Omaxe Ltd IPO Note
Tuesday, July 17, 2007
Surprisingly, the Omaxe issue is priced at a discount to its net asset value and a reasonable earnings multiple.
Realty issues are the centre of attraction at the bourses these days. Especially after realty bellwether DLF made its debut in the stock market raising over Rs 9,000 crore, a slew of realty companies are knocking at the doors of the capital market to grab their share of the booty.
So much so that developers are vehemently denying talks of correction in real estate prices and venturing out confidently to raise money. The latest in the fray is North India based developer Omaxe, which plans to raise Rs 470-605 crore through its public issue comprising of 1.78 crore shares with a greenshoe option of 17.5 million shares at a price band of Rs 265-310 per share.
A large part of the issue proceeds is earmarked for making payments for land acquisitions (Rs 325 crore) while Rs 200 crore will be used to retire debt. The rest will be devoted to development and construction of projects.
Omaxe, which forayed in the real estate development business in 2001, has scaled up its business at a whopping pace, establishing itself among the leading developers in the northern capital region (NCR) and neighbouring states of Haryana, Punjab and Uttar Pradesh.
The company mainly focused on integrated township development so far, which is a highly profitable segment in the real estate business. Apart from this, it has carved a niche for itself in high-end luxury apartments priced upward of Rs 75 lakh-1 crore, in the NCR region.
So far, the company has developed and delivered approximately 5.13 million sq ft of built-up area, which comprised of eight residential and two commercial projects. From hereon, the company is scaling up rapidly, and it has 52 new projects planned, of which 38 are under construction.
These projects are under construction upon nearly 67 million sq ft area, which is a part of its total land reserve of nearly 150 million sq ft, or 3,255 acres. Says Rohtas Goel, chairman and managing director, Omaxe, “All our land bank has been totally paid for, and the company holds a clear title,” talking about the company’s land reserve.
Since the company is developing projects on a large part of its current land reserves simultaneously, the reserves would deplete faster, as compared to its peers. This creates the need to replenish the land bank faster. On the flipside, a large number of ongoing projects provides a visible earnings stream over the forthcoming years.
“Even though we delivered just 5.13 million sq ft till FY06, we have completed construction (not sold) of 20 million sq ft in FY07, and and plan to carry out construction on about 30 million sq ft in FY08 and FY09 each,” claims a confident Arvind Parakh, chief executive officer – corporate strategy and finance, Omaxe.
Considering the fact that Omaxe has been in the business for just over six years, it has grown at a phenomenal pace. The company’s revenue has grown at a compounded rate of around 72 per cent over FY04-FY07 annually.
As the business mix moved from construction contracting to real estate development, the profitability witnessed dramatic improvements. Its operating margins, which were as low as 7-7.5 per cent in FY04-FY05, bolstered to over 24 per cent in FY07, thus growing at a compounded rate of 163 per cent over the same period.
The trend is reflected in the net profit margins too. “With the issue funding, we are planning to retire debt of around Rs 200 crore, which would bring down the cost of finance, thus improving profitability further,” says Parakh.
So far, the company followed the build-and-sell model even for its commercial projects. Going forward, Omaxe plans to increase the proportion of commercial properties (around 7 per cent of total revenues) in its project mix, and adopt the build-and-lease model, which would ensure regular cash flows in the form of rental income.
There is, however, a risk of slower revenue growth owing to a lease model from the commercial property segment. Going further, this segment is likely to account for about 20-25 per cent contribution to the company’s topline.
In September 2006, real estate consultancy Trammel Crow Meghraj had carried out a valuation of all the 47 projects of Omaxe aggregating about 140 million sq ft (2,837 acres), and had arrived at a net asset value (NAV) of Rs 19,700 crore. Post-issue, the company will have market capitalisation in the range of Rs 4,214- Rs 5859 crore, which amounts to a meagre 22-30 per cent of the estimated NAV.
“This valuation has not been mentioned in the red herring prospectus following SEBI guidelines which bar real estate players from providing valuations,” said Rohtas Goel, chairman.
Looking at the past growth trend of the company and the robust ongoing project pipeline, Omaxe appears to promise a steady flow of earnings in the coming years.
