Emkay - Morning Notes, Infosys Technologies

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Market may remain firm

The market sentiment may remain bullish on decent earning numbers reported by Infosys in the last week and same is expected from TCS & HCL Tech today. The firm Asian indices in current trades and strong fund inflows in the last few sessions may boost the sentiment of the investors further. The Nifty could test higher levels between 3950and 3980 and may dip around 3770, while the Sensex has a likely support at 13300 and may face resistance at 13500.

US indices rose modestly Friday as upbeat company news gave investors a reason to set aside the day's mixed hints about the economy and run up in Treasury bond yields. While the Dow Jones gained by 59 points to close at 12612, the Nasdaq ended 12 points up at 2492.

The Nymex light crude oil for May delivery slipped 22 cents to close at $63.63. In the commodity space, the Comex gold for June series gained $10.20 to settle at $689.90 a troy ounce.

Market may extend gains on firm Asian bourses

The market is likely to extend Friday’s rally on the back of firm global markets. A fall in inflation and Infosys’ Q4 results had triggered a 270 points surge in Sensex on Friday (13 April). The major Q4 result today is that of software major TCS.

The data released on Friday showed that the wholesale price index rose 5.74% in the 12 months to 31 March 2007, lower than the previous week's increase of 6.39%.

Infosys’ FY 2008 EPS guidance announced on Friday was muted but it was in line with market expectations. The software major gave a strong guidance in dollar terms that sent shares of IT pivotals surging on Friday.

Though FIIs remained net buyers, their volumes as reflected in daily gross purchases and gross sales declined on Thursday (12 April). Earlier, their volumes had remained low on 9 April as well. FIIs were net buyers to the tune of Rs 55.20 crore on Thursday. The net inflow of between Rs 55.20 crore to Rs 101.90 crore in two trading sessions on 11 April and 12 April was much lower compared to robust inflow of between Rs 402.60 crore to Rs 569.40 crore in three trading sessions from 5 April to 10 April.

As per provisional data, FIIs were net buyers to the tune of Rs 238.50 crore on Friday 13 April, the day when Sensex had surged 270 points. They were net buyers to the tune of Rs 355 crore in index-based futures on that day. They were net buyers to the tune of Rs 216.53 crore in individual stock futures on that day.

Asian markets were firm on Monday (16 April). Key benchmark indices in Hong Kong, China, Japan, South Korea, and Singapore were up by between 0.46% to 1.6%.

US stocks rose on Friday, cheered by a higher profit forecast from drug maker Merck & Co. The Dow Jones industrial average closed up 59.17 points, or 0.47 percent, at 12,612.13. The Standard & Poor's 500 Index finished 5.05 points, or 0.35 percent, higher at 1,452.85. The Nasdaq Composite Index ended up 11.62 points, or 0.47 percent, at 2,491.94.

Global liquidity still remains strong. It has helped global markets recover quickly from recent steep corrections. However, there are concerns that too much money will lead to inflated prices of assets and volatility.

US crude oil futures ended lower on Friday on profit-taking. May crude settled down 22 cents, or 0.3 percent, at $63.63 a barrel.

Ashish Chugh - HIDDEN GEMS - Uniproducts India

Ashish Chugh - HIDDEN GEMS - Uniproducts India

Anagram - Daily Call - Apr 16

Ready for the Surge

Motilal Oswal - Derivatives, Daily Margin, Corporate News, Market Diary, Market Action - Apr 16

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Stocks you can pick-up this week

Reliance Communications
Research: JM Morgan Stanley (April 10, ’07)
Rating: Overweight
CMP: Rs 422 (Face Value Rs 5)

Reliance Communications has written off 15% of its wireless subscriber base. i.e. 56 lakh wireless subscribers from its 336 lakh subscriber base as on March 31, ’07. The re-verified subscriber base stands at 280 lakh subscribers. The write-off is meant to comply with the requirements of the Department of Telecom (DoT), which made it mandatory for all operators to re-verify 100% of their subscribe base by March 31, ’07.

The company added 12 lakh wireless subscribers in March ’07. The company is continuing with the re-verification process and will re-activate the 56 lakh wireless subscribers written off, once they are verified. This will impact RCOM’s net adds in future months, which may increase once the written-off subscribers are re-verified. JM Morgan maintains its ‘overweight’ rating on the stock. However, there could be near-term pressures on RCOM’s share price.

ITC
Research: Macquarie (April 09, ’07)
Rating: Outperform
CMP: Rs 153 (Face Value Rs 1)

ITC has under-performed the Sensex over the past four months, due to uncertainty regarding VAT on cigarettes, which contribute 80% to the company’s profits. A 12.5% VAT has been proposed in three state budgets; the remaining 25 states are expected to follow suit.

ITC is a strong defensive play due to limited operational exposure to three key risks — a slowdown in the US economy, rising interest rates and softening commodity prices. It is also a play on a bullish sub-plot emerging in India — the consumption boom, driven by emerging demographic trends.

ITC’s shares currently trade at a PER of 23x FY08E EPS. However, Macquarie notes that FY08E will be the first year when the company will feel the pain of VAT implementation. It forecasts that ITC will resume normalised earnings growth of 20% CAGR over three years from FY09E. Additionally, FY08E multiples do not capture the growth potential of the other businesses, such as hotels, paper, other FMCG and agri-business.

iGate Global
Research: Edelweiss (April 11, ’07)
Rating: Buy
CMP: Rs 360 (Face Value Rs 4)

iGate’S Q4 FY07 results were ahead of expectations. Revenues, at Rs 210 crore, were muted (sequentially flat), but net profit, at Rs 22.6 crore — up 41.7% QoQ and 379.8% YoY — was ahead of estimates. EBITDA margins for Q4 FY07 stood at 15.3%, the highest since Q3 FY01.

This quarter completes a strong turnaround story for the company through FY07; profits grew nearly 200% in FY07, with EBITDA margins of 11.4% in FY07 (up 180 bps from the FY06 level). The company has established a robust clientele, which is likely to sustain its growth at healthy levels, going forward.

At current market price, the stock is valued at a P/E of 14.2x and 9.8x for FY08E and FY09E earnings, respectively. The company’s valuation on EV/EBITDA and EV/revenue for FY08E continues to be attractive at 7.4x and 1.2x, respectively.

Over the next two years, iGATE is likely to earn cumulative cash profits of Rs 310 crore and post a cash-earnings growth of 41.4% CAGR over FY07-09. Edelweiss expects the company’s EPS growth to be among the highest in its set of companies over FY07-09E. At a PEG of 0.25, the current valuations look compelling.

Jet Airways
Research: Citigroup (April 10, ’07)
Rating: Sell
CMP: Rs 626 (Face Value Rs 10)

Jet has acquired Air Sahara for a total purchase consideration of Rs 1,450 crore (including Rs 500 crore paid earlier). Rs 400 crore will be paid shortly, while Rs 550 crore will be paid in four annual instalments, commencing on or before March ’08.

