PVR Ltd: Buy

An investment can be considered in the stock of PVR Ltd, one of the country’s larger multiplex chains. The stock trades at 18 times its estimated financial year 2008 per-share earnings and at about 12-13 times estimated financial year 2009 earnings, assuming conservatively that growth rates will halve from historic levels.

PVR appears quite capable of delivering such growth rates, given its aggressive plans to add screens, its superior track record in execution and a healthy film production pipeline that will ensure steady content supply. It’s own foray into co-production and other businesses also holds promise.

PVR reported a 40 per cent growth in revenues to Rs 116 crore and 80 per cent growth in net profits in the first half of the financial year 2008 A significant driver of margin expansion in recent quarters has been the waiver of entertainment tax for some of its multiplex properties. However, we expect PVR to maintain its margins. With 23 multiplexes or 89 screens under the PVR Cinemas circuit, it is likely to add 37 screens over the next three quarters. It has a particularly strong presence in Delhi and the NCR regions, which means it has access to premium real estate.

Forays into other regions might come at relatively lower rental costs. PVR now claims to account for at least 10 per cent of domestic theatrical revenues. Shorter film runs have resulted in a higher distributor share, but PVR has so far managed to maintain this share at about 30 per cent of gross ticket sales. It also has a favourable revenue mix, with only 60 per cent of its revenues coming from box office sales.

About 20 per cent of its revenue is derived from sale of food and beverages.

The company’s subsidiary PVR Pictures has gained traction in the distribution business. PVR is also foraying into food courts business through a joint venture with the Dabur group.

Use of the joint venture route and the measured pace of expansion into new areas lend confidence. We, however, have not factored in any gains from these businesses.

Nicholas Piramal: Buy

Investors with a two-three year perspective can buy the stock of Nicholas Piramal India (NPIL). After cementing its position in the branded formulations business– its top10 brands and lifestyle products contribute over 50 per cent of formulations portfolio sales–NPIL forayed into the international market not through costly intellectual property rights (IPR) tussles but through partnerships with “Big Pharma”. These relationships have begun to bear fruit.

The custom manufacturing (CMG) business, grew 22 per cent to Rs 340 crore in Q2 FY-08. CMG revenues from Indian facilities, in particular, increased over three-fold to Rs 70 crore, as shipments for a supply contract with a big pharma company commenced.

A five-year formulations contract with a Fortune 500 company is set to commence from third quarter and another contract for anti-glaucoma active pharmaceutical ingredients is already underway with Allergan Inc. NPIL is set to clock peak sales of $30 million per year from both these contracts.

Numerous contracts to be executed in the next two years give NPIL admirable earnings visibility. At the current market price of Rs 301, Nicholas Piramal trades at 16 times its likely FY-09 per share earnings.
Custom manufacturing model

NPIL has, till date, invested Rs 900 crore to transform itself into a full-service custom manufacturing organisation. Its strong early stage capabilities provide a strong value proposition to shift active pharmaceutical ingredients (API) and dosage-form manufacturing to NPIL. Notably, its strategy to stay away from conflicting customer intellectual property rights (IPR) has enabled a comfortable equation with western innovator companies.

With the help of its global outsourcing strategy, NPIL sources cheap raw material from China and uses its US FDA-approved Indian facilities spread across Hyderabad, Pithampur, Digwal, among others, as manufacturing hubs. While raw material costs are a bit higher in India, conversion costs are significantly lower.

This helps NPIL post higher margins than its other facilities. Its US and UK units form the last end of the value chain helping with sales and distribution, apart from R&D expertise-led innovation at Avecia Pharma and Morpeth in the UK. Fixed costs are already covered and with Indian assets making a higher contribution to revenues, profitability is likely to improve.

There has also been a significant rise in NPIL’s global contract manufacturing and research business with molecules in pre-clinical and clinical trials (PDS) in the last six months. There are now 17 molecules in Phase-III compared to 12 in the second half of 2007. Sixty three molecules are in Phase-II as against just 44 six months ago. Encouraging data in some molecules will mean commercialisation that will give NPIL a boost. This is inline with the company’s strategy of trying to build a strong PDS pipeline, which would ultimately lead to contracts eventually on the Pharmaceutical Manufacturing Services.
Formulations and Pathlabs

Apart from its CMG business, strong foothold in the domestic formulations (finished dosages) market will see the company acquire momentum.

