Results Calendar - Jan 23 2007

Jan 23 2007	ABG Shipyard Ltd
Jan 23 2007	Adlabs Films Ltd
Jan 23 2007	Advanced Micronic Devices Ltd
Jan 23 2007	Alpha Hi-Tech Fuel Ltd
Jan 23 2007	Apeego Ltd
Jan 23 2007	Apollo Sindhoori Capital Investments Ltd
Jan 23 2007	Arvind Products Ltd
Jan 23 2007	Automotive Stampings & Assemblies Ltd
Jan 23 2007	Balmer Lawrie Vanleer Ltd
Jan 23 2007	Banswara Syntex Ltd
Jan 23 2007	Birla Ericsson Optical Ltd
Jan 23 2007	CCL Products (India) Ltd
Jan 23 2007	CEAT Ltd
Jan 23 2007	Ceekay Daikin Ltd
Jan 23 2007	Chettinad Cement Corporation Ltd
Jan 23 2007	Coromandel Fertilisers Ltd
Jan 23 2007	Cosmo Films Ltd
Jan 23 2007	D S Kulkarni Developers Ltd
Jan 23 2007	Dabur Pharma Ltd
Jan 23 2007	DCM Shriram Industries Ltd
Jan 23 2007	Educomp Solutions Ltd
Jan 23 2007	Everest Kanto Cylinder Ltd
Jan 23 2007	Fiem Industries Ltd
Jan 23 2007	Filmcity Media Ltd
Jan 23 2007	Gabriel India Ltd
Jan 23 2007	Gayatri Projects Ltd
Jan 23 2007	Glenmark Pharmaceuticals Ltd
Jan 23 2007	GMR Infrastructure Ltd
Jan 23 2007	Goa Carbon Ltd
Jan 23 2007	GRUH Finance Ltd
Jan 23 2007	Gujarat Reclaim & Rubber Products Ltd
Jan 23 2007	HB Portfolio Ltd
Jan 23 2007	Helios & Matheson Information Technology Ltd
Jan 23 2007	Hindustan Organic Chemicals Ltd
Jan 23 2007	India Infoline Ltd
Jan 23 2007	Indian Hotels Co Ltd
Jan 23 2007	Ipca Laboratories Ltd
Jan 23 2007	ITI Ltd
Jan 23 2007	Kesoram Industries Ltd
Jan 23 2007	Khandwala Securities Ltd
Jan 23 2007	Lifestyle Fabrics Ltd
Jan 23 2007	Maharashtra Polybutenes Ltd
Jan 23 2007	Mahindra Gesco Developers Ltd
Jan 23 2007	Mangalam Cement Ltd
Jan 23 2007	Mangalore Refinery And Petrochemicals Ltd
Jan 23 2007	Mediaone Global Entertainment Ltd
Jan 23 2007	Millennium Beer Industries Ltd
Jan 23 2007	Mold-Tek Technologies Ltd
Jan 23 2007	Munjal Showa Ltd
Jan 23 2007	Mysore Paper Mills Ltd
Jan 23 2007	National Organic Chemical Industries Ltd
Jan 23 2007	Nitco Tiles Ltd
Jan 23 2007	Noida Toll Bridge Company Ltd
Jan 23 2007	Onward Technologies Ltd
Jan 23 2007	Opto Circuits (India) Ltd
Jan 23 2007	Oxides & Specialities Ltd
Jan 23 2007	Premier Ltd
Jan 23 2007	Radha Madhav Corporation Ltd
Jan 23 2007	Real Strips Ltd
Jan 23 2007	Rollatainers Ltd
Jan 23 2007	Ruby Mills Ltd
Jan 23 2007	SB & T International Ltd
Jan 23 2007	Scana Color (India) Ltd
Jan 23 2007	Shalimar Paints Ltd
Jan 23 2007	Sharon Bio-Medicine Ltd
Jan 23 2007	Sumedha Fiscal Services Ltd
Jan 23 2007	Swaraj Engines Ltd
Jan 23 2007	Tata Motors Ltd
Jan 23 2007	Times Guaranty Ltd
Jan 23 2007	Transport Corporation of India Ltd
Jan 23 2007	United Breweries (Holdings) Ltd
Jan 23 2007	United Spirits Ltd
Jan 23 2007	Universal Cables Ltd
Jan 23 2007	Vikram Thermo (India) Ltd
Jan 23 2007	Vindhya Telelinks Ltd
Jan 23 2007	Western India Shipyard Ltd
Jan 23 2007	Wheel & Axle Textiles Ltd
Jan 23 2007	Zandu Pharmaceutical Works Ltd

