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Thursday, October 11, 2007
IFCI suitors worried about stake stability
Potential buyers of a 26 per cent stake in the government-owned Industrial Finance Corporation of India's (IFCI), the country's oldest financial institution, have raised concerns over the stability of their shareholding and board representation.
Interested parties are concerned about the possibility of 24 domestic banks and six financial institutions converting to equity Rs 1,480 crore worth of zero-coupon debentures to which they subscribed in 2002-03.
They are also worried at IFCI’s inability to accommodate more than three or four representatives from the prospective strategic investor on its 15-member board.
The IFCI board is expected to meet on Monday to discuss these issues.
Representatives of two potential buyers told once the debentures are converted, the strategic investor’s equity and, therefore, control will be reduced.
Sources at IFCI, however, said no time frame has been decided for the conversion. “The conversion has to follow certain legal procedures, including approval from the IFCI board. Nothing will be done which could impact strategic investors' interests,” they added.
On the issue of board representation, one suitor said: “Four seats on the board will not be in tune with the strategic investor’s equity holding of 26 per cent.”
In addition, the suitors said, the idea of buying 26 per cent was aimed at an eventual control of the company. Under the law, any acquisition of more than a 15 per cent stake requires a mandatory 20 per cent open offer for retail shareholders.
The successful bidder will eventually emerge as the largest shareholder in IFCI with nearly 46 per cent after an open offer.
“But the present structure of the IFCI board is averse to offering the majority of the board seats to the successful bidder. This will defeat the purpose of acquiring a majority stake,” he added.
The IFCI stock today closed at Rs 83.80 on the Bombay Stock Exchange, 3.29 per cent lower than yesterday's close. At this rate, the company's valuation of the company stands at Rs 5,352 crore. So an acquisition of 26 per cent is estimated at Rs 1,392 crore.
Sources close to IFCI said the effort to strike a balance between the interest of the bidder as well as other stakeholders is on. “We are hopeful of finding a solution,” they said.
RelComm to promote OLPC
Reliance Anil Dhirubhai Ambani Group on Thursday joined hands with One Laptop Per Child (OLPC) Foundation under which Reliance Communication (Rcom) would provide Internet connectivity, network and logistics to the OLPC's India initiative.
"Every child has the right to education. Reliance Communication is going to facilitate that right. This is not a laptop but an educational programme which will promote e-learning in the country," RADAG Chairman Anil Ambani's wife Tina Ambani told reporters here.
She invited state governments, NGOs, corporates and media to be a party to the programme, a pilot of which has already been started in a school in the tribal-dominated Khairat village, near Karjat in Maharashtra.
Under the programme, every student will be given a water-proof and almost unbreakable laptop, priced at $188 (landed price in India at $ 220) which would reduce the burden of the school bag and promote e-learning in the country reducing the digital divide in the society.
"India's economy is growing at a rapid pace. We need to to impart quality education to children. The education system has to be more student-friendly. It has to be fun-filled for them," Ambani said.
"OLPC programme would be application-oriented and not syllabus-oriented, as is the current practice," Ambani added.
Market Close: Some consolidation but 19k is near !
There seems to be no stopping for the bull run which the market has been witnessing. Liquidity inflow is so strong that investors tend to ignore negative news and participate in bulls run. Indices opened on a fair note with less support from the mixed global cues. In the early sessions itself the investors booked profits heavily at the high levels which bought in the volatility. Indices swung both the sides between positive and negative zone with no clear direction. IT pivotals were major losers after unimpressive results and guidance by Infosys. Market struggled to keep up the gains till the mid sessions but steady buying in other sectors kept the momentum up as the markets ended near all time high. Nifty crossed 5500 mark for the first time.
Today the Bank of Japan (BoJ) reported that it would keep the interest rates unchanged at 0.5% which saw some rally in the Asian markets. Hang Seng for the first time crossed the 29000 mark. Capital goods, Metal, Auto and Realty stocks extended their gains and took Sensex to a new high. Mid cap and small cap indices outperformed the front liners. If the market continues to rally in the same way then 19k is on cards. Sensex can see some correction but if results are good mid caps may see rally.
Sensex ended the day up by 156 points at 18814.07. It was helped up by gains in ONGC (1066.45,+6 percent), Grasim (3800.3999,+4 percent), BHEL (2421.2,+4 percent), ACC (1260.3,+3 percent) and L & T (3486.6499,+3 percent). Restricting the gains were Satyam (447.95,-7 percent), Infosys (1976,-7 percent), TCS (1071.9,-5 percent), Wipro (488.1,-3 percent) and Cipla (191.05,-1 percent).
