Crompton Greaves, Financial Technologies, GAIL, Jindal Steel and Power, Nestle, ONGC, Reliance Energy, TCS, Tata Steel, Wipro, ITC

Crompton Greaves, Financial Technologies, GAIL, Jindal Steel and Power, Nestle, ONGC, Reliance Energy, TCS, Tata Steel, Wipro, ITC

Titan Industries, IDFC, Reliance Energy, Punj LLoyd, India Economy

Titan Industries, IDFC, Reliance Energy, Punj LLoyd, India Economy

Reliance Energy gets New Delhi order

Reliance Energy (REL) has reportedly bagged the New Delhi-Indira Gandhi International Airport link of the Delhi metro. Delhi Metro Rail Corporation (DMRC) has issued a letter of intent (LOI) to a consortium of REL and CAF of Spain, the reprots suggested.

Infosys and Wipro may reportedly bid for specific verticals of $13-billion Capgemini. The Indian IT majors who have enough cash assets for a large buyout are not interested in complete company acquisition because of stringent labour laws in France (where the Capgemini is headquartered) and other parts of Europe, reports suggested.

GHCL is reprotedly demerging its businesses into three separate firms which would all be listed entities. According to reports, the firm is likely to demerge into three companies which would be involved in soda ash, home textiles and retailing.

Consolidation of associate banks’ of State Bank of India (SBI) with their parent bank is likely to get delayed. The crucial board meeting of the six associate banks of SBI slated on 24 January 2008 to consider an in-principle nod for merger with their parent bank has been put off, the reports suggested.

Balaji Telefilms reported 13.55% decline in net profit to Rs 18.82 crore 5.95% fall in sales to Rs 79.97 crore in Q3 December 2007 over Q3 December 2006.

SpiceJet reported net profit of Rs 9.34 crore in the quarter ended December 2007. Sales reported at Rs 408.51 crore in the quarter ended December 2007

Punjab Tractors reported 3.25% rise in net profit to Rs 25.40 crore 15% increase in sales to Rs 302.90 crore in Q3 December 2007 over Q3 December 2006.

Lanco Industries reported 30% rise in net profit to Rs 8.06 crore on 28.28% increase in sales to Rs 130.29 crore in Q3 December 2007 over Q3 December 2006.

Swaraj Engines reported 24.80% rise in net profit to Rs 4.68 crore on 12.28% increase in sales to Rs 38.96 crore in Q3 December 2007 over Q3 December 2006.

Tamil Nadu Newsprint & Papers reported 27.71% rise in net profit to Rs 28.48 crore on 9.65% increase in sales to Rs 235.14 crore in Q3 December 2007 over Q3 December 2006.

Tata Teleservices Maharashtra (TTML) reported net loss of Rs 27.43 crore in the quarter ended December 2007 as against net loss of Rs 59.17 crore during the previous quarter ended December 2006. Sales rose 21.25% to Rs 439.76 crore in Q3 December 2007 over Q3 December 2006.

Ballarpur Industries, Bank Of Maharashtra, Bongaigaon Refinery & Petrochemicals, Canara Bank, Chennai Petroleum, Dena Bank, Fortis Healthcare, Hind Zinc, Mid-Day, Nagarjuna Fertiliser, Polaris Software, PVR, Shree Renuka Sugars, Shriram Transport Finance, Sonata Software, SRF, Sun TV Network, Bank Of Rajasthan, Union Bank of India, Varun Shipping, will declare their December 2007 ended results today.

Reliance Energy - the story

Via Unkown Source - Not our view, we don't subscribe to these views . Do your due diligence

Do you know-
One stock that has surprised almost every-one on street in terms of stock performance (no analyst could justify that on fundamental grounds !!!)
One company that has led to re-rating of utility valuations
One company with most flamboyant Chairman who never hesitates to paint rosy picture
One company that has miserably failed in past to deliver (investors paid premium valuations to this stock 4 years ago, but were let down)
One company who now plans the biggest corporate governance frauds (by floating the parallel company in same business to increase promoter shareholding)
One company that wants to be 30 GW over next 9 years, but don't know exactly how
One company (group) that believes they can get 10X price to book for their power plants today (while their first projects will begin construction soon !!!)

Well I am talking about RELE-Reliance Power here.

1. The stock performance took everyone for a big surprise and led to re-rating of all the utility stocks in India. The company today wanted to set up 30 GW capacity over next 9 years; let me remind you that the same company had promised to set up the largest single location gas power plant 4 years ago, while the main plant has not
been ordered yet. (It is easier for this stock lovers to say that gas didn't come through, so is it Reliance Energy's fault).. Well here is a question I want to ask, when investors pay premium valuations, they assume there is almost ZERO risk in project. And this company failed to live upto the investor expectations.

