Tuesday, January 01, 2008
Cluster: Apple Green
Price target: Rs500
Current market price: Rs423
Strong triggers for an upgrade
- The management of Ranbaxy Laboratories (Ranbaxy) has been emphatic in stating that going forward, they will avail of atleast one exclusive product opportunity in the USA every year. While the opportunities for CY2009 and CY2010 have already been lined up, the management plans to announce the CY2008 opportunity in January 2008. The announcement of a product launch under exclusivity in CY2008 could lead to a significant earnings upgrade to Ranbaxy's current CY2008E earnings.
- While Ranbaxy has already announced its intention to de-merge and subsequently list its Novel Drug Discovery Research (NDDR) operations into a separate entity effective from January 1, 2008, the specific framework and other details of the de-merger are yet awaited. While the de-merger will unlock value of the discovery R&D assets, it will also enable the parent company to save about $20-25 million in expenses, which are incurred on NDDR projects annually from CY2008 onwards. This will boost the overall profitability of the core business.
- In a recent media interview, Malvinder Singh, Managing Director and CEO of Ranbaxy has indicated that 2008 will be a stronger year for Ranbaxy as compared with 2007, as the company will strive to focus on more profitable growth through expansion of margins. This would basically come with a more optimum geographic and product mix including niche product opportunities. In light of this, we look forward to a strong vision and guidance given by the management for CY2008 post the announcement of the CY2007 results in January 2008.
- With the acquisition of a significant stake in Zenotech Laboratories (Zenotech), Ranbaxy plans to market Zenotech's oncology and biopharmaceutical pipeline across emerging markets immediately and developed markets over the next two-three years using its strong global reach and regulatory expertise. We may see some revenues from these avenues to flow in from the second/third quarter of 2008.
- At the current market price of Rs423, Ranbaxy is available at 23.9x its CY2008E earnings. However, the announcement of the exclusive opportunity for 2008, the strong guidance provided by the management post CY2007 results and the disclosure of the NDDR de-merger details could lead to significant earnings upgrades and hence generate strong buying interest from investors in the near-term. For now, we reiterate our Buy recommendation on the stock with a price target of Rs500.
Housing Development Finance Corporation
Price target: Rs3,362
Current market price: Rs2,919
Value unlocking to continue
- Housing Development Finance Corporation (HDFC) has agreed to sell 8.1 crore equity shares representing 7.2% of the paid-up equity capital of HDFC Standard Life Insurance Company (HDFC SLIC) to Standard Life of the UK. Consequent to the sale, Standard Life would hold 26% stake in HDFC SLIC, while HDFC will hold around 72.4% stake and the employees of HDFC and other group companies would hold the remaining 1.6% stake.
- The main highlight of the deal has been that both the parties, HDFC and Standard Life, have officially agreed that any further stake sale in HDFC SLIC between the two entities would be at a fair market value. This is a big positive for HDFC as current pricing methodology restricted HDFC from realising current market valuation for its stake sales in its insurance venture so far.
- HDFC SLIC has also unveiled plans of coming out with an initial public offer (IPO) before 2009 end, which we feel would further help HDFC in unlocking value in its subsidiaries.
New Delhi Television
Promoters make open offer
With a slew of new channel launches in the second quarter of FY2008, NDTV stepped in the execution phase of its mega plans in the broadcasting space. It has recently launched four channels, the lifestyle channel NDTV Good Times, NDTV Arabia that caters to the news and infotainment market in the Middle East and north Africa, NDTV MetroNation, an English channel catering to Delhi and the national capital region (NCR) and Astro Awani Malaysia, a Bahasa language channel launched through its joint venture with Astro. These ventures are a testimony to NDTV's intention to be a major player not only in the Indian broadcasting arena but also other countries of Asian region.
01-JAN-2008,RAJESHEXPO,Rajesh Exports Ltd.,CITIGROUP GLOBAL MARKETS MAURITIUS PVT. LTD.,BUY,220825,894.16,-
01-JAN-2008,ASSAMCO,Assam Company Limited,RELIANCE CAPITAL PARTNERS,SELL,1942703,56.88,-
01-JAN-2008,GLFL,Gujarat Lease Fin Ltd,GUJARAT INDUSTRIAL INVESTMENT CORPORATION LTD,SELL,152500,20.30,-
01-JAN-2008,HINDOILEXP,Hind. Oil Exploration ,HARDY OIL AND GAS LIMITED,SELL,770000,162.98,-
01-JAN-2008,PTC,PTC India Limited,PRUDENTIAL ICICI MUTUAL FUND,SELL,960000,159.85,-
01-JAN-2008,VIVIMEDLAB,Vivimed Labs Limited,MERRILL LYNCH CAPITAL MARKETS ESPANA S.A. SVB,SELL,300000,150.00,-
The year 2008 started on flat note, the markets across Asia and Europe were closed on account of New Year. Indian indices started the New Year day with modest gains but the indices could not sustain the gains and immediately fell into negative region with marinal pull back. The first day of year was not so attractive for the investors with no triggers from global markets. Throughout the day indices traded in choppy manner, some level of profit taking was seen at mid trades. Major support to the indices came in from realty stocks as the segment index gained by 310 points. Late session was too volatile with no clear direction; indices hovered on both the regions but value buying at lows helped the indices to recover and ended on a flat note. Interest was much seen in mid and small caps. Both the indices hit all time and out performed the front line indices. Selling was seen in Technology and Capital Goods. FMCG, Power, Realty and PSU?s stocks cheer the day.
India?s largest private sector power company, Reliance Energy was the top gainer, made all time and closed up by 6.83%. The buying interest was largely due to forth coming IPO of Reliance Power where REL hold 50% stake in this company. India?s largest cigarette manufacturer ITC surged up by 3.63% and the stock hit all time, due to ITC's subsidiary Fortune Park Hotels plans to invest around Rs 130 cr in 3-4 hotels in Bangalore, Coimbatore and Kolkata.
Sensex closed up by 94 points at 20300.711. It was helped up by gains in NTPC (256.8,+6 percent), ITC (217.6,+6 percent), Rel Energy (2279,+6 percent), Tata Motors (763.05,+4 percent) and Grasim (3762.3999,+4 percent). Restricting the gains are Wipro (515.6,-3 percent), Infosys (1749.7,-3 percent), TCS (1053.65,-2 percent), RIL (2847.1001,-2 percent) and Cipla (211.65,-2 percent).
