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Deutsche Bank pays $1 bn for 5% in Emaar-MGF
Firm is gearing up to float an IPO and has now raised its targetted mop-up to Rs 25K cr.
New Delhi-based real estate company Emaar-MGF, which is gearing up to float an initial public offering, has sold under 5 per cent of its equity for $1 billion (Rs 4,500 crore) to Deutsche Bank, which has the right to buy more.
With the Deutsche money in its kitty, Emaar-MGF is raising the estimated mop-up from its IPO from Rs 13,000 crore to Rs 25,000 crore, said a top executive of the company. As per the earlier plan, the IPO was to dilute 10 per cent of its post-issue capital. This has trebled to 30 per cent in the new plan.
So far, the IPO of another Delhi-based company DLF, which has been waiting for Securities & Exchange Board of India’s approval, was billed as the largest in India’s capital market history. It was intended to raise about Rs 13,000 crore. The biggest IPO to have hit the market so far was that of Reliance Petroleum, which raised Rs 8,000 crore last year.
When contacted, the Emaar-MGF spokesperson declined to comment.
Last year, the company had brought in Rs 4,500 crore as foreign direct investment. It already has an investment kitty of about Rs 18,000 crore.
The company has also put in place a new organisational structure under which the group’s head of strategy, Dinesh Jain, will head the special economic zones initiative. The retail business will be overseen jointly by Susil Dungarwal, group vice-chairman, and Shravan Gupta, the managing director.
Gupta will look after the north Indian side of the business, with Dungarwal taking care of west and south. The township business will be headed by Gupta’s younger brother Siddharth, while Sanjay Malhotra will head the commercial realty business.
The hotels and leisure businesses will be headed by Sanjay Rai. The company is looking for someone to head its retail business in the east as well as two other persons to take charge of its education and hospital businesses.
The company is still in the process of acquiring land around metros, while it has bought land in around 30 second and third tier towns and cities. It has acquired 12,000 acres of land, which could be valued at Rs 36,000 crore.
It is working on a strategy on building a large land bank over the next 18 -24 months and developing it in a phased manner as satellite townships in and around tier 2 and tier 3 cities to accommodate its planned business streams, SEZs, hospitals, education, retail (both malls and retail), hospitality and leisure, townships and commercial real estate. Each of these businesses will operate as a separate profit centre, to be headed by a senior executive.
Mkt Outlook: Rally done, time for breather
After five weeks of losses, the major indices - Sensex and Nifty - posted gains last week on the back of renewed buying interest.
The markets began on a positive note, and the Sensex gained as much as 215 points on the first trading day of the week. The index went on to log gains on four trading days and touched a high of 13,387 - up 960 points from a low of 12,427 touched earlier in the week. The index finally settled with a significant gain of nearly 7% (856 points) at 13,286.
Last week, we had mentioned that the bulls have a glimmer of hope, and if the index is able to cross 12,940 then it may rally to 13,800. The index seems to be on course to 13,800 after having crossed 12,940, which now becomes the support level for the index this week.
The overall bias of the market, however, still remains negative, and may change only if the index sustains above the 13,800-mark in the coming days. The Sensex is likely to face resistance around 13,650-13,765-13,880, while the index may find support around 12,920-12,805-12,690.
Similarly, the Nifty from a low of 3603 rallied to a high of 3902 - an intra-week up move of 299 points. The index ended with a gain of 252 points at 3861.
The Nifty is likely to target 3975 this week above which the index could rally to 4010 and 4045. On the downside, the index is likely to find support around 3745 below which the index could drift to 3710 and 3675.
Board Meetings - March 29 2007
| Mar 29 2007 | Abbott India Ltd | Abbott India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 29, 2007 for taking on record the Unaudited Financial Results for the first quarter ended February 28, 2007 (Q1). |
| Mar 29 2007 | ANG Auto Ltd | ANG Auto Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 29, 2007, inter alia, to consider, Conversion of Warrants into Equity Shares and allotment thereof. |
| Mar 29 2007 | Bharat Earth Movers Ltd | Bharat Earth Movers Ltd (BEML) has informed BSE that a meeting of the Board of Directors of the Company will be held on March 29, 2007, for consideration of the Red Herring Prospectus for the proposed Public Issue of 49 lakh Equity Shares of Rs 10/- each at a premium to be decided under Book building process as per SEBI guidelines. |
| Mar 29 2007 | City Union Bank Ltd | City Union Bank Ltd has informed BSE that a meeting of the Board of Directors of the Bank will be held on March 29, 2007, to consider and make allotment of 12,00,000 Equity Shares of Rs 10/- each at a price of Rs 169/- per share (including a share premium of Rs 159/- per share) on preferential basis pursuant to the special resolution passed by the members of the Bank at their Extra Ordinary General Meeting held on December 29, 2006 and the approval thereof received from Reserve Bank of India. |
| Mar 29 2007 | Megasoft Ltd | Accounts |
| Mar 29 2007 | Oriental Carbon & Chemicals Ltd | Oriental Carbon & Chemicals Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 29, 2007, to consider issue of convertible warrants on preferential basis to the persons falling in the catagory of promoter group to part-finance the cost of expansion of its insoluble sulphur plant and / or for setting-up a new project to manufacture Insoluble Sulphur. |
| Mar 29 2007 | Ranbaxy Laboratories Ltd | Ranbaxy Laboratories Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 29, 2007, inter alia, for consideration of Audited Accounts for the year ended December 31, 2006 and declaration of 2nd interim dividend on Equity Shares for the year ended December 31, 2006. |
