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Tuesday, June 19, 2007
No retail worries seen for ICICI offer
ICICI Bank need not worry about the retail subscription of its Rs 10,062-crore domestic issue. All that Indian investors have to do is to invest only around Rs 3,000 crore to enable the bank to issue the rest of the shares to foreign investors, without breaching the 74% foreign investment limit post-issue.
In addition to the domestic issue, the bank is mobilising funds through the American depository receipt route, which will take the total mop-up to Rs 20,124 crore.
Overseas investors can hold up to 74% in a private sector bank. In case of ICICI Bank, foreign investors currently hold 71.13%. In the local market, ICICI Bank will raise Rs 8,750 crore. Around Rs 4,375 crore have been set aside for retail investors and non-institutional investors.
The issue also has a greenshoe option of Rs 1,312.5 crore. However, bankers are betting on domestic investors picking up at least around Rs 5,000 crore in the issue, primarily on the back of strong institution and corporate interest. This would give the bank enough leeway for foreign investors post issue.
Even in the last issue LIC and SBI were among the biggest Indian investors. This time around too, among the state-owned corporations LIC, SBI, and GIC are likely to subscribe to the issue. Some of the other bigger public sector banks are also expected to subscribe the issue. Currently, LIC holds a 7.63% stake, while GIC and other general insurance companies have another 3.86% stake. Domestic retail investors hold 6.55%.
Few corporate bigwigs are said to have shown commitment to the issue, including a large south Mumbai-based company. Currently, Bajaj Auto holds a 4.06% stake in the bank. Incidentally, Bajaj has increased its stake in the bank. As on June 2005, Bajaj’s stake was 3.12% while LIC’s had 9.86%.
The ICICI Bank scrip rose marginally on the BSE to close at Rs 917.85. Retail investors have been shying away from some of the bigger issues in recent times. In case of DLF too, retail investors had subscribed 0.97% of the issue.
The bank has offered sweeteners to retail investors including a discount of Rs 50 per share, options of partly paid-up shares and 5% reservations for existing shareholders. Under the partly paid share option, a retail investor will have to pay Rs 250 as on application and Rs 250 as on allotment. These shares will be also listed on the exchanges. This option is said to be attracting retail investors.
EXCLUSIVE - Equibrain Report - June 19 2007
EXCLUSIVE - Equibrain Report - June 19 2007
You can customize the above report for your own stocks. Contact Aditya (details inside in the PDF) who can do this for you for any stocks you want
Monday, June 18, 2007
Weekly Cherries
BEML, Uptrend, BUY, Support @ 1062-1000, Resistance @ 1160-1196
Glaxo, Uptrend, BUY, Support @ 1282-1253, Resistance @ 1334-1356
L&T, Uptrend, BUY, Support @ 1885-1823, Resistance @ 1988-2028
Apar Industries, Uptrend, BUY, Support @ 157-153, Resistance @ 167-172
PSL, Uptrend, BUY, Support @ 242-228 Resistance @ 270-284
Finolex Cables, Uptrend BUY, Support @ 89-86, Resistance @ 94-95
Market Close: Gains wiped off at the end
Market opened with significant gap up on the back of strong cues from Asian markets. After the morning session market turned to be bit lacklustre and ranged. There seems to be liquidity outflow from the system given the major IPO from ICICI Bank. However indices could hold on the gains and slipped into red during mid session. This sell off was led by selling in IT, Pharma, Auto and Consumer durable stocks. However, Banking, Cap goods and Oil & Gas indices managed to hold gains. Midcaps could not sustain and closed flat while the smallcap ended in red. Most of the Asia markets ended in green except Europe.