Results Calendar - Jan 22 2007

Jan 22 2007	Aarti Drugs Ltd
Jan 22 2007	ANG Auto Ltd
Jan 22 2007	Apple Finance Ltd
Jan 22 2007	Asian Hotels Ltd
Jan 22 2007	AVT Natural Products Ltd
Jan 22 2007	Bell Ceramics Ltd
Jan 22 2007	Betala Global Securities Ltd
Jan 22 2007	Bhushan Steels & Strips Ltd
Jan 22 2007	Bijlee Textiles Ltd
Jan 22 2007	Cubex Tubings Ltd
Jan 22 2007	Daulat Securities Ltd
Jan 22 2007	DCM Shriram Consolidated Ltd
Jan 22 2007	Diamines & Chemicals Ltd
Jan 22 2007	Elder Pharmaceuticals Ltd
Jan 22 2007	Electrosteel Castings Ltd
Jan 22 2007	Emmessar Biotech & Nutrition Ltd
Jan 22 2007	Flawless Diamond (India) Ltd
Jan 22 2007	Greenply Industries Ltd
Jan 22 2007	GTL Infrastructure Ltd
Jan 22 2007	Harsh Polymers(India) Ltd
Jan 22 2007	Hi-Tech Gears Ltd
Jan 22 2007	Himachal Futuristic Communications Ltd
Jan 22 2007	Hind Rectifiers Ltd
Jan 22 2007	Honda Siel Power Products Ltd
Jan 22 2007	Indag Rubber Ltd
Jan 22 2007	India Cements Capital & Finance Ltd
Jan 22 2007	India Cements Ltd
Jan 22 2007	Indo Tech Transformers Ltd
Jan 22 2007	Industrial Investment Trust Ltd
Jan 22 2007	Jain Studios Ltd
Jan 22 2007	Jarigold Textiles Ltd
Jan 22 2007	JK Paper Ltd
Jan 22 2007	Jyoti Structures Ltd
Jan 22 2007	Kar Mobiles Ltd
Jan 22 2007	Kewal Kiran Clothing Ltd
Jan 22 2007	Khaitan Weaving Mills Ltd
Jan 22 2007	Kirloskar Ferrous Industries Ltd
Jan 22 2007	Kohinoor Foods Ltd
Jan 22 2007	Kriti Industries (India) Ltd
Jan 22 2007	Lakshmi Automatic Loom Works Ltd
Jan 22 2007	Lakshmi Mills Company Ltd
Jan 22 2007	Libord Infotech Ltd
Jan 22 2007	Libords Securities Ltd
Jan 22 2007	Lloyds Finance Ltd
Jan 22 2007	Madhav Marbles & Granities Ltd
Jan 22 2007	Maharaja Shree Umaid Mills Ltd
Jan 22 2007	Mazda Ltd
Jan 22 2007	MMTC Ltd
Jan 22 2007	Murudeshwar Ceramics Ltd
Jan 22 2007	Narmada Chematur Petrochemicals Ltd
Jan 22 2007	Navin Fluorine International Limited
Jan 22 2007	Nectar Lifescience Ltd
Jan 22 2007	Nettlinx Ltd
Jan 22 2007	New Bombay Printing & Dyeing Mills Ltd
Jan 22 2007	Nu-Tech Corporate Services Ltd
Jan 22 2007	Nucleus Software Exports Ltd
Jan 22 2007	Omax Autos Ltd
Jan 22 2007	ORG Informatics Ltd
Jan 22 2007	Padmalaya Telefilms Ltd
Jan 22 2007	Panoramic Universal Ltd
Jan 22 2007	Pitti Laminations Ltd
Jan 22 2007	Poddar Pigments Ltd
Jan 22 2007	Pratibha Industries Ltd
Jan 22 2007	Raj Packaging Industries Ltd
Jan 22 2007	Rasoya Proteins Ltd
Jan 22 2007	Rosekamal Textiles Ltd
Jan 22 2007	Saboo Sodium Chloro Ltd
Jan 22 2007	Saksoft Ltd
Jan 22 2007	Salora International Ltd
Jan 22 2007	Saregama India Ltd
Jan 22 2007	Shanthi Gears Ltd
Jan 22 2007	Shaw Wallace & Company Ltd
Jan 22 2007	Spectrum Foods Ltd
Jan 22 2007	Sri Adhikari Brothers Television Network Ltd
Jan 22 2007	Sterling Spinners Ltd
Jan 22 2007	Stovec Industries Ltd
Jan 22 2007	Sukhjit Starch & Chemicals Ltd
Jan 22 2007	Sumeet Industries Ltd
Jan 22 2007	Sunflag Iron & Steel Company Ltd
Jan 22 2007	Supreme Holdings Ltd
Jan 22 2007	Supreme Yarns Ltd
Jan 22 2007	TECIL Chemicals & Hydro Power Ltd
Jan 22 2007	TRF Ltd
Jan 22 2007	Triton Corp. Ltd
Jan 22 2007	United Breweries Ltd
Jan 22 2007	Ventura Textiles Ltd
Jan 22 2007	Vinati Organics Ltd
Jan 22 2007	Visisth Merchantile Ltd
Jan 22 2007	VMF Soft Tech Ltd
Jan 22 2007	Voltas Ltd
Jan 22 2007	Wearology Ltd
Jan 22 2007	Yes Bank Ltd
Jan 22 2007	Zee Telefilms Ltd

Man Financial - Reliance Industries

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Sharekhan Daring Derivatives for January 22, 2007

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Akruti Nirman IPO Subscription Details

Overall - 81 times

QIB - 118 times

NII/HNI - 64 times

Retail - 12.3 times

10paisa.com & Midcaps.in Newsletter

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Edelweiss - TCS, Bajaj Auto, Auto Result Preview , Wipro

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Edelweiss - IIS Reports

Sona Koya Steering

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Sharekhan Eagle Eye (equities) & Derivatives Info Kit for January 22, 2007

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Sharekhan Investor's Eye dated January 19, 2007

Ranbaxy Laboratories
Cluster: Apple Green
Recommendation: Buy
Price target: Rs558
Current market price: Rs414

Operating margin lower than expected

Result highlights

• Ranbaxy Laboratories (Ranbaxy) reported an impressive 167% growth in its net profit to Rs183.3 crore in Q4CY2006, which is higher than our expectation of Rs174.1 crore. The improvement in the profitability was triggered by a forex gain of $8 million. The focused cost-control efforts and rationalisation of research and development (R&D) spending also contributed to the profit growth.
• The net sales were higher by 22% to Rs1,697.50 crore in Q4CY2006 which was 4% above our expectation. The revenue growth was supported by a stronger revenue inflow from the Simvastatin-80mg tablet (which was under exclusivity in the USA), integration of Terapia SA (which reported over 50% growth) and the jump of 45% in the business from Brazil, Russia, India, China and South Africa (BRICS) during the quarter.
• However, the revenue growth was moderated by the pricing concerns in Europe, particularly the UK, Germany and France, leading to a 6% fall in the sales to $52 million and a 16% sequential decline in the domestic revenues to $66 million.
• With the higher realisation from the products under exclusivity and cost-cutting efforts, the operating profit margin (OPM) expanded by 920 basis points to 15%; but the expansion was 240 basis points less than our expectation. Again the margins were inflated by a foreign exchange (forex) gain of $8 million (against a $2 million forex gain in Q4CY2005). So if we discount the impact of the forex gain and the other operating income, the OPM appears 620 basis points less than our expectation. There is another cause for concern as well: The OPM has declined by 180 basis points sequentially. The decline was caused partly by the tapering of the realisation from Simvastatin after the expiration of exclusivity in the fag end of Q4CY2006.
• For CY2006, the company reported an 18% growth in the top line to Rs6,021.6 crore and an 890-basis-point expansion in the OPM to 15.4%. This caused the net profit to double (ie a 97% rise) to Rs515.1 crore.
• The company has guided for a 15% top line growth (which is in line with our estimations) with an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 16% for CY2007. At the current market price, the stock trades at 19.9x CY2007E earnings of Rs20.8 per share. We maintain our Buy recommendation with a longer-term price target of Rs558.

Shree Cement
Cluster: Cannonball
Recommendation: Buy
Price target: Rs1,700
Current market price: Rs1,482

Another quarter of superlative performance

Result highlights

• The company achieved a net profit of Rs104 crore for Q3FY2007, in line with our expectations, translating into a year-on-year (y-o-y) growth of 165%.
• The net sales increased by 153% year on year (yoy) to Rs364.5 crore driven by a huge 80% jump in the volumes and a robust 40% y-o-y rise in the realisations; however, the sales were down sequetially by 2%.
• The operating expenditure increased by 128% yoy to Rs204.4 crore. The rise in the expenditure was in line with our expectations except for the freight cost, which was slightly more than expectations at Rs390 per tonne.
• The sequential dip in the realisations as well as the rise in the freight costs can be attributed to the exercise undertaken by the company to test new markets like Uttar Pradesh. This exercise was undertaken as the company will be commissioning a plant of 1.5 million metric tonne (MMT) capacity in March 2007.
• The operating profit rose by a whopping 194% yoy to Rs160 crore whereas the operating margins expanded by 620 basis points to 43.9%. The earnings before interest, tax, depreciation and amortisation (EBITDA) per tonne rose 1.5x yoy to stand at Rs1,222 per tonne, whereas the EBITDA witnessed a marginal dip of 4% sequentially.
• The interest cost stood much lower at Rs0.65 crore whereas the depreciation provision was also lower at Rs26 crore. Consequently, the net profit grew by 165.5 % yoy to Rs104 crore in line with our expectations.
• Looking at the stupendous performance by the company in the first nine months of the current fiscal year, we are upgrading our FY2007 estimates by 20% to Rs400 crore as against Rs332 crore as per current estimates.
• At the current market price of Rs1,500, the stock is trading at 13.1x its FY2007 earnings and 11.7x its FY2008 earnings. We maintain our Buy recommendation on the stock with a price target of Rs1,700.