The current value of the deal is Rs 1,200 crore. Prima facie, the deal appears more reasonable (in valuation terms); immediate cash outflows will also be lower. Jet is the country’s largest airline with a market share of more than 30%. Economic growth and liberalisation have stimulated demand for air travel, and the sector has been averaging growth of around 20% for the past two years.

Given the positive trend in key demand drivers, Citigroup expects growth rates to accelerate in the medium term. The government’s policy of gradually opening up international routes has opened up another substantial growth opportunity for local airlines such as Jet.

The situation of irrational pricing will persist in the near term. In the long term, it will accelerate the consolidation process in the industry, but the timing and extent of consolidation remain uncertain. For the next 2-3 years, the domestic aviation sector could witness conditions last evidenced in the mid-1990s, when some start-up airlines had to close down.

The discount to Asian airlines is justified given: a) the very competitive domestic landscape; b) delays in stabilisation in Jet’s international operations; and c) soaring fuel costs (which Indian carriers cannot hedge).

Eicher Motors
Research: Merrill Lynch (April 12, ’07)
Rating: Sell
CMP: Rs 231 (Face Value Rs 10)

Eicher’s sales beat estimates in FY07, driven by the medium tonnage segment (9-11 T trucks), where the company enjoys exceptional franchise. However, overall growth at 18.8% was below industry average, despite its beneficial low base. Absence of heavy tonnage tractor trailers was the key reason for this.

Merrill Lynch’s views on long haulage trucks remains negative (flattish growth estimated in FY08, tonnage 2% YoY growth). Eicher’s sales are expected to follow industry trends, at best. In FY09, new competition will hurt Eicher more than relatively larger incumbents like Tata Motors and Ashok Leyland.

Given the company’s strong performance in the last fiscal, Merrill Lynch is tweaking its volume assumptions upwards. Other notable revisions include higher tax rate assumption for FY07 (having liquidated some of the tax-free investments), and postponing sale of the motorcycle business to the next fiscal.

The stock trades at 11.6x FY08E and 10x FY09E EPS, which is reasonable and in line with the sector. However, given the company’s marginal position in trucks and its high vulnerability, Merrill Lynch maintains ‘sell’ rating on the stock.

ABG Shipyard
Research: Citigroup (April 12, ’07)
Rating: Buy
CMP: Rs 373 (Face Value Rs 10)

ABG Shipyard has secured an order worth $139 million from Essar Shipping for construction of four bulk carriers. This follows the $13-million repeat order that the company recently won for construction of one APS tug vessel for Lamnalco, Cyprus.

ABG’s total unexecuted order book now stands at Rs 3,300 crore (5x FY07E sales) compared to Rs 2,500 crore earlier. With the order backlog extending well into FY10 and orders for the company’s upcoming Dahej facility yet to be completely tied up (five slots are still available even after the recent order wins), earnings visibility for the company over the next three years has improved significantly.

Citigroup expects ABG to deliver an EPS CAGR of 46% over FY07-09E. ABG’s expansion plans remain on target and are well-timed to capture the continued upswing in the shipbuilding cycle.

10 paisa & Midcaps.in - Apr 16

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Board Meetings - Apr 16 - 21

Apr 16 2007	Agarwal Holdings Ltd	Quarterly Results
Apr 16 2007	Aventis Pharma Ltd	Quarterly Results
Apr 16 2007	Bayer CropScience Ltd	Quarterly Results
Apr 16 2007	Borax Morarji Ltd	Borax Morarji Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 16, 2007, inter alia, to consider the following business:1. Proposed increase in the authorized capital of the Company.2. Proposed Issue of Shares on Rights basis to the existing shareholders.3. Proposed Alteration of Articles of Association of the Company to reflect the change in the authorized capital of the Company.4. Seeking the relevant approval of the members by way of postal ballot.
Apr 16 2007	Brushman (India) Ltd	Brushman India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 16, 2007, inter alia, to consider issue of 6.5 Million Shares / Securities.
Apr 16 2007	Ceekay Daikin Ltd	Quarterly Results
Apr 16 2007	Country Club (India) Ltd	Quarterly Results
Apr 16 2007	Dhanalakshmi Bank Ltd	Dhanalakshmi Bank Ltd has informed BSE that, a meeting of the Board of Directors of the Bank will be held on April 16, 2007, inter alia, to consider a rights issue of equity shares.
Apr 16 2007	DIC India Ltd	DIC India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 16, 2007, inter alia, to consider, capital raising plan, increase of authorized capital, issue of rights shares and consequential matters arising thereof.
Apr 16 2007	ECE Industries Ltd	ECE Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 16, 2007, to consider and adopt the Audited Financial results of the Company for the year ended March 31, 2007 and recommend dividend, if any.
Apr 16 2007	Financial Technologies (India) Ltd	Financial Technologies India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 16, 2007, inter alia, to consider, Fourth Interim Dividend for the Financial Year ended March 31, 2007.
Apr 16 2007	Gujarat Ambuja Exports Ltd	Gujarat Ambuja Exports Ltd has informed BSE that a meeting of the Audit Committee and Board of Directors of the Company will be held on April 16, 2007, inter alia, will consider the following:1. Consideration and approval of Unaudited Financial Results for the quarter and year ended March 31, 2007 along with Limited Review Report from Auditors of the Company.2. To note progress of proposed Buyback of Equity Shares of the Company approved at meeting of Board of Directors at its meeting held on January 16, 2007.3. To consider internal audit reports submitted by the Internal Auditors of the Company.4. Transact other routine businesses.
Apr 16 2007	HCL Technologies Ltd	HCL Technologies Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 16, 2007, inter alia, to consider the following:1. Take on record the Un-audited Financial Results of the Company for the quarter and nine months ended March 31, 2007 (Q3).2. Payment of 3rd Interim Dividend for the year 2006-07.Further the Company has informed that, April 21, 2007 has been fixed as the Record Date for the purpose of payment of third interim divided, subject to approval of the interim dividend by the Board of Directors.
Apr 16 2007	Indiabulls Financial Services Ltd	Indiabulls Financial Services Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 16, 2007, inter alia, to consider the Audited Financial Results of the Company for the Financial Year ended March 31, 2007, and to consider recommendation of final dividend, if any, for the said financial year.
Apr 16 2007	Jay Bharat Maruti Ltd	Jay Bharat Maruti Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 16, 2007, to primarily consider the Audited Annual Accounts and Audited Financial Results for the financial year ended on March 31, 2007 and declaration of dividend, if any.
Apr 16 2007	K S Oils Ltd	Quarterly Results
Apr 16 2007	Mazda Ltd	Quarterly Results
Apr 16 2007	Midas Pharmasec Ltd	Midas Pharmasec Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 16, 2007, inter alia, to consider the following:1. To discuss and approve the Audited Financial Results Accounts for the year ended March 31, 2007.2. To discuss and consider the possibility of Amalgamation of Yew Investments Pvt Ltd with the Company with effect from April 01, 2007 subject to approval of various authorities.3. To consider and discuss the possible share swap ratio for the above mentioned Companies.4. To approve the Merger Scheme as proposed by M/s. Rajesh Shah & Co., Advocates, Mumbai.
Apr 16 2007	Natraj Financial & Services Ltd	Quarterly Results
Apr 16 2007	Pacific Cotspin Ltd	Pacific Cotspin Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 16, 2007, to allot 15,00,000 Equity Shares of Rs 10/- each at par on preferential basis to Anita Mehra and Sarda Mehra as under:1. Anita Mehra, Kolkata : 7,50,000 No. of Shares2. Sarda Mehra, Kolkata : 7,50,000 No. of Shares.
Apr 16 2007	Petronet LNG Ltd	Dividend & Accounts
Apr 16 2007	Pyramid Saimira Theatre Ltd	Quarterly Results
Apr 16 2007	Regliaa Realty Ltd	Regaliaa Realty Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 16, 2007, inter alia, for allotment fully convertible warrants on preferential basis to Promoters and Non-Promoter as approved by the shareholders at the Extra Ordinary General Meeting of the members of the Company held on April 04, 2007 and to decided the time for presentation of audited accounts for the quarter ended March 31, 2007 and the year ended March 31, 2007.
Apr 16 2007	Sanwaria Agro Oils Ltd	Quarterly Results
Apr 16 2007	Sarda Plywood Industries Ltd	Sarda Plywood Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 16, 2007, to consider issue of Warrants carrying an option / entitlement to subscribe to equivalent number of Equity Shares of Rs 10/- each to Private Corporate Bodies on preferential basis.
Apr 16 2007	Shri Lakshmi Cotsyn Ltd	Quarterly Results
Apr 16 2007	Srinivasa Shipping & Property Development Ltd	Quarterly Results
Apr 16 2007	Tata Consultancy Services Ltd	Tata Consultancy Services Ltd (TCS) has informed BSE that a meeting of the Board of Directors of the Company will be held on April 16, 2007, inter alia, for considering the following matters:1. To approve and take on record the audited financial results of the Company for the quarter and year ended March 31, 2007.2. To propose a Final Dividend for the year ended March 31, 2007 for the approval of the shareholders at the existing Annual General Meeting.
Apr 16 2007	Tele Data Informatics Ltd	Quarterly Results
Apr 16 2007	Typhoon Holdings Ltd	Quarterly Results
Apr 16 2007	Unitex Designs Ltd	Unitex Designs Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 16, 2007, inter alia, to consider the following:1. Take on record the Unaudited Financial Results of the Company for the quarter / year ended on March 31, 2007.2. Issue of Equity Shares on Rights Basis.
Apr 16 2007	Vesuvius India Ltd	Quarterly Results
Apr 16 2007	Wartsila India Ltd	Quarterly Results