Adhunik Metals was locked on upper circuit after the news that it is looking to set up 1.1 mn tones of integrated steel plant in West Bengal and invest Rs 7,200 cr in next 4 years. They are also looking to diversify into cement and planning to set up 1 mn tones capacity. It has signed the MoU with West Bengal Government; it will be coming in the group company which does not matter for the listed company. The main trigger is that expansion plans are on curve of getting completed in next quarter itself and from next quarter Adhunik will have 4.5 lak tone capacity available. As far as power is concerned 17 MW is running and another 17 MW is coming by next quarter itself so combining will fiche about 34 mega watt of captive power plant in the steel business. Adhunik supplies specialized steel & value added steel components to industries such as Automobiles, Power, and Defense and Engineering companies. The valuation looks attractive considering its transformation to a fully integrated steel player. We believe primarily growth will be driven by higher realization as a result of rolled products ( rolled from outside rolling companies, as its own rolling mill is likely to come in FY08.
UCO Bank's shares surged on news of merger. The Kolkata based public sector bank is looking at merging itself with another bank in the next three months to boost its business. UCO Bank plans to merge with a smaller or a similar sized bank by March to attain size. It won?t acquire any banks, but will merge with some other banks in three months. UCO Bank officials could not be immediately reached for comment. The merger will boost the banks total business size to 2 trillion rupees from 1.23 trillion rupees as per the source news. The merger certainly helps to grow inorganically which helps to bring fast growth to the business. This also helps to face completion from private and MNC banks which are growing faster than PSU banks. On hopes of merger the stock closed up by 20%.
Technically Speaking: It was choppy session for complete day before closing, Sensex traded on both the sides with no clear direction and ended with small gains. Sensex touched intraday high of 20,395 and low of 20,220. Overall breadth was in favor of Advances, where the Advances stood at 2415, while Declines at 447. The turnover was pretty good at Rs 6021 cr.
1/1/2008 523277 G V FILMS LT BNP PARIBAS ARBITAGE GDR S 4500000 12.63
1/1/2008 526717 GOPALA POLYP IDBI LTD S 100000 13.94 1/1/2008 532160 GUJ ST FN CO GSFC STAFF CO OP CREDIT SOC S 175000 30.60
1/1/2008 523218 KILBURN OFFI IDBI LTD S 50000 15.34
1/1/2008 532660 VIVIMED LABS MERRILL LYNCH CAPITAL MARKETS ESPANA S.A. S.V. S 300000 150.00
1/1/2008 508933 WELSPUN SYNE IDBI LTD S 500000 14.63
31/12/2007 500141 FERRO ALLO C CORNELL CORPORATION S 1800000 42.67 31/12/2007 500142 FGP LIMITED JMP SECURITIES PVT. LTD. S 60000 16.01
In order to curtail incidents of insider trading, capital market regulator SEBI on Tuesday floated a consultative paper, whereby insiders would not be able to buy and sell the company's securities within a period of six months. Insiders would have to surrender any profit made by buying and selling company securities in six months, according to SEBI's proposed regulations on Short Swing Profit.
The proposed regulation is based on a similar rule in the US, which requires 10% owners, directors and officers of a company to give up any profit realised from any purchase and sale, or any sale and purchase, of any equity security of the company within a six-month period.
According to SEBI, the regulation would help prevent company insiders, who have greater access to price sensitive company information, from taking advantage of information for the purpose of making short-term profits, called as short swing profit. Additionally, it would align the long term objectives of company insiders with the company shareholders.
SEBI has proposed the “Last In First Out” (LIFO) method for determining the six month period between buy and sell trades by company insiders.
The short swing rule would automatically get invoked once two things are established. First is the fact of being an insider or a designated insider. And second, the fact that the same securities were bought and sold within six months of each other.
The intent of the person would be immaterial. Merely the fact of the trade will be sufficient to take action. Where there is a delay, interest may be payable by such insider to the company.
SEBI has proposed certain exemptions, such as transactions approved by a regulatory authority, employee benefit plans, bona fide gifts and inheritances, mergers and acquisitions etc. Certain securities may also be considered as exempt altogether.
The regulator invited comments from the public on the consultative paper particularly with regard to coverage of persons in the definition of designated insider, method of calculating the dates of purchase and sale and classes of exemptions.
Leading credit rating agency, ICRA assigned IPO Grade 4, indicating above average fundamentals, to the proposed initial public offering of Reliance Power (RPower), a subsidiary of Reliance Energy. ICRA assigns IPO grading on a scale of IPO Grade 5 to IPO Grade 1, with Grade 5 indicating strong fundamentals and Grade 1 indicating poor fundamentals.
The IPO Grade 4 assigned by ICRA reflects the benefits arising out of being a part of the Reliance Anil Dhirubhai Ambani Group which has considerable experience across the value chain in the power sector and the expected cost competitiveness of most of the power projects in relation to the markets it proposes to serve, which when combined with spiraling energy deficits and the groups plans of maintaining a judicious mix of long term PPAs and short term trading, should result in strong earnings growth in the long term.
Further, the IPO proceeds would enable the company to tie up the equity funding for the first tranche of projects that it has identified. The grading also reflects the prospects for the power generation business in the country with increasing regulatory clarity, gradual emergence of a market for trading in power and improvement in financial position of some of the utilities in the state sector.
The grading is however constrained by the implementation risks inherent in project implementation of the scale and magnitude being envisaged by RPower, uncertainty on issues related to gas and the ability of the company to maintain the desired levels of all operating parameters, especially in case of the competitively bid projects, apart from executing the projects without cost overruns.
The company would also be subject to technology risks arising out of the fact that for some of its plants, which are based on Super Critical Technology, the BTG would be primarily imported and these are yet to be proven in Indian conditions, even though they have an operating history internationally. However these risks are partly mitigated due the significant financial strength enjoyed by the promoter group, along with demonstrated execution capabilities. Also, as a strategy to mitigate the financing risk, RPower has taken in principle sanctions for rupee debt facilities of Rs 179.4 billion and foreign currency denominated debt facilities of USD 542 million, which constitute more than 87% of total debt requirement for identified projects.
Shares of Reliance Energy gained Rs 144.4, or 6.76%, to settle at Rs 2,279. The total volume of shares traded was 1,396,980 at the BSE.