Canara Bank
Cluster: Apple Green
Recommendation: Buy
Price target: Rs320
Current market price: Rs262

Higher investment provisions are a surprise

Result highlights

• Canara Bank's net profit grew by only 1.9% to Rs363 crore, below our expectations of Rs394.7 crore. The operating performance was better than our expectations mainly due to the controlled expenses rather than the growth in the income, but higher provisions have been a surprise, which resulted in the reported profit after tax (PAT) being 8% lower than our estimates.
• During the quarter the bank's net interest income (NII) grew by 8.4% year on year (yoy) to Rs1,038.6 crore compared to our expectations of a 5.6% year-on-year (y-o-y) growth to Rs1,012.3 crore. The increase is primarily due to a sharp rise in the inteest on the RBI balances and the other interest component.
• The other income declined by 3.8% yoy due to a 1.4% decline in the fee and other income and a 20% decline in the trading income.
• The reported net interest margin (NIM) has declined by 16 basis points to 3.14% on a y-o-y basis but remained stable on a sequential basis. The NIM has been under pressure on a y-o-y basis because of a steep jump in the interest expended component, which has increased by 50% yoy mainly due to a 29% growth in the deposits and a 58-basis-point y-o-y increase in the cost of funds to 4.86%.
• The operating profit was better than our estimates of Rs648.7 crore and touched Rs701 crore, which remained stable on a y-o-y basis but improved by 13.9% on a sequential basis mainly due to a 6.2% quarter-on-quarter (q-o-q) decline in the operating expenses brought about by the lower staff expenses.
• The provisions at Rs263 crore were up 7.4% yoy. However we expected the provisions to be lower on account of the lower marked-to-market provisions. Hence, despite the operating profits being higher than our expectations the PAT at Rs363 crore was below our expectations of Rs394.7 crore.
• The non-performing asset (NPA) provisions have been lower although the absolute NPA numbers are on the rise on a sequential basis. Hence we feel that going forward higher NPA provisions slightly above the regulatory requirement would be prudent.

Satyam Computer Services
Cluster: Apple Green
Recommendation: Buy
Price target: Rs550
Current market price: Rs488

Price target revised to Rs550

Result highlights

• Satyam Computer Services (Satyam) reported a revenue growth of 3.7% quarter on quarter (qoq) and of 31.3% year on year (yoy) to Rs1,661 crore during the third quarter. The revenue growth was not only below market expectations but also a tad below the company's guidance. The consolidated volume growth was decent at 8.2% qoq but the same was not reflected in the revenue growth due to the appreciation in the rupee and the shift in the revenue mix towards the offshore business.
• The operating profit margin (OPM) improved by 205 basis points to 24.7% on a sequential basis, in spite of the adverse impact of the rupee appreciation, an increase in the selling, general and administrative (SG&A) expenses as a percentage of sales and a decline in the profitability of its subsidiaries. On the ther hand, the shift towards high-margin offshore business, decline in provisions (related to leave encashment and gratuity) and other cost efficiencies (including pricing and productivity gains in foxed priced projects) had a positive impact (of over 400 basis points) on the margins. Consequently, the operating profit grew at a healthy rate of 13.1% sequentially to Rs410 crore.
• However, the earnings growth was limited by the steep decline of 64.2% in the other income component to Rs10.1 crore (due to the foreign exchange fluctuation loss of Rs35.5 crore) and the increase in the effective tax rate to 10.7% (up from 8.8% in the previous quarter). Consequently, the consolidated earnings grew by 5.4% qoq and 25% yoy to Rs337.2 crore, which is below the consensus estimate of around Rs340 crore.
• For Q4, the consolidated revenues and earnings are guided to grow by 4-4.5% and 5.4% respectively on a sequential basis. This implies a 0.3-0.5% downgrade in the annual revenue guidance to Rs6,434-6,442 crore (down from Rs6,452-6,476 crore guided earlier). But the annual guidance for the earnings including the stock compensation charges has increased marginally to Rs20.9 per share (up from Rs20.73-20.81 per share guided earlier). Moreover, the marginal upgrade in the revenue guidance in dollar terms to $1,443-1,445 million (up from $1,434-1,440 million guided earlier) suggests that the downgrade in the revenue guidance in rupee terms is largely due to the steep appreciation in the rupee.
• At the current price the stock trades at 23.3x FY2007 and 19.4x FY2008 estimated earnings (including the non-cash charges for the stock options). We maintain our Buy call on the stock with a revised price target of Rs550 (18x rolling four quarters one-year forward earnings).

Nicholas Piramal India
Cluster: Apple Green
Recommendation: Buy
Price target: Rs393
Current market price: Rs266

Results in line with expectations

Result highlights

• Nicholas Piramal (Nicholas) reported a 61.3% year-on-year (y-o-y) increase in its net sales to Rs649.5 crore in Q3FY2007. The growth was achieved on the back of a 13% increase in the domestic sales and a whopping 208.9% surge in the global revenues. The sales growth was ahead of expectations.
• The 13% rise in the domestic sales was driven mainly by a 12.6% growth in the branded formulation business and a staggering 53.1% rise in the pathology laboratory (pathlabs) business.
• The  international sales benefitted largely from the incremental revenues flowing in from Pfizer's Morpeth facility in the UK and Avecia (now NPIL UK). Morpeth and NPIL UK together contributed Rs216 crore of revenues during the quarter, up 17% on a sequential basis.
• Nicholas' operating profit margin (OPM) expanded by 650 basis points to 14.9% in the quarter, driven by a sharp 970-basis-point reduction in the raw material cost and a 360-basis-point drop in the other expenses. The material cost improved because the company derived a higher amount of the high-margin CRAMS revenues during the quarter. Further, the enhanced capacity utilisation of the Morpeth facility also increased the operating leverage.
• Consequently, the company's operating profit rose by 185.3% to Rs97 crore during the quarter.
• Even though the acquisitions led to a substantial increase in the interest and depreciation expenses during the quarter, the growth in the net profit was impressive at 400% to Rs48.4 crore. Adjusting for the income for the prior-period adjustments, the adjusted net profit stood at Rs55.6 crore, up 474% year on year (yoy). The net profit growth was aided by a relatively lower tax incidence during the quarter. The tax outgo was lower on account of the progressive shift of the manufacturing activities to the tax-exempt Baddi facility. The net profit was in line with our estimates.
• At the current market price of Rs266, the stock is quoting at 15.9x its estimated FY2008 earnings. In view of the strong revenue flows and the enhanced profitability picture for the coming years, we maintain our Buy recommendation on the stock with a price target of Rs393.