Apr 17 2007	A V Cottex Ltd	AV Cottex Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 17, 2007 to consider and approve the unaudited financial results of the Company for the quarter ended on March 31, 2007 and to consider the declaration of dividend to its shareholders.Further the Company has informed that, the Audit Committee meeting of the Company will also be held on April 17, 2007.
Apr 17 2007	Alufluoride Ltd	Quarterly Results
Apr 17 2007	Baroda Extrusion Ltd	Quarterly Results
Apr 17 2007	Batliboi Ltd	Batliboi Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 17, 2007, inter alia, to take on record the Audited Results for the Financial Year ended on March 31, 2007 and to consider the proposal to recommend the dividend, if any.
Apr 17 2007	Bhuruka Gases Ltd	Quarterly Results
Apr 17 2007	Blue Dart Express Ltd	Quarterly Results
Apr 17 2007	Cosmo Ferrites Ltd	Quarterly Results
Apr 17 2007	Disa India Ltd	Quarterly Results
Apr 17 2007	Dover Securities Ltd	Quarterly Results
Apr 17 2007	Entegra Infrastructures Ltd	Induj Enertech Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 17, 2007, inter alia, to consider the following:1. Take on record the Audited Financial Results of the Company for the quarter / year ended on March 31, 2007.2. To discuss further issue of equity shares on Rights Basis and appointment of intermediaries.
Apr 17 2007	Godavari Fertilizers & Chemicals Ltd	Godavari Fertilisers & Chemicals Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 17, 2007, inter alia, to approve the Audited Financial Results and to recommend dividend for the year ended March 31, 2007.
Apr 17 2007	Jaypee Hotels Ltd	Jaypee Hotels Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 17, 2007, inter-alia, to consider and adopt the Audited Accounts for the Financial Year 2006-2007 and to recommend dividend, if any, on the equity share capital for the Financial Year 2006-2007.
Apr 17 2007	Supreme Industries Ltd	Quarterly Results
Apr 17 2007	Tata Steel Ltd	Tata Steel Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 17, 2007, to consider possible proposals for raising equity funds as part of its long-term fund raising exercise to finance the Company's investment in the SPV (Special Purpose Vehicle) for acquiring Corus Group Plc, UK.
Apr 17 2007	Ushdev International Ltd	Ushdev International Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 17, 2007 to consider and decide further issue of capital by way of Rights / GDR / ADR etc.
Apr 17 2007	Ventura Textiles Ltd	Ventura Textiles Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 17, 2007, inter alia, to consider the following:1. (i) To approve the terms and conditions of the credit facilities sanctioned by State Bank of India towards part funding of the setting up of a State-of-the_art Dyeing and Processing House (Expansion cum forward integration project).(ii) Proposal for Preferential Issue towards Equity Funding.2. Proposal to submit application to BIFR for their approval viz,i. To write-off 75% of the existing Equity Share Capital and the required existing reserves and surplus against the accumulate losses of the Company.ii. Subsequent to the reduction of the share capital, consolidate the Face Value of the Equity Shares to Rs 10/- each from the existing Face Value of Re 1/- each.iii. Exemption from applicability of SEBI Regulations and other rules / regulations / guidelines / listing agreement relating to Preferential Allotment of Equity Sha