At its estimated FY08 earnings, the price-earnings multiple for the offer works out in the range of 7-10 times, which appears reasonable considering the underlying execution risks arising out of the massive scale-up plans.
Parakh counters this risk: “Before entering real estate development, we have been in the construction contracting business since 1987, and have a track record of delivering nearly 30 million sq ft of built-up area to various clients.”
In addition, the issue is priced at a significant discount to its listed peers. Summing up the project pipeline, the company’s NAV and the recent revival of real estate stock, the issue appears worth subscribing, as there are factors supporting potential upside.
Finance Minister P Chidambaram on Tuesday said it is possible for the country to achieve a 10 per cent economic growth in the next financial year.
"Achieving a 10 per cent growth in 2007-08 is tough, but it is possible in 2008-09. That will be a fitting finale for the UPA government's five-year tenure," Chidambaram said while addressing the India Policy Forum here.
The country's GDP grew 9.4 per cent in 2006-07 and as per the Economic Advisory Council to the Prime Minister, it is poised to achieve a 9 per cent economic growth in the current fiscal.
The Reserve Bank of India (RBI), however, in its Annual Policy statement has projected GDP growth rate of 8.5 per cent for 2007-08.
Chidambaram said it would be possible to push up the economic growth by improving the performance of agriculture, which is stagnant for the last nine years.
Commenting on the comparisons which economists make between India and China, Chidambaram said the country's 9 per cent GDP growth rate compares well with 10-10.5 per cent growth rate of China.
He said the country's growth rate vis-a-vis China was not bad in view of the fact that it had to adhere to democratic norms and generate consensus, evolve laws and endure criticism before moving forward.
Reliance Communications has grand plans. The Anil Ambani-led telecommunications major aims to have the single largest wireless network in the world by year-end, covering over 900 million Indians.
The company will invest Rs 16,000 crore (Rs 160 billion) for network expansion in FY08, said RCom chairman Anil Ambani on Tuesday in Mumbai.
RCom is looking at inorganic growth route across the world. The company will cover 23,000 towns, or every single Indian habitation with a population of over 1,000 persons, he said. The company will cover almost 100 per cent of all rail routes, all national highways, and 84 per cent of all state highways, he added.
The company has more than 1 million retail customers in the United States, the largest for any Indian company across any sector, a media release from RCom said.
RCom has launched virtual international calling and voice content services in the US, Canada, UK, Australia and New Zealand. The company is one of the leading providers of international connectivity and data services to telecom operators, content providers and Internet communities.
FLAG Telecom has turned around and delivered profits at the net level for the first time since its inception. FLAG connectivity to expand from 40 to 60 countries across the world, representing over 80 per cent of global population and 90 per cent of global GDP.
Yipes acquisition will transform RCom's position in data communications services business in the US and globally.
Yipes operations in 14 major cities of the US, from New York to Los Angeles, from Boston to Houston, from Washington to Seattle. Yipes has nearly 1,000 enterprise customers in the US.
RCom to take the Yipes franchise global, leveraging FLAG network in nearly 40 countries, including India, the Middle East, Asia and Europe. RCom enterprise business serves more than 800 of the top 1,000 companies in India.
RCom wireline network expanded to cover almost 5,00,000 buildings, located in 360 business districts in the top 40 cities of India.
RCom has secured a higher share of the IT and telecom spends of enterprise customers, with market share of more than 50 per cent in new business. RCom has also won repeat orders from premium marquee customers from banking to finance, from aviation to hotels, from IT to BPO.
RCom is already deploying broadband and wireless WiMax network in top 10 cities to serve over 4 million small and medium enterprises, RCom has equipped Bangalore and Pune to provide premier WiMax business solution on an "anyone, anywhere, anytime" basis.
Next generation DTH network is in the final stages of preparation, and services will be launched before the end of the year. RCom plans to launch premium IPTV services in the top cities of India.
Reliance multi-play IPTV platform will leverage optical fiber Ethernet network to deliver the most advanced suite of services.
RCOM undertaking 4 key initiatives for unlocking value this year.
* Unlocking of value in TowerCo through placement of minority stake to financial investors at an advanced stage.