Reliance Industries
Cluster: Evergreen
Recommendation: Buy
Price target: Rs1,530
Current market price: Rs1,380

Price target revised to Rs1,530

Result highlights

• Reliance Industries (RIL) has positively surprised in its Q3FY2007 results by reporting a whopping 57.6% year-on-year (y-o-y) growth in its earnings, way ahead of our and consensus estimates.
• The net revenues for the quarter grew by 45.7% driven by a strong 48.2% y-o-y growth in the revenues from the petrochemicals business and a 37.5% y-o-y growth in the revenues from the refining business.
• The profit before interest and tax (PBIT) in the petrochemicals business grew by only 32.2% on account of a 156-basis-point contraction in the margins. The PBIT of the refiing business grew by 124.9% on the back of a 358-basis-point expansion in the margins. As a result the PBIT grew by 38% yoy to Rs1,764 crore.
• The refining business again gave a positive surprise and the gross refining margins (GRMs) grew by 28.6% yoy and also 28.6% sequentially despite a 36.1% yoy and a 17.9% sequential decline in the Singapore benchmark GRMs. In fact this is the highest ever out-performance over the benchmark Singapore complex by RIL.
• With the better-than-expected performance of the refining division and the robust top line growth of the petrochemical business, the net profit grew by a massive 57.6% to Rs2,799 crore.
• We like the way RIL has been diversifying into new areas of growth like the upstream oil and gas activity, organised retailing and construction of special economic zones (SEZs). However, these areas of businesses would entail a lot of investment for RIL going forward and we expect them to generate tremendous value for the shareholders.
• We are revising our FY2007E earnings by 7.1% and the FY2008E earnings by 7.9%. Given the out-performance of our and street's expectations for the second consecutive quarter, more clarity on the exploration end of the business and definitive visions for the new ventures like retail, we are revising our price target to Rs1,530.

UltraTech Cement
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs1,365
Current market price: Rs1,130

Stellar performance

Result highlights

• UltraTech Cement Limited (UTCL) has reported a whopping 790% year-on-year (y-o-y) jump in its net profit at Rs212.46 crore for Q3FY2007, marginally ahead of our expectations.
• The net sales increased by 61% year on year (yoy) from Rs782 crore to Rs1,260 crore boosted by a 14% increase in the volumes and a 41% jump in the realisations.
• The company's leverage to volumes resulted in the operating profit registering a growth of 244.5% yoy to Rs380 crore whereas the operating margins expanded by 1,600 basis points to 30% yoy.
• On the backdrop of a robust realisation growth and a muted increase in the operating expenditure, the earnings before interest, tax, depreciation and amortisation (EBITDA) per tonne stood at Rs879 clocking a y-o-y growth of 200% and a quarter-on-quarter (q-o-q) growth of 27%.
• 
  Depreciation stood at Rs57 crore whereas the interest expenditure stood at Rs20 crore, marginally lower than expectations.
• Sweetened by a higher-than-expected other income of Rs16 crore, the net profit stood at Rs212.5 crore clocking a y-o-y growth of 790%.
• The company's capital expenditure (capex) plan of Rs2,700 crore is progressing well. This will provide the much needed volume growth going forward and result in higher profitability on account of the savings in power costs.
• Taking notice of the stellar third quarter performance and considering the buoyant scenario in the sector in the next one year, we are upgrading our FY2007 earnings estimates by 6% to Rs722 crore and FY2008 earnings by 28% to Rs1,132 crore.
• At the current market price of Rs1,130, the stock is discounting its FY2007 revised earnings by 18.4x and its FY2008 revised estimates by 12.4x whereas on an enterprise value (EV) per tonne basis, the stock is trading at USD171 per tonne. Maintaining our positive view on the stock, we are upgrading our price target to Rs1,365.

Bharat Bijlee
Cluster: Apple Green
Recommendation: Buy
Price target: Rs1,730
Current market price: Rs1,435

Price target revised to Rs1,730

Result highlights

• Bharat Bijlee Ltd's (BBL) Q3FY2007 results are slightly ahead of our expectations.
• The revenue for the quarter grew by 28.5% to Rs120 crore on the back of a strong order book of Rs270 crore at the beginning of the quarter.
• The operating profit for the quarter grew by 41.5% to Rs22.2 crore, as the operating profit margin (OPM) for the quarter improved by 180 basis points to 20.2% against 18.4% in Q3FY2006. This is a significant improvement and the company has been able to reverse the declining margin trend as depicted in H1FY2007 (H1FY2007 OPM stood at 11.9% as against 12.4%). The H1FY2007 performance was marred by the low margin 100MVA transformer business, which was the entry order for BBL in the high range market.
• The interest for the quarter increased by 53% while the depreciation increased by 25%.
• Consequently the net profit for the quarter grew by an impressive 43% to Rs13.37 crore.
• <ONT face="Trebuchet MS" size=2>The order backlog for the quarter jumped by almost 100%. The order inflows also showed a very strong growth of about 140% year on year (yoy).

Genus Overseas Electronics
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs345
Current market price: Rs256

Price target revised to Rs345

Result highlights

• The Q3FY2007 results of Genus Overseas Electronics (Genus) are in line with our expectations.
• The revenues for the quarter grew by 266% to Rs89.5 crore mainly on the back of the faster execution of the Surat meter supply contract.
• The operating profit for the quarter grew by 182% to Rs12.6 crore and the operating profit margin (OPM) for the quarter stood at 14.1% as against 18.3% in Q3FY2006. However, the Q3FY2007 and Q3FY2006 OPMs are not comparable. That's because the company had abnormal operations in Q3FY2006 due to a fire incident because of which the other expenses were on the lower side in Q3FY2006. Going forward, we expect the company to maintain its OPM in the range of 14.5-15%.
• The interest expense for the quarter rose by 108%, as the company has availed of large working capital loans to execute its project orders.
• Consequently, the net profit for the quarter grew by 273% to Rs6.2 crore.
• The order book of the company stood at Rs470 crore at the end of December 2006.