Apr 18 2007	ABL Bio-Technologies Ltd	ABL Bio Technologies Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 18, 2007, to consider and take on record the final accounts of the Company for the year 2006-2007 and approve a proposed Rights Rights Issue and matters relating to the said Issue.
Apr 18 2007	DHP India Ltd	Audited Results
Apr 18 2007	ETC Networks Ltd	Audited Results
Apr 18 2007	Flawless Diamond (India) Ltd	Quarterly Results
Apr 18 2007	Greaves Cotton Ltd	Quarterly Results
Apr 18 2007	GRUH Finance Ltd	Gruh Finance Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 18, 2007, inter alia, to consider the Annual Accounts for the financial year 2006-2007, and recommendation of dividend, if any.Further the Company has informed that, the Board will also consider and take on record the audited financial results in respect of Company's financial year ended on March 31, 2007.
Apr 18 2007	Infotech Enterprises Ltd	Infotech Enterprises Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 18, 2007, inter alia, to transact the following:1. To consider and take on record Audited Financial Results for the Quarter and Year ended March 31, 2007.2. To consider and recommend the dividend for the financial year 2006-07, if any.
Apr 18 2007	Neelamalai Agro Industries Ltd	Quarterly Results
Apr 18 2007	Praj Industries Ltd	Praj Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 18, 2007, inter alia, to transact the following business:1. To consider and approve Audited Accounts for the year ended March 31, 2007.2. To discuss and recommend capitalization of reserves by way of issue of Bonus Shares.
Apr 18 2007	Prithvi Information Solutions Ltd	Prithvi Information Solutions Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 18, 2007, inter alia, to consider the Un-audited Financial Results for the quarter ended March 31, 2007 and payment of interim dividend for the FY ended March 31, 2007.
Apr 18 2007	Samtex Fashions Ltd	Quarterly Results
Apr 18 2007	South East Asia Marine Engg & Construction Ltd	Quarterly Results
Apr 18 2007	Southern Ispat Ltd	Southern Ispat Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 10, 2007 to consider issue of Share Warrants and convening of Extraordinary General Meeting on May 04, 2007.Southern Ispat Ltd has informed BSE that the meeting of the Board of Directors of the Company scheduled to be held on April 10, 2007 is adjourned for want of quorum and the same will be held on April 18, 2007.Further the Company has informed that, the agenda for the meeting remains the same as notified in earlier notice dated April 03, 2007.(As per BSE Announcement website dated on 10/04/2007)
Apr 18 2007	Tera Software Ltd	Tera Software Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 18, 2007, inter alia, to consider the Unaudited Financial Results (Provisional) of the Company for the 4th quarter ended on March 31, 2007 and to allot 8,00,000 Equity Shares of Rs 10/- each at a premium of Rs 67/- (total price of Rs 77/-) on conversion of 8,00,000 Share Warrants issued on June 19, 2006 as per the members approval at the EGM held on June 05, 2006.
Apr 18 2007	VST Industries Ltd	VST Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 18, 2007, inter alia, to consider the following:1. To take on record the financial results for the quarter ended March 31, 2007 and to approve the Directors' Report and the audited accounts for the financial year ended March 31, 2007.2. Recommendation for declaration by the shareholders at the forthcoming Annual General Meeting a Dividend, if any, in respect of the said financial year.

Apr 19 2007	ACC Ltd	ACC Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 19, 2007, inter alia, to consider and take on record the unaudited financial results (provisional) for the quarter ended March 31, 2007 (Q1).
Apr 19 2007	Biocon Ltd	Biocon Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 19, 2007, inter alia, to approve / take on record the audited financial results of the Company for the year ended on March 31, 2007 and to consider recommendation of payment of dividend, if any, for the year 2006-2007.
Apr 19 2007	Clariant Chemicals (India) Ltd	Quarterly Results
Apr 19 2007	Essel Propack Ltd	Essel Propack Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 19, 2007, inter alia, to consider and take on record the Unaudited Financial Results (Provisional with Limited Review) of the Company for the First quarter ended March 31, 2007 (Q1).
Apr 19 2007	Ircon International Ltd	Quarterly Results
Apr 19 2007	Kirloskar Brothers Ltd	Kirloskar Brothers Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 19, 2007, inter alia, to consider the following:1. To take on record the Audited Financial Results for the quarter and year ended March 31, 2007.2. Recommendation of final dividend on the equity shares for the financial year 2006-07.
Apr 19 2007	Kirloskar Oil Engines Ltd	Kirloskar Oil Engines Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 19, 2007, inter alia, for taking on record audited Financial Results for the year ended March 31, 2007.Further the Company has informed that, the aforesaid meeting of the Board of Directors will also consider, inter alia, recommendation of final dividend for the year 2006-07 to the shareholders of the Company, subject to the approval of the shareholders in the Annual General Meeting.
Apr 19 2007	MRF Ltd	Quarterly Results
Apr 19 2007	National Fertilizer Ltd	National Fertilizers Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 19, 2007, inter alia, for consideration and taking on record the unaudited financial results of the Company for the Quarter ended March 31, 2007 (Q4).
Apr 19 2007	Schlafhorst Engineering (India) Ltd	Quarterly Results & Accounts
Apr 19 2007	Shiva Cement Ltd	Shiva Cement Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 19, 2007, inter alia, to transact the following business:1. To consider, discuss and approve means of raising additional resources including by way of Equity Shares, Share Warrants and any other Financial Instruments to Strategic Investors and / or to Promoters on preferential basis for retiring existing debt and for improving operations of the plant.2. Increase in Authorised share capital of the Company.3. Increase in borrowing powers of the Company.

Apr 20 2007	Beck India Ltd	Quarterly Results
Apr 20 2007	Exide Industries Ltd	Exide Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 20, 2007, to consider both the audited financial results and the un-audited consolidated financial results of the Company for the year ended March 31, 2007. At the said meeting, the Board of Directors would also recommend dividend, if any.
Apr 20 2007	India Cements Ltd	India Cements Ltd has informed BSE that a meetings of Audit Committee of Board and Board of Directors of the Company will be held on April 20, 2007, to consider unaudited financial results of the Company (excluding that of VISAKA CEMENT INDUSTRY LTD which is in the process of merger with the Company) subjected to a "Limited Review" by the auditors for the quarter / year ended March 31, 2007.
Apr 20 2007	Merck Ltd	Merck Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 20, 2007, to take on record the audited Financial Results for the quarter ended March 31, 2007 (Q1).
Apr 20 2007	Nippo Batteries Company Ltd	Nippo Batteries Company Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 20, 2007, inter alia, to transact the following:1. Consideration and approval of Audited Accounts of the Company for the Financial Year ending March 31, 2007.2. Recommendation of Dividend for the above Financial Year; and3. Consideration and approval of Publication of Audited Financial Results of the Company for the Financial Year ending March 31, 2007.
Apr 20 2007	Panasonic Carbon India Company Ltd	Panasonic Carbon India Company Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 20, 2007, inter alia, for consideration and approval of Audited Accounts of the Company for the Financial Year ended March 31, 2007 and Recommendation of Dividend for the said Financial Year.
Apr 20 2007	PBM Polytex Ltd	Quarterly Results
Apr 20 2007	Sasken Communication Technology Ltd	Accounts
Apr 20 2007	Satyam Computer Services Ltd	Satyam Computer Services Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 20, 2007, inter alia, to consider, the audited financial results of the Company for the quarter and year ended March 31, 2007 and also consider recommendation of final dividend, if any, for the financial year 2006-07.
Apr 20 2007	SBI Home Finance Ltd	Accounts
Apr 20 2007	Shree Digvijay Cement Co. Ltd	Audited Results
Apr 20 2007	Shree Renuka Sugars Ltd	Quarterly Results
Apr 20 2007	Stovec Industries Ltd	Accounts
Apr 20 2007	Tayo Rolls Ltd	Tayo Rolls Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 20, 2007, to consider the accounts for the financial year 2006-2007 and also the question of declaration of dividend, if any.
Apr 20 2007	Vakrangee Softwares Ltd	Vakrangee Softwares Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 20, 2007, inter alia, to consider and approve the following matters:1. Un-audited Financial Results (Provisional) of the Company for the quarter ended March 31, 2007.2. To propose dividend (if any) on Equity shares for the year 2006-07.
Apr 20 2007	Wipro Ltd	Wipro Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 19 to April 20, 2007, inter alia, to consider and approve, the accounts for the quarter and Year ended March 31, 2007.Further the Company has informed that, the Board of Directors will also consider and approve the recommendation for declaration of final dividend during the Board meeting.The Approval of accounts as well as recommendation for declaration of final dividend would be finally approved by the Board of Directors only on April 20, 2007 (morning).