| Mar 29 2007 | Sai Service Station Ltd | Sai Service Station Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 29, 2007, to consider payment of interim dividend to the shareholders of the Company. |
| Mar 29 2007 | Sanwaria Agro Oils Ltd | Sanwaria Agro Oils Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 29, 2007, to pass a resolution, for the start of the energy division to produce and sell the power for captive / commercial use within the Company, with effect from April 01, 2007 in terms of the authority given by the shareholders through the special resolution passed at the 13th Annual General meeting of the Company held on September 30, 2004 and which is covered under Clause No 46 of the Other Objects Clause of the Memorandum and Articles of the Association of the Company. |
| Mar 29 2007 | Sterling Biotech Ltd | Final Dividend & AccountsSterling Biotech Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 29, 2007, to consider Audited Accounts for the year ending December 31, 2006 and also to consider the declaration of Dividend subject to the final approval of the members at the Annual General MeetingSterling Biotech Ltd has informed BSE that the meeting of the Board of Directors of the Company will be held on March 29, 2007, for adoption of Audited Accounts and declaration of Dividend subject to the final approval of the members at the Annual General Meeting of the Company, the Board shall also consider the passing of resolution for raising of further capital up to US$ 300 million or equivalent to INR by way of issue of equity / convertible instrument / ADR / GDR / Bonds etc., subject to passing by way of Special Resolution at General Meeting of the Company.(As Per BSE Announcement Website Dated on 23/03/2007) |
| Mar 29 2007 | Sulzer India Ltd | Dividend & AccountsSulzer India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 29, 2007 to consider the audited financial results and dividend, if any, of the Company for the quarter / year ended on December 31, 2006.(As Per BSE Announcement Website Dated on 22/03/2007) |
Board Meetings - March 28 2007
| Mar 28 2007 | Arvind Chemicals Ltd | Arvind Chemicals Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 28, 2007, inter alia, to consider the following:1. Allotment of Bonus Shares in the ratio of 2 Equity shares for every one Equity share held in the Company.2. Merger of Arvind Commodities Ltd (an unlisted Company) with the Company. |
| Mar 28 2007 | Bloom Dekor Ltd | Bloom Dekor Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 28, 2007, for Preferential Allotment of Equity Shares on conversion of Equity Warrants of the Company and discussing about the Preferential Allotment of equity shares and review of progress of business activities of the Company. |
| Mar 28 2007 | D S Kulkarni Developers Ltd | DS Kulkarni Developers Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 28, 2007, inter alia, to consider, the matters relating to the business of the Company and to consider the formation of the Merger Committee. |
| Mar 28 2007 | DIC India Ltd | DIC India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 06, 2007, inter alia, to consider the following:1. Approval of Audited Financial Results for the financial year ended December 31, 2006.2. Recommendation of Dividend.(As Per BSE Bulletin Dated on 20/02/2007)DIC India Ltd has informed BSE that the meeting of the Board of Directors of the Company which was re-scheduled on March 30, 2007, to consider and take on record the audited full year accounts for the year ended December 31, 2006, and declaration of final dividend, if any, has been preponed and will now be held on March 28, 2007.(As Per BSE Announcement Website Dated on 23/02/2007) |
| Mar 28 2007 | Elder Project Ltd | Elder Projects Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 28, 2007, inter alia, to consider the following business:1. To consider and give consent to the proposed amalgamation of Maverick Products Pvt Ltd into the Company in order to consolidate and merge the operations of both the entities.2. To approve the scheme of amalgamation and share exchange ratio for the proposed merge. |
| Mar 28 2007 | Flex Industries Ltd | Flex Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 28, 2007, inter alia, to consider the Company's proposal for payment of interim dividend to the shareholders of the Company. |
| Mar 28 2007 | Ind-Swift Laboratories Ltd | Ind Swift Laboratories Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 28, 2007, inter alia, to consider and approve part allotment of shares upon conversion of Zero Coupon Convertible warrants into equity shares of the holders of the warrants. |
| Mar 28 2007 | India Gelatine & Chemicals Ltd | India Gelatine & Chemicals Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 28, 2007 to issue and allot 9,20,000 Equity Shares of Rs 10/- each fully paid at a premium of Rs 14.50 per share to Nippi Incorporated, Japan. |
| Mar 28 2007 | Jupiter Bioscience Ltd | Jupiter Bioscience Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 28, 2007, inter alia, to consider and approve the following:1. To consider and allot Equity Shares in lieu of Share Warrants as approved by the share holders of the Company in the Extra Ordinary General Meeting held on September 30, 2005.2. Conversion of 2750000 Equity Share Warrants into 2750000 Equity 5hares. |
| Mar 28 2007 | K G Denim Ltd | KG Denim Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 28, 2007, to consider the issue of equity shares for redemption of preference shares in accordance with the approval by shareholders in the EGM to be held on the said date. |
| Mar 28 2007 | Keynote Corporate Services Ltd | Keynote Corporate Services Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 28, 2007, for the allotment of 77,170 equity shares of Rs 10/- each to the shareholders of group transferor Companies as per "Scheme of Amalgamation" approved by the Hon'ble High Courts at Allahabad, Bombay and Guwahati. |
| Mar 28 2007 | Macmillan India Ltd | Second Interim Dividend & Accounts |