* Expect positive surprise in TowerCo valuation compared to analyst estimates.
* Yipes acquisition to substantially enhance FLAG Telecom valuation.
* Unlocking of value in FLAG Telecom through private placement of equity and/ or international listing of shares before year-end.
Further unlocking of value through development of Special Economic Zone at Dhirubhai Ambani Knowledge Centre focused on IT and IT-enabled services.
IT/ITES SEZ project already cleared by the GOI's Board of Approvals.
RCom will spin out global-size and profitable BPO business leveraging in-house skills and operational capabilities. RCom in-house BPO enjoys unique competencies and demonstrated operational excellence in telecom, BFSI, utilities and entertainment verticals.
RCom BPO has over 7,800 employees providing multi-lingual support in voice and back office services from multiple locations.
Unlocking of hidden value through 4 initiatives could represent a significant proportion of RCom's current market capitalisation.
Over the next few years, RCOM will have over 100 million customers, becoming one of the top 5 global telecom players. Convergence between telecom, media, entertainment and the Internet will transform how telecom companies are viewed by all stakeholders.
Digital connectivity brings infinite possibilities of creation, consumption and proliferation of media content in all its diverse forms. RCom will provide the interface and multiple delivery platforms for digital content to be served to hundreds of millions of customers.
Indians prefer to park their savings in low-yielding bank deposits and postal schemes rather than a booming stock market, which they see as risky, a survey said this week.
Based on more than a million rural and urban households, it found about 45 percent of India's paid workers, or 144 million people, put their savings in bank deposits, and state-run banks were preferred over private ones due to government guarantees.
Commissioned by IIMS Dataworks and Invest India Economic Foundation last December and completed in June, the survey estimated India's paid workforce at 321 million.
About 105 million salary earners -- out of a population of 1.1 billion -- own a life insurance policy. About 21 million are expected to buy policies in the next 12 months, while 36 million invest in postal saving schemes, the survey said.
Over 50 percent of respondents felt investing in equities was risky and only 5.6 million had an electronic share holding account.
India's stock market hit an all-time high on Tuesday and has gained 11 percent so far in 2007, following a 47 percent rise in 2006.
The survey tracks behavioural patterns and preferences for financial products among individuals. More than 100,000 people from the sample households were polled individually. They were aged 18 to 59 and came from in 852 towns and 931 villages.
About 94 million paid workers live in urban areas. Females account for nearly 13 percent of the workforce, the survey said.
India has 4.3 million active retail equity investors, of whom 3.5 million live in urban areas. Approximately 135 billion rupees in fresh investments by workers are expected in the next 12 months, the survey said.
Mutual funds have about 5.3 million investors and 106 billion rupees of new investments are expected, it said.
India's gross domestic savings rate was 32 percent in 2005/06 -- its highest since 1950-51 and one of the highest in the Asia-Pacific region, according to central bank data.
Global cues were mixed and nothing to settle on...But buying in Index heavyweights particularly Reliace helped the indices to gain. However profit booking crept in the mid session and pared off all the gains. Reliance Industries continued to support the indices right from the start of the session on the back of Gas discovery news. Technology counter continued to bear the brunt of Rupee appreciation. Profit booking was witnessed on the Auto, Banking and Metal stocks along with small and mid caps. Celestial Labs which got listed today closed at a premium. Higher Crude continued to impact the Aviation counter along with the Oil marketing companies. Some stock specific action was seen ahead of resutls. However we believe that normally stocks run up ahead of numbers and see profit taking once the results are out. So its better to avoid buying post good numbers. Better to wait for the cool off.
Sensex closed down by 32 points at 15278.95. Weighing on the Sensex were losses in RCVL (561.15,-2 percent), BHEL (1622,-2 percent), SBI (1579.5,-2 percent), TISCO (680.25,-2 percent) and Bharti Tele (862.05,-2 percent). Losses were restricted by gains in Guj Ambuja (137.2,+3 percent), RIL (1825.95,+3 percent), TCS (1155.95,+2 percent), Dr Reddys (674,+2 percent) and Hero Honda (695.5,+2 percent).
