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Monday, March 19, 2007
ICRA Ltd.
Background:
- ICRA Ltd. was incorporated in year 1991 as a credit rating agency by a consortium of financial/investment institutions, commercial banks and financial services companies. Moody’s India, a part of Moody’s Group is the promoter of the ICRA Ltd.
- The company is engaged in the business of providing rating and grading services. The company also provides consulting, information technology based and outsourcing services.
- The Company has three subsidiaries, namely, IMaCS, ICTEAS and ICRA Online. ICTEAS provides business solutions and computer aided engineering services. ICRA Online provides mutual fund based information and outsourcing services while IMACS provides management consulting services.
- Rating services, consulting services and information technology based services contributed 55.97%, 21.70% and 14.00% of total revenues respectively in FY06 and 55.64%, 17.08% and 15.84% respectively for the 9 months ended December 2006.
- In fiscal 2006, volume of debt rated by the company was Rs. 1,389.49 billion and the number of published issuers outstanding as on March 31, 2006 were 398. For the nine months period ended December 31, 2006, the volume of debt rated by the company was Rs. 988.64 billion and the number of published issuers rated outstanding as on December 31, 2006 was 399.
- The company has entered into an agreement with ICRA Online for ranking of mutual funds. For this purpose, ICRA Ltd pays ICRA Online a sum of Rs. 70, 000 per month and revenues from these services are shared in ratio of 85:15 by ICRA Ltd and ICRA Online.
- To achieve the benefits of listing
- To carry out the sale of equity shares upto 2581100 shares.
- The company has developed in depth knowledge in several sectors supplemented by knowledge management system. This has enabled company to develop a comprehensive range of products and thus enabling company to obtain additional business from existing clients as well as address a larger base of potential clients.
- The net sales of the company has increased at a CAGR of 28.55% to Rs. 543.21 million in FY06 from Rs. 328.69 million in FY04. The net profit has increased at a CAGR of 13.35% to Rs. 142.08 million from Rs. 110.58 million for the same period. For the nine months ended net sales stood at Rs. 495.41 million and net profit was Rs. 135.87 million.
- The company has consistently high EBITDA margin. Its EBITDA margin improved marginally from 33.79% in FY04 to 33.93% in FY06. For the nine months ended December’06 it has EBITDA margin of 35.70%.
- Since 97% of the debt offers in India are rated, expected increase in corporate take off and the potential for new businesses from a variety of issuers and debt instruments, prospects for its rating business is expected to increase.
- The company has high debtors turnover ratio. The same has increased from 77 days in 2004 to 86 days in 2006. Further, it has increased to 144 days for the 9 months ended December 2006.
- The company operates in an industry where retaining skilled personnel with particular industry domain knowledge for performing credit and financial analysis is essential. The company has high attrition rate of 23% and 22% for FY06 and for the nine months ended respectively. This can have a negative impact on company’s margin.
- The company had declining operating profit from FY02 to FY05. It has declined from Rs. 121.63 million in FY02 to Rs. 87.03 million in FY05. However, its operating profit increased to Rs. 164.87 million for FY06.
Valuations:
- The results of FY06 are not comparable with FY05 as ICRA Online and ICTEAS both become its subsidiary during FY06 and data is given on consolidated basis.
- Return on net worth (RONW) has increased from 9.66% in FY05 to 15.23% in FY06. For the nine months ended RONW stood at 12.75%.
- Book value per share as on December 31, 2006 is Rs. 120.98/-.
- Post issue annualised EPS based on December 2006 earning is Rs. 18.16. The shared are being offered in a price band of Rs. 275/- to Rs. 330/-. POST issue PE ranges from 15.17 to 18.21. Industry average PE is 43.8.