| Mar 28 2007 | Polaris Software Lab Ltd | Polaris Software Lab Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 28, 2007, inter alia, to consider declaration of second interim dividend on the equity share capital of the Company.Further the Company has informed that, April 05, 2007 has been fixed as the Record Date for the purpose of payment of second interim dividend. In the event of the Board deciding to pay Interim Dividend, the Company shall commence payment of the same on and from April 17, 2007. |
| Mar 28 2007 | Sam Industries Ltd | Sam Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 28, 2007, to transact the following:1. To consider the resignation submitted by Messrs. J M Trivedi & Associates, Chartered Accountant, Mumbai, from the statutory auditors of the Company.2. To call an Extra-Ordinary General Meeting to fill the casual vacancy caused by resignation of statutory auditors of the Company. |
| Mar 28 2007 | Satra Properties (India) Ltd | Satra Properties India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 28, 2007, inter alia, to consider allotment of equity shares on preferential basis @ Rs 800/- per share, which is at a premium of 30% above the current market price, to the proposed allottees as per the resolution passed in the Extra Ordinary General Meeting held on March 20, 2007, which are as follows:Name of Proposed Allottees:1. Ramesh Ramchandani - 40,000 (Maximum no. of Equity Shares to be Allotted)2. Uttam Ramchandani - 40,000 (Maximum no. of Equity Shares to be Allotted)3. Mohini Ramchandani - 40,000 (Maximum no. of Equity Shares to be Allotted)4. Ajjay Ramanlal Aggarwal - 15,000 (Maximum no. of Equity Shares to be Allotted)5. Barkha Ajay Aggarwal - 15,000 (Maximum no. of Equity Shares to be Allotted)6. Ajay Ramanlal Aggarwal HUF - 15,000 (Maximum no. of Equity Shares to be Allotted)7. Ramanlal S Aggarwal HUF - 15,000 (Maximum no. of Equity Shares to be Allot |
| Mar 28 2007 | Sharon Bio-Medicine Ltd | Sharon Bio Medicine Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 28, 2007, inter alia, to consider for issue of 1,50,000 Equity shares and 3,75,000 warrants on preferential basis in terms of Special Resolution passed in the Extra Ordinary General Meeting held on March 15, 2007. |
| Mar 28 2007 | Usha Martin Infotech Ltd | Usha Martin Infotech Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 28, 2007, inter alia, to consider redemption of preference shares. |
| Mar 28 2007 | Vippy Spinpro Ltd | Vippy Spinpro Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 28, 2007, to consider the allotment of equity to the promoters towards the exercise of right of conversion of warrants into equity shares. |
Board Meetings - March 27 2007
| Mar 27 2007 | Arihant Foundations & Housing Ltd | Arihant Foundations & Housing Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 27, 2007, inter alia, to consider the conversion of 850000 convertible warrants in to 850000 fully paid up equity shares.The aforementioned warrants were allotted on September 28, 2005 at 10% of the total exercise price of Rs 201/- (including premium of Rs 191). |
| Mar 27 2007 | B & A Ltd | Accounts |
| Mar 27 2007 | Crazy Infotech Ltd | Crazy Infotech Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 27, 2007, inter alia, to transact the following business:1. The Company Diversification & its Expansion Plans.2. The Company Plans to Foray in to Retailing of IT Products & Solutions etc. |
| Mar 27 2007 | HFCL Infotel Ltd | HFCL Infotel Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007, inter alia, to consider issue of equity shares and / or other securities convertible into equity shares on preferential allotment basis.HFCL Infotel Ltd has informed BSE that due to unavoidable circumstance, the meeting of the Board of Directors of the Company which is scheduled to be held on March 26, 2007, has been postponed to be held on March 27, 2007, inter alia, to consider, issue of equity shares and / or other securities convertible into equity shares on preferential allotment basis(As Per BSE Announcement Website Dated on 23/03/2007) |
| Mar 27 2007 | Mac Charles (India) Ltd | Mac Charles India Ltd has informed BSE that a meeting of the Board of Directors of the Comapny will be held on March 27, 2007, to declare interim dividend for the financial year 2006-2007. |
| Mar 27 2007 | Shri Lakshmi Cotsyn Ltd | Shri Lakshmi Cotsyn Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 27, 2007, inter alia, for considering the conversion of Seven Lacs warrants of Rs 10/- each issued at a premium of Rs 119/- per warrant into Seven Lacs equity shares of Rs 10/- each at a premium of Rs 119/- per share. |
| Mar 27 2007 | TIL Ltd | TIL Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 27, 2007, to consider budget for the financial year 2007-08. |
| Mar 27 2007 | United Credit Ltd | United Credit Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 27, 2007, inter alia, to consider acquisition of 255,100 equity shares of Rs 10/- each of United Nanotechnologies Pvt Ltd.On acquisition of such shares, United Nanotechnologies Pvt Ltd would become a wholly owned subsidiary of the Company. |
Board Meetings - March 26 2007
| Mar 26 2007 | Aegis Logistics Ltd | Aegis Logistics Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007 to consider investment proposals. |
| Mar 26 2007 | Anant Raj Industries Ltd | Anant Raj Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007, to consider and approve the conversion of 15,00,000 Warrants into Equity Share of the Company. The said Warrants were issued to Non Promoter Bodies Corporate on a preferential basis on September 27, 2005. |
| Mar 26 2007 | Archies Ltd | Archies Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007, inter alia, to consider issue of Equity Shares and Warrants convertible into Equity Shares on preferential Basis. |
| Mar 26 2007 | Aventis Pharma Ltd | Aventis Pharma Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007 for approving the audited Accounts for the year ended December 31, 2006 and also to consider recommendation of Final Dividend for the said financial year. |
| Mar 26 2007 | Bacil Pharma Ltd | Bacil Pharma Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007, inter alia, to consider forfeiture of Partly paid-up Equity Shares of the Company and other business as deemed fit. |