New Delhi Television
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs348
Current market price: Rs309

Price target revised to Rs348

Result highlights

• NDTV witnessed a muted revenue growth of 15.8% year on year (yoy) to Rs79.1 crore owing to higher competition.
• The operating profit margin (OPM) was down by 360 basis points yoy to 24.2% as the company is spending for new businesses. The operating profit was flat yoy at Rs19.1 crore as per expectations; however, it improved substantially compared to an operating loss in Q2FY2007.
• The marketing and distribution cost, the primary reason forthe increased cost, was up 59.8% yoy at Rs10.7 crore, but as a percentage of sales it declined to 13.5% as compared to 14.1% and 18% in Q1FY2007 and Q2FY2007 respectively.
• The incubation costs of the planned new ventures seem to have inflated the cost structure and segregation of these costs this quarter onwards will lead to the improved profitability picture for the news business.
• The profit after tax (adjusted for extraordinary items) was down at Rs10.0 crore as against Rs14.1 crore in Q3FY2006 as expected.
• We have lowered our earnings estimates for FY2007 and FY2008 as NDTV continues to be in an investment mode whereby we expect the short-term profitability to remain muted. At the same time we remain bullish on its exciting broadcasting properties, diversification in other genres of broadcasting such as general entertainment and lifestyle, its foray in the media consulting segment and media process outsourcing thus leveraging on its expertise in the business. The above makes it a good integrated media play.
  

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Weekly Ideas - Indiainfoline

BUY Kernex (222)
SL 207 T 249, 255

BUY Kotak Bank (446)
SL 431 T 472, 477

BUY Glenmark (626)
SL 601 T 670, 675

BUY IVRCL Infra (403)
SL 390 T 423, 429

BUY Kesoram Industries (614)
SL 589 T 643, 649

From Research Desk

Jubilant Organosys Limited
Result Update (Q3 FY07)

Jubilant Organosys Limited's (Jubilant) Q3 FY07 sales increased by 11.2% to Rs4.69bn driven by continued growth momentum in Pharmaceuticals and Life Science division (PLSC), which comprises high growth, segments like CRAMS, API's, drug discovery and formulations. Lower than expected sales were due to a 3.3% decline in the Industrial Products segment attributed to one-time merchandise sales of alcohol in Q3 FY06. Normalized growth stands at 18.6% for the quarter. Operating profit margins expanded by 383bps to 19.1% on account of strong volume growth in PLSC, favorable raw material cost scenario and savings on S,G&A front. Robust margin expansion and contribution of other income has led to 74% bottom line growth to Rs637mn, translating into an annualized EPS of Rs14.1 on a fully diluted basis.

Jubilant is well placed to deliver revenue CAGR of 22.9% to Rs22.75bn over FY06-08. PLSC division estimated to account for 57% of sales in FY08 has all its growth drivers in place while the non-pharma divisions will continue to generate cash flows for investment in PLSC. We estimate operating margins to expand by 520bps to 19.6% over the next two years driven by higher contribution from PLSC division and a favorable material cost scenario. Consequently earnings are likely to witness CAGR of 50% to Rs2.9bn over FY06-08. At Rs259, the stock is trading at 19.9x FY07E EPS of Rs13.0 and 16.2x FY08E EPS of Rs16 on a fully diluted basis. While the growth drivers are in place, we believe the market has factored in all the positives from the stock. Our target price of Rs275 at 17x FY08 earnings leaves an upside potential of 6.2% from current levels. We recommend a HOLD on the stock.

Jubilant has decided to venture into the healthcare space and has earmarked Rs800mn over a period of two years for this project. The management has indicated that they would be sharing further details about this venture over the next 2-3 months. We shall revisit our estimates post this announcement.

Reliance Industries Ltd. (Q3 FY07)
Rating: BUY

Reliance Industries Ltd (RIL) reported Q3 FY07 PAT of Rs28bn, which was significantly higher than our estimates of Rs23.3bn. The earnings surprise is primarily on account of a stellar performance posted by the refining segment of the business. RIL earned a GRM US$11.7/bbl as against US$9.1/bbl in Q3 FY06. However, the petrochemical business witnessed some slump in EBIT margins due to higher depreciation and rising feedstock prices for the polyester business. Production from the Panna-Mukta-Tapti fields have increased and there is a greater clarity on the KG-D 6 production status, as the field is all set to commence commercial production from second half of FY09. Reliance Retail business kicked off in the quarter and currently operates 24 retail outlets in Hyderabad and Jaipur. We believe that in the years to come, contribution from the high margin E&P business to revenue and profitability will increase substantially, thus reducing dependence on highly volatile and unstable business of Refining and petrochemicals. Our sum of parts valuation gives us a target price of Rs1,499 providing an upside of 8.5% from current levels.

DOMESTIC NEWS & GLOBAL NEWS

Govt may not revise fuel prices this month


The Government would slash domestic retail prices of petrol and diesel only if crude oil prices stabilise under US$50 per barrel for at least a month, Petroleum Minister Murli Deora said. Deora said that prices of petroleum products may not be reviewed at the end of the month, as announced earlier, as the Petroleum Ministry was waiting for the Indian crude basket to stabilise below US$50 a barrel. "We want prices to stabilise below US$50 a barrel at least for a month," Deora told reporters Petroleum Secretary MS Srinivasan had said earlier that the Government would review fuel prices by the end of this month. Deora also said that he would meet Finance Minister P. Chidambaram on Tuesday to discuss budget proposals for the petroleum sector. He said that the Petroleum Ministry had sought a cut in excise duties on petroleum products to lower retail prices, but declined to divulge details. Meanwhile, crude futures in New York were set for a fifth weekly decline, after US stockpiles surged and the International Energy Agency (IEA) cut forecast for global demand because of warmer weather. Oil prices in New York fell under US$50 per barrel, but recovered to trade above the psychological level.

Refined profits for Reliance

Reliance Industries Ltd. stunned the market with a much better than expected performance for the October to December quarter, thanks largely to the sharply higher gross refining margins. The company posted a net profit of Rs27.99bn for the quarter ended December 31, 2006 as against Rs17.76bn for the year-ago quarter. The turnover was up 40% at Rs277.71bn versus Rs198.99bn in the quarter ended December 31, 2005. PBDIT for the quarter stood at Rs47.51bn compared to Rs31.56bn in the corresponding quarter a year earlier. Earnings Per Share (EPS) for the fiscal third quarter were Rs20.1 versus Rs12.7 in the same quarter of the previous financial year. The operating profit margin climbed 170 basis points to 17.7%. Crude throughput was up 18%. However, the base was lower in Q3 FY06 as the refinery was shut for about a month in October and November 2005. Shares of the company climbed on the news and quite a few brokerages raised their price targets on the stock, citing the much improved show from the private sector giant. But, all is not hunky dory for Reliance Industries as the petrochemicals business remains under pressure. While revenues in this segment rose by 48% margins fell sharply from 14.5% to 12.9%.