Sensex traded down by 83 points at 14080.14. Weighing on the Sensex were losses in Ranbaxy (359.25,-4 percent), Hero Honda (653.7,-4 percent), TISCO (588.95,-2 percent), HDFC Bk (1087.9,-2 percent) and TCS (1166.6,-2 percent). Losses were restricted by gains in ICICI Bk (917.85,+1 percent), ONGC (889.5,+1 percent), Hindalco (162.1,+0 percent), ACC (823.6,+0 percent) and ITC (152.9,+0 percent)
Software counter was mixed. Market reported that Cranes Software (Software products maker) is close to buy out the Bangalore-based anti-virus software maker Proland Software. The proprietary firm Proland Software has been in the business of designing, developing and supporting anti-virus software products for over 15 years. Proland has anti-virus offerings on almost every platform, namely Windows Vista, Windows XP, Windows 98, Windows 2000 and NetWare among others. Sold under the Protector Plus brand, Proland's anti-virus software products have users in over 100 countries. Proland derives about 65% of its revenues form the US market, while Europe was its second largest market. The stock runs up on the news which is inline with the business. Cranes Software ended up by 4.5% while its pears like Hexaware Technologies was up 2%.
It was a good listing day for Plastic packaging maker Glory Polyfilms which started the day at its issue price of Rs 48 and touched a high of Rs 84 in the trade. Strong support from buyers helped the stock to hold above Rs 60 till the end despite sluggish markets in the late mid trade. Glory Polyfilms expect FY09 topline at Rs 150 crore. They also expect operating profit margin and net profit margin at 20-22% and 10%, respectively. The company entered capital markets with around Rs40crs. The issue will be used to part finance the expansion of multlayer film, printing capacity and lamination film. Money will also be used for meeting the working capital margin requirements. The stock ended the day down by 2.5% on account of heavy selling pressure.
Technically Speaking: Market drifted to lower levels as selling pressure eroded the gains. Sensex touched intraday high of 14283 and days low of 14057. Resistance lies at 14360 levels and Support lies at 13860 levels. Overall breadth was in favor of Decliners, where the Declines were 1323 against 1237 Advancers. Market is expected to be ranged for the week.
Techs pull Indian shares down, ICICI Bank gains
Indian shares reversed early gains to end down 0.58 percent on Monday, led by losses in technology firms such as Infosys Technologies Ltd. on concerns a strong rupee would hurt earnings.
Shares in top private lender ICICI Bank Ltd. rose 1.1 percent to 917.85 rupees, having risen as much as 1.9 percent during trade, on hopes of successful sale of up to $4.9 billion of shares in India and the United States this week.
"We are seeing persistent selling at the higher levels in the recent sessions. The market is too volatile and the trend is likely to continue till the beginning of the corporate earnings season," said Neeraj Deewan, director at Quantum Securities.
The benchmark 30-issue BSE index fell 82.57 points to end at 14,080.14 with 23 components losing. The index is 4.4 percent below its all-time high of 14,723.88 hit on Feb. 9.
The 50-issue Nifty was down 0.58 percent at 4,147.10. It hit an all-time high of 4,362.95 on June 4.
The Indian leg of ICICI Bank's share sale opens on Tuesday, with an indicative price band of 885-950 rupees per share. Last week, property developer DLF Ltd. raised $2.25 billion in India's biggest initial public offering.
Deewan said ICICI Bank's share sale, the country's largest ever, had put pressure on the broader market as interested investors diverted cash away from other shares.
Some gains in the rupee at the start of the week hurt export-focused software services firms on concerns about their profit in the quarter ending June 30. Indian software firms earn about 60 percent of their revenue from the United States.
The rupee rose to 40.760/770 per dollar on Monday afternoon, up from 40.86/87 on Friday. The rupee, which hit a nine-year high of 40.28 in late May, has gained about 8.5 percent against the dollar this year.
Second-ranked Infosys Technologies fell 1 percent to 1,988.90 rupees and top exporter Tata Consultancy Services Ltd. ended 1.5 percent lower at 1,166.60 rupees.
In the broader market, losers outpaced gainers 1,438 to 1,112 on total volume of 218 million shares.
For a technical analysis by Reuters, please see: www.reutersindia.net.
Elsewhere in the region, Karachi's 100-share index gained 0.96 percent to 13,567.40 points, while Colombo's All-Share index fell 0.33 percent to 2,594.50 points.