| Mar 26 2007 | Batliboi Ltd | Batliboi Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007, inter alia, to review the progress made on inorganic growth initiatives and confirm actions taken pursuant to Board Resolution dated January 16, 2007 and Circular Resolution dated March 16, 2007. |
| Mar 26 2007 | Bayer CropScience Ltd | Bayer CropScience Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007, inter alia, to take on record the audited accounts of the Company for the year ended December 31, 2006 and to consider recommendation of dividend, if any. |
| Mar 26 2007 | Cholamandalam DBS Finance Ltd | Cholamandalam DBS Finance Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007, inter alia, to consider the Business plan of the Company for the year 07-08.Further the Board will also consider the option of attaching warrants to the rights issue of equity shares up to Rs 200 crores approved by the Board at its meeting held on January 24, 2007. |
| Mar 26 2007 | Gabriel India Ltd | Gabriel India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007, inter alia, to consider declaration of Second Interim Dividend. |
| Mar 26 2007 | H. S. India Ltd | H S India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007, inter alia, to consider the following:1. Raising the fund upto Rs 100 Crores by way of Debt, Equity or combination of both for the purpose of expansion, acquisition and retirement of existing high cost debt.2. Proposal for acquiring substantial stake exceeding 51% in two hotel properties located at Ankleshwar and Varanasi with four star facility.3. Purchase of land at Mumbai and Jaipur for setting up 4 star hotel project.4. To fix date, time & place of holding Extra-ordinary General Meeting of the Shareholders of the Company. |
| Mar 26 2007 | Hazoor Multi Projects Ltd | Hazoor Multi Projects Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007, inter alia, to consider and approve the following:1. Allotment of 7,50,000 Equity Shares against conversion of existing share warrants issued on preferential allotment basis and consequently allotting 7,50,000 Bonus shares kept in abeyance for the aforesaid share warrants.2. To carry on the Media & Entertainment business operations of the company through the subsidiary company which will be managed by the professionals from the field of Media Industry. |
| Mar 26 2007 | Hindustan Photo Films Manufacturing Company Ltd | |
| Mar 26 2007 | Ishwar Bhuvan Hotels Ltd | Ishwar Bhuvan Hotels Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007, to consider and approve the terms and conditions of re-issue of forfeited equity shares of the CompanyIshwar Bhuvan Hotels Ltd has informed BSE that the Company had forfeited 7,32,300 equity shares on December 08, 2006. The Company is now proposed to re-issue the forfeited shares at a price of Rs 15/- each at the Meeting of the Board of Directors to be held on March 26, 2007.(As Per BSE Announcement Website Dated on 23/03/2007) |
| Mar 26 2007 | Jindal Stainless Ltd | Jindal Stainless Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007, inter alia, to consider payment of interim dividend on equity shares of the Company for the year 2006-07.Further the Company has informed that, March 31, 2007 has been fixed as the Record Date for the purpose of payment of interim dividend, if approved by the Board of Directors. |
| Mar 26 2007 | Karnataka Bank Ltd | Karnataka Bank Ltd has informed BSE that a meeting of the Board of Directors of the Bank will be held on March 26, 2007 to consider a proposal for private placement of Unsecured Redeemable Non-Convertible Subordinated (Tier-II) Bonds (Series I) in the nature of Promissory Notes / Debentures to augment its capital funds. |
| Mar 26 2007 | KPIT Cummins Infosystems Ltd | Kpit Cummins Infosystems Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007, inter alia, to consider and approve, the following business:1. Issuance of equity shares of the Company to Cargill Mauritius Ltd, on a preferential basis for a cash consideration of USD 4.50 million, at a price to be determined in accordance with the provisions of Chapter XIII of Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000, as amended from time to time (the "SEBI (DIP) Guidelines").2. Issuance of convertible warrants to Cargill Mauritius Ltd, on a preferential basis for an aggregate consideration of not exceeding USD 4.50 million, at a price to be determined in accordance with SEBI (DIP) Guidelines, representing the right to convert into equity shares of the Company at the end of 18 months based on achievement of certain parameters. |
| Mar 26 2007 | Lumax Industries Ltd | Lumax Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007, inter alia, to consider, the preferential issue of 10,00,000 Equity Shares of Rs 10/- each to Stanley Electric Company Ltd, Japan, the Foreign Collaborators on preferential basis by private placement as per SEBI (Disclosure & Investor Protection) Guidelines, 2000 to mobilize funds for modernisation and expansion of existing Plant capacities, setting up of new manufacturing facilities and meeting long term working capital requirements of the Company due to growth of business. |
| Mar 26 2007 | Nettlinx Ltd | For the purpose of considering Investment in new line of business activities i.e., "TV CHANNEL / MEDIA ENTERTAINMENT" through wholly owned subsidiary Company, to be Incorporated. |
| Mar 26 2007 | Saint-Gobain Sekurit India Ltd | Quarterly Results & Accounts |
| Mar 26 2007 | Stanpacks (India) Ltd | General |
| Mar 26 2007 | Vishal Cotspin Ltd | Vishal Cotspin Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 26, 2007, inter alia, to consider the scheme of merger of the company with Madanapalle Spinning Mills Ltd. |
On the virtues of selling
If you invest actively in stocks, your net worth has probably taken a battering in the recent market tailspin, leaving you wondering what you should now do. Investment gurus tell you that corrective phases are the wrong time to hit the panic button and sell stocks. Be a patient long-term investor and your portfolio will eventually regain its past glory, is their message.