2. This company is doing the same mistake once again - while they have been announcing new capacities left - right - centre; do they now have fuel tie-ups for all their projects. (I believe they don't have fuel supply surety for more than 1-2 projects). Aren't they doing the same mistake again? Before you announce a project, a management is expected to do all sorts of due-diligence to make sure the project comes on time. (Unfortunately declaring projects can get you market-cap; why to bother about fuel linkages today.)

3. As far as Reliance Power is concerned, where is the need to float this company when Reliance Energy is there. If at all Reliance Energy wants all power projects should come in one SPV; why is Reliance Energy not having 100% stake in this SPV. WHY ANIL AMBANI OWNS 50% of Reliance Power and just 50% stake is given to RELIANCE
ENERGY. ANIL AMBANI has very smartly increased his share in the growing power capacity of Reliance Energy to 75% (50% directly and 50% through his holding in Reliance Energy, which holds 50% of Reliance Power), by just paying US$ 125 mn. And now wants US$ 25-30 bn for Reliance Power.

4. Promoter contribution to Reliance Power is US$ 250 million for 100% stake. They want to offload 10% stake for US$ 2.5 bn (this would lead to biggest investment appreciation, 100 times) in a span of 5 months of formation of Reliance Power). With promoters contribution a capacity of just about 1000 MW can be set-up. Imagine the situation
- entire risk of projects is on minority share holders (after listing of Reliance Power IPO, the money that comes in would be used as equity contribution for upcoming projects); and ANIL would create personal wealth of US$ 17 - 20bn (Direct and indirect stake on Anil post listing would be ~ 67.5% in Reliance power).

5. If promoters are really serious about their business, they should have atleast contributed full equity for first 8-10 GW, commissioned these projects and then come to markets. With the small promoter contribution of US$ 125 mn, if they want to set up 25-30 GW, it is quite clear that entire risk is being shifted to those who contribute larger sum (which is going to be minority share holders post listing; as I heard it that 10% stake would be offloaded at US$
2.5 bn). Are you ready to put your money to face all the entire execution risk connected to projects and just to make ANIL richer. Well I won't.

I believe a couple of broking houses would try to justify the RELE stock price (might do NAV for its power projects that he plans to), might revise their target price upwards factoring in US$ 25 bn or US$ 30 bn value of Reliance Power etc, just because they can't afford to lose the IB deal from Anil Ambani group..

What should an independent analyst do???

(Independent analyst may not be able to say BUY on the stock on fundamental grounds; may not be able to say SELL as-well because of momentum in the stock. But can very well release a note saying we decide to drop coverage on this stock because I simply don't understand this company. It would be a nice way to say we don't subscribe to what's going on in Reliance Energy and Reliance Power. Believe me lot of level headed fund managers would appreciate it. In
London people liked our view.)

Or else let us just do a IB deals for them and earn big brokerage out
of it rather than just give trading calls on this stock

Stock is hitting lifetime highs as we are reading this................................

Reliance Energy, Tata Steel, Pantaloon, India Economy, Global Economy

Reliance Energy, Tata Steel, Pantaloon, India Economy, Global Economy

Reliance Energy, GAIL, Gateway Distripaks, Polaris Software, Consumer Products

Reliance Energy, GAIL, Gateway Distripaks, Polaris Software, Consumer Products

Reliance Energy, YES Bank

Reliance Energy, YES Bank

Reliance Energy, ONGC, Technicals, Market Update

Reliance Energy, ONGC, Technicals, Market Update

Reliance Energy September 2007 futures most active

Settle at premium

The Nifty September 2007 futures settled at 4434, a discount of 45.25 points as compared to spot closing of 4479.25.

The NSE’s F&O turnover was Rs 39013.75 crore as compared to Rs 34491.99 crore on Monday, 3 September 2007.

Reliance Energy September 2007 futures settled at premium, at 828.50, compared to the spot closing of Rs 822.20. It was the most active contract with turnover of Rs 2204.56 crore.

Reliance Industries September 2007 futures settled at discount, at 1967, compared to the spot closing of Rs 1969.

IFCI September 2007 futures settled at premium at 69.50 as compared to spot closing of Rs 69.20 .

Century Textiles September 2007 futures settled at premium, at 802.90, compared to the spot closing of Rs 797.50.

In the cash market, the S&P CNX Nifty was up 4.50 points or 0.10% at 4479.25.