Navneet, the education company has finally made a big entry into the e-education space which was dominated by Educomp. In a matter of 3 months the company has developed the animated software which covers the school syllabus for 1st ? 10th for the state of Gujarat. This it has already launched and has more than 50 schools to its credit. The pricing policy is penetrative at Rs 25000 for the full licence for the school per annum. This is set to change the paradigm set by Educomp. The low pricing really has the schools willing to buy and use the same in the audio Video room. Navneet believes that in an environment driven by marks, a product which helps the student score higher markets will be a winner. Near term the results for the September quarter should be good helped by the spillover effect from the previous quarter sales. We are really bullish on this one as it provides tuff competition to Educomp which has become too expensive but still is the market leader. Navneet has along way to go but we see that the company has the potential to deliver. We have our call on Navneet running which is now on the verge to deliver. The stock was almost 8% up.
IT People surged almost 10% after the board of the company approved the proposal to issue up to 75 lakh share warrants to either foreign investors or mutual funds or corporate bodies. The board also authorised the company to raise up to Rs 100 crore by issuing equity shares, warrants, FCCBs, or even borrow from banks/financial institutions. The company wanted to raise the money for funding the acquisition, also to set up new offices at various locations and for advertising itself as recruitment solutions provider. The company earlier in August 2007 had withdrawn its follow on public issue (FPO) to raise around Rs 45.25 crore due to lack of response from the retail investors. Recently the company acquired 100% stake in Marketplace Technologies (MT). MT is an established player in e-enabling the businesses in financial services sectors having similar products that to Financial Technologies. Its totally different area of operations for IT people as they provide recruitment solutions to the IT and ITES industry globally through a recruitment portal. But the potential of MT?s business is seen high with good growth and would one could see the upsides from this.
The demand for explosives is directly linked to the growth in mining and infrastructure sector. Demand for explosives is more in Coal mining, Infrastructure development and Metal mining. Mining industry is expected to grow in the core segments like coal, iron ore, and limestone. Coal mining remains the largest application for Explosives worldwide accounting for almost 70% of total explosive consumption. With the increasing allocation of coal fields to private sectors, the demand for explosives will continue to grow. Solar Explosive is the best bet in this sector as the industry has a huge entry barrier for the new player as it?s a licensed industry where you have to procure license for producing, transportation and can sell to sell only to those company having a license. Specialized knowledge on the kind of explosive and the right combination needed for kind of rocks gives Solar the extra edge. The company had recently announced that it had bagged orders from CIL and some are also in pipeline. The stock has rallied ahead of result; we will update more on results soon. Do read the note on the same for a better view.
Technically Speaking: Market traded the whole day with volatile session but finally ending the day up by more than 150 points as buying intensified in the last sessions. Sensex touched intraday high of 18833 and low of 18537. Overall breadth was marginally in favor of Declines, where the Declines stood at 1363, while Advances at 1349. High volumes have been noticed over past week but today it broke all the records. The market churned an astonishing Rs 10545 crores. It shows that there is a huge liquidity inflow from foreign as well as domestically. Sensex is marching up with some huge volumes. Traders can take longs keeping a stoploss of 18300 on Sensex.
Sensex recovers in late rally
The market recouped its lost ground in noon trades and rallied sharply thereafter, after a fall of about 91 points to the day's low of 18,537. The market was quiet in early trades as the second quarter performance of Infosys Technologies disappointed investors. IT stocks, which rallied over the past couple of sessions expecting the technology bellwether to surprise, were beaten down. However, the market trimmed losses as the trading progressed and zigzagged between positive and negative territory in late morning trades before taking a dip on renewed selling. The index shrugged off its bearish trend towards the closing hours and surged to another record high of 18,833 on healthy buying in auto, capital goods, and metal stocks. The Sensex finally ended 156 points higher at 18,814, while the Nifty gained 83 points to close at 5,525.
Among the sectoral indices the PSU index led the upsurge with gains of 3.094% at 8,778 followed by the BSE CG index (up 2.75% at 17,088), the BSE Auto index (up 2.69% at 5,604) and the BSE Metal (up 2.69% at 14,833). The market breadth was neutral. Of the 2,804 stocks traded on the BSE 1,354 stocks advanced, 1,378 stocks declined and 72 stocks ended unchanged.