This advice will definitely apply to any orderly and well-thought-out portfolio of bluechip stocks. But, then, how many of us actually own such a portfolio? Most of us make our stock/fund purchases on impulse, ploughing in whatever surplus funds we have into whatever opportunities happen to come by at that time.
If you have been doing this over time, your portfolio may now feature scores of stocks. Start by listing out your entire portfolio in terms of the current value of each of your holding and arrive at stocks that make up your largest positions.
Go by conviction
Having zeroed-in on your top holdings, try to dredge up the reason why you added the stock to your portfolio in the first place. If you cannot recollect any solid reasoning behind the choice, it may be best to dump the stock and stick to investments you understand better.
We say this because stocks from a wide range of sectors have participated in the breathless rally of the past four years; with the result that most investment ideas, well-substantiated or not, have worked.
Going forward, with a few sectors going off the radar screens of investors , the rally may turn more selective. Therefore, even if the stock market does recover over the next couple of years, there is no guarantee that every stock you own will be in on the party!
Look for business changes
If a stock choice was backed by homework, check whether the fundamentals of the sector or the business have undergone a drastic change since you made the purchase. Rising interest rates, the meltdown in commodity prices and recent policy moves have drastically changed the earnings prospects for quite a few businesses. To cite a few examples: Instead of the stellar growth they saw in 2005-06, sugar companies are now facing the prospect of an earnings decline on a reversal in the sugar cycle.
The earnings outlook for cement companies appears distinctly weaker after the policy froze selling prices. Smaller infrastructure and IT companies may be vulnerable to the impact of the Budget proposals on Minimum Alternate Tax and Fringe Benefit Tax on Employee Stock Options (ESOPs).
Use secondary sources to get more information on these factors and their specific impact on your holdings. Where the outlook has decisively changed for the worse, don't hesitate to exit your holdings, even at a loss.
Don't wait for the right price
Most of us are reluctant to sell a stock or a fund at a price well below our `buy' price; we're always hoping to catch it just above this magic number. This can be quite injurious to your portfolio. Holding on to a lemon denies you the opportunity to deploy that money in a stock with better fundamentals and greater chances of participating in a subsequent rally.
If you have lost conviction in a particular holding or feel that business fundamentals have deteriorated beyond repair, don't transfer it to your long-term portfolio — Sell! Invest those proceeds in a stock that you've always wanted to buy, but refrained because prices appeared high. You could recoup your losses faster that way.
Hold on
After a thorough review, if you have whittled down your portfolio to just the stocks and businesses you understand and believe in, don't "book profits" on them during a correction because you believe that the stock marketis going to tank. It is always difficult to forecast where the market is going in the short term.
Therefore, selling your better holdings in the hope of re-entering the same stocks at lower prices is a strategy that may lead to missed opportunities.
Mid-cap musings
Almost all the fund managers and analysts we spoke to feel that mid-caps will soon join the rally but they caution that returns from current valuations can be had only over the medium to long term. Some, like Mr Siva Subramanian of Franklin Templeton, feel that mid-caps could under-perform in the short term but "fundamentally sound stocks are likely to deliver a good performance over the long term".
Mr Rajagopal of DBS Chola advises investors to allocate to the mid-cap segment "very judiciously". "We need to have a longer-term view insofar as mid-caps are concerned. A partial allocation to mid-caps is advocated in addition to normal allocation to large-caps", he says.
"Mid-caps tend to lag large-caps", says Mr Bharat of Advent Group offering a reason for mid-caps staying out of the rally in the last year. "Over the next 12 months, I expect that mid-caps will join the party in the later six-month period", he feels.
Market strategist Gul Tekchandani is more philosophical: "The mid-caps will join the party, eventually. The disconnect, at points in time, actually provides an opportunity to a stock picker but since most people focus on the index, it seems to be an emotional issue for them to see that there is no 1:1 correlation between the index and their individual stocks."
In the view of Mr C. J. George of Geojit Securities, good mid-cap stocks tend to out-perform the market over a medium- to long-term time-frame. "These stocks deliver superior earnings growth that goes to re-rate them at times when index stocks are exhibiting signs of plateauing", he says.
Investment Nuggets
As one of Wall Street's successful hedge-fund managers, Michael Steinhardt has few peers. One dollar invested in his fund, Steinhardt Partners in 1967, would have been worth $480 when it closed in 1995, a year in which the fund suffered heavy losses. Post his retirement from active stock investing, he wrote an engaging autobiography titled No Bull: My Life In and Out of Markets.
In his book, he reveals that his father, who was a convicted felon, gave him envelopes stuffed with money that helped him build up a net worth of $2,00,000 at an early age. After his retirement, he also become a philanthropist, giving away millions that he earned in his investing career.
"I constructed a system that overcame the necessity of specific knowledge across a wide range of industries. In short, I asked the right questions by seeking the `variant perception' inherent in each idea. A summer intern reminded me years later of the advice I had given him on his first day at work. I told him that ideally he should be able to tell me, in two minutes, four things: the idea; the consensus view; his variant perception, and a trigger event.
No mean feat. In those instances where there was no variant perception — that is, solid growth recommendations within consensus — I generally had no interest and would discourage investing."