The market closed with marginal gains on the first day of the year 2008. Soon after the firm starts to the market it pared its entire initial gains. The market got the momentum towards the end of the session but the volatility ruled the market throughout the trading session. Most the Asian Markets are remain closed toady for the celebration of the New Year. The Realty and Power indices attract the investor''s confidence as most buying is seen from these baskets. As usual the inevestor''s showed more interest in buying the Small Caps and Mid Caps scrips as they closed higher by 145.54 points and 354.70 points at 9,935.03 and 13,703.07 respectively. The BSE Sensex closed marginally higher by 13.72 points at 20,300.71 and NSE Nifty grew by 5.75 points to close at 6,144.35.
BSE Power index surged 98.81 points to close at 4,647.66. Scrips that grew are Reliance energy (6.76%), Tata Power (5.33%), NTPC (2.70%), Torrent Power (2.02%), Power Grid (1.91%) and GVK Power (1.30%).
BSE FMCG index closed up by 55.15 points at 2,375.07. Scrips that jumped are Rei Agro (5%), ITC (3.47%), Marico (3.20%), Tata Tea (2.36%), Dabur (2.10%) .
BSE Metal index grew by 41.27 points to close at 20,061.49. Scrips that gained are Gujarat NRE (13.77%), SH. Precoated (3.99%), Nalco (3.24%), Maharash Sea (1.56%) and Sesa Goa (1.43%).BSE Realty index closed higher by 310.47 points at 13,037.89. Scris that grew are HDIL (6.59%), IndiaBull Real (5.78%), Parsavnath (5.53%), Unitech (4.12%).
BSE Oil & Gas index fell by 20.72 points to close at 13,280.88 as Cairn India (3.80%), Indian Oil (2.18%), Reliance (1.18%), HPCL (0.76%) and BPCL (0.72%) closed in red.
BSE Bankex index grew by 92.31 points to close at 11,510.31. Scrips that gained are IOB (8.93%), CentBOP (8.28%), Allahabad Bank (8.56%), Andhra Bank (5.67%), Union Bank (4.89%) and BOB (3.31%).
BSE IT index fell 58.11 points to close at 4,471.48. Scrips that fell are Mphasis (3.25%), NIIT Ltd. (2.58%), TCS (2.74%), Wipro (1.90%) and Satyam (1.24%).
It has been a quiet start for the markets in the New Year. As most of the Asian markets were closed on account of New Year, the Sensex resumed 38 points above its previous close of 20,325. But, slipped immediately to touch the day's low of 20,220 on the back of selling in information technology, oil and consumer durables stocks. However, selective buying in index pivotal, fast moving consumer goods (FMCG) and power stocks helped the Sensex enter the green once again and touch the day's high of 20,395. Lack of buying interest kept the market in a range thereafter. After hovering around its previous close in the afternoon, the Sensex finally closed the session with a gain of 14 points at 20,301. Broad based Nifty closed at 6,148, up nine points.
Broader markets outperformed the frontliners giving markets positive breadth. Of the 2,934 stocks traded on the Bombay Stock Exchange (BSE), 2,282 stocks advanced, 626 stocks declined and 26 stocks ended unchanged. Among the sectoral indices the BSE Realty index moved up by 2.44% at 13,038 followed by the BSE FMCG index (up 2.38% at 2,375) and the BSE Power index (up 2.17% at 4,648). However, the BSE CD index, the BSE CG index, the BSE HC index, the BSE IT index, the BSE Oil & Gas index and the BSE Teck index fell around 1% each.
Reliance Energy witnessed strong buying interest and soared 6.76% at Rs2,279, ITC rose 3.47% at Rs218, Grasim Industries was up 3.03% at Rs3,762, Tata Motors shot up by 2.82% at Rs763, NTPC jumped 2.70% at Rs257, HLL added 1.96% at Rs218 and HDFC gained 1.61% at Rs2,919. However, TCS slipped 2.74% at Rs1,054, Bharti Airtel lost 2.71% at Rs968, Wipro dipped 1.90% at Rs516 and Satyam Computer was down 1.24% at Rs444.
Over 2.41 crore GV Films shares changed hands on the BSE followed by IFCI (2.38 crore shares), GTL Infrastructure (1.50 crore shares), Centurion Bank of Punjab (1.50 crore shares) and Hindustan Motors (1.15 crore shares).
Valuewise, Reliance Energy registered a turnover of Rs311 crore on the BSE followed by Essar Oil (Rs247 crore), IFCI (Rs232 crore), Reliance Petroleum (Rs208 crore) and GTL Infrastructure (Rs152 crore).
The market posted marginal gains on day one of calendar 2008. Trading for the day began on a firm note. The market slipped into negative zone in mid-afternoon trade before recovering from lower level later.
ITC and Reliance Energy hit all-time highs. FMCG, real estate, hotel and power shares gained while IT and consumer durables shares declined. The market breadth was strong. BSE Mid-Cap and BSE Small-Cap indices struck record highs today.
Most of the Asian and European markets were closed today, 1 January 2008, for the New Year holiday.
The 30-share BSE Sensex rose 13.72 points or 0.07% to 20,300.71. Sensex opened 16.38 points higher at 20,325.27. The barometer index hit a high of 20,394.89 at, the onset of the trading session. At day's high, Sensex rose 107.90 points. Sensex hit a low of 20,220.46 in mid-afternoon trade. At day's low, Sensex had lost 66.53 points.
Sensex had struck an all-time high of 20,498.11 on 13 December 2007.
The broader CNX S&P Nifty gained 5.75 points or 0.09% to 6,144.35
Most sectoral indices on BSE rose. BSE FMCG Index (up 2.38% at 2,375.07), BSE PSU index (up 1.58% to 10,633.48), BSE Metal index (up 0.21% at 20,061.49), and Bankex (up 0.81% to 11,510.31), BSE Power Index (up 2.17% at 4,647.66), BSE Auto index (up 0.87% at 5,716.49) and BSE Realty (up 2.44% to 13,037.89), outperformed the Sensex.
BSE Health Care index (down 0.16% at 4,411.54), BSE Oil and Gas index (down 0.16% at 13,280.88), BSE Consumer Durables index (down 0.86% to 6,897.19), BSE TecK index (down 1.04% to 3,973.32), BSE Capital Goods index (down 0.04% at 19,747.80), BSE IT index (down 1.28% to 4,471.48), underperformed the Sensex.