Apr 21 2007	Clutch Auto Ltd	Quarterly Results
Apr 21 2007	Exdon Trading Company Ltd	Exdon Trading Company Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 21, 2007, inter alia, to transact the following:1. To take on record about all the formalities completed as on date in respect of take over offer for the management of the Company.2. To take on record the steps taken by the Company for the Dematerialisation of the equity shares of the Company listed on the stock exchange at Mumbai and the progress made by the registrar of the Company M/s. Purva Sharegistry Pvt Ltd in this regard.3. To take on record the Un-audited financial results of the Company for the quarter ended March 31, 2007.
Apr 21 2007	JK Paper Ltd	Quarterly Results
Apr 21 2007	K Z Leasing & Finance Ltd	Quarterly Results
Apr 21 2007	Titan Industries Ltd	Titan Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 21, 2007, to consider and approve the Audited Financial Results for the year ending March 31, 2007 and to recommend payment of equity dividend for the Financial Year 2006-2007.The Company will therefore not publish Unaudited results for the quarter ended March 31, 2007.
Apr 21 2007	Zee Entertainment Enterprises Ltd	Zee Entertainment Enterprises Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 21, 2007, inter alia, to consider and approve the un-audited financial results of the Company for the 4th quarter and year ended March 31, 2007.

Citigroup - India Tech Weekly

Toward 4000

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Go for bull-spread

In an uptrending market, the near-term contract is likely to develop more of a premium versus the mid-term given that there are two weeks to settlement.

The rise on Friday sparked by Infy’s results may be deceptive and cause a bull-trap. This is results season and a downtrend could as easily be triggered by poor workings from some other bellwether. However, the likelihood is that the market will hit settlement without major losses.

Index strategies: The spot Nifty is at 3917 points with the April Nifty futures contract settled on 3897 while the May futures contract was settled on 3894. Open interest rose in both contracts. There isn’t enough of a differential to make calendar spreads obviously worthwhile. Assuming that the market stays up, long positions in either contract would work.

Also, in an uptrending market, the near-term contract is likely to develop more of a premium versus the mid-term given that there are two weeks to settlement. Hence a bullspread with long April –short May should work.

The positions in the CNXIT and Bank Nifty are also interesting. Both indices jumped on Friday. The BankNifty is at 5362 in spot with the April future trading at 5353. The CNXIT is at 5353 in spot and the future is trading at 5335. Open interest increased in both futures contracts.

The discount is unusual when there’s an apparently bullish perspective. Most of the time, the futures tend to run at premium in these two indices. This discount could mean that the market is still not particularly confident that the trend is good in these two indices.

The strong rupee and rising rates are negative factors for both industries. In terms of specific heavyweights, TCS and Satyam look bullish, Wipro and HCL Tech less so where the CNX IT is concerned. In the bank universe, Syndicate and Bank of India are the two bullish stocks.

Rather than go long on either index, one would prefer to track and go long on the individual stock futures. In the Nifty options segment, the put-call ratio was positive on Thursday and accentuated on Friday as winning calls were cashed while more long puts were opened. By definition, a high PCR means that the market is more likely to advance than not and the priceline suggests that as well.

Technically, there’s likely to be an upside till the 3975-4000 level at least. On the downside, there’s support at 3850 and lower down all the way till 3775. Based on the movements since early March, we are likely to see extra-high-volatility every fourth or fifth session. So be prepared for that.

If you take a long 3950c (44) and a short 4000c (29.35), you commit a net premium of about 15 and hope for a maximum payout of about 35. That’s a very good risk:reward relationship. A wider bullspread with short 4050c (15.1) will cost 29 and offer a maximum payout of 71.

On the downside, a bearspread of long 3900p (71) versus short 3850p (51.3) costs 20 and pays a maximum of 30. That’s also an excellent risk:reward ratio.A wider bearspread of short 3800p (38.3) costs about 33 and offers a maximum payoff of about 67. Again, fairly decent ratios

My gut-feel is that close-to-money options are underpriced at this instant because the recent historic volatility is much higher than we would assume from the implied volatilities. Both bullspreads and bearspreads could be struck and fully realised. The bullspreads in particular seem underpriced.

Also, there is a case for wide strangles with a long 3800p and a long 4050c. This position costs 53 and it will start yielding profits if the market goes beyond 3750-4100.

If it’s capped by a short 3700p (18.9) and a short 4200c (4.5), that cuts initial costs down to about 30. The resulting positions would offer returns if the market moved beyond 3770-4080. That could occur inside the settlement given the tendency to big swing sessions.

STOCK FUTURES/OPTIONS

Given that its results season, single-stock positions assume more importance. Long positions in TCS and Satyam have already been suggested – TCS could be make-or-break since the results are due on Monday and SCS on next Friday.

If these two results are well-received, the IT sector could be a major gainer in terms of sentiment. I-Flex and Polaris are two other tech-stocks that might repay long traders. Polaris’ results are due on 27 April – right after settlement.

Infy itself has an ambiguous chart position despite having sparked the bull run. The stock saw a high-low range of 2026-2132 but it opened (2100) and closed (2086) at nearly the same levels.

This sort of “star-doji” indicates an undecided market according to candlestick analysts and a big swing in either direction is possible. A possible hedge for IT-traders would be long Satyam, long TCS, short infosys position.

The other sector that looks really interesting is two-wheelers. The macro-outlook is unfavourable – auto sales have slowed due to rising rates of financing.

However stocks have been hammered down and appear to have found support – maybe the downside has been discounted. Reasonable results could enthuse the market about Bajaj and Hero Honda in particular.

In banking Syndicate Bank seems set to provide a surprise given the number of bulls who have been chasing the stock. Otherwise, there isn’t too much excitement about the sector – the rise last week was a technical correction following a massive sell off.