"I defined variant perception as holding a well-founded view that was meaningfully different than the market consensus. Understanding market expectation was at least as important as, and often different from, the fundamental knowledge."
"When your views are truly contrarian, they are inevitably uncomfortable. Courage and the ability to withstand pain are required."
"A good trader has to have three things: A chronic inability to accept things at face value, to feel continuously unsettled and to have humility."
"Time and again, in every market cycle I have witnessed, the extremes of emotion always appear, even among experienced investors. When the world wants to buy only (bonds), you can almost close your eyes and (buy) stocks."
"The hardest thing over the years has been having the courage to go against the dominant wisdom of the time, to have a view that is at variance with the present consensus and bet that view. The hard part is that an investor must measure himself not by his own perceptions of his performance but by the objective measure of the market. The market has its own reality. In an immediate, emotional sense, the market is always right. So if you take a variant point of view, you will always be bombarded for some period of time by the conventional wisdom as expressed by the market."
Advanta: Invest at cut-off
Investors with a high-risk appetite can consider bidding for the initial public offer from Advanta India at the cut-off price. The pricing is stiff and the company has a limited track record of financial performance on consolidated operations.
However, earnings growth prospects for the seeds business appear bright in the light of its high growth and margin potential, as well as high entry barriers protecting the players.
Advanta India, by virtue of a strong research pipeline and entrenched presence across the global markets, offers a good proxy for this business. The offer is priced at 23-25 times the company's FY-07 consolidated earnings, in the price band of Rs 600-650. There are no direct comparables to the company in the Indian listed space, as players such as Monsanto India and Syngenta India, which have a presence in seeds, derive the bulk of their revenues from agrochemicals. Moreover, they are focussed mainly on the Indian markets.
The business
Advanta India (a spin-off from the erstwhile ITC Zeneca) is into research, development and production of hybrid seeds for a wide range of crops — corn, sorghum, canola, sunflower, rice, mustard, and vegetables. Apart from its India operations, the company has wholly-owned subsidiaries operating in Australia, Thailand and Argentina, apart from Pacific Seeds International, a subsidiary which markets Advanta's products across other geographies.
Advanta, through its subsidiaries, has dominant market shares for key crops in Australia (sorghum), Thailand (baby corn and sunflower) and Argentina (sunflower), apart from marketing rice, corn, Bt cotton and sunflower seeds in the Indian market. Though the global seeds business has been growing at 4-5 per cent annually, growth opportunities for the players arise from increasing adoption of hybrid seeds in the developing markets and premium pricing power for players (seeds with desirable traits are patent-protected in most countries, India being an exception).
Advanta India has a strong line-up of patent-protected products. It also has established research capabilities and access to proprietary germplasm, the crucial feedstock to research efforts. Globally, entry barriers to the seeds business are high, given the long gestations involved in development and field trials of new hybrids. As a result, the industry is dominated by a handful of players such as Monsanto, Pro-Agro (a Bayer Crop Science subsidiary), Pioneer Hi Bred (a DuPont subsidiary) and Dow AgroSciences.
Risks
Though Advanta has a global foothold in a business that offers good growth possibilities, there are several business and company-specific risks to this offer, that may make it unsuitable to a conservative investor:
The global seeds business is subject to high regulatory intervention, both in terms of market access and pricing of products.
The business is seasonal and cyclical. Poor climactic conditions, pest attacks or crop failure in a focus market can have a significant negative earnings impact.
Specific to Advanta: The company competes with some of the largest life sciences companies worldwide and may not be in a position to match the research spends and staying power of some of its competitors.
The major portion of offer proceeds will not be deployed in the business.
Since Advanta's operations were acquired and consolidated by United Phosphorus only in early 2006, financial results for the consolidated operations are available only for the seven-month period ending October 31, 2006. For this period, the company reported consolidated profits before tax (and exceptionals) of about Rs 28.9 crore on revenues of Rs 237 crore, translating into annualised per share earnings of about Rs 25 on the post-offer equity base.
Offer details: Advanta India is offering 33.8 lakh shares in the price band of Rs 600-650 through this book-built offer. Proceeds of this offer will go mainly to partly repay Bio Win Corporation — a promoter group company — for the initial acquisition of the seeds business from a private equity investor.
United Phosphorus, the promoter, will hold a 49.9 per cent stake in the company, post-offer.
Tube Investments: Buy
Investors with a medium-term perspective can consider fresh exposure in the Tube Investments of India (TII) stock. At the current market price of Rs 53, the stock trades at about eight times its likely FY-08 earnings per share.
Robust demand environment, planned expansion in capacity and an expected improvement in operating margin are likely to enhance earnings growth.
The boom in the automobile industry is also likely to rub off positively on TII's metal-forming division, which, we believe, will be the growth driver.
Though the stock price has declined in the recent past, the planned expansion and growth prospects are likely to favour its performance in the long run.
Business Segments
TII has its presence across three business segments — metal-forming, engineering and cycles. The metal-forming division supplies doorframes to car manufacturers such as Maruti and Hyundai for their specific models.
This unit is likely to propel growth, given that both the companies are well established and could come up with new models . In addition to this, TII plans to set up a new car doorframe plant near Pune, which is a positive.
With a 65 per cent market share in the manufacture of roll-formed car doorframes, TII is likely to be a big beneficiary of an automobile boom. However, since the doorframes are model-specific, revenues for this division depend, to a large extent, on the success of the particular car models.