Reliance Energy

Reliance Energy

Tata Steel, Reliance Energy

Tata Steel, Reliance Energy

Biocon, KPIT Cummins, Reliance Energy, Dish TV

SSKI on Biocon

Biocon’s Q1’08 profits are in line with expectations with 35.9% yoy growth in net profits at Rs530m. In a positive move, Biocon has also sold its relatively sluggish enzyme business to Novozyme for $115m, at an attractive valuation of ~4.8x sales which is clearly indicative of the intrinsic value of Biocon’s biotechnology based businesses. The proceeds will enable Biocon to pursue strategic acquisitions to further strengthen its innovation business. Key positives are strong growth momentum in biopharma business with 28% yoy growth and continued progress in biosimilars programme as exhibited through the new licensing deals for GCSF and Insulin. Biocon is clearly amongst the leaders in the Biosimilars space in India and the developments in US / EU to accelerate biosimilars entry bode well for the company. Contract research services business continues to grow strongly and discovery R&D projects are looking promising. The only concern is the sharp appreciation in rupee which is significantly impacting Biocon’s margins given that ~60% of its sales are denominated in dollars and pricing revisions are slow to come through. In reflection Q1FY08 margins at 28% are 120bps below our estimates despite a much higher component of licensing income (Rs160m against Rs20m expectation). To adjust for the enzyme business divestment and lower operating margins, we are reducing our FY08 and FY09 earning estimates by 8% and 10% respectively. Maintain Outperformer with a price target of Rs546 (23.8xFY08E and 19xFY09E earning estimates). Unlocking of discovery R&D assets and acceleration in licensing revenue growth will be upsides to our estimates.

SSKI on Reliance Energy

REL's 1QFY08 results were above our estimates at Rs3.04bn led by sharply higher than expected other income of Rs3.6bn (forex gain of Rs1.9bn). Revenues grew by 41% yoy to Rs16.2bn during the quarter led by sharp jump in EPC division (faster execution of projects) coupled with 42% yoy increase in power revenues (14% growth in volumes and 25% jump in realizations). However, margins of EPC fell by 110bps to 5.1% led by execution of lower margin components of the order backlog, while energy business EBIT margins fell by 100bps to 13.2% led higher purchased power cost. Despite, the poor operating performance during the quarter, we have upgraded our FY08 and FY09 earnings estimates by 10% and 8.5% respectively to reflect the higher other income. REL is currently trading at 13.3x FY09 earnings. Despite being bullish on REL’s business model of backward integrating the distribution business through own generation, we believe valuations adequately factor in the medium term upsides. Moreover, the gas pricing uncertainty for the Dadri power plant is delaying the big value trigger for the stock. We maintain our Neutral rating on the stock.

SSKI on Dish TV

Mapping our estimates, Dish TV has reported revenue growth of 35%qoq at Rs893m in Q1FY08 with subscriber reach of 2.1m (0.18m subscribers added during the quarter). High content cost (65%); subscriber acquisition costs and Set Top Box subsidies have led to operating loss of Rs488m and net loss of Rs898m.

Unlike cable, DTH is a more organized and less regulated business. With heavyweights like Reliance ADAG, Bharti, Tata Sky, Dish TV and Sun TV foraying into the space, we expect DTH to outpace digital cable in near term and become a 14m home market by FY10. However, intense competition would also mean increasing subscriber acquisition cost and subsidization (from 4-6 months of ARPU now to 8-10months of ARPU), given the fact that there is no content differentiation. We have already witnessed the early signs, with customer acquisition cost for Dish TV more than doubling since the entry of Tata Sky. As competition is more funded and aggressive, we believe that Dish TV’s share of incremental market would drop and its market share would reach 32% by FY10E from 75% now. Intensifying competition, increasing bleed period and impending dilution to fund Rs7-8bn of capex leaves limited value for the investors. Reiterate Neutral.

SSKI on KPIT Cummins

In Q1FY08, KPIT’s revenue grew 3.8% qoq to Rs1.35bn (+5.4% in $ terms) – higher than our expectations of Rs1.32bn. However the company books forex gains / (losses) on hedges in revenues as well as in G&A. The average exchange rate realization for the company was Rs43.64/$ compared to average exchange rate of Rs41.3/$ during the quarter. As per our estimates the revenues would have included forex gains of Rs73m. The management has not provided clarity on volume growth and pricing increase during the quarter. Despite wage hike (17% offshore and 6% onsite) the EBITDA margins improved by 10bp primarily on account of booking of forex gains in revenues and lower S&M (-10% qoq in absolute terms) on getting benefit of rupee appreciation on $ terms costs and absence of variable salary paid during Q4FY07. PAT declined 9.8% qoq to Rs127m (we expected Rs120m) despite 4.4% increase in EBITDA on higher depreciation and interest expenses. The company has entered into partnership with Cummins to provide F&A BPO work (potential size of $55m over 5 years) but KPIT will be paying $5m upfront of which $4.5m have been raised through equity dilution to Cargill (2% dilution) and additional $5m towards end of 5 years based on certain performance parameters. The company has cut rupee terms PAT guidance by 6.8-10% on account of rupee appreciation – though it has raised $ terms revenue guidance by 1.4-3%. We expect 19% earning CAGR over FY07-09E – at Rs135 the stock trades at 17x FY08E and 14x FY09E – maintain Neutral.