Both SAIL and Tata Steel appear to be in bullruns. Despite promises to keep product prices stable in April, institutional buying seems to be occurring in both stocks.

There’s reasonable liquidity in the Sail 125c (4.3) and the 130c (2.45). A bullspread would cost about 2 and pay a maximum of 3. A naked long call is also a possibility –the premium might jump since this is almost on the money.

Multi flex

Aggressive expansion into non-metro markets will turn the wheels of fortune for the multiplex industry.

Five years back, it would have been a job of a visionary to imagine large format retail malls, hypermarkets and multi-screen film exhibition theatres or multiplexes all at one place, in all the prime locations of every city. Today with most prime locations in the metros boasting of multiplexes, the spotlight is on the film exhibition industry.

The cinema exhibition segment has traditionally been the dominant contributor to the rising prosperity of Indian film entertainment industry, the size of which is estimated to be about Rs 8,400 crore currently.

According to a recent FICCI-Pricewaterhouse Coopers report titled Frames 2007, this industry is expected to grow at a compounded annual rate of 16 per cent over the next five years, roughly doubling to Rs 17,500 crore by the year 2011. Exhibition of films contributes over 85 per cent to this kitty, with the domestic box office revenues bringing in about 75 per cent plus, traditionally.

Macro optimism In 2006, domestic box office revenues grew by about 21 per cent, as blockbusters like Dhoom 2, Lage Raho Munnabhai, Krrish, Fanaa and Rang De Basanti amassed over Rs 300 crore. At present, the domestic box office market is pegged at Rs 6,400 crore, and is expected to grow at a compounded rate of 13.5 per cent.

At this rate, the market would double in size to Rs 11,900 crore by 2011. With the multiplex boom, the average ticket prices (ATPs) on an all-India basis have grown from Rs 20 to Rs 35 per ticket, and close to Rs 100 per ticket in metro cities.

On the flipside, it is expected that the share of box office revenues will reduce in the overall entertainment business, considering the growth of home video and exhibition of films over broadcast networks.

However, the segment will remain strong, contributing nearly 70 per cent, due to increasing demand in Tier II and Tier III cities where multiplexes are just being rolled-out.

“Tier II and Tier III cities would now be the new playground to compete on, for almost all the multiplex companies,” claims Sanjeev Hota of Emkay Shares and Stockbrokers. “Over 65 per cent of the total box office collections in the country come from non-metros,” he adds.

The boom in the sector will not just ride on high demand. The advent of digitisation of cinema exhibition too, will help a great deal. More and more producers and distributors are emphasising on digitisation to combat piracy.

Digital prints are less prone to illegal duplication as well as cheaper compared to their analogue counterparts. In addition to this, satellite delivery of prints too, will help curb piracy, thus attracting higher footfalls in theatres.

Reaching out In order to reach out to a wider geography all the players are aggressively expanding into new locations. Adlabs, the largest player by market capitalisation and revenues, currently operates 13 multiplexes in eight cities with 50 screens and over 16,000 seats.

It plans to set up another 200-plus screens by 2010. PVR Cinemas too, is looking at adding about 50-60 screens in 8 locations in east India within the next five years.

“We expect to exceed our projections and launch about 100 screens at 32 locations, taking the count of seats to around 25,000 by the end of FY08,” says Rasesh Kanakia, chairman, Cinemax India.

Inox too, plans to launch about 10-12 new multiplexes in tier II cities such as Lucknow, Raipur and Faridabad in FY08. Pyramid Saimira, a dominant player in south India, is planning to set up around 300 mall-cum-multiplex projects over the coming few years.

Among the unlisted players, Apollo Group’s United Film Organisers (UFO) has about 585 digital cinemas, which it plans to increase to 2000, at an investment of Rs 300 crore. Essel Group’s E-city Ventures which operates Fun Cinemas and Fun Republic projects to increase its current count of 125 screens to 150 by December 2008, thus boasting of over 35 multiplexes across the country.

Micro pessimism Indeed, for multiplex companies to flourish, it is necessary that they roll-out new multiplexes on a continual basis. Rising interest rates and sky-high real estate prices pose a roadblock to expansion.

“Since the existing multiplex companies have by and large tapped the equity markets, they now need to procure debt in order to make capital expenditure. This would raise the cost of their projects due to high interest rates,” says Gaurav Chugh, analyst, IL&FS Investsmart.

A delay in execution too, could postpone the launches of new multiplexes. “Inability to execute projects in time would further delay the break even of projects, and thus hold back the company’s future earnings,” says Chugh. Here, companies with experience in developing their own properties will have an edge over the rest.

“Therefore, players like Cinemax, Inox and PVR will manage to ride the tide of high real estate prices and delays in execution,” points out an analyst. On the other hand, players like Shringar Cinema, which have less experience in real estate as compared to peers, may take a hit.

“We have already tied up all the properties required for our expansion until the year 2009, and hence are almost immune to high real estate prices currently,” claims a confident Rasesh Kanakia, Cinemax.

Alok Tandon, chief operating officer, Inox Leisure says: “Most of our properties are on a long lease of around 20-24 years. Four out of 14 of our properties are owned. In addition, in the new properties that we sign, we get considerably lower rentals as compared to other occupants of a mall or a property being the anchor tenant.” An anchor tenant is the main tenant in a shopping centre.

Besides, there are certain state governments, which pose regulatory restrictions in terms of capping of ticket prices for multiplexes. “At present, Rajasthan does not allow multiplexes to increase ticket prices for more than once a year, and not more than 15 per cent, while Tamil Nadu has capped the price to Rs 120 per ticket,” says Tandon of Inox.

However, considering the increasing contribution of food and beverage sales and other revenue streams such as gaming which provide higher margins, lower ticket prices would be compensated. Usually, food and beverages contribute around 30 per cent of the total revenues of a multiplex player.

Some players are going a step further to augment revenues and margins. For instance, Cinemax launched Red Lounge in Mumbai, a premium multiplex in an exclusive lounge format with reclining seats, massage chairs and karaoke facilities which commands an ATP of around Rs 350 and above, along with launching Giggles Gaming Zones at all its multiplexes to augment footfalls. SHOW ME THE MONEY Rs crore Revenue Net Profit EPS (Rs) PE(x) FY08E FY09E FY08E FY09E FY08E FY09E FY08E FY09E Adlabs Films 365.30 413.00 73.10 82.60 18.40 20.80 23.50 20.70 Cinemax 182.00 206.00 32.60 37.10 11.60 13.20 11.00 9.70 Inox Leisure 185.80 209.90 30.30 34.20 5.10 5.70 23.00 20.60 PVR 195.00 220.40 13.70 15.40 5.40 6.00 32.50 29.30 Pyramid Saimira 131.10 157.30 12.50 15.30 4.40 5.40 68.80 56.00 Shringar Cinema 69.30 78.30 11.40 12.90 3.60 4.00 14.80 13.30

Adlabs is making a foray in the content production business, by picking up stakes in companies like Synergy Communications (and plans to pick up a stake in Miditech), which have a proven track record. Players like Shringar and Inox have forayed into film production and distribution.