The division also makes chains for automotive and industrial purposes. The revenue contribution from this segment is likely to improve on the back of a healthy demand environment in the two-wheeler industry. In addition to this, the existence of a sizeable replacement market for such chains underscores the growth prospects for this segment.
TII is an established player in precision tubes and steel strips — the two key products of the engineering division. The capacity expansion in the precision tubes segment, which was postponed last year due to delay in getting clearance from the Pollution Board, is likely to be in place in FY-08. The positive demand outlook from its user industries, coupled with TII's plan to nearly double its capacity, suffuses more confidence on the prospects of this division. In addition to this, with the increased capacity skewed in favour of manufacture of cold-drawn welded tubes, which enjoy higher realisations, the bottomline contribution from this division is likely to improve .
The cycle division of TII, however, has been a laggard. In spite of double-digit sales figures, the division's contribution to the overall profitability was only about 8 per cent for the last financial year. However, the shift in the company's product mix towards more of engineering and metal-forming goods is likely to reduce its dependence on the cycle business. Also, TII's holding in Cholamandalam MS General Insurance and Cholamandalam DBS Finance could see some value unlocking in the future. However, the same has not been factored into the valuation of the stock.
For the quarter-ended December 2006, the topline recorded a marginal growth of about 6 per cent over the corresponding quarter last year. Revenues from the metal forming and engineering divisions rose 25 per cent and 13 per cent during the period. However, in terms of earnings, the engineering division continues to be highest contributor (about 56 per cent in the last quarter).
The quarter also saw a 411 basis points dip in operating profit margin. Rise in input costs and muted revenue growth could be responsible for this. However, with the addition of capacities, change in product mix and a stable steel price outlook, the margin pressure is likely to ease.
Concerns
Given that a significant portion of TII's revenues (about 60 per cent) depends on the performance of the auto sector, any slowdown is likely to affect its earnings negatively. This apart, the threat of imports from China, rising raw material costs and the inability to pass on input cost hikes to its customers fully, could pose downside risks to our recommendation.
Subhash Projects: Buy
Investors with a medium-term perspective can consider exposures in the stock of Subhash Projects and Marketing (Subhash). Strong growth in earnings, a robust order-book and successful bids in water-related projects and power transmission and distribution space augur well for the company's earnings growth prospects. Hydropower projects being implemented by subsidiary companies are likely to be earnings-accretive in the long term. At the current market price, the stock trades at 10.5 times its likely earnings for FY-08. Subhash Projects has a small market capitalisation of about Rs 600 crore and may be subject to market volatility in the short term. The stock is unlikely to repeat the manifold gains it made in 2005. Investors may, therefore, have to moderate their returns expectations.
Expanding business
Subhash Projects is an established player in water-related projects. It has also successfully diversified into solid waste management, power transmission and distribution (T&D) and hydropower projects. We believe that the diversified areas hold potential, as there are not too many players executing small projects in this space. Further, they are also likely to offer sustained income to the company.
The company's waste management project in Delhi, for instance, will ensure regular flow of income for eight years.
The company has also completed hydel projects of 20 MW and 6 MW in Karnataka and Arunachal Pradesh respectively.
Though of smallsize, these projects offer the company the technical qualification to bid for similar schemes. Though qualified for road projects, the company has not joined the plethora of small players in riding the road infrastructure wave.
The company appears to prefer to build on its core competencies, thus distinguishing itself from other similar-size players.
Subhash's expansion in the power T&D (transmission and distribution) space has been well-timed. Projects in this area, which now account for about 35 per cent of the order-book, have been the main driver of the company's revenue over 2006 and this year. The company has T&D contracts from Bihar, West Bengal and Uttar Pradesh, with over 8,000 villages under the Rajiv Gandhi Vidyutikaran Yojna.
With an early entry advantage, we expect Subhash to benefit from the rural electrification programme.
From being a water projects contractor, Subhash Projects has transformed itself into an integrated player in urban development projects.
Its recent agreement with the Gujarat Government for various city development plans in areas such as water supply and sewerage, electricity utility, roads and township development, reflects the company's plan to move up the value chain. Though these projects have a long gestation period, they are likely to provide steady cash flows.
Growing numbers
The present order-book of Rs 2,800 crore, with about half in water projects, is likely to be executed over the next two-three years, lending visibility to earnings over the medium term.
For the nine months ended December 2006, the company's revenue stood at Rs 533 crore — twice that of the corresponding previous period. This has improved the operating margin to about 8 per cent from less than 6 per cent a couple of years ago.
While this is still less than a number of peers, we expect the increase in T&D revenue stream to improve the OPM. The company's return-on-equity is, however, superior to peers such as Madhucon Projects.
The company's aggressive bidding in water and T&D projects and participation in projects such as the Pondicherry port would require it to ramp up capital.
This may lead to equity expansion without adequate earnings growth, as the benefits of such capital deployment are likely to occur much later. Investors may, therefore, see sedate performance in the near term, if there is ramp up in equity.
Sun TV Network: Hold
Shareholders can retain their exposure in the stock of Sun TV Network (Sun TV). We re-visit the stock after our `invest' recommendation during its IPO (Initial Public Offer) last April. Sun TV continues to trade at a substantial premium to its offer price of Rs 875.
The market took a fancy to the stock immediately upon listing and this has sustained since then. The developments, post-offer, such as the inclusion of the group's Kannada and Telugu channels under the Sun TV fold, have cemented its premium positioning in the media space.