Tata Steel shares slip on higher bid news

Shares of Tata Steel Ltd. fell by more than 2% on Friday after a financial daily reported that its Board was likely to authorize Chairman Ratan Tata and MD B. Muthuraman to offer as much as 600 pence per share for Corus Group Plc. According to the business newspaper, the Board of India's largest private sector was to meet soon to "enable the management to take the bid up to 600 pence per share." The financial daily reported that Tata Steel was likely to first increase its offer to 530 pence per share and study CSN's response before deciding its future course of action. But a Tata Steel spokesman denied the news. The stock closed down 1.7% at Rs467.6 after being as low as Rs463.25 and as high as Rs479.40. Tata Steel shares are down about 8.5% since Oct. 20, when Corus approved the mumbai-based company's initial offer of 455 pence a share. On Dec. 11, Tata Steel increased its initial bid for Corus by 10% to 500 pence per share. However, Brazil's CSN offered to buy the Anglo-Dutch steel major for 4.9bn, or 515 pence a share in cash. Britain's takeover watchdog has set a January 30 as the deadline for Tata Steel and CSN to make a revised offers for Corus.

India, ASEAN FTA to be signed by July

The much-delayed Free Trade Agreement (FTA) with ASEAN could see the light of day sooner rather than later. The two sides agreed on the broad contours of the agreement, which is expected to be signed by July, Commerce Minister Kamal Nath announced on Jan. 14. Speaking to the media after the conclusion of talks with ASEAN leaders at the tropical Philippines resort of Cebu, Nath said that the two sides had agreed to have a list of products that would not be subject to any tariff cuts till 2022. The negative list will not exceed 5% of India's total trade with ASEAN countries. Likewise, ASEAN will have a negative list which will not cross 5% of its trade with India. On all the other goods that would make up 95% of the trade, there would be either elimination or reduction of duties.
India is expected to bring into this list some 490 items that include rubber and coconut. In addition, India has offered to cut tariffs on about 700 manufactured items to 0-5% over the next 10 to 15 years.

AI-Indian merger by March end

The proposed merger of the Government-owned Air India with Indian (erstwhile Indian Airlines) will be completed by March 31, as part of the Government strategy to counter the dominance by private carriers. Civil Aviation Minister Praful Patel said that there would be no loss of jobs or salary cuts after the merger. "The two airlines would gain Rs5bn annually after the merger," Patel said, adding that the cost of the merger would be about Rs1.5bn to Rs2bn. Meanwhile, the empowered Group of Ministers (eGOM) has asked the Civil Aviation Ministry to hold talks with employees of the two state-run carriers before finalising the merger.

No agreement on pipeline yet: Cairn India

Shares of Cairn India rose more than 8% in the week amid reports that ONGC had agreed to partner it in building the pipeline for evacuating the crude from the Rajasthan fields. Reports said that the cost of the pipeline will be shared in 70:30 ratio by Cairn India and ONGC. Reports said that MRPL will no longer be the designated company to buy the crude from Cairn India. Instead, oil will be sold to Reliance Industries Ltd. (RIL) and Essar Oil in Gujarat. The news sent Cairn India's stock higher. The stock ended the week at Rs146.55 as against Rs134.90 on Jan. 12. But, the Indian subsidiary of the UK-based Cairn Energy Plc said it was yet to reach an agreement with ONGC on the construction of the pipeline. Meanwhile, the controversial IPO of Cairn India got into further trouble. Media reports said that market regulator SEBI had sought details of institutional bids and allotments from merchant bankers in the recently concluded public issue.

PFC to mop up nearly Rs10bn from IPO

Power Finance Corporation Ltd. (PFC) plans to raise close to Rs10bn through its proposed Initial Public Offering (IPO). The public sector company, which provides funds to the power sector, plans to issue 117,316,700 equity shares of Rs10 each to the public through a 100% book building process. It will reserve 2,500,000 shares for the employees of the company. PFC fixed a price band of Rs73-85. At the lower end, the company would raise Rs8.56bn, while at the upper end it could mop up over Rs9.97bn. The issue would open on January 31 and would close on February 6. The company would utilise the funds to boost capital for meeting future requirements arising out of the growth of the power sector. Meanwhile, the Government is considering a proposal to disinvest % stake each in three other public sector power sector companies - Power Grid Corporation of India (PGCIL), National Hydroelectric Power Corporation (NHPC) and Rural Electrification Corporation (REC) via the public issue route.

Govt to table bill for raising FDI in insurance

The Government said it would bring legislation in the winter session of parliament starting next month to increase Foreign Direct Investment (FDI) in the insurance sector to 49% from 26% at present. This was told by Finance Minister P. Chidambaram during his meeting with British Chancellor of Exchequer, Gordon Brown in New Delhi. "The Finance Minister, P. Chidambaram indicated that a bill will be introduced in parliament next month to increase FDI limit in insurance to 49% from 26%," Brown told a news conference. CPM General Secretary Prakash Karat said that the Left parties won't back the Centre's bid to increase the FDI in insurance. The issue of raising the FDI cap in the insurance sector has been hanging fire for quite some time owing to stiff opposition from Left parties, key allies in the Congress-led coalition Government. So, it would be interesting to see how the Government goes about convincing the communist leaders on this issue. The Left parties in the past have accused the Government, led by Prime Minister Dr. Manmohan Singh, of bowing to pressure from western nations such as the US and the UK on key economic policies. The remarks by Brown could lead to another showdown between the Government and its key partners.

Govt to up ECB limit to US$22bn

With India Inc. firing on all cylinders and given the tight liquidity in the domestic market, the Government is all set to increase the cap on External Commercial Borrowing (ECB) for the current fiscal year. The Centre is likely to hike the ECB limit, from the current US$18bn to US$22bn, owing to huge demand for overseas funds from Indian companies expanding rapidly to cash in on the economic boom. A notification to this effect is expected soon. The total amount raised through the ECB route till December 31, 2006 is US$14.3bn. Proposals for another US$6-7bn are awaiting clearance by a high-level committee. The move is expected to help companies like Reliance Communications Ltd., which proposes to raise US$4bn. Apart from Reliance Communications, India Infrastructure Finance Company Ltd., the Special Purpose Vehicle set up by the Government last year, is also expected to raise a sizable amount. IDFC has also started the process to raise money via ECBs.

NCAER ups FY07 GDP growth forecast

With the manufacturing and services sectors on a roll, the National Council for Applied Economic Research (NCAER) said it was revising upwards its FY07 economic growth forecast to 8.4%. NCAER raised its GDP growth forecast from 8.1%. This is the third upward revision in the GDP growth projection by the economic think tank. The Indian economy grew by 8.4% in the year 2005-06. It expanded at an annual pace of 9.1% in the first six months of FY07. NCAER expects the agriculture growth to moderate to 2.7% from 3.9% in 2005-06. Industrial output is estimated to grow at 9.1% this fiscal, up from 8.7% in 2005-06, while the services sector is expected to grow by 10.2%, marginally higher than a year before. NCAER expects inflation to be at the lower end of the 5-5.5% range set by the Reserve Bank of India (RBI).