Reliance communication ended 2% lower. Company increased its subscriber base by 1.45 million in the month of June. This makes Reliance the fastest growing CDMA service provider in the country. The talk time registered by the company is 50 crore minutes per day. Company continues to grow aggressively by lowering the price barrier. The Rs.777 plan launched by the company helped in adding a million customers in just a week. Company intends to add 100 million customers in the next few years. In order to support the increasing subscriber base Company intends to set up a network of 23,000 towers through out the country. This will involve a capex of Rs.16,000 cr. A $ 400 million contract was recently awarded by the company to expand its wireless network to over 20,000 towns and 600,000 villages in the country. Tower business of the company would get listed once the private equity placement deals of the company is through. Mr. Anil Ambani also informed that the private placement of the equity deal is in advanced stages. We believe company is well placed in the telecom sector and could be considered as a long term investment option.
Bajaj Auto continued its weakness. Company reported a net profit of Rs 226 Cr against Rs 266 Cr in the corresponding quarter of the previous year, down by 15%. PAT margins saw a 134 bps yoy decline. Net Revenues were down 4% at Rs 2109 crore from Rs 2202 crore (YoY). Company intends to launch a new model in the month of September. The new bike will provide comforts of 125 cc bike However, The price and economy would be in line with the 100 cc bikes. We believe that could help in bringing the volumes, which would be the key to success. This will help in beating Hero Honda the arch rival of the company in the Two wheeler business. Bajaj was also looking for a big-ticket acquisition in the European motorcycle market. We believe that the margins pressure is unlikely to ease much on the back of cut throat competition. The dependence on the new platform is excessive. This launch is due in September. There is also the demerger which has to take effect. Its not a very clean demerger and it seems more like a family rearrangement of holdings. Do read our note for more details.
Nitin Fire was 3% higher. The company is into manufacturing of Fire protection equipments and Cylinders (Industrial and CNG). Fire protection is growing at 20-25% but it is CNG cylinder where we see exponetial growth. To cater this growth Nitin has put plant in Vishakhapatnam which was suppose to go on strem by July 2nd week. Probably this was the reason for action in stock. EKC is the biggest player here (3rd largest globally) and agressively expanding to become world no. 1. We remain positive on both the company but valuation is what makes it unattractive.
Technically Speaking : Sensex traded between an intra day high of 15,440 and low of 15,272. Declines outnumbered Declines in the ratio of 2:1. Support lies at 15,225 levels. The resistance is at 15,000 levels. Turnover was to the tune of Rs.6,023 cr for the day.
The market was poised for another positive close, but a late bout of selling dragged the Sensex below 15300 and halted its upmove. Shrugging off the mixed trend in the US and European markets, the Sensex took a cue from the Asian indices and resumed 47 points above its last close at 15358. Extending the upmove on hectic buying support, the Sensex breached the 15400 mark and touched the day's high of 15440. The market remained above the crucial 15350 level for a major portion of the day, but it witnessed a major slump towards the close and touched an intra-day low of 15272. The Sensex closed with losses of 21 points at 15290, while the Nifty was down 15 points at 4497.
The breadth of the market was marginally weak. Of the 2733 stocks traded on the BSE, 1,692 stocks declined, 978 stocks advanced and 63 stocks ended unchanged. On the sectoral front, the BSE Oil & Gas index was up 1.46% at 7985 and the BSE IT index gained 0.65% at 4880 while the BSE CD index closed marginally higher at 4230. However BSE Metal index, BSE CD index, BSE AUto index and BSE PSU were down 1% each.
Among the major losers M&M shed 2.63% at Rs780, Reliance Com declined 2.31% at Rs561, BHEL fell 2.16% at Rs1623, SBI slipped 2.09% at Rs1580, Tata Steel dipped 1.98% at Rs681, Bharti Airtel lost 1.62% at Rs863 and Bajaj Auto slumped 1.61% at Rs2219. HDFC, Tata Motors, Grasim, HDFC Bank, REL, Cipla, Hindalco, L&T, ONGC and ACC were down 1% each. Ambuja Cements, however, gained 3% at Rs137, followed by RIL up 2.86% at Rs1827, TCS added 2.39% at Rs1155, Dr reddy's jumped 1.79% at Rs674 and Satyam was up by 1.30% at Rs488. Wipro and ITC were up 1% each. ICICI Bank, NTPC, Infosys and Ranbaxy ended the day in the positive territory.