Board Meetings - March 22 2007
| Mar 22 2007 | Advani Hotels & Resorts (India) Ltd | Advani Hotels & Resorts India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 22, 2007, inter alia, to consider, the payment of Interim Dividend on the Equity Share Capital of the Company. |
| Mar 22 2007 | Bartronics India Ltd | Bartronics India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 22, 2007, inter alia, to consider, the proposal for Issue of Foreign Currency Convertible Bonds (FCCBs) / Global Depository Receipts (GDRs) / American Depository Receipts (ADRs) by the Company. |
| Mar 22 2007 | Bimetal Bearings Ltd | Bimetal Bearings Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 22, 2007 to consider declaration of Interim Dividend for the year ending March 31, 2007. |
| Mar 22 2007 | FCS Software Solutions Ltd | FCS Software Solutions Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 22, 2007, inter alia, to consider payment of Interim Dividend if any declared for the financial year 2006-07. |
| Mar 22 2007 | Garware Offshore Services Ltd | Garware Offshore Services Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 22, 2007, for consideration of Audited Annual Accounts for the year ended December 31, 2006 and recommendation of final dividend. |
| Mar 22 2007 | GTC Industries Ltd | GTC Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 22, 2007, inter alia, to consider and discuss the development of surplus land of the Company in the State of Andhra Pradesh. |
| Mar 22 2007 | Harita Seating Systems Ltd | Harita Seating Systems Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 22, 2007, for the purpose of considering declaration of interim dividend to the shareholders of the Company for the financial year ending March 31, 2007. |
| Mar 22 2007 | KSB Pumps Ltd | KSB Pumps Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 22, 2007, to consider the following:1. Annual Accounts for the year ended December 31, 2006.2. Final Dividend for the said accounting year. |
| Mar 22 2007 | Mahalaxmi Rubtech Ltd | Mahalaxmi Rubtech Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 22, 2007, inter alia, to transact the following:1. To consider and fix the Record date for the purpose of issue of Bonus shares.2. To consider and decide about to avail the fund by way of Borrowings from Bank for the ongoing expansion plan of the Company.3. To discuss and review the activities of the Company. |
| Mar 22 2007 | Nucleus Netsoft & G I S India Ltd | Interim DividendNucleus Netsoft & GIS India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 22, 2007, inter alia, to consider the payment of Interim Dividend on the Equity Capital for the financial year ending on March 31, 2007.(As Per BSE Announcement Website Dated on 06/03/2007) |
| Mar 22 2007 | Panchmahal Steel Ltd | Accounts Nine Months |
| Mar 22 2007 | Pfizer Ltd | Pfizer Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 22, 2007, to consider the Unaudited Financial Results of the Company for the 1st Quarter ended February 28, 2007 (Q1). |
| Mar 22 2007 | Rane Brake Linings Ltd | Rane Brake Linings Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 22, 2007, inter alia, to consider, the payment of 2nd Interim Dividend proposed for the year ended March 31, 2007. |
| Mar 22 2007 | S & S Power Switchgear Ltd | S&S Power Switchgear Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 22, 2007, to consider and approve the Annual Accounts for the year ended September 30, 2006 and to convene the 29th Annual General Meeting of the Company on April 23, 2007. |
| Mar 22 2007 | Tulsyan NEC Ltd | Tulsyan NEC Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 22, 2007 to consider and declare Interim Dividend. |
Edelweisss -Daily Market Outlook
Market Snapshot
On Friday, the Sensex opened with a positive gap of 26 points at 12,570. It advanced to a high of 12,639 in early trades, but soon slipped into red owing to selling pressure at higher levels. Persistent selling in bank, cement and engineering stocks forced the index drop to a low of 12,316. Selective buying towards the end helped the index recoup some losses. The Sensex finally settled with a loss of 113 points at 12,430. In the process, the index ended the week with a loss of 455 points. Nifty Lost 35 points to close at 3608.
The NSE and BSE cash volumes were slightly lower compared to the previous day at INR 70 bn and INR 35 bn respectively. The F&O volumes were higher at INR 249 bn.
Sentiment Indicators
The Implied Volatility (IV) across Nifty strikes has slightly decreased to 31% levels. The WPCR of Nifty Options increased to 1.19 compared to the previous day while the 5 day average is 0.95.
Outlook
The markets are expected to remain range-bound in today’s trading session with participation expected to remain lackluster as seen in the last few trading sessions. On the domestic front, higher than expected inflation numbers led to a decline in the market.
Nifty has found support at 200 DMA at the 3580 levels. Though there has been continuous addition of fresh shorts in Nifty futures.
Banking sector will be an underperformer as worries over credit growth, high inflation which might see further tightening of liquidity by the RBI. IT sector is expected to remain an out performer and position in the sector against Nifty could be taken.
In shorter term the Nifty has a support at 3584 followed by 3568 and 3554 while the resistance is at 3643 followed by 3683.
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