While the June quarter was a bad one for NPIL’s top selling cough syrup, Phensedyl, September has seen the situation normalise as the company has received enough quantities of Codeine — the most important ingredient for Phensedyl. Some recovery is expected in the rest of the year for the company’s best brand.

Nicholas has also continuously launched products (11 in the last three months) that could go in a long way in de-risking its portfolio. Products launched in the last two years have managed to garner 8 per cent of Q2 FY-08 formulations sales.

Revenues from its Pathlabs segment (Wellspring) grew 72 per cent to Rs 31 crore in the September quarter.

While the segment by itself has contributed just 3 per cent of sales in FY-07, the acquisition of Jankharia Imaging (Mumbai) has helped it deliver an all-encompassing range of high-end health imaging in Wellspring’s plans.
R&D demerger

NPIL recently announced the demerger of its Research and Development unit dealing with new drugs, with effect from April 1, 2007. Recognising that innovative research entails a higher risk profile than its core business nature, the division has been hived off. Shareholders will get one share of the research outfit for every 10 held in NPIL.

The new company will be listed by June-July 2008. With a strong pipeline of four products under clinical trials and nine additional ones undergoing pre-clinical tests, the new company’s R&D pipeline targets a potential market size of $48.5 billion.

The new company’s lead oncology molecule P-276 continues to do well in the clinic as extended phase I/II study carried out in Canada and India progress. If all goes well, the drug could be launched by 2011.

KPIT Cummins

Investors with a one-two year perspective can consider buying the shares of KPIT Cummins Infosystems, given its reasonable business prospects and valuation.

At the current market price (Rs 103), the stock trades at 14 times its estimated 2007-08 earnings. This estimate takes into account the 12-15 per cent price increase on new contracts to be effected from January 1 next year, but conservatively assumes that the company may not meet its guidance this year.

At this valuation, KPIT trades at a discount to Tier-2 players such as Hexaware, iGate and MindTree. If the company achieves its guidance, the valuation would be more attractive. Apprehension on revenue and margin pressures arising from the rupee appreciation, the sub-prime crisis and the possibility of a US slowdown tend to affect Tier-2 companies significantly because of their considerable dependence on the US and BFSI (banking, financial services and insurance) verticals.

But it is here that a player like KPIT can be a reasonable bet. KPIT Cummins has a differently focussed business model compared to other Tier-2 players and derives less than nine per cent of its revenues from the BFSI segment.

The company derives over three-fourths of its revenues from manufacturing, auto electronics, and semiconductor solutions clientele. Business Intelligence solutions is another key area for KPIT. KPIT has hedged $36.8 million, about 25 per cent of its revenues, at Rs 42.6 to the dollar.

Business Drivers

New engagements: Increasingly, KPIT is focussing on bagging multi-million, multi-year deals rather than smaller engagements. This has some healthy facets to it. Most of these engagements are from OEMs in the automotive, semiconductor and manufacturing sectors as well as others.

New deals and existing engagements are increasingly coming in from the Asia-Pacific and European clients, thus expanding the company’s geographical footprint. The manufacturing and automotive sectors are seeing robust growth in both these regions, especially in the Asia-Pacific region.

Auto electronics may play a key role in fulfilling the rising safety requirements and increasing sophistication in car manufacturing.

In this context, KPIT’s engagements with car OEMs and suppliers offers possibilities to enlarge the existing business and bag new contracts. This may also help KPIT decrease its dependence on the US from the present 56 per cent, thus reducing currency risks.

Expertise and business partnerships: Business Intelligence solutions is an area that has contributed increasingly to revenues. Being a high-margin service, it is good for realisations. This works through (implementation) partnership with leading players in this space such as Business Objects.