Inox is also setting up low-cost multiplexes, in order to tap growth in smaller towns. Pyramid Saimira has plans to set up retail malls and budget hotels along with multiplexes in partnership with Baderwals Infraprojects and Shriram Malls.

Compete more Even as there seems to be huge demand for multiplexes, increasing competition is a concern. In order to woo higher footfalls and augment occupancy levels some multiplexes are offering discounts on ticket prices, which may hold back a rise in ATPs and margins, in turn.

“The differences in ticket prices are too specific to various locations. Similar is the case for our costs,” says Alok Tandon, Inox, adding that it is not a serious threat.

“ATPs are rising steadily in metros. In non-metros, although ATPs are low, they are compensated by high incremental demand,” says Hota of Emkay. IL&FS’ Chugh is optimistic suggesting that, “newer players entering the business confirms the healthy state of the sector for the coming years.”

Valuations Over the past year, all the players in the segment have taken a beating. The valuations of Inox and PVR, for instance, eroded more than 40 per cent over the year. Adlabs however has managed to stay afloat riding on a fairly diverse composition of business, with forays in film production, distribution and FM radio. FRESH BLITZ Multiplexes Current Screens Seats Projected in next 5 years PVR 17 67 16,578 208 Inox Leisure 11 41 12,299 165 Cinemax 9 29 8,260 141 Shringar 7 30 9,051 168 Adlabs 7 26 9,146 225 Source: FICCI-PwC Report: Frames 2007

Due to varied composition of businesses, it is difficult to compare these companies going solely by price-earnings multiple. In spite of this, Adlabs and Inox at about 23 and 20 times their expected FY08 and FY09 earnings, respectively, appear to be reasonably valued considering their expansion plans and their proven ability to execute their plans. Adlabs however has a significant upside potential, in case it hives-off its radio business into a separate unit, thus unlocking value.

In comparison, Cinemax appears cheap, but it has to improve its operating margins from around 14 per cent currently to about 18 per cent, which is normal across the industry. The upside from Pyramid Saimira’s aggressive expansion and diversification plans appears to be already factored in its valuation.

On the other hand, even though Shringar Cinema appears fairly valued, concerns loom large over its turnaround efforts as well as its ability to execute its expansion plan. With continuing uncertainty prevailing across the board in broader markets, investors may want to bet on this sector as it offers enough variety to suit different tastes.

Jet, Sahara, go

The Air Sahara acquisition will strain the balance sheet of Jet Airways but its international operations should drive earnings.

The stock market is not flattered with the deal Jet Airways, India’s number 1 private airline, has finally struck with competitor Air Sahara. But the Jet stock has not been hammered the way some analysts were predicting when talks of the deal going through first emerged on April 10.

The stock, which lost 5.57 per cent on April 11 on reports that the deal value would be closer to what Jet Airways had offered to acquire Air Sahara when it first bid for the company a year-and-a-half ago, gained 3.24 per cent when the final announcement was made on Thursday. The stock ended the week at Rs 629.90.

Jet currently flies 44 domestic and 6 international operations and has one of the youngest fleets globally boasting of an average age of less than five years. Apart from the domestic routes, Jet now flies to destinations like London, Singapore, Bangkok and Kuala Lumpur. The airline commands a 25 per cent market share in the domesic market.

While Jet claims that the deal comes 40 per cent cheaper than its earlier aborted attempt, there are hidden numbers which make the deal more expensive. Eitherway, analysts are divided on the stock.

Those bullish are relying on Jet’s flourishing international operations and a more benign domestic climate to accelerate its earnings. The bears on the contrary fear that the Sahara buy-out will strain Jet’s balance sheet unnecessarily.

Even though Sahara’s 27 aircraft, parking bays, staff and other infrastructure apart from its ready eight per cent market-share will be a definite plus, the benefits do not seem to be commensurate with the price Jet is paying for it, they feel.

A leading foreign broking firm put a sell on the stock with a target price of Rs 390. But two other firms, which have been positive on the counter since January this year, reaffirmed their bullish stance with a target price of over Rs 720.

Apart from the Rs 500 crore that Jet paid as upfront payment for the aborted merger attempt, the company would pay Rs 400 crore by April 20 and another Rs 550 crore through four equated annual instalments between 2008-2011. One good part of the deal is that the staggered payment eases the cash flow burden somewhat and reduces the acquisition price going by the net present value of Rs 1250 crore.

The total cost to Jet Airways for control of the Air Sahara however comes to Rs 1950 crore considering the money Jet had spent on Sahara before the deal was called off in June last year and certain other liabilities.

The valuation seems high for a company whose losses have soared and market share halved since the first aborted merger attempt in January 2006. If the stock market has still forgiven the company for this, it is because analysts were expecting a dead loss of Rs 700 crore for Jet Airways considering the litigation would have worked against Jet in all probability.

With intense competition from Low Cost Carriers and price undercutting becoming the order of the day, Sahara’s financials have only worsened since January 2006.

According to reliable sources, Air Sahara incurred a loss of Rs 300 crore on a revenue base of around Rs 1800 crore with accumulated losses totalling to Rs 700 crore. Jet has also seen its realisations fall in the past year and is estimated to close FY07 with a loss of Rs 120 crore.

“Though the current indicated deal size is lower than the amount Jet was ready to pay for Air Sahara, when the deal was first announced, since then the overall competitive environment hasn’t improved. As on December 2006, Jet Airways and Air Sahara both reported running in losses and lost a significant market share after the deal was announced. At the current valuations, we believe the merger would strain the profitability and balance sheet of Jet Airways in the near to medium term, before the merger can fully realize the benefits arising out of the synergies” says Surbhi Chawla, Research Analyst, Angel Broking.

Already, Jet Airways financials look streched with a debt-equity ratio of more than 2. In all the company will need to raise in excess of Rs 5000 crore in order to fund the acquisition and avail of export credit to pay for the aircrafts it proposes to buy for its international operations over the next couple of years.

The company plans to add 20 wide-body aircrafts for its international fleet expansion. All this only means that the need for additional capital would entail equity dilution creating an overhang on the stock.

But there are a few critical positives as well. Given the acute shortage of trained airline staff especially pilots, Jet gets a ready pool of experienced staff from Sahara. Besides, access to Sahara’s parking bays will come in handy as it increases its international fleet.

“The synergies that we see from the merger of two entities will arise from the commonality of fleet (B-737), reduction in spares, maintenance cost, infrastructure facilities,” adds Chawla of Angel Broking.

Critical to the financial performance of Jet would be how the domestic environment pans out. For now the reality is that most domestic airlines are adding to their existing fleet and increasing capacity. Unless the fleet addition slows and price competition eases, domestic yields may continue to be under pressure. But there are analysts who feel that the worst may be over.