The market breadth was strong on BSE with 2264 shares advancing as compared to 647 that declined. 23 remained unchanged
BSE clocked a turnover of Rs 8911.47 crore as compared to Rs 8977 crore on Monday, 31 December 2007.
The NSE's futures & options turnover rose to Rs 49163.28 crore from Rs 46186.73 crore on Monday, 31 December 2007.
Nifty January 2007 futures were at 6160.80, a 16.45 premium of points compared to the spot closing of 6144.35.
The BSE Mid-Cap index rose 1.49% to 9,935.03 while the BSE Small-Cap index gained 2.66% to 13,703.40. The BSE Mid-Cap index struck an all time high of 9,972.53 and the BSE Small-Cap index hit a record high of 13,787.50 today. Both these indices outperformed the Sensex.
Among the Sensex pack, 16 rose while the rest slipped
India’s largest private sector power utility company in terms of net profit, Reliance Energy surged 6.73% to Rs 2278.25. The stock hit all-time high of Rs 2289 today. It was the top gainer from Sensex pack. The company owns 50% in Reliance Power, which it plans to list.
Among power generation stocks, Tata Power surged 5.33% to Rs 1549.30 and National Thermal Power Corporation gained 2.70% to Rs 256.80.
FMCG stocks gained on fresh buying. India’s largest cigarette manufacturer in terms of sales, ITC jumped 3.80% to Rs 218.30. The stock hit all-time high of Rs 220.90 today. As per reports, ITC's subsidiary Fortune Park Hotels plans to invest around Rs 130 crore in three or four hotels in Bangalore, Coimbatore and Kolkata.
Hindustan Unilever (up 1.96% to Rs 218.10), Marico (up 3.20% to Rs 70.85), and Dabur India (up 2.10% to Rs 116.10), were the other gainers from FMCG pack.
India’s largest private sector firm by market capitalization & oil refiner Reliance Industries declined 1.01% to Rs 2,852
Shares of Bharti Airtel, the country’s largest cellular services provider in terms of market capitalisation slipped 2.67% to Rs 968, and was the biggest loser from the Sensex pack. The stock slipped on profit booking after surging 5.84% yesterday, 31 December 2007.
IT pivotals were subdued. TCS (down 2.62% to Rs 1055), Wipro (down 2.02% to Rs 515), Satyam Computers (down 1.48% to Rs 442.50) and Infosys (down 1.10% to Rs 1748.90), were the other losers from IT pack.
Infosys Technologies, the nation's second biggest software exporter in terms of net profit, will be one of the first among India's big companies to report Q3 December 2007 earnings on 11 January 2008.
Hotel shares surged on fresh buying. EIH (up 12.44% to Rs 207.50), EIH Associated Hotels (up 9.98% to Rs 209.35), Indian Hotels Company (up 9.24% to Rs 174.30), Viceroy Hotels (up 6.83% to Rs 134.45) and Hotel Leelaventure (up 1.79% to Rs 74), surged.
Reliance group stocks dominated turnover charts on BSE, with 4 out of top 5 stocks being from Reliance group. Reliance Energy was the top traded counter on BSE with total turnover of Rs 312.18 crore followed by Reliance Petroleum (Rs 208.25 crore), Mahanagar Telehone Nigam (Rs 110.80 crore), Reliance Industries (Rs 111.60 crore), and Reliance Capital (Rs 111.04 crore), in that order.
Among the side counters, Venkys India (up 20% to Rs 240.30), Vadilal Enterprises (up 20% to Rs 127.20), and Atlanta (up 20% to Rs 425.55), surged
Rashtriya Chemicals & Fertilizers (RCF) surged 4.98% to Rs 123.80. On Monday, RCF signed a memorandum of understanding with GAIL India for setting up coal gasification project in Talcher, Orissa
Krypton Industries jumped 9.18% Rs 76.10 after the company said its board will consider stock split in a meeting to be held on 24 January 2008.
UCO Bank surged 19.49% to Rs 70.80 on reports it plans to merge with a smaller or a similar sized bank by March 2008 to attain size.
Ramsarup Industries gained 5.10% Rs 275 after the company said it has increased prices of steel wires in range of Rs 1000 per metric tonne to Rs 2500 per metric tonne with effect from 1 January 2008.
TVS Motor Company rose 0.28% to Rs 72.65 despite its two-wheeler sales eclining 5.4% to 97,576 units in December 2007 over December 2006.
Marksans Pharma gained 4.99% to Rs 323.15 after the company said it has signed an agreement with U.K.'s Hale Group to buy it out along with its subsidiary.
IFCI surged 3.23% to Rs 96 after Reserve Bank of India announced that foreign funds can buy equity shares and convertible debentures of IFCI through primary and secondary markets up to 74 % of the capital of the company.
Venus Remedies spurted 16.47% to Rs 565.25 after the company said it has received the European good manufacturing practices certification for its Cephalosporin and Carbapenem plants at Baddi, Himachal Pradesh.
Dhanus Technologies jumped 5.60% to Rs 366.85 on reports of the company reaching final round of negotiations with Boursan Holding, Turkey's diversified business conglomerate, to acquire its telecom arm, Boursan Telekom Corporation.
GV Films was the volumes topper on BSE with total volume of 2.41 crore shares followed by IFCI (2.38 crore shares), GTL Infrastructure (1.50 crore shares), Centurion Bank of Punjab (1.50 crore shares), and Hindustan Motors (1.15 crore shares), in that order.
The National Stock Exchange today launched mini derivative futures & options contracts based on S&P CNX Nifty index with a lot size of 20.
US markets ended year 2007 on a negative note as tech stocks were hit by profit-takers and falling oil prices sent energy shares lower on Friday, 31 December 2007. The Dow Jones industrial average slipped 101.05 points, or 0.76%, to 13,264.82. The S&P 500 index declined 10.13 points, or 0.69%, to 1,468.36. The Nasdaq Composite index fell 22.18 points, or 0.83%, to 2,652.28.
In the calendar year 2007, the BSE Sensex surged 6,500.08 points or 47.14% to 20,286.99, from its close of 13,786.91 on 29 December 2006. The S&P CNX Nifty vaulted 2,172.20 or 54.76% in calendar 2007.
FIIs regarded as key drivers in the recent bull-run pumped Rs 71,486.50 crore in Indian equity market in the calendar year 2007.
The Godrej business group recently commissioned a London marketing agency to redesign its brand image. The aim was to dust down the dowdy Godrej of Almira cupboards to something smarter befitting New India.
