software
Research: Sharekhan
Recommendation: Buy
CMP: Rs 558 (Face Value Rs 10)
12-Month Price Target: Rs 680

Nucleus Software Exports is a niche player offering software products to companies in banking and financial service. It has established itself globally with a product installation base of over 250 application modules in more than 30 countries.

The product business grew exponentially in FY06. It added 21 new clients and bagged orders for 38 new installations in FY06. In H1 FY07, it added 14 new clients; its order book stood at Rs 135 crore as on September ’06. Product revenues may grow at a CAGR of 67% over FY06-08.

Alliances with global technology giants could result in higher-than-expected order bookings. At the current price, the stock trades at 11x its FY08 earnings, which is relatively cheaper than its peers.

Hidden Gems - Ashish Chugh - Dec 18

Ashiana Housing & Finance India Ltd.

CMP - Rs. 213 BSE Code -523716

Ashiana Housing & Finance India Ltd. (Ashiana) known for its housing projects in Bhiwadi, has positioned itself as a provider of housing at affordable rates.

The company has been in existence for almost two decades. Having started its operations in Patna, the company extended its operations to Jamshedpur, Bhiwadi, Ghaziabad, Gurgaon and Greater Noida. Since its inception in 1986, Ashiana Housing has built and delivered 40 lakh square feet of residential and commercial space to the clients. The Corporate philosophy has always been to provide quality construction at affordable prices. The company started its operations in Jamshedpur in 1986 and in Bhiwadi in 1993.


The company has in the past completed various projects which include :-

Ashiana Villas, Bhiwadi - The project on 5 Acres land comprised of 49 Villas having a total built up area of over 1 lakh square feet and got completed in 2004.

Ashiana Gardens, Bhiwadi - The project comprised of 316 units on a plot area of 11 Acres and a total built up area of 3.75 lakh square feet was completed in 2004.

Ashiana Gulmohar Park, Bhiwadi - The project comprised of 195 units on a plot area of 7 Acres and a total built up area of 2.50 lakh square feet was completed in 2001.

Ashiana Bageecha, Bhiwadi - The project comprised of 253 units on a plot area of 5.7 Acres and a total built up area of 2.40 lakh square feet was completed in 1998.

Ashiana Greens, Bhiwadi - The project comprised of 125 units on a plot area of 2.75 Acres and a total built up area of 1.35 lakh square feet was completed in 1996.

Ashiana Heritage, Ghaziabad - The project on 1 Acres land comprised on 98 Units having a total built up area of over 1.46 lakh square feet and got completed in 2000.

Ashiana Suncity, Jamshedpur - - The project comprised of 249 units on a plot area of 8.30 Acres and a total built up area of 2.90 lakh square feet was completed in 2003.

Ashiana Enclave, Jamshedpur - - The project comprised of 288 units on a plot area of 6.25 Acres and a total built up area of 3.17 lakh square feet was completed in 2001.

Ashiana Gardens, Jamshedpur - - The project comprised of 555 units on a plot area of 14 Acres and a total built up area of 6.20 lakh square feet was completed in 1997.

Ashiana Residency Greens, Jamshedpur - A project comprising residential apartments in Jamshedpur. The project had a choice of 2 and 3 bedroom apartments and executive floors - a total of 149 residential units.

Besides, the company has also executed residential projects like Residency Garden, Shantiniketan and Plaza in Patna and various commercial projects.


The ongoing projects of the company include :-

Ashiana Greenhill, Neemrana - Nestled in the foothills of the Aravali Hills, the clear sky, lush green surroundings and the view of the Neemrana Fort, make Ashiana Green Hill a choice for the residents of Gurgaon and Delhi as the weekend outhouse as well as those working in Neemrana as their home. The company has sold the entire 280 units in the project and construction work is in full swing at the site.

Ashiana Utsav, Bhiwadi - Ashiana Utsav, Bhiwadi is being targeted towards retired and retiring people as a Retirement Resort. The project well equipped with recreational facilities like swimming pool and club is being projected as a place Celebrate Life after Retirement. The project is nearing completion.

Ashiana Rangoli, Bhiwadi - Ashiana Rangoli is a premium project and comprises residential apartments equipped with all amenities and recreational facilities like club and swimming pool.