Reliance Energy, Hexaware, Polaris, Aditya Birla Nuvo, Insurance

Reliance Energy, Hexaware, Polaris, Aditya Birla Nuvo, Insurance

Hexaware Technologies, Reliance Industries, Reliance Energy, Larsen Tourbo, Biocon

Hexaware Technologies

Reliance Industries

Reliance Energy

Larsen Tourbo

Biocon

Tata Steel, Reliance Energy, State Bank of India, TVS Motors

Tata Steel, Reliance Energy, State Bank of India, TVS Motors

Tata Steel, Reliance Energy

Tata Steel, Reliance Energy

HSBC - India Power Utilities

HSBC in their report on India Utilities is very bullish on PTC

We see distinct opportunities in India’s deregulated power sector, with growth driven by consumer demand for a cheaper and more efficient power supply and industry players who will make higher margins than in the regulated market, especially those with first mover advantage.

In a country with a severe power shortage, we believe there is a bigger growth story here than the market is factoring in. Our analysis yields a 71% CAGR for deregulated power from FY07-12e and our estimates for companies discussed in this report are 0-40% above consensus. We believe government initiatives to increase competition –
including the ultra mega power policy – will increase deregulated power capacity from just 2.6GW (less than 2% of the country’s total) to 38GW (18%) by FY12e. While regulated plants’ ROE is currently 14%, deregulated plants should average 20-25%. We forecast that merchant power plants – those permitted to sell power to the spot
market – will be the most profitable segment, with expected ROEs of 25%.
PTC India should be a key beneficiary; we estimate net profit CAGR of 42% over FY06-11e and initiate coverage with an Overweight (V) rating and target price of INR99. Tata Power (Overweight), with 77% capacity in the deregulated segment
by FY12, should also gain significantly.


PTC India: market leader in trading Target price: INR99; rating: Overweight (V)
PTC India has a pipeline of 5GW of projects to be developed over the next five years, most of its capacity is in merchant power and it has innovative propositions like tolling (a virtual power plant agreement wherein the company will pay fixed charges to the plant developer, supply fuel and get power in return). We initiate coverage with Overweight (V) and a target price of INR99 (average of DCF fair value of INR114 and sumof- the-parts fair value of INR84/share). It trades at 15.5x FY08e and 12.7x FY09e earnings.

Our forecasts for trading volumes are higher than consensus, as we have factored in fee-based income from its non banking finance company (NBFC). Our EPS forecasts are 13% and 18% above consensus for FY08e and FY09e respectively.

Tata Power: right place, right time Target price: INR732; rating: Overweight Tata Power is likely to have more than 40% of its capacity in the deregulated segment by 2010,
compared to its current capacity of less than 20%.


NTPC
Target price: INR176; rating: Neutral
NTPC, the biggest player in the power sector, will also benefit from deregulation. However, we think valuations have run up recently and maintain our Neutral rating on the stock. If NTPC wins the Tilaiya or Krishanapatanam ultra mega power projects we think it stands to gain. It trades at 14.3x FY08e and 12.3x FY09e earnings.
We have factored in very high utilisation rates (88%) for coal plants, and so our EPS forecasts for FY08e and FY09e are 20% and 23% above consensus, respectively.

Reliance Energy
Target price: INR589; rating: Neutral
We think Reliance Energy is a cautious player and has taken a small step towards deregulation. If it wins the Tilaiya project, its earnings could grow above our forecasts. It trades at 12.2x FY08e and 10.7x FY09e earnings. Our forecasts for other income are higher than consensus because we factor in higher interest and foreign exchange income. Our EPS forecasts are 16% and 17% above consensus for FY08e and FY09e, respectively.

Citigroup - Reliance Energy, United Spirits

Reliance Energy

United Spirits

First Global - MICO, Maruti Udyog, Reliance Energy

First Global - MICOFirst Global - Maruti Udyog

First Global - Reliance Energy

UBS - IDFC, Reliance Energy, IDEA, Maharastra Seamless, Sun Pharma

IDFC

Reliance Energy

IDEA Cellular

Maharastra Seamless

Sun Pharma