Out of the 30 Sensex stocks, 23 managed to end in the green while seven stocks ended with losses. M&M registered solid gains and soared 7.62% at Rs814. ONGC jumped 5.66% at Rs1,066, Grasim shot up by 4.14% at Rs3,800, BHEL advanced 3.89% at Rs2,421, ACC moved up by 3.46% at Rs1,260, L&T added 3.40% at Rs3,487 and Hindalco gained 3.26% at Rs176. Among the laggards Satyam Computer dropped 7.50% at Rs448, Infosys shed 6.99% at Rs1,976, TCS declined by 4.72% at Rs1,072, Wipro fell 2.99% at Rs488 and Cipla slipped 1.14% at Rs191, while Dr Reddy's Lab and Bajaj Auto closed with marginal losses.
Over 5.25 crore Power Grid Corporation shares changed hands on the BSE followed by Reliance Natural Resources (2.11 crore shares), IFCI (1.99 crore shares), Reliance Petroleum (1.72 crore shares) and Ispat Industries (1.23 crore shares).
Reliance Industries registered a turnover of Rs604 crore on the BSE followed by Power Grid Corporation (Rs581 crore), Infosys (Rs483 crore), Reliance Capital (Rs386 crore) and Reliance Communication (Rs336 crore)
Bull charge continues; Nifty settles above 5,500
Strong liquidity lifted the bourses for the third consecutive day today. The market hit fresh all-time high towards the latter part of the trading session. The market had witnessed a bout of volatility in early trade. Capital goods, metal, auto and realty stocks extended gains. Mid-cap and small-cap indices outperformed market. Asian markets held firm. European markets were positive. The market breadth was marginally weak.
Infosys witnessed a setback after it announced Q2 September 2007 results before trading hours today, 11 October 2007. Other IT pivotals tumbled following the post Q2 results setback in Infosys counter. Reliance Industries edged higher in volatile trade.
The BSE 30-share Sensex was ended up 155.82 points, or 0.84%, to 18,814.07, a record closing high. It opened on a positive note. It hit fresh all-time high of 18,832.65 in late trade. It hit intra-day low of 18,536.97 in afternoon trade. At day's low of 18,536.97, Sensex had lost 121.28 points for the day.
The broader based S&P CNX Nifty ended up 83.4 points, or 1.53%, to 5,524.85, a record closing high. Nifty hit a fresh all-time high of 5,532.75 in late trade.
Of the 30 shares of the Sensex, 23 had moved up, while the remaining were trading down. The market breadth was almost even on BSE: 1,323 scrips advanced, 1,378 declined, while 394 remained unchanged.
BSE clocked a turnover of Rs 10603 crore, much higher than Wednesday (10 October 2007)'s Rs 8552 crore.
Nifty October 2007 futures were at 5,555.05, a premium of 30.2 points or 0.54% over the spot price of 5,524.85.
NSE's futures & options (F&O) segment clocked a turnover of Rs 72,261.05 crore today, 11 September 2007 compared to a turnover of Rs 79,786.18 crore on Wednesday, 10 October 2007.
The BSE Mid Cap index rose 1.42% to 7,590.60 and BSE Small Cap index rose 1.08% to 9,120.61. Both these indices outperformed Sensex.
Only, BSE IT index (down 5.59% to 4,766.72) and BSE Teck index (down 1.97% to 4,089.19) underperformed Sensex.
Rest all the sectoral indices, BSE Auto index (up 2.69% to 5,603.85), BSE Capital Goods index (up 2.75% to 17,088), BSE Bankex (up 1.57% to 9,570.79), BSE Oil & Gas (up 1.66% to10,725.65), BSE Metal index (up 2.69% to 14,832.64), and BSE Realty (up 2.71% to 10,214.15) outperformed the Sensex.
The Bank of Japan (BoJ) today, 11 October 2007, kept interest rates unchanged at 0.5% as widely expected. Bank of Japan Governor Toshihiko Fukui said in a news conference that price pressures are growing and that there is no change in the central bank's stance on gradually adjusting interest rates in line with economic conditions.