Ashiana Gymkhana Club, Bhiwadi - This is a club with state-of-the art facilities that lets you enjoy the company of friends and experience the essence of pleasure, recreation, fitness, entertainment and relaxation. The club is being positioned as lifestyle of the emperors.

Ashiana Woodlands, Jamshedpur - Located in the foothills of the Dalma Hills in Pardih, Jamshedpur, the project offers 244 units comprising of three bedroom villas, executive floors and super deluxe apartments.

he company has a small Equity Capital of Rs.5.35 crores with promoters holding 65%. The total market cap of the company at its current stock price is Rs.114 crores.
As on 31.3.2006, the company had investments of roughly Rs.21.50 crores out of which around Rs.18 crores were in various Mutual Funds, mostly in the Debt schemes. The company had a Cash and Bank Balance of Rs.16.30 crores on 31.3.06. The company has negligible debt.

Future Plans & Conclusion

BHIWADI - The company has aggressive expansion plans. Towards this, the company has acquired 23 acres of land in Bhiwadi and is launching Ashiana Angan in Bhiwadi. The company has already received the licence (90-B) for the same and will shortly launch the project. The project comprises a total of 1300 apartments of 2 and 3 bedrooms. The project would be valued at roughly Rs.300 crores.

JAIPUR - The company has acquired 5 Acres of land at Jaipur and is launching Ashiana Greenwood. The company through its subsidiary Ashiana Retirement Villages Ltd., has also entered into a Joint Venture with Jaipur Based Mangalam Group for development in 18 Acres at Kalwar Road, Jaipur.

PUNE - The company has entered into a Memorandum of Association with Lavsa Corporation Ltd., Pune for acquisition of 31 acres of land in Lavasa, Pune for making retirement homes.

Besides, the company is also considering fresh land acquisitions at Bhiwadi and Lawasa, Pune. The company is also considering land acquisitions at various other places in the NCR of Delhi.

As regard the latest financials of the company, there is a decline in revenues for the first 6 months of the current FY compared to the same period last year with almost stagnant profitability. This is because of the fact that the company follows the accounting method based upon Sales completion model - where sales are booked when possession is handed over to the customer. The company expects to handover possession of roughly 1000 units over the next 18 months - these include around 640 units at Ashiana Utsav, Bhiwadi 240 units at Ashiana Greenhill, Neemrana and 100 units at Ashiana Rangoli, Bhiwadi. The Revenues and profitability are therefore set for a quantum jump over the next few quarters.

The management projects total project sales of around Rs.1000 crores over the next 4 years. The figure is huge given the small equity capital of just Rs.5.35 crores.

Even though the company has been in the business for almost 20 years, the management has been conservative regarding land acquisitions. This is definitely hurting the company in the short run since the stock analysts are valuing the companies based upon their land bank and not upon their development & delivery capabilities.

We however believe this phenomena is a short term aberration which may get corrected soon. This is due to the fact that every day we hear of unheard of names getting into real estate or companies shifting from their core business to venture into real estate business or merging real estate arms with the listed entities. The situation is somewhat similar to what we saw during the technology boom in the year 2000. One may choose to ride the wave depending upon one's risk appetite - for how long will the wave lasts is anybody's guess.

Over the longer term, the ability to execute and deliver the project will be a parameter which would be as important or probably more important than the land bank. The company scores high on this parameter since it has demonstrated its ability to develop and deliver the projects in time and has created a loyal customer base. Infact, most of the business is either from the existing customers or through referrals. The company's focus has been on development and delivery of the projects and to acquire land at reasonable valuations, which would lead to long term wealth creation for the shareholders.

Investors can accumulate the stock at the current price and on declines.

Weekly close: Again ready for a bounceback

It was the week of big correction as Sensex showed a free fall in the first two days with a loss of almost 1000 points but soon it bounced back and showed a smart recovery of almost 600 points in the last three days of the week. The sessions were really volatility over the week with Sensex ending down by 1.4% from the previous weekly close. Markets saw severe selling pressure and there are many notes giving excuses for the same starting with the surprise CRR hike, advance tax withdrawals, sudden FII selling pressure and then to add to that the weak IIP numbers which means some slowdown so on so forth that created panic among investors. But this free fall was used by investors as an opportunity to get in.