Though the sprawling Godrej empire is vast (sales last year totalled an estimated Rs246.57 billion), the group seemed to lack the sparkling edge of New India as represented by financial services, mass retail, telecoms, even foreign acquisitions. Godrej only went down that path recently, and modest it was too. That has now changed with the revaluation of the group's huge and historically most passive asset — property.
With the repeal of the Urban Land (Ceiling and Regulation) Act, long regarded as a drag on property-driven economic growth in Mumbai, Adi Godrej, chairman, is expected to gain control over nearly 3,000 acres of land in and around Mumbai. That will make him a significant player in Mumbai's real estate market.
The traditional landed elite of Mumbai — many, such as Godrej, from the Parsi community—has watched as its unproductive land assets have in recent years been lifted, first, by a low interest regime and a revolution in financial products such as mortgages, and, more recently, by the ditching of a law that most analysts believe will be transformational for such businesses. Godrej stands at the head of this queue.
The self-effacing and gentlemanly Godrej remains calm as his historic business is changed beyond the rewording of his evidently redundant branding agency. Market estimates suggest that the group is in various stages of developing 20m sq ft of property and that the Godrej property unit, growing by a fifth annually, will be the group's fastest-growing business in a couple of years.
But for all the fundamental change within his business, Godrej is simple at heart. Citing an early morning drive to his corporate office at Vikhroli, he is more likely to excuse himself from one of his wife Parmesh's glamorous parties.
Catch him on an average weekend and he'll be wind surfing, jet skiing or racing a couple of his kids and their friends around on a speed boat. Adi's ruggedness and adventurous streak have given Parmesh sleepless nights. Once when he eschewed the car and chose to sail back from Madh Island he was even given up for dead - until search parties rescued him.
His office at Vikhroli is modest, he adheres to strict protocol and his matronly Parsi and Goan secretariat add a homely fuddy-duddy air. He talks with pride of his strong mother who was a keen Gandhian, a freedom fighter and a passionate philanthropist.
His unstinting support of his wife Parmesh's legendary flamboyance speaks of a genuine liberal attitude. He is as committed in promoting his daughters' careers in the Godrej company as he is of his son's.
Buy Sriniwas Shipping at Rs 208. Stop Loss at Rs 167, target at Rs 306 and Rs 495.
Buy Dish TV at Rs 105. Stop Loss at Rs 82, target of Rs 133-Rs 165-Rs 185-Rs 216.
Buy Gujarat NRE Coke around Rs 143.40. Stop Loss at Rs 129, target at Rs 190 and Rs 277.
Forget year-end bonuses. India Inc’s professionals have capitalised on the market boom to make some serious money in the last quarter of 2007. With the market at record levels, several big shots encashed crores by selling part of their stock options in the last three months. While several of them pulled out a few lakhs, some big shots including Vineet Nayyar of Tech Mahindra, HDFC’s Deepak Parekh and Renu Karnad, AM Naik and VK Magapu of L&T and PB Kashyap of Ambuja Cement have grossed crores in the run-up to the new year.
The biggest gainer was Tech Mahindra MD Vineet Nayyar, who encashed Rs 23 crore last week. The head of the outsourcing firm which went public in 2006 is still sitting on a neat pile. Given the outstanding shares in his name, Mr Nayyar currently owns Tech Mahindra shares worth a little over Rs 140 crore, which would place him among the best compensated chief executives in the country.
Among other well-known names, HDFC's Deepak Parekh and Renu Karnad sold shares worth Rs 9.3 crore each in mid-December. They had earlier sold shares worth about Rs 5 crore each in late September. And that’s not all. The current value of the shares that Ms Karnad holds adds up to Rs 45.45 crore or more than $11 million, while that of Mr Parekh stands at Rs 60 crore or about $15 million.
Some of the other board members of HDFC also encashed a part of their holdings. For instance, SB Patel has encashed about Rs 1.38 crore at the fag end of October, while NM Munjee, an independent director in HDFC and currently chairman of Development Credit Bank, encashed about Rs 92 lakh through multiple transactions over the last eight weeks.
It's not just the service sector companies whose top execs have hit bull’s eye. Take engineering and construction giant Larsen & Toubro (L&T), which has been facing succession issues. The company, which had to extend the retirement age of its top management, including its chairman and managing director, has created quite a few millionaires.
L&T chairman and managing director AM Naik sold shares worth Rs 8.6 crore between end of October and early November. Among others, whole-time director VK Magapu encashed Rs 8.5 crore while RN Mukhija and KV Ramaswami pulled out approximately Rs 87 lakh and Rs 84 lakh respectively.
The top shots of L&T are still sitting on big money, given the value of their unsold shares. For instance, Mr Naik’s existing L&T shares are worth Rs 420.4 crore or a whopping $105 million, while whole-time director RN Mukhija’s shares are worth Rs 168.55 crore.
Ambuja Cements also proved to be a gold mine for its top executives. For instance, whole-time director PB Kulkarni encashed close to Rs 1.46 crore through multiple transactions since mid November. Among others Ambuja Cements MD AL Kapur sold shares worth Rs 65 lakh and BL Taparia, another whole-time director, encashed Ambuja Cements shares worth about Rs 90 lakh, as per recent disclosures to the stock exchange.
Among other companies, ITC directors SSH Rehman and Anup Singh sold shares worth Rs 1.68 crore and 1.15 crore respectively over the last two months alone. They had been regularly selling their shares for the last few months.
Telecom operator Bharti Airtel’s company secretary Vijay Sampath pulled out Rs 46 lakh about five weeks back while Matrix Labs COO S Srinivasan encashed shares worth Rs 41 lakh.
The party is not limited to execs at India-listed companies. The top management of Nasdaq-listed BPO ExlService Holdings, too, made hay while the stock traded at levels of $22-25 for the last few months.
While president & COO Rohit Kapoor has sold a portion of his shares to pocket $1.26 million or about Rs 5.04 crore in just two transactions in December, the firm’s HR head Deepak Dhawan sold his remaining 40,000 shares to take home $1 million or about Rs 4 crore. Vice-chairman & CEO Vikram Talwar too has sold some of his stock to garner about $344,873 or Rs 1.38 crore in three tranches in November and December this year.