According to Nikhil Vora, research analyst, SSKI, fears of price wars, low load factors and oversupply seem to be a thing of the past. He estimates that gross yields which were hovering under Rs 6.0 till 2006 are expected to improve to Rs 6.6 (FY08E) and Rs 6.8 (FY09E). Average load factors are also expected to improve from 69 per cent to 74 per cent in FY09 even as the aviation industry growth at 20-25 per cent per annum, the domestic air travel is expected to touch 60 mn passengers by FY09.

Much would depend on how Jet utilises Sahara. The talk doing the rounds is that Jet would convert Sahara into a LCC and it would remain focussed on business travellers as a premium carrier. This should help Jet hold up both realisations and market share. Eventually, Jet should be able to extend its higher level of operational efficiency to Sahara and turn it around within the next eighteen months.

The biggest plus is that the acquisition of Sahara strengthens Jet Airways’ international operations as Sahara has permit to operate in Gulf market and operations could commence in early 2008. International operations enjoy higher realisation, load factor and better margins.

And in just a few months since launch Jet has been able to achieve yields and load factor comparable to that of global peers like British Airways and Singapore Airlines. The commencement of India-US operations later this year and the Gulf route through Sahara will further boost business and margins.

“Profitability in the business will be driven by rapidly surging international operations,” says Vora who has put an Outperformer on the stock. He estimates that international revenues will help Jet double its total revenues over the next couple of years.

Overall, analysts estimate that Jet could incur a loss close to Rs 170 crore in the current fiscal, as much as in FY07 (estimated). Estimated earnings for FY09, at roughly Rs 40 crore is half of what it would have been without the merger. Rise in crude prices also remains a key risk.

But with buoyant economy, driving demand for air travel up at 20 per cent per annum, and international operations on a par with the best in the world, Jet’s business looks a good story to buy. But one will have to wait patiently for gains to trickle in.

A good KS

Traditionally, the domestic edible oil industry has been dominated by unorganised players. However, with rising demand for packaged food, revolution in the retail space, growing health consciousness amongst the Indian consumers and the implementation of Value Added Tax (VAT), the organised players are gaining ground.

KS Oils, the largest producer of mustard oil in the country, is aggressively foraying into the retail segment. The company is spending more on brand building and distribution of its products. Apart from making efforts to integrate its plants and streamline its operations, the company also aims to grow its business through the organic and inorganic route.

“We command a market share of three per cent of the total edible oil market and are targeting to increase this to 10-15 per cent over the next three years. We aim to achieve a revenue target of Rs 3000 crore by 2010 as compared to Rs 600 crore in FY06,” says, Sanjay Agarwal, managing director, K S Oils. FINANCIALS Rs crore FY06 FY07E FY08E Net sales 604.25 1050.00 1700.00 Operating profit 29.12 105.00 195.50 OPM (%) 4.82 10.00 11.50 Net profit 16.02 63.00 119.00 NPM (%) 2.65 6.00 7.00 P/E (x) 39.70 10.09 5.35

On firm footing KS Oils is one of the leading manufacturers of mustard in the country. It commands a strong position in edible oils like mustard oil, refined oil, vanaspati oil and non edible solvent oil.

The company has its manufacturing facility at Morena in Madhya Pradesh, which is in close proximity to oil seed cultivating states such as Rajasthan, Uttar Pradesh and Haryana.

The company is a dominant player in eastern and north-eastern India, and accounts for three per cent of the total edible oil market and about 25 per cent of the organised segment.

Under the mustard oil segment, the company’s flagship brand Double Sher commands 40 per cent market share in the north-eastern states. Besides, its premium mustard oil brand Kalash is sold in Delhi, Chattisgarh, Uttaranchal and UP and also enjoys 50 per cent market share in Madhya Pradesh. KS Oils also manufactures vanaspati oil under the brand name KS Gold and KS Gold Plus.

It sells soya refined oil branded KS Crystal Clear. Also, the company is the largest supplier of edible oil to the defense sector, supplying almost 8000-10000 tonne of refined edible oil annually, generating Rs 40 crore.

To achieve its Rs 3000 crore sales turnover by 2010, the company is looking at both the inorganic and the organic growth path. Agarwal, says “We will double our existing capacities by FY08, which we will achieve through investments in green field projects and 2-3 acquisitions.”

The firm has already acquired one unit in Jodhpur in Rajasthan, which has a daily capacity of 225 tonne of oil mill and 150 tonne of refinery. The company is looking for some more such units.

Getting organised The domestic edible oil market is controlled by a large number of regional and unorganised players. In terms of size the Indian edible oil market is estimated to be around Rs 60,000 crore and out of this mustard oil accounts for about Rs 12,000 crore. But despite being a huge market, organised players constitute only 20 per cent of the total market. Packaged and branded oil constitute only about 10 per cent.

“We expect to sell branded edible oil products to grow faster at about 20 per cent as compared to the overall industry growth of six per cent,” says, Agarwal. The growing preference for branded edible oil and quality products will augur well for the company.

Besides, KS Oils is increasing its focus on the packaged oil segment. The company is actively in talks with leading retail chains, hypermarkets and foreign companies for supplying its products. It also intends to strengthen its retail presence by selling its products in smaller sachets and pouches which are more affordable.

The company plans to invest Rs 12 crore in brand building and distribution this year. It added about 300 distributors last year, which will be increased to 1000 by the end of current fiscal. In FY05, branded sales contributed almost 48 per cent to the company’s total income and is likely to increase to over 60 per cent this fiscal.

The bottomline Increase in the proportion of branded sales will not only result in higher volumes, but also help in improving the company’s profitability. Presently branded products have a margin of about 15-16 per cent compared to 11 per cent from the non-branded segment.

Further, the implementation of four per cent VAT will take away the undue advantage unorganised players enjoyed so far by paying nil taxes. Organised players will thus become more competitive.

In March 2006, KS Oils established a power plant of 2.5 MW for captive consumption to slash power cost. Such initiatives have helped in improving margins. The operating margin in FY06 was merely 4.8 per cent, which has gone up to 10 per cent in Q3FY07. The company is expecting this to further improve to 12-13 per cent.

Besides, the company has commissioned a 6 MW wind power plant to sell power in Gujarat. The company will sell power at Rs 3.3 per unit providing an additional revenue of Rs 5-6 crore annually. Driven by higher operating margin and income from other sources, KS Oils will also witness an expansion in net profit margin from 6.6 per cent in Q3FY07 to 7-8 per cent over the next two years.

At Rs 288, the stock trades at price to earnings multiple of 10.1 times and 5.35 times its estimated earnings for FY07 and FY08 respectively.Apart from favourable industry dynamics, KS Oils’ retail plans and expansion over the next 2-3 years makes a case for investment. Considering the consistent growth in volumes and expected margin improvement in future, the valuations seem reasonably attractive.