The stock trades at a price-earnings multiple of 50 times its annualised per share earnings of 2006-07. The current valuations capture a fair degree of the growth potential and we feel that the stock is richly valued.
The growth story is largely intact, with the network lining up new channel launches for FY-08. It remains a dominant player across the four southern States and is well-placed to take on competition from such new entrants as Star and Zee.
We would, however, watch its progress in the radio business as it forays into the North where it faces competition from Radio Mirchi (Entertainment Network) and Big FM (Adlabs). The progress of the Conditional Access System (CAS) will also play a role in determining subscription revenue growth.
Rising strength
Some of the key developments, post-offer, that have lent strength to the stock are:
A richer bouquet: At the time of its IPO, only the Tamil channels — Sun TV, Sun News, Sun Music and KTV — and Malayalam offerings — Surya and Kiran — were available.
The company has since decided to merge with itself the five Telugu channels under the Gemini banner and the four Kannada channels under the Udaya banner. The flagship channels of Gemini and Udaya also enjoy a dominant presence in their respective markets.
With 15 channels under its fold that tap viewers across all the southern States, Sun TV is the top choice for content providers.
With the southern States accounting for a significant share of regional TV advertising, the combined entity will be an attractive option for investors. This has been largely factored in the stock price.
The 30 per cent expansion in the equity base that will arise from the merger is likely to be earnings-accretive.
Operating margins of the combined entity may, however, dip, although they are still likely to be at robust 70 per cent levels.
Sun TV goes pay: Margins might yet get a fillip, however, from the stronger subscription revenue that will come in from the current quarter onwards, with the network's flagship channel, Sun TV, turning pay (except in Chennai where it remains free-to-air).
Better declaration rates from new platforms such as DTH will drive subscription revenues.
Most of its channels are now pay. With Asianet close at its heels in Kerala, Sun is likely to wait for the viewership gap to widen before it shifts its flagship Malayalam channel Surya channel to pay mode. So far, switching to pay mode has not involved any sacrifices on the advertising revenue front for Sun TV.
Such a move by broadcasters has rarely impacted viewership in non-CAS areas, as viewers have been often forced to pay higher rentals even for channels they did not wish to watch.
Though a way off, it would be interesting to note Sun TV's strategy should CAS be extended to other cities in the South or across Tamil Nadu, where it enjoys its strongest viewership.
While people may be willing to pay for Sun's channels, the initial investment for a set-top box may still be a stumbling block.
Unless CAS makes significant inroads into cable and satellite homes in Tamil Nadu (so far, there has been little offtake for set top boxes in Chennai), the network may again choose to air its channels for free as it has in Chennai. Its strategy may also depend on the success of Sun Direct, the group's DTH service, in penetrating the CAS market.
Ad rate hike: With a dominant presence across markets, Sun TV is well-placed to milk the rising trend in advertising spends.
After a gap of two years, Sun TV announced an across-the-board advertisement rate hike of between 5 per cent and 25 per cent with effect from January.
Additional growth avenues
So far, the offer proceeds have mainly been deployed in its radio business, which is being operated through its subsidiaries. Suryan FM has licences to operate 44 radio stations, mainly in smaller cities.
While Suryan is likely to be more successful in the South, where it has a strong understanding of the market, its foray into the North Indian market is likely to be more challenging.
It recently entered Bangalore, Hyderabad and Jaipur markets. Suryan does not have licences to operate stations in Delhi, Mumbai and Kolkata where in any case it would have encountered stiff competition in Radio Mirchi.
A failure to make a mark in the North could pose a drag on earnings growth and this segment would merit watching. Sun TV has also lined up for launch in fiscal 2008 channels for children, sports and documentaries. The channels are likely to be free-to-air initially.
If the launches go on stream to schedule, the channels should begin to make a contribution to revenues and cash flows from FY-09.
Tech Mahindra: Buy
Investors with a two-year perspective can consider taking an exposure in the Tech Mahindra stock. At the current market price, the stock is trading at a price earnings multiple of 30 times its annualised 2006-07 earnings. While the PEM appears stiff, the $1-billion, five-year contract bagged from BT Global Services in December has enhanced the revenue visibility considerably. The revenues from this contract will start flowing in from April. Even if a slowdown in tech spending were to materialise, working with strategic telecom clients such as BT will help Tech Mahindra mitigate its adverse impact to some extent.
Interaction with the senior BT management recently has strengthened our view that they are comfortable with Tech Mahindra as their preferred vendor and the contract was won in a competitive environment. BT, which is a 32.4-per cent shareholder in Tech Mahindra, is also comfortable with the company expanding its relationships with other telecom players such as AT&T, Alcatel-Lucent or Motorola. Our medium-term recommendation on the stock impounds lower margins in the first year, with margins likely to reach normal levels from the second year. For the third quarter ended December 31, 2006, the operating profit margins from the telecom service provider segment, which accounts for a substantial chunk of its revenues, were fairly robust at 38 per cent.
With Infosys Technologies management guidance for the year 2007-08 round the corner, any turbulence on this front may lead to a PEM derating across the board. But any correction in the markets will be a good opportunity to step up exposures in the Tech Mahindra stock. We are revising our November 2006 recommendation of "Book Profits partially" (especially those who had entered the stock through the IPO) made prior to the BT contract.
The principal risks to our recommendation are: High client concentration, project execution risks, slowdown in telecom spending, wage inflation/attrition in a competitive environment and rupee appreciation.
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