Cluster: Ugly Duckling
Price target: Rs535
Current market price: Rs411
Riding on uptrend in soda ash cycle
- Soda ash prices up by 60%: Tata Chemicals Ltd (TCL), the third largest producer of soda ash in the world, is set to benefit from the upturn in the soda ash cycle. A worldwide shortage of soda ash has pushed its prices up by 60% to $260-300 per tonne in the last six months. Since the supply of soda ash is expected to remain tight, its prices would stay firm going forward.
- Soda ash capacity addition to lead to volume growth: TCL has recently added 365,000tpa of capacity at its Kenyan (Magadi) plant, which is the lowest cost producer of soda ash in the world. It is also planning to raise its Magadi capacity by another 365,000tpa to 1.1mmtpa by FY2011. It has also undertaken the debottlenecking of its Mithapur plant to raise the latter's capacity from 0.9mmtpa to 1.2mmtpa by FY2011.
- Windfall profits awaiting de-bottlenecking of urea capacity: After the de-bottlenecking of the urea capacity to 1.2mmtpa by September 2008, the normative capacity utilisation would reach 145%. This would generate windfall profits for the company till capacity re-rating takes place in FY2011.
- IMACID JV to benefit from higher prices of phosphoric acid: Higher phosphoric acid prices due to a shortage coupled with a better pricing policy would further improve the profit margins for the IMACID joint venture.
- Investment portfolio worth Rs187 per share: TCL's investment portfolio of Rs775 crore (book value) is worth Rs4,600 crore, which works out to Rs187 per share.
- Valuation: At the current market price of Rs411, the stock is trading at 13.5x its FY2009E diluted earnings and an EV/EBIDTA of 6.6x. We value TCL's core business at 14.4x its FY2009E diluted earnings and investments at Rs94.8 per share after discounting 50% of their fair value. We recommend Buy on the stock with a price target of Rs535.
The Indian market is likely to have a positive opening due to more active participation of the FII. Yesterday, the market closed on a positive territory on the last trading day of the year 2007. The market opened with handsome gains on the back of favoring cues from the global markets. But all of a sudden it lost the momentum to pare most of its initial gains and gathered the momentum after the mid session as the buying intensified across the counters. Both the Mid Caps and Small Caps indices once again outperformed the benchmark indices as they closed with handsome The BSE Sensex closed higher by 80.04 points at 20,286.99 and NSE Nifty grew by 58.9 points to close at 6,138.60. We expect that market may remain volatile during the trading session.
On Monday the US market closed in red. The Dow Jones Industrial Average (DJIA) closed lower by 101.05 points at 13,264.82. S&P 500 index fell by 10.13 points to close at 1,468.36 and NASDAQ dropped by 22.18 points to close at 2,652.28.
India ADRs ended in negative territory. In technology sector, Patni computers fell by (2.52%) along with Wipro by (2.24%), Satyam by (1.73%) and Infosys by (0.42%). In banking sector, HDFC bank dropped by (0.90%). VSNL and MTNL increased by (3.79%) and (0.19%) respectively.
All the Asian markets except BSE Sensex and NSE Nifty are remain closed today.
On Monday, the FIIs stood as net buyer both in equity and debt. The gross equity purchased was Rs3, 255.20 Crore and the gross debt purchased was Rs241.70 Crore while the gross equity sold stood at Rs2, 114.30 Crore and gross debt sold stood at Rs0.00 Crore. Therefore, the net investment of equity reported was Rs1, 140.90 Crore and net debt was Rs241.70Crore.
Today, Nifty has support at 6,082 and resistance at 6,213 and BSE Sensex has support at 20,034 and resistance at 20,592.
The market is expected to head higher following the return of foreign institutional investors (FIIs) from their year end holidays. FIIs, regarded as key drivers in the recent bull-run pumped Rs 72000 crore in Indian equity market. They are expected to allocate higher funds for India from their annual portfolio following expectations of strong December 2007 quarterly earnings and positive expectations from Union budget.
All Asian markets except, BSE Sensex, will remain closed today, 1 January 2008. US markets ended year 2007 on a negative note as tech stocks were hit by profit-takers and falling oil prices sent energy shares lower on Friday, 31 December 2007. The Dow Jones industrial average slipped 101.05 points, or 0.76%, to 13,264.82. The S&P 500 index declined 10.13 points, or 0.69%, to 1,468.36. The Nasdaq Composite index fell 22.18 points, or 0.83%, to 2,652.28.
Back home, the 30-share BSE Sensex rose 80.04 points or 0.40% to 20,286.99, on Monday 31 December 2007. The broader CNX S&P Nifty rose 58.90 points or 0.97% to 6,138.60 on that day. Sensex struck an all time high of 20,498.11, while Nifty hit a record high of 6,185.40 on 13 December 2007.
In the calendar year 2007, the BSE Sensex surged 6,500.08 points or 47.14% to 20,286.99, from its close of 13,786.91 on 29 December 2006. It was the fourth best performer in terms of world market. The S&P CNX Nifty vaulted 2,172.20 or 54.76% in calendar 2007.
As per provisional data, foreign institutional investors (FIIs) purchased shares worth a net Rs 516.06 crore, while domestic institutional investors (DIIs) were net sellers of shares worth Rs 442.99 crore on Monday, 31 December 2007.
FIIs were net sellers of Rs 1,119 crore in the futures & options (F&O) market on Monday, 31 December 2007. FIIs were net sellers of Rs 867 crore in stock futures and Rs 340 crore in index futures, but net buyers of Rs 88 crore in index options.
The strong buying by FIIs in equities and the renewed buying interest in heavyweights and sectoral stocks may keep the bias positive for the day. Among the key indices, the Nifty can see an up- move till 6,200 levels and has a key support at 5,850 levels in the near-term. The Sensex has a likely support at 19,500 and may face resistance at 21,000.
US indices stumble on the last trading day of year on worries about housing and credit markets, with the Dow Jones closed at 13265, down 101 points, while the Nasdaq slipped 2 points to close at 2652.
The Indian ADRs trading on the US bourses had a mixed outing on Monday. MTNL led the pack with gains of 3.79% while,VSNL and Tata Motors gained marginally. However, Wipro, HDFC Bank, Dr Reddy's Lab, Infosys, Satyam, Patni Computers and Rediff slipped over 1-2% each.
Crude oil prices in the international market moved marginally down, with the Nymex light crude oil for February delivery slipping by two cent to close at $95.98 per barrel. In the commodity space, the Comex gold for February series fell $4.70 to settle at $838 a troy ounce.