This vertical has also helped the company cross-sell services and achieve better client-mining. KPIT also has a partnership for implementing enterprise software with players such as SAP and Oracle. Many of the multi-million dollar deals are coming in because of such partnerships.

The company has also formed a JV with Symbio, in China, which may help serve global customers with Chinese presence.

Operating metrics: The onshore-offsite mix is seeing an increase in the offshore component. Onsite revenues carry high costs compared to offshore revenues and, hence, this mix change may be healthy for the company’s margin. Fixed-price billing, as a percentage of total revenues, is increasing slowly.

This would enable the company in better resource planning and deployment as well as its hedging strategies. Repeat business at 90 per cent appears healthy, indicating better execution capabilities. Employee utilisation in offshore locations, is at a reasonable 70.5 per cent and the company has indicated that it would further increase this to enable better volume growth.
Risks

KPIT Cummins does carry some client-concentration risk as the top 10 customers account for over 72 per cent of revenues. Attrition at a high 21 per cent also creates execution risks.

These apart, KPIT is working in areas such as semiconductors and auto-electronics that require the company to be on top of the game in terms of adaptability to keep pace with the rapidly evolving technologies and changing customer requirements. This may pose quality and technology challenges. Any significant slowdown in the US may also pose client side risks.

Trading Tutorials

We all know that there are three kinds of trend: up trend, down trend and sideways trend. The ancient Japanese discovered candlestick patterns that signal the onset of these trends. In our previous columns, we dealt with both bullish and bearish reversal patterns.

However, there are distinct candlestick patterns, which are considered as neutral or indecisive patterns. The most common among these is the doji pattern. When the opening price and the closing price of a stock are almost equal, the candlestick pattern is known as doji. The body of these patterns is just a small horizontal line. The shadows or wicks can, however, be of varying length. A doji line with long upper and lower shadows indicates substantial indecision on the part of market participation.

Doji line with long lower shadow and no upper shadow is called a dragonfly doji candlestick. This pattern is believed to have bullish implications. It is formed when the security falls lower during the trading session but recovers all the losses and closes near the day’s high, which is also its opening level; denoting bargain hunting at lower levels.

Gravestone doji pattern is the opposite of dragonfly doji pattern. In this pattern the upper shadow is longer and there is no lower shadow. The implication of gravestone doji is bearish. This pattern is formed when a bout of selling is experienced at intra-day high and the stock wipes out all its gains to close near the day’s low. Gravestone doji is yet another example of the colourful terminology used by the Japanese. This pattern marks the end (death) of an uptrend.

The candlesticks, which have a small bodies with long upper and lower shadows are called spinning tops. The colour of the body is not important in this pattern. These candlestick patterns occur on days of indecisiveness. Not much inference can be drawn from these patterns, except that the security is pausing or moving sideways.

Index Outlook

Sensex (18907.6)

The razzle-dazzle of Diwali left Dalal Street untouched this year as the Sensex recorded a negative weekly close; the second in the last three months. This sulky mood is a trifle worrisome. But we need to remember that the Sensex has gained 46 per cent in the last three months. One can’t blame the investors for taking some of those gains off the table to spend on Diwali revelry.

Volumes petered off towards the end of the week reflecting investors’ disinterest. FIIs too have taken their foot off the accelerator; turning net sellers this month in both cash as well as derivative segment.

There are disturbing signals emanating from the derivative segment. Despite the open interest nudging Rs 1,00,000 crore mark, the Nifty put call ratio is extremely low at around 1.1. This could be due to excessive optimism or due to the absence of external participants taking directional calls or hedging at higher levels. Whatever be the cause, our markets are rendered vulnerable without the protective cover of these short positions.

The gentle slide witnessed last week made the Sensex fall to an intra week low of 18737, below our trend deciding level of 19066. The first two session of next week are crucial for determining the short-term trend. The bulls need to stage a bounce from these levels if the momentum has to be maintained. A fall below 18700 would mean that the Sensex is slipping in to a medium-term down trend.

The momentum indicators too signal that the Sensex needs to fall a little further to turn the medium-term trend downwards. A bounce from current levels will result in the resumption of the exhilarating rally in the index.