India’s largest private company in terms of market capitalization and oil refiner Reliance Industries (RIL) rose 0.47% at Rs 2,629.65. The stock came off session's low of Rs 2,585.25. Earlier, the stock had pared gains from session's high of Rs 2,656. Reliance Industries and Indian Oil Corporation may jointly explore an oil area in East Timor, reports suggest. RIL said after trading hours yesterday, 10 October 2007, it will unveil Q2 September 2007 results on 18 October 2007.
Auto stocks rose in late trade. Tata Motors rose 3.05% to Rs 830.40.
Maruti Suzuki India rose 1.59% to Rs 1,118.60 on signing an agreement with Magneti Marelli and Suzuki Motor Corporation for starting a joint venture in India for manufacturing electronic control units for diesel engines. Bajaj Auto (down 0.04% to Rs 2,619.90) edged lower. Hero Honda Motors (up 0.06% to Rs 754.15) edged higher.
Mahindra & Mahindra rose 7.62% to Rs 813.35 and was the top gainer from the Sensex pack. Mahindra & Mahindra's wholly owned subsidiary Mahindra Intertrade is all set to step into front end retail, reports suggest.
IT pivotals were major losers from Sensex pack after Infosys announced its results just before trading hours today, 11 October 2007. India's No. 2 software services exporter Infosys Technologies declined 6.99% to Rs 1,976. It clocked high volume of 24.27 lakh shares on BSE.
Satyam Computer Services (down 7.5% to Rs 447.95), Tata Consultancy Services (down 4.72% to Rs 1,071.90), Wipro (down 2.99% to Rs 488.10) edged lower.
Infosys revised upwards earnings and revenue guidance for FY 2008 (year ending 31 March 2008). The company has forecast a between 17.5% to 18.1% growth in EPS in FY 2008 as per Indian GAAP to between Rs 78.60 to Rs 78.99. It has forecast a between 19.4% to 19.8% growth in revenue as per Indian GAAP to between Rs 16588 crore to Rs 16648 crore.
As per US GAAP, the company has forecast a between 32.4% to 33.1% growth in consolidated earning per American depository share to between $1.96 to $1.97. The company has forecast a between 34.5% to 35% growth in revenue as per US GAAP to between $4.16 billion to $4.17 billion.
Infosys’ consolidated net profit as per Indian GAAP rose 1.94% to Rs 1100 crore in Q2 September 2007 over Q1 June 2007. Consolidated revenue rose 8.8% to Rs 4106 crore from Rs 3773 crore in Q1 June 2007.
Capital goods stocks extended gains. Larsen & Toubro rose 3.4% to Rs 3,486.65. It hit an all-time high of Rs 3,501 today after it acquired switchgear company in Malaysia. Bharat Heavy Electricals (up 3.89% to 2,421.20) and Suzlon Energy (up 0.54% to Rs 1,778.10) edged higher.
Metal stocks extended gains. Tata Steel (up 0.48% to Rs 849.60), Hindalco Industries (up 3.26% to Rs 175.85) edged higher.
DLF rose 2.92% to Rs 918.55. It touched a new high of Rs 929.95 ahead of its board meeting later today to consider overseas acquisitions and fund raising offshore.
ONGC (up 5.66% to Rs 1,066.45), Grasim Industries (up 4.14% to Rs 3,800.40), ACC (up 3.46% to Rs 1,260.30) edged higher.
Cipla declined 1.14% to Rs 191.05.
Power Finance Corporation was up 1.61% to Rs 211.40 after it said its shareholder approved borrowing up to Rs 100000 crore
Bharati Shipyard was down 0.79% to Rs 570.65 after it said that Shipping Corporation of India would acquire four anchor-handling tugs cum supply vessels from the company for $89.28 million.
DIC India moved up 5.08% to Rs 195.50 after it priced rights share issue at Rs 225 each.
State Bank of India rose 1.08% to Rs 1,944.55 on BSE, on cutting interest rates on new loans for homes, automobiles and farm equipment in the festival season.
Indowind Energy jumped 7.95% to Rs 170.35 after it reported a net profit of Rs 2.31 crore in Q1 September 2007.
Adlabs Films soared 10.38% to Rs 714.90 after the Bombay High Court approved the company’s proposal to amalgamate its wholly owned subsidiary with itself.
ICICI Bank was up 1.99% to Rs 1,089.70 after global investment firm CLSA maintained buy rating on the stock with target price of Rs 1150.
IT People (India) soared 9.13% to Rs 40.65 after its board approved raising funds through various means.