Reliance Power 400 to 450 340 to 350 (Shooting up!)
BGR Energy 480 350 to 370
Burnpur Cement Ltd. 12 5 to 7
SVPCL 42 DISCOUNT
Aries Agro 130 20 to 22
Manaksia Ltd. 160 12 to 15
Porwal Autocomponents 75 DISCOUNT
Precision Pipes & Profiles 150 20 to 22
We recommend a buy in the stock of Macmillan India at current market price. From the weekly chart of Macmillan, we note that it has been on a long-term downtrend from its April 2006 high of Rs 550. After declining almost 63 per cent from the April 2006 high, however, the stock found support at Rs 200 in early December 2007 and began to move up. During this short-term up move, the stock has the crossed the 21-day and 50-day moving average lines. The positive divergence in the daily momentum indicator supports this trend reversal. The weekly momentum indicator has also recovered from the oversold region. The daily moving average convergence divergence is progressively rising and is on the verge of entering the positive region. We see that the volume has been increasing for the past four trading sessions. All these are positive signals. On the downside, the immediate support for the stock is at Rs 200 and the next support is at Rs 180 levels. We expect the stock to penetrate the down trendline and move up to Rs 270 level in the short-term. The short-term investors can buy the stock with stop at Rs 216.
US Market ended lower today, Monday, 31 December, 2007, the last trading day of FY 2007. Concerns about the overall health of the economy, which had taken a toll on the market for the whole year, continued even today. A relatively “stable” housing report also failed to cheer investors.
Indices lingered in the red right out of the gate. In the afternoon hours, they shed off most of their losses but going into close, sell-off accelerated. The Dow Jones industrial Average ended the day with a loss of 101 points at 13,265. The Nasdaq Composite Index, finished lower by 22 points at 2,652. S&P 500 finished lower by 10 points at 1,468.
Nine out of ten economic sectors posted losses today. IBM, AT&T and Exxon Mobil were the main Dow losers for the day.
For 2007, the Dow Jones Industrials average gained 6.4%, while the broader S&P 500 and the tech-heavy Nasdaq Composite gained 3.5% and 9.8%, respectively. Nasdaq was a clear winner, aided by Apple, Google and RIMM stocks.
Sector wise – Energy, Technologies and Utilities were the winners during FY 2007 while Financials remained the top loser. Housing market woes arising from mortgage related problems took a big toll on the sector. Citigroup weighed heavily on the sector with the stock drubbing almost 47% on a yearly basis.
November existing home sales data does not disappoint market
Among economic news that hit the wires today, the National Association of Realtors reports November existing home sales came in at a seasonally adjusted annualized rate of 5 million. This was in-line with economists' expectations. The reading marks a 0.4% increase month over month, but sales are still down 20% compared to last year.
IBM shares today lost almost 2% following a report that it's in talks to buy Israeli storage-technology company XIV for $300 million to $350 million.
Indian ADRs ended mixed today. MTNL and Tata Motors were the only two ADRs to register gains, gaining 3.8% and 1.8% respectively. Wipro Technologies remained the topmost loser shedding 2.3%.
Oil prices fell for the second consecutive day today. Monday, 31 December, 2007. But today’s fall was limited. Prices fell as dollar strengthened against its rival currencies for the first time in six sessions. Nevertheless, crude ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.
The markets will be closed tomorrow in recognition of the New Year holiday. Investors will look for economic data to help set the tone of trading on Wednesday and for the New Year. The Commerce Dept.'s report on Construction Spending and the Institute for Supply Management's national survey of manufacturing conditions are the expected main reports.
CMP 2872, SL 2850, Target 2928
Buy Dhanush Tech (532903)
CMP347, SL 341, Target 365
Buy Deccan Aviation
CMP 276, SL 271, Target 286
CMP 213, SL 215, Target 208
Buy HCL Tech
CMP 331, SL 327, Target 336, 339
Year's end is neither an end nor a beginning but a going on, with all the wisdom that experience can instill in us.
US stocks finished the final trading day of 2007 in the red, as lingering concerns over the economic slowdown sent shares of energy companies and miners lower.
Exxon Mobil and Freeport-McMoRan Copper & Gold led declines in energy and commodity producers, the year's best- performing industries. Amazon.com and EBay slipped after holiday Internet sales rose at the slowest pace on record.
The S&P 500 dropped 10 points, or 0.7%, to 1,468.36. The Dow Jones Industrial Average lost 101 points, or 0.8%, to 13,264.82. The Nasdaq Composite Index declined 22 points, or 0.8%, to 2,652.28.
Market breadth was negative. Some 1.15bn shares changed hands on the New York Stock Exchange (NYSE), the most ever on the last day of the year, according to Bloomberg. Trading was 19% less than the three-month average.
On the housing front, the number of existing homes sold in November inched moderately higher, according to the National Association of Realtors. The increase was expected by economists but still helped give some companies in the housing sector a lift.
On the corporate side, British newspaper The Observer said that Merrill Lynch could receive another infusion of capital from sovereign wealth funds. Billionaire investor Kirk Kerkorian's Tracinda Corp. is paying $684mn for a 35% stake in Delta Petroleum, an independent energy exploration company.
But, for the year all the three main US indices finished higher despite the housing sector meltdown and the subsequent credit market turmoil. Year-to-date, the Dow is up 6.4%, the S&P 500 is up 3.5% and the Nasdaq is up 9.8%, its biggest rally since 2003.
The S&P 500 has posted gains every year since 2002, advancing 67% over the past five years.
Concern about the credit crunch and a possible recession sent the S&P 500 down 3.8% in the fourth quarter, leaving it 6.2% below its record close on Oct. 9. The declined was the first for any fourth quarter in seven years.
The Dow reached a record high on Oct. 9, then fell more than 10% off its highs by November. Though the Nasdaq was the strongest of the three indexes, it never came close to the record it set in March of 2000.
US light crude oil for January delivery fell 2 cents to $95.89 a barrel on the New York Mercantile Exchange. Crude oil soared $34.93 a barrel in 2007 - a gain of 57% - and came close to the $100 a barrel mark in November.
Treasury prices rose, with the yield on the 10-year note falling to 4.03%, down from 4.07% on Friday. The dollar gained slightly against the euro and lost ground versus the yen. COMEX gold for February delivery fell $4.70 to $838.00 an ounce.