Moody's warns on capacity constraints

Meanwhile, Moody's Investors Service said India was unlikely to sustain the high GDP growth of close to 9% for long due to capacity constraints. There are several signs of overheating in the economy such as high growth in credit and widening currency account deficit, in addition to concerns over fiscal deficit. Also, inflation is likely to be above RBI’s comfort zone of 5-5.5%. As a result, a further upgrade in India’s sovereign rating outlook is unlikely, Moody's said. India’s robust economic momentum seems to defy the constraints posed by the country’s inadequate infrastructure, and an inefficient government sector, said Kristin Lindow, Senior Credit Officer at Moody’s. And, such a rapid growth and structural impediments cannot coexist. Still, Moody's reaffirmed India's sovereign ratings outlook saying that the country's local currency rating suffers owing to the heavy borrowings by the Government and large budget deficits.

ONGC confirms gas finds in KG, Mahanadi basins

Its official now. Oil & Natural Gas Corp Ltd. (ONGC) has put an end to the protracted drought in discovering new hydrocarbon assets. The public sector oil & gas giant confirmed recent media reports that it had struck natural gas in Krishna Godavari basin and the Mahanadi basin off the country's east coast. "I can confirm a huge gas find in ultra deepwater in KG Basin and a commercial discovery in Mahanadi basin," Petroleum Minister Murli Deora said. The finds are commercially viable, and details would be announced at a suitable time, said ONGC Chairman RS Sharma. But he added that the KG Basin discovery was posing a few 'technological challenges' and that it was scouting for a strategic partner. "We are in talks with Petrobras of Brazil, ENI of Italy, Norsk Hydro of Norway, Malaysia's Petronas and BG of the UK for a strategic tie-up," Sharma said. He also said that the company was willing to offer the partner equity stake in the block KG-DWN-98/2. "Western firms don't just come for charity, we will offer them equity," Sharma said.

Saudi Aramco may buy 26% in Paradip refinery

In line with the growing trade ties between India and Saudi Arabia, oil major Saudi Aramco is likely to pick up a 26% stake in Indian Oil Corp. Ltd.'s (IOC) proposed Paradip grass-root refinery. The 15-MT refinery is expected to go on stream by 2012 at an investment of Rs250bn. According to IOC Chairman Sarthak Behuria the issue was discussed between Petroleum Minister Murli Deora and Ali Al-Niami, Saudi Arabia's Oil Minister. However, Behuria declined to divulge further details. The move is part of the Government's decision to offer Saudi Aramco a stake in three upcoming refineries at Bina, Bhatinda and Paradip. Saudi Aramco has also invited Indian state-run oil companies to invest in refineries in Saudi Arabia. While BPCL is building the Bina refinery in Madhya Pradesh, HPCL is putting up a refinery at Bhatinda in Punjab and IOC is setting up one at Paradip in Orissa.

RIL to build refinery in Yemen; ONGC may also join

After making its mark in India, Mukesh Ambani is slowly spreading its energy tentacles abroad. His group's flagship company, Reliance Industries Ltd. (RIL) will build a 50,000 barrels per day refinery in Yemen, Khalid Mahfoudh Dahah, Yemen's Oil Minister said. RIL will partner local company Hood Oil for this refinery. The capacity of the RIL refinery can be doubled later. Construction would begin this year and will take 36 months to complete. RIL already has picked up a stake in two onshore oil Blocks 34 and 37 in Yemen. Hood Oil is its partner in the two blocks. Yemen also invited ONGC to set up a US$1bn oil refinery on its Arabian coast. The refinery would have a capacity of 100,000 barrels per day (bpd). "We have proposed to them to partner in one of the two 100,000 barrels per day refineries being planned. They have said they will think of partnering in the refinery project when they get an oil block in Yemen," Dahah said.

UTI, Benchmark win SEBI approval for Gold ETFs

UTI Asset Management Co. and Benchmark Asset Management Company received the approval from capital market regulator SEBI to launch gold exchange-traded funds (Gold ETFs). The schemes would be open-ended and are proposed to be listed on the NSE. Both UTI and Benchmarks said that the unit of the gold shares would be one gram to attract the maximum retail participation. SEBI asked both UTI and Benchmark to file their offer documents to start attracting investments. Gold ETFs are products through which investors can trade in the precious metal via stock exchanges without physically owning it. This product, which tracks the price of gold in the spot market, will enable investors buy even smaller quantity of the metal, without concerns about quality and physical delivery. There are some 10 bullion ETFs in countries including the US, UK, Australia, Turkey, Singapore and South Africa. Other Indian AMCs which have filed offer documents with the SEBI for Gold ETFs include Kotak Mutual Fund.

Nissan Copper...SEBI clamps down on 40 entities

Market regulator SEBI asked the BSE and the NSE to withhold the profits of about 40 entities in a separate escrow account, while it probed the abnormal rise in price, volume and net deliverable quantity in Nissan Copper Ltd. on Dec. 29, the day it made its debut. At the same time, SEBI asked the exchanges to release the funds and securities payout of Dec. 29 and Jan. 2 immediately with the exception of the 40 entities/clients. Earlier, SEBI had asked exchanges to freeze the payout of shares and funds for all transactions in Nissan Copper on Dec. 29 and Jan. 2, except the trades done by retail investors who had subscribed to the issue. SEBI also barred brokers Matrix Equitrade, RSS Investments, Park Light Securities, Dimensional Securities, Religare Securities and H Nyalchand Financial Services from trading in the shares of Nissan Copper. Three FIIs - Venus Capital Management, ITF Mauritius and VACUF - are also under the SEBI scanner. The regulator also initiated action against merchant banker Keynote Corporate Services and registrar Bigshare Services to ascertain whether they have exercised due diligence in the allotment process.

Deals continue to pour

Tata Steel Ltd. said it was acquiring Rawmet Ferrous Industries Pvt. Ltd. at an enterprise value of Rs1.01bn, with Rs413.1mn going towards the equity of the Kolkata-based unlisted company. The company expects the transaction to be completed by the end of February. Rawmet has a ferro alloy plant at Anantapur near Cuttack, Orissa, with two 16.5 MVA electric arc furnaces that have the capacity to produce about 50,000 tons of high carbon ferro chrome annually. Pantaloon Retail India Ltd. said that its wholly-owned subsidiary Future Office Products, has acquired Officedge, an online B2B office products company providing contract delivery services to corporate customers on a pan India basis. Shares of Krebs Biochemicals & Industries Ltd. rose after Ranbaxy Laboratories Ltd. said it was planning to acquire a 14.9% stake in the Hyderabad-based company. Ranbaxy would buy the stake in Krebs Biochemical through a preferential allotment of 10.5 lakh shares at Rs85 per share. Morgan Stanley invested about Rs6.75bn (US$150mn) in Mumbai-based Oberoi Constructions. The quantum of stake sale was not disclosed. According to reports, Oberoi Constructions is valued at US$1bn by Kotak Mahindra Investment Bank, which has brokered the deal.