It is too early to label the correction that began from the peak at 20238. The magnitude and the time of this move will help us decide if the Sensex is correcting the move from 13780 or the move that began much earlier, at 12316. Either way, the Sensex is expected to remain volatile within the 17000 to 22000 range in the medium term as the last phase of the move from June 2006 completes itself.

Investors ought to watch out for the support in the band between 18800 and 19100 next week. A reversal from this band will make the Sensex rally towards 19310 and then 19664. Traders should wait for a move beyond the second resistance before making fresh purchases. A fall below 18800 will mean that the Sensex is heading towards 18342 and then 17861.

To sum up, though the short-term trend is down, the outlook will turn explicitly negative only when the Sensex falls below 18700. But investors are advised to stay on the sidelines and desist from making fresh purchases until index’ trajectory becomes apparent. It is imperative to reduce positions in stock futures as the derivative segment is getting overheated.

Nifty (5663.2)

Nifty too drifted lower to an intra-week low of 5614. The short-term support indicated last week, at 5664, has not been breached convincingly. So the short-term outlook for the index stays positive. A bounce from the support band between 5600 and 5650 can make the Nifty rise higher to 5766 or 5860 next week.

Traders can initiate short positions if the Nifty fails to rise above the first resistance. Our medium term range for the Nifty is between 5000 and 6500. Fall below 5600 can make the Nifty drift lower towards the zone between 5050 and 5150 in the medium term. Swing traders can watch out for buying opportunity in this band.

Global Cues It was a defining week for the Dow Jones Industrial Average. The 4 per cent fall in the index has turned the medium-term trend downward. It is now obvious that the DJIA is charting the third leg of the correction that began in August. That brings the support at 12500 to the fore again. Fall below this level would mean that a more serious correction is in progress. The Nasdaq Composite Index launched in to a medium-term down trend last week. Other global markets too witnessed some profit booking. CBOE VIX index is near a two-month high indicating the resurfacing of the fears that had pulled the markets lower in August

Edelweiss Capital: Invest at cut-off

Investors can bid for the initial public offering from Edelweiss Capital at the cut-off price. A good track record of growth, a balanced business model with a focus on institutional clients, and a superior margin profile make Edelweiss Capital a quality exposure to the Indian financial services sector, which is in the take-off phase. The offer, which is being made in the price band of Rs 725-825, values the company at 34-38 times the likely earnings for FY-08. This assumes that Edelweiss will sustain its income growth of the first five months for the full year and manage an operating profit margin in line with its three year trend.

At the higher end of the price band, the asking price values Edelweiss at a premium to Motilal Oswal Financial Services and Religare Enterprises (based on its offer price), but at a discount to firms such as IndiaInfoline. Though these valuations appear expensive on an absolute basis, they are justified by the scorching pace of growth managed by Edelweiss since inception, its less risky business mix and the scalability offered by businesses such as wealth management, financing and asset management, which are recent additions to its portfolio.

Different business mix

Edelweiss Capital’s core operations are investment banking, asset management and portfolio management services, which are housed in the parent company. However, like other financial services companies, Edelweiss Capital too has a range of subsidiaries engaged in private client and institutional broking, advisory and wealth management services (all housed in Edelweiss Securities, a 100 per cent arm), as well as insurance broking and financing businesses. Most of these, save for the insurance broking arm, are 100 per cent subsidiaries, whose financials reflect in the company’s consolidated numbers.

Fee-based income arising from investment banking services and brokerage from advisory/trading services for institutional clients, have accounted for between 55 and 63 per cent of the company’s total income over the past three years, while trading/arbitrage and treasury income have accounted for much of the rest. Edelweiss’ reliance on investment banking and institutional advisory services for its income makes its business less volume-driven than that of peers such as Religare — which are more focused on retail equity broking services.

The growth in fee income for Edelweiss would hinge indirectly on buoyant equity market conditions and healthy levels of M&A and fund-raising activity by Indian companies. But unlike equity broking targeted at retail clients, the business is not vulnerable to blips in transaction volumes in the equity markets caused by short-term market volatility. Regulatory risks would also be relatively lower in engagements with institutional investors as compared to retail investors.