STOCKS THAT MOVED
* Pig-iron supplier Visa Steel Ltd. rose nearly 5 percent to 34.45 rupees after a top official said China's Baoshan Iron and Steel Co. Ltd. (BaoSteel) had approached the company for a possible tie-up.
* Sparsh BPO Services Ltd. slipped 1.8 percent to 204 rupees after U.S.-based Blackstone Group offered to buy an additional 20 percent in the company at 200 rupees a share. Parent Intelenet, being acquired by Blackstone for an undisclosed sum, holds 51 percent in the firm.
* Geodesic Information Systems Ltd. ended 10 percent up at 274.50 rupees after the software firm's board approved issuing one bonus share for every two shares held and raising $150 million overseas.
* Cranes Software International Ltd. rose 4.3 percent to 132.90 rupees after the software products maker said it would spend 700 million rupees to acquire U.S.-based Dunn Solutions Group and Tilak Autotech Pvt Ltd.
TOP 3 BY VOLUME
* IKF Technologies Ltd. on 18.9 million shares
* Glory Polyfilms Ltd. on 15.7 million shares
* IFCI Ltd. on 15.5 million shares
SBI, LIC, others to dilute 50% in UTI MF via IPO
UTI Asset Management Company will float an initial public offer by March-end next year to help its sponsors, SBI, LIC, PNB and BoB, offload up to 50%.
UTI Asset Management Company Ltd chairman and managing director U K Sinha told PTI that the board of the company had recently approved the proposal to offload up to 50% stake held by the four sponsors.
State Bank of India (SBI), Life Insurance Corporation of India (LIC), Punjab National Bank (PNB) and Bank of Baroda (BoB), individually hold 25% stake each in the asset management firm.
Sinha said UTI AMC would probably be the first domestic mutual fund in the country to go for an IPO, through which the four sponsors would make a partial exit.
He said the details on the valuation of the company were being worked out.
The valuation of the firm was last done in November 2005, when the four sponsors bought stake in it.
Sharekhan - Zensar Tech
Zensar Technologies
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs484
Current market price: Rs342
Zen(sar) and the art of growing
Key points
- Strengthening its portfolio of service offerings: Zensar Technologies (Zensar) has effectively utilised the inorganic route to gain the required critical mass in the fast growing enterprise solutions segment (through the acquisition of OBT Global and ThoughtDigital), to strengthen its footprint in under-penetrated geographies such as Japan (through joint venture with Eza, Japan), and to gain access to marquee clients.
- Maintaining the growth momentum: Zensar is well poised to report a healthy growth of over 40% in FY2008. It is witnessing a strong traction in its organic business and the incremental revenues of Rs110 crore from the recent inorganic initiatives would only add to the overall growth momentum in its revenues. Consequently, even after factoring in the adverse impact of the rupee appreciation, the company is expected to achieve its stated revenue guidance of Rs850 crore in FY2008.
- Margins are sustainable: Zensar is also expected to buck the general declining trend in margins in FY2008. That's because some of its relatively new businesses of ITS and BPO that have been in the investment mode are expected to show a substantial improvement in their margins. It also has other margin levers like a favourable revenue mix and lower overhead costs to cushion against the adverse impact of wage hikes, the appreciation in the rupee and the consolidation of the relatively lower-margin revenues of ThoughtDigital.
- Key concern of stake sale by Fujitsu has been dispelled: The acquisition of the entire stake of Fujitsu in Zensar by the RPG group has eliminated a key concern that was a drag on the stock's valuations.
- Attractive valuations: At the current market price the stock trades at 10.6x FY2008 and 8.2x FY2009 estimated earnings; the valuations are extremely attractive considering the estimated earnings growth of 33% CAGR over FY2007-09. We recommend Buy on the stock with a price target of Rs484.
Short Term Trading Calls
Buy IOL Broadband with stop loss of Rs 440 for a target of Rs 535.
Buy Chola DBS with stop loss of Rs 146 for a target of Rs 190.
Buy United Spirits with stop loss of Rs 1100(On closing basis) for a short-term target of Rs 1320.
Buy Federal Bank with stop loss of Rs 277(On closing basis) for a short-term target of Rs 301.
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