European stocks ended a half-session of trading slightly down, but finished the year with the first losses since 2002 on the back of nagging worries about the credit crunch and rising energy prices.
The FTSE 100 in London dropped 0.3% to 6,456.90 while the French CAC 40 shed 0.2% to 5,614.08 while the Dutch AEX finished flat 515.77. Many markets were closed, including those in Germany, Switzerland and Italy.
For the year, the pan-European Dow Jones Stoxx 600 index closed with a loss of 0.1%. Though Germany's DAX 30 rose 22%, most other major European stock markets finished with tepid growth, or no growth at all.
Markets across Asia are shut today on account of the new year holiday. But, Asian stocks trading in the US fell for a third day, on weak metal and energy prices. BHP Billiton and Posco paced the decline. The Bank of New York's Asia ADR Index lost 0.1% to 166.70.
Hong Kong stocks rallied yesterday in a curtailed session on China-related issues such as Air China. The Hang Seng Index rose 1.6% to 27,812.65, rising 39.3% for the full year.
The Nikkei in Tokyo dropped 11% in 2007 to close at 15,307.78. It was shut yesterday. Pakistani shares plummeted as trading resumed in Karachi following a three-day mourning period for former Prime Minister Benazir Bhutto, who was assassinated on Dec. 27.
Rangebound market expected
It was a day of modest gains as bulls signed off the year 2007 on a firm note. The benchmark Sensex opened with a positive gap touching an intra-day high of 20,484 missing the all time peak by just 14 points. However, after the trading steady for most part of the session 30-share Sensex closed at 20,286 adding 80 points and Nifty gained 58 points to close at 6,138.
The IT index was the only loser among the sectoral indices. The Consumer Durable index was the top gainer (up 5.2%), BSE FMCG index (up 2%) and BSE PSU index (up 2%). Even the Mid-Cap and the Small-Cap indices were in limelight both the indices were up over2% each.
Refinery stocks were in the limelight and closed with smart gains on expectations of petrol price hike in the near future. Oil marketing companies like HPCL, IOC and BPCL ended recording healthy gains.
Shares of Brigade Enterprise posted a flat listing at Rs395 versus an issue price of Rs390. However, the scrip lost momentum and finally ended 3% lower to Rs378. The company offered 16,624,720 equity shares of Rs10 each. The price band was fixed at Rs351 to Rs390 per equity share.
Brigade Enterprise is one of the leading real estate development companies based in Bangalore, primarily focused on the development of residential, commercial and hospitality properties in South India. Residential properties include integrated lifestyle enclaves and apartment buildings targeted towards middle income and high income customers. According to the company the funds raised are to be used for land acquisition and construction at ongoing projects, JP Morgan India, Enam Securities and ICICI Securities are the book running lead managers to the issue.
The scrip touched an intra-day high of Rs409 and a low of Rs365 and recorded volumes of over 47,00,000 shares on NSE.
eClerx started trading at Rs320 on BSE versus an issue price of Rs315. However, unlike Brigade Enterprises the scrip gained momentum as the day progressed and finally ended the day with gains of 42% to Rs448.
The company is a provider of data analytics and customized process solutions to global enterprise clients from offshore delivery centers in India. Portfolio of services comprises data analytics, operations management, data audits, metrics management and reporting services.
The issue was subscribed 26.30 times. JM Financial Consultants and Edelweiss Capital provided assistance to the company to raise Rs1,010mn via this public issue. The scrip has touched an intra-day high of Rs390 and a low of Rs320 and has recorded volumes of over 6,00,000 shares on NSE.
NTPC gained 4% to Rs250 after reports stated that t he company is in negotiations with Bharat Forge to set up a joint venture to produce components for power plants. The scrip touched an intra-day high of Rs252 and a low of Rs241 and recorded volumes of over 66,00,000 shares on NSE.
ONGC advanced 1% to Rs1235 according to reports the company would put a slew of conditions, including land free of cost from AP Government and fiscal incentives, for setting up the Rs256bn export-oriented refinery-cum-petrochemical project at Kakinada. The scrip touched an intra-day high of Rs1245 and a low of Rs1229 and recorded volumes of over 11,00,000 shares on NSE.
Bharti Airtel surged by over 5.5% to Rs996 as reports stated Bharti Infratel, a wholly owned subsidiary of Bharti Airtel agreed to divest ~7.5-9% to a clutch of international investors for Rs40bn. The company also signed US$150mn deal with China Huawei Technologies to set up mobile phone network in Sri Lanka according to reports. The scrip touched an intra-day high of Rs1023 and a low of Rs960 and recorded volumes of over 44,00,000 shares on NSE.
Bilcare rallied by over 12% to Rs1700 after reports stated that the company’s Singapore, subsidiary of Bilcare raised US$90mn through issue of 4% convertible bonds, due for maturity in 2012. The scrip touched an intra-day high of Rs1797 and a low of Rs1525 and recorded volumes of over 49,000 shares on NSE.
What the FIIs are doing
FIIs were net buyers of Rs5.16bn (provisional) in the cash segment on Monday while the local institutions sold shares worth Rs4.43bn. In the F&O segment, foreign funds were net sellers of Rs11.2bn.
On Friday, FIIs were net buyers of Rs11.41bn in the cash segment. Mutual Funds were net buyers of Rs7.16bn on the same day.
Stocks in News:
HDFC has agreed to sell 7.15 per cent stake in its life insurance joint venture - HDFC Standard Life Insurance Company - to its foreign partner, Standard Life (Mauritius Holdings), at a pre-agreed price.
Videocon Industries, Jindal Photo Ltd., Indo Rama Synthetics and National Buildings Construction Company (NBCC), are in the fray for entering the thermal power generation business.
Pfizer has got the approval of its board to transfer four of its consumer health brands - mouth-wash Listerine, cough-syrup Benadryl, skin-cream Caladryl and cough-suppressant Benylin - to Johnson & Johnson for a consideration of Rs214.85 crore.
There are reports state IOC has maintained $2-3 higher refining margin during the first nine months.
Shreyas Intermediates has received an order worth Rs30 crore. The company manufactures CPC crude and other pigments used in dye and dye intermediates and has tied up with German Luvomax to add value to the latter’s rubber master batches by injecting blue colour into them.Ranbaxy is being accumulated reportedly on the assumption that the company may formalise its plan for hiving off its drug discovery research operation soon.