The different business mix also appears responsible for Edelweiss enjoying a superior operating profit margin compared to similar sized peers in the financial services space. The company’s OPM has consistently hovered above 50 per cent for the past four years, while the best performers within its peer group have only managed 30-35 per cent. This superior margin profile has allowed the company greater cushion to handle a spike in financing costs in recent times.

Edelweiss has managed to bag mandates for a reasonable number of mid-sized IPOs over the past year (Cinemax, Meghmani Organics, Orbit Corporation), has dabbled in private equity and real estate advisory, and has a portfolio of 150 clients for its institutional equities business. While competition in the investment banking business is intense with large international firms and a host of boutique investment banks vying for a share of the pie, the buoyancy in fund raising by mid and small sized firms through the equities and convertibles route offer potential for an entrenched player such as Edelweiss to scale up fee-based income.

That fee and brokerage income for Edelweiss has risen over four-fold from Rs 42 crore in FY-05 to over Rs 137 crore, in the first five months of FY-08, with steady growth from year to year, suggests that it has been successful in bagging a steady stream of mandates for its investment banking business. Contributions from the investment banking business however, may be lumpy and may make for considerable variation in performance between quarters.

Treasury gains

The substantial contribution made by treasury operations, however, appears to be a weak spot in the company’s financials. Treasury gains over the past three years have been driven by a steady expansion in the company’s surplus funds, which have contributed to a swelling investment book. However, these surplus funds may have to be ploughed back into the business as the company scales up its nascent businesses and expands its presence in more capital-intensive segments such as wholesale financing.

This would substantially shrink the treasury income from current levels. Profit contributions from Edelweiss’ recent forays such as wealth management and asset management, as well as a rise in fee-based income, could make up for the reduced treasury contributions. That the company’s treasury has been conservatively managed, relying more on arbitrage and debt returns, rather than the stock markets, is a comforting factor on this score.

Financials

Overall, Edelweiss’ consolidated operations are comparable in scale to companies such as Motilal Oswal, Indiainfoline and Religare, with a total income of Rs 371 crore in FY-07. Like its peers, Edelweiss has seen a substantial scaling up of revenues this fiscal, with a total income of Rs 284 crore in the first five months of FY-08 alone. With net profits (after minority interests) of Rs 109 crore and Rs 80.9 crore in FY-07 and FY-08 (five months to August) respectively, the company ranks higher than the others on profitability. The company’s profits for FY-07 would translate into per share earnings of Rs.15 on the post-offer equity base. Our earnings estimate for FY-08 suggests a likely per share earnings of Rs.20-22 for the year.

Offer details: Edelweiss Capital is offering 83.8 lakh shares at a price band of Rs 725-825 (face value of Rs.5) through this book-built initial public offering. The promoter holding will stand at 34.98 per cent of the post-offer capital, while institutional investors and employees (through ESOPs) will hold another 54.7 per cent.

The offer proceeds will be deployed mainly towards enhancing margin limits to be maintained with the exchanges, opening of additional offices, IT investments and prepayment of loans.

Godawari Power & Ispat (GPIL)

Godawari Power & Ispat (GPIL)

Monnet Ispat

Monnet Ispat

Q2FY08 Earnings Review

Q2FY08 Earnings Review

Gokul Refoils IPO

Gokul Refoils And Solvent Limited, a Gujarat based company, engaged in the business of solvent extraction, refining of Edible oils and Vanaspati manufacturing, proposes to raise Rs15bn with an Initial Public Offer (IPO).

The Objects of this issue are to set up a new 1500 TPD Soyabean processing plant near Gandhidham, expansion of its existing edible oil refinery at Surat, investment in its wholly owned Singapore subsidiary, funding part of its long term working capital, brand building activities, investment in increasing warehousing capacities and continuous Capex for existing units, general corporate purposes and public issue expenses.

Gokul Refoil started its business in 1982 and is primarily engaged in the business of Solvent Extraction, refining of Edible oils and Vanaspati manufacturing. The group's interest also includes power generation, commodity trading in the domestic and international markets.