Side counters, Triton Valves (up 20% to Rs 2,137.30), Ennore Coke (up 20% to Rs 31.80), Ashiana Housing (up 20% to Rs 357.40), Nagreeka Capital (up 19.96% to Rs 102.15) and Jindal Drilling (up 20% to Rs 1,106.60) edged higher.
G L Hotels (down 9.08% to Rs 330), Infotrek Syscom (down 8.78% to Rs 63.40) and Nagpur Power (down 8.41% to Rs 56.10) edged lower.
European markets were firm. France’s CAC 40 (up 0.47% to 5,868.35), UK’s FTSE 100 (up 0.91% to 6,693.40), Germany’s DAX (up 0.77% to 8,048.18) edged higher.
Asian markets, which opened before the Indian markets, were trading higher today. Hong Kong’s Hang Seng (up 1.97% to 29,133.02) Singapore’s Straits Times (up 1.61% to 3,875.77), Japan's Nikkei (up 1.64% at 17,458.98), South Korea’s Seoul Composite (up 0.87% to 2,058.85), Taiwan's Taiwan Weighted (up 0.6% to 9,697.67) edged higher.
The BSE 30-share Sensex rose 378.01 points, or 2.07%, to 18,658.25, a record closing high on Wednesday, 10 October 2007. Sensex had earlier completed its 17,000 to 18,000 journey in just 8 trading sessions, the second fastest 1,000-point rally ever. The market had hit 17,000 mark on 26 September 2007.
Heavy FII buying and hopes of a further cut in interest rates by the US Federal Reserve at its next policy meeting on 30-31 October 2007 have boosted the bourses in the past few days.
Dhanus Technologies fixes IPO price
At Rs 295 a share
Telecom services provider Dhanus Technologies has fixed the issue price of its IPO at Rs 295 a share, the top end of the Rs 280-Rs 295 price band.
At the IPO price of Rs 295, the PE multiple works out to 23.9, based on FY 2007 consolidated EPS of Rs 12.40.
The company had entered the capital market on 10 September 2007 with a public issue of 38.35 lakh equity shares of Rs 10 each. The issue was subscribed 28.47 times when it closed on 12 September 2007.
The qualified institutional buyers category was subscribed 36.17 times. The non institutional investors category was subscribed 26.73 times. The retail investors category was subscribed 18.6 times.
The company proposes to utilise the proceeds to expand its infrastructural facilities and equipment base, construct a new corporate office and network operating centre.
Chennai-based Dhanus Technologies offers telecommunication and unified messaging and enhanced logistics services. The company's BPO unit has clients from the US, UK and Australia.
On a consolidated basis, Dhanus Technologies reported a net profit of Rs 22.17 crore on revenue of Rs 92.13 crore in the year ended 30 June 2007.
Morning Call
Market Grape Wine :
In House :
Nifty at a supp of 5400 and 5350 levels and resistance at 5480 and 5540 levels .
Buy : Intraday : Colgate above 421.3 target 434 s/l of 417
Buy : Intraday : VSNL above 511 target 525 s/l of 504
Buy : Intraday : in F&O RComm
Out House :
Markets at a support of 18558 & 18484 levels with resistance at 18881 & 19019 levels .
Buy : RIL
Buy : REL
Buy : HDIL & DLF bullet
Buy : Bharti
Buy : JpAsso
Buy : Ibullsreal & IBUlls
Buy : Centextile
Buy : Maruti & M&M bullet
Buy : INFY at dips
Dark Horse : ABAN , RPL , REL , HDIL , RIL , Jp , DLF & SBIN
Bullet for the Day : IBullReal & Maruti with stop loss .
Latest Grey Market Premiums
Reliance Power - GREY MARKET PREMIUM at 40
Dhanus Tech 295 70 to 75
Koutons Retail 415 75 to 80
Consolidated Construction 510 200 to 205
Supreme Infra 108 60 to 65
Saamya Biotech 10 6 to 8
MAYTAS Infra 320 to 370 135 to 140
Circuit Systems (India) Ltd 35 3 to 3.5
ICICI, SBI cut home loan rates
ICICI Bank Ltd, India's second-biggest bank, has cut interest rates on home loans and other retail loans by 25-50 basis points with immediate effect, a spokesman said on Thursday.
The move comes after leader State Bank of India on Wednesday cut interest rates on new loans for homes, automobiles and farm equipment in a festival season offer that runs until the end of 2007.
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