M&M, Honda unveil plans for new plants

Mahindra & Mahindra Ltd. (M&M) said it would set up a new plant at Chakan near Pune to manufacture commercial vehicles under the Joint Venture (JV) with US-based International Truck and Engine Corp. An agreement to this effect was signed by the company with the Maharashtra Government. M&M plans to spend Rs25bn on the proposed plant, which would have an initial capacity of 250,000 units per annum, said Pawan Goenka, President (Automotive Sector). He said that production would begin in two years. M&M has a 51% stake in the joint venture with Navistar International. Honda to build second car plant in Rajasthan Honda Siel Cars India (HSCI) selected Rajasthan for setting up its second car plant in India. The second plant will manufacture HSCI's small car in the Indian market and will have an initial capacity of 50,000 units per annum. The new plant will also have a Suppliers' Park, which will house Honda's network of ancillary units.

TCS, ABG Shipyard, Areva T&D bag big orders

Tata Consultancy Services Ltd. (TCS) announced that it had signed an agreement with Banco Pichincha, Ecuador's largest private bank, to provide a comprehensive outsourcing solution valued at over US$140mn over the next five years. Banco Pichincha, a renowned regional leader in adopting innovation and new technology, has over 1.5mn clients, a loan portfolio of over US$1.5bn and over 232 branches spanning Ecuador, Peru, Colombia, Panama, Spain and the US. ABG Shipyard Ltd. said it had bagged an order worth Rs10.31bn (US$229mn) from Pacific First Shipping Pte. Ltd., Singapore. The order is for the construction of 9 Anchor Handling Tug Supply (AHTS) vessels and 3 Dry Bulk carriers. The last delivery will take place in December 2009. With this, the company has started accepting orders for its upcoming Dahej Shipyard where it can make vessels up to 120,000 DWT. Also, the company's order book position as on date stands at about Rs34.76bn. Areva T&D India Ltd. announced on Thursday that it had won fresh orders worth Rs25.2bn from Reliance Petroleum Ltd. (RPL), National Aluminium Company Ltd. (NALCO) and General Electricity Company of Libya (GECOL).

Oil falls under US$50; will touch US$100 says Jim Rogers

Crude oil futures in New York were set for a fifth weekly decline, after US stockpiles surged and the International Energy Agency (IEA) cut forecast for global demand because of warmer weather. Light, sweet crude for February delivery was quoting at US$50.57 per barrel in after-hours electronic trading on the New York Mercantile Exchange (NYMEX) at 12:56 p.m. in London. On Jan. 18, it closed down US $1.76, or 3.4%, at US $50.48, after touching US $49.90, the lowest intraday price since May 25, 2005. The five-week losing streak would be the longest since a six-week drop ending Dec. 11, 1998. The February oil contract expires on Jan. 22. The more actively traded March contract was US $52.03 a barrel. Brent crude oil for March settlement rose 41 cents to US $52.16 a barrel on the ICE Futures exchange in London. Meanwhile, Jim Rogers said that crude will resume its upward march towards US $100 per barrel after a correction. "I'm just not smart enough to know how far down it will go and how long it will stay, but I do know that within the context of the bull market, oil will go over US$100," Rogers, who predicted the start of the commodities rally in 1999, told Bloomberg in an interview. "It will go over US $150. Whether that is in 2009 or 2013, I don't have a clue, but I know it's going to happen."

Asian countries agree on trading bloc

Move over US and EU. Here comes Asia. With the two major western powers refusing to resolve differences with developing nations, Asia decided to form a large trading zone to rival the US and EU. The trend of forming regional trade agreements picked up momentum, with Asia's key economies saying they would start planning a free trade zone stretching from India to New Zealand, after China gave up its resistance against such a move. Leaders of 16 nations endorsed the plan for a trade zone including India, Australia and New Zealand at a meeting in Cebu, in the Philippines. Japan, the region's largest economy, will fund a study into the proposal. The 16 countries that would be included in the free trade area are Japan, China, India, South Korea, Australia, Indonesia, Thailand, New Zealand, Malaysia, Singapore, the Philippines, Vietnam, Brunei, Laos, Cambodia and Myanmar. The free trade area would include countries with economic output of US$9 trillion and a combined population of three billion - almost half the world's people. However, experts cautioned that it will take years for the plan to become a reality and that Asian leaders should try to revive the WTO talks. Setting up so many regional agreements could lead to chaos and the move will undermine the multilateral system. Meanwhile, China signed a free trade agreement covering 60 services industries with 10 Southeast Asian nations. The pact, which covers everything from transport to energy services, will come into effect on July 1.

BOJ keeps rates unchanged

The Bank of Japan (BOJ) left the benchmark interest rate unchanged for a sixth month running as it collects more evidence of strength in the world's second-largest economy. Policy makers kept the overnight lending rate unchanged at 0.25% in a six-to-three vote, the Japanese central bank said in a statement today in Tokyo. Economic growth and inflation were slower than the forecasts made in the semi-annual assessment made in October, the BOJ said. The central bank wants more time to study consumer spending and other economic data like consumer price inflation before moving to lift borrowing rates at its meeting in February. The Government will publish fourth-quarter GDP data in the middle of next month, a week before the BOJ meeting on Feb. 20-21. Investors increased their bets that the BOJ will lift rates in February to a 69% chance, up from 42% before the decision, according to Credit Suisse. The Swiss investment bank calculates the chances of a quarter-point rate increase based on trading in contracts for the exchange of interest payments.

GE unveils 2 big-ticket deals

General Electric Co. (GE), the world's largest aircraft engine maker, agreed to buy the aerospace business of Smiths Group Plc, Britain's third-largest aerospace company, for US$4.8bn in cash. Smiths will return US$2.1bn to shareholders. GE and Smiths also announced plans for a joint venture called Smiths GE Detection. Smiths Aerospace has more than 11,000 employees and posted revenue of US$2.4bn in 2006. GE also said it will buy two of Abbott Laboratories Inc.'s diagnostics business units for US$8.13bn in cash. GE said it would buy Abbott's primary in-vitro diagnostics businesses and its Point-of-Care diagnostics business. Abbott's molecular diagnostics and diabetes-care businesses are not part of the transaction. GE said that fourth-quarter profit rose, boosted by growth across all its units except GE Industrial. The industrial unit's results were hurt by weak performance in the plastics business, which may be put up for sale, the company said. GE also said it overstated its earnings dating back to 2001 by a total of US $343 mn, as a result of its accounting for interest rate swaps.

Airbus bagged less orders than Boeing in 2006

Airbus won orders for 824 airliners last year, well short of both Boeing's 1,050 tally and its own industry record of 1,111 in 2005. But, Airbus delivered 434 planes compared to its US-based rival's 398. Despite the production crisis that is hurting the double-decker A380, year 2006 was the best year ever in terms of deliveries and the second best year in terms of sales, said EADS co-CEO Louis Gallois, who also heads Airbus. Meanwhile, EADS said the two-year delay to the Airbus A380 was proving costlier than expected, sending shares lower. EADS said an unspecified fourth-quarter accounting charge tipped Airbus into an operating loss for 2006 that will "roughly balance" earnings before interest and tax from other divisions. Full-year results will be released March 9.