The company markets its products under the brand name "Gokul" in the states of Gujarat, Maharashtra, Rajasthan, Madhya Pradesh and Punjab. The brand enjoys a national recognition and the products are packed and sold include Mustard oil, Sunflower oil, Groundnut oil, Cottonseed oil, Palmolein oil, Vanaspati oil and Soya bean oil these are not only sold in in bulk quantities but also consumer retail packs of 15 Kgs, 15 Litre, 10 Litre, 5 Litre, 1 Litre and 500 ml.

Pan India distribution network spread across 19 States catered by 18 C&F agents and 802 distributors, 3 depots, 15 brokers and 295 resellers, distributing Gokul products through a total 1133 bulk points.

Gokul Refoils has setup a Solvent Extraction plant and an oil refinery at Sidhpur, Gujarat, a refinery of 800 TPD and Vanaspati plant of 100 TPD at Gandhidham, four environment friendly wind mills of 1.25 MW each in Kutch for captive power consumption and a 100 TPD operational refinery in Surat. It has also set up a co-generation power plant of 500 KWH at its Gandhidham unit. At present the company has 680 TPD of seed processing, 600 TPD of Solvent Extraction, 1200 TPD of refining and 200 TPD of Vanaspati manufacturing.

Towards expanding the scale of operations and having global presence Gokul Refoils has setup two wholly owned subsidiaries in Mauritius and Singapore under the name Maurigo Pte Limited and propose to invest approximately Rs250mn i.e. US$ ~6.10mn for enhancing the resources of the subsidiary.

Commenting on company's global expansion plans, Kanubhai Thakkar, MD, Gokul Refoils and Solvent limited said, “Singapore is the global hub of edible oil industry with all major oil suppliers having a base in Singapore. Currently we are sourcing about 1, 50,000 MT of Palm oil from Malaysia and Indonesia and 1, 00,000 MT of soyabean oil from Argentina and Brazil. If we have our presence in Singapore, we shall be in a position to negotiate locally and deal with the small and fragmented oil suppliers of Malaysia and Indonesia, which will further enable us to procure the raw materials at reasonable terms."

“Setting up of this office was a part of our long term strategy of increasing our foot print in the global markets to reduce the involvement of intermediaries and source raw materials from the producers. It will help us in procuring oil at reasonable terms and also providing assured supplies round the year. This global presence shall help us to improve the scope of exports of De-Oiled Cake and our margins in export of de-oiled cake," Said Thakkar.

Gokul Refoils consolidated total income for the financial years / period ended July 31, 2007, March 31, 2007, 2006 and 2005 was Rs6.57bn, Rs15.66bn, Rs12.55bn and Rs9.07bn respectively. The Company posted net profit for the said years / period was Rs207mn, Rs254.2mn, Rs123.4mn and Rs200.5mn respectively.

Diwali Picks

Diwali Picks

DOW slides again

Both the major US indices declined on Firday on worries over the tech sector and concerns on subprime losses.

While the Dow dropped 223 points to 13,043, the Nasdaq Composite was down 68 points at 2,628. For the week, the Dow dropped over 4% and the Nasdaq Composite Index declined 6.5% - its biggest weekly loss since 9/11.

Indian ADRs, too, declined on Friday. ICICI Bank plunged over 7% to $60.24. HDFC Bank, Tata Motors, Infosys and Wipro also declined.

Analysts' Picks

PTC

CMP: Rs 152.40
TARGET PRICE: Rs 99

HSBC Securities has downgraded its rating on PTC India to ‘underweight’ from overweight, but maintained its target price of Rs 99 for the stock. “The stock has had a strong run of 75% appreciation over the last month and is now trading at 42.7 times FY08e(estimated) earnings, which is substantially higher than the Chinese and Indian utilities average of 22.1 times. We believe it is fully priced for the next 12 months and the time has come to book profits,” the HSBC note to clients said.“Since we believe in its long term growth story on the back of higher visibility of implementation of its power projects, we maintain our forecasts for net profit CAGR at 54% over the next five years. We have not factored any future investment or dilution of equity into our forecasts,” the note added.