The Reserve Bank of India surprised the markets on Friday last week by raising the cash reserve ratio (CRR) by 50 basis points to 5.5 percent to be implemented in two stages starting December 23. Reasons cited were high WPI and CPI inflation. The intention is to tighten liquidity conditions, to moderate the frenetic pace of bank lending and also to manage expectations of higher inflation. The hike will soak up Rs 13,500 crore from the financial system. This seems to be against the long term goal of RBI to reduce CRR to 3 percent. WPI seems to be quite manageable at 5 - 5.5% but CPI has been around 7%. Clearly, the banks' cost of funds will go up, forcing them to tweak upward the sub-PLR loan rates. Banks immediately felt the pressure of this hike and tumbled as the trading started on Monday.

The Indo US Nuke deal was finally passed in the US. This deal is important to India for reasons stated earlier. There is a large capacity to come up and its enriched Uranium which is not available. The political hurdles still exist and there will be debates on whether Indian sovereignty has been compromised. However this is a big thing happening in the power sector. The expectations have begun to creep in that the economy is slowing.

The Federal Reserve noted a "substantial cooling" in the housing market but also kept its emphasis on inflation fighting in the statement accompanying its decision to leave interest rates unchanged. The Fed has not softened its stance towards interest rates and thats confusing. The dollar was down post the Fed comments. Markets are seeing the possibility of a rate cut by March. Interestingly there was positive data for the US dollar. The U.S. trade deficit narrowed sharply in October. We view that a weak dollar as the negative for the US which has so far had a strong dollar policy. Given this uncertainty, Central Governments will be diversifying their forex holdings on the sly so as not to deliver a dollar shock. Its in the interest of everyone.

Century Textiles informed that voluntary retirement scheme (VRS) for the Mumbai textile mill, of a total staff strength of 6600, about 6300 workers have opted for voluntary retirement. As per reports on an average, in the new VRS scheme, the workers were given Rs 9 lakh to Rs 10 lakh which works to around Rs 600 crore. The Worli mill had been losing money on the back of high costs such as electricity at Rs 4.25 paise per unit, water at Rs 45 per 1000 litres, octroi at 4% and Rs 400 as wages per worker per day. This year the company inducted Kumar Mangalam Birla, on the board. BK Birla is now 80+. Certainly, we feel that Kumarmangalam is taking active interest. The company has 30 acres of land in the heart of the city of which roughly of 10 acres, was taken on lease from Bombay Dyeing on a 999-year lease and can be extended for another 999 years. This land is worth over Rs 100 per share. The land is likely to be used for development. A Marwari would not pay Rs 350 crore for nothing. On an EV per tonne basis at current levels $ 167 seems to be fair for Century. Better Operational performance will be the driver ahead. The stock fell by almost 17% in the initial carnage but recovered handsomely by more than 16% in last three days.

ESPN Star Sports has won the ICC telecast rights for an eight-year period starting 2007. Industry estimates that ESPN Star's bid was at $1.1 billion followed by Nimbus at $900 million, Zee ($850 million) and Tensports ($825 millon). This news created negative sentiments initially however the positive about this bid is that Zee is not going overboard to get the programmes. It would have been a big risk. Risk needs to be taken for returns but it needs to be managed well. The stock tumbled initially by 12% reacting to the news but again pulled back by more than 10%. Zee Telefilms is going for restructuring and it will demerge itself into three entities namely Zee Entertainment, Zee News Limited, and Wire & Wireless India Ltd.(WWIL). Zee Telefilms will be delisted from today itself and the Zee entertainment will be relisted on 18th December while the othe two entities will be listed in January. This restructuring will bring clarity in the business.

The mid caps have started joining the party and more is possible next week. However the worry is from the global markets where the US cues are not too encouraging. Indian Markets made a sharp recovery as was the fall and this good news should bring in more momentum. However it has brought forth the risks and we believe that the large caps will be seen more cautiously than ever before. We believe that the valuations are high and thats the bane for now. However in the near term the advance tax figures will bring in some gains.

Networth - Sasken

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Easun Reyrolle Limited

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MK Shares Weekly Newsletter - December 18 - 24, 2006

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Thanks Vishesh