Oriental Bank

CMP: Rs 233.65
TARGET PRICE: Rs 280

Merrill Lynch has retained its ‘buy’ rating on Oriental Bank of Commerce with a price target of Rs 280 despite weak earnings for July September. “While core earnings have disappointed in 2Q(July-September), we maintain our buy given the low valuations (0.9 times FY09E book value with 15% return on equity) and the fact that it is one of the few banks that is providing for AS-15, giving it some buffer to its earnings. We believe OBC currently trading at 1.0 time FY08E book, could trade up to 1.1 times FY09E adjusted book given the forecast rise in ROE to +15% in FY09E on back of improving NII (net interest income, rising fee income and lower NPL (non performing loan) provisions,” the Merrill Lynch note to clients said.

IVRCL Infra

CMP: Rs 521.15
TARGET PRICE: Rs 601

ABN Amro has initiated coverage on IVRCL Infrastructures & Projects with a ‘buy’ rating and a sum-of-the-parts based target price of Rs 601.“We believe IVRCL will be a key beneficiary of the government's plans to develop the agriculture sector by increasing irrigation facilities. IVRCL’s diversification into power distribution (18% of sales) and roads should balance its product mix, as these segments are growing exponentially due to private participation,” the ABN Amro note to clients said. Adjusting for subsidiary value of Rs 158.1 per share at 15% holding company discount, the stock trades at 17.3 times FY09F (forecast) diluted EPS of Rs 24.8, the lowest among tier-2 construction companies.

Samvat 2064 a whimper

The Samvat year 2064 began on a weak note as Sensex plunged by 151 points in the special Diwali muhurat trading on the Bombay Stock Exchange today due to the heavy profit sellings by funds.

The Sensex, which fell by about 917 points or 4.59 per cent in the last four trading sessions, fell further by 151.33 points at 18,907.60 in the muhurat trading on the first day of Hindi calender year Samvat. It witnessed the day's high of 19,329.57 and a low of 18,737.22 points.

Similarly, the broad-based National Stock Exchange index Nifty fell by 35.50 points at 5663.25, after touching a high of 5794.20 and a low of 5614.90 points.

Visa files for $10 billion IPO

Visa Inc, the world's largest credit card network, filed with regulators on Friday to raise up to $10 billion in an initial public offering, in one of the largest and most eagerly awaited US stock offerings.

Visa announced the offering two days after agreeing to pay $2.1 billion to settle a three-year-old antitrust lawsuit with rival American Express Co.

The card network did not reveal in its registration statement filed with the US Securities and Exchange Commission when it plans to go public, how many shares it plans to offer, or the expected share price.

San Francisco-based Visa outlined plans in October 2006 to float a majority of the network, which is now owned by its 13,400 member banks, and at the time said it hoped to go public within 12 to 18 months.

On Wednesday, it agreed to settle a 2004 lawsuit that American Express filed against Visa, the smaller MasterCard Inc and eight banks charging them with anti-competitive practices.

The new publicly traded entity, Visa Inc, will combine Visa's US, international and Canadian operations. Another affiliate. Visa Europe, will remain a membership organization and take a minority stake in Visa Inc.

Visa has said it plans to use IPO proceeds to fund expansion and an escrow account to help cover legal bills. The network and MasterCard face a variety of antitrust lawsuits from rivals and retailers, some of which accuse them of price fixing.

Visa's roots date to 1958 when a Bank of America Corp predecessor created the blue, white and gold BankAmericard, helping pave the way for the modern credit card business. That card has evolved into Visa.

MasterCard went public in May 2006 in a $2.4 billion IPO and its shares have since risen roughly five-fold.

Morgan Stanley spun off its Discover Financial Services, but those shares have fallen by about one-third.

Visa said Bank of America Securities, Citi, Goldman Sachs & Co, HSBC Securities USA Inc, JPMorgan, Merrill Lynch & Co, UBS Investment Bank and Wachovia Securities are joint book-runners for the IPO.