Over 23.22 million Reliance Natural Resources shares changed hands on the BSE followed by Bella Steel (14.29 million shares), Celest Lab (77.87 lakh shares), Silverline Technologies (74.80 lakh shares) and IFCI (74.03 lakh shares).
Value-wise Indiabulls Real Estate registered a turnover of Rs403.62 crore on the BSE followed by Indiabulls (Rs238.85 crore), DLF (Rs185.94 crore), RIL (Rs166.85 crore) and GMR Infrastructure (Rs153.31 crore).
The market saw a complete trend reversal in today’s (17 July 2007) trading session. After remaining firm till early-afternoon trade, the market turned volatile later and started declining on profit booking at higher level. Weakness in European stocks weighed on the domestic bourses.
Shares from metal, auto and banking pack declined, while cement, IT and real-estate stocks saw buying interest.
The BSE 30-share Sensex lost 21.40 points or 0.14% at 15,289.82. It opened higher at 15,357.60 and surged to strike an all-time high of 15,440.20 at 10:43 IST. The index slipped to a low of 15,272.46 at 15:13 IST, as selling intensified
Prior to today’s fall, the Sensex had risen 400.60 points to a record closing high of 15,311.22 on 16 July 2007, from 14,910.62 on 11 July 2007
The S&P CNX Nifty also struck an all-time high of 4,550.25 today. It lost 15.40 points or 0.34% at 4,496.75. The Nifty July 2007 futures settled at 4485, a discount of 11.75 points compared to spot closing.
The market breadth turned negative as selling emerged in small- and mid-cap stocks. On BSE, 1,724 shares declined as compared to 985 that advanced, while 62 remained unchanged. The market breadth was strong in opening session, but declined as the day progressed.
The BSE Mid-Cap Index slipped 45 points or 0.70% to 6,789.57 after striking an all time high of 6,906.04. The BSE Small-Cap index declined 73 points or 0.88% to 8,207.77, after hitting an all time high of 8,354.60.
The total turnover on BSE amounted to Rs 6,023 crore as against Rs 5,392.11 crore on Monday, 16 July 2007. The NSE F&O turnover was Rs 45,837.68 crore as compared to Rs 38884.18 crore on Monday, 16 July 2007
Among the Sensex pack, 19 declined while the rest advanced.
The ongoing infrastructure boom continued to boost cement stocks. Cement major Ambuja Cement advanced 3.15% to Rs 137.50 and was the top gainer from the Sensex pack: 19.84 lakh shares were traded in the counter on BSE.
JK Cement (up 0.97% to Rs 156.10), Birla Corporation (up 0.86% to Rs 294), and Madras Cement (up 1.22% to Rs 3540) were the other gaines from the cement pack.
Index heavyweight Reliance Industries (RIL) rallied to an all-time high of Rs 1,834 on reports it had made a gas discovery in the Cauvery basin. It settled 2.80% higher to Rs 1,826.25, on 9.14 lakh shares. The size of the discovery will be known after appraisals. The company had acquired the block under the third round of exploration bidding. It has sent the discovery notice on the find to the directorate general of hydrocarbons (DGH).
Led by RIL, the BSE Oil and Gas Index advanced 1.46% to 7,990.02 ands was the top gainer among the sectoral indices on BSE.
IT stocks staged a comeback, led by better-than-expected results from TCS. The BSE IT Index gained 0.65% at 4,874.93.
TCS jumped 2.23% to Rs 1,153. After market hours on Monday, 16 July 2007, TCS posted a 36% surge in net profit to Rs 1,202.93 crore in the first quarter ended June 2007 compared to Rs 882.66 crore in Q1 June 2006. Total income advanced 27% at Rs 5,364.67 crore (Rs 4,225.62 crore). Growth in revenue and profit was 0.8% and 0.7%, respectively, compared to the fourth quarter ended March 2007. TCS does not make sales and profit forecasts.
Satyam Computer Services advanced 1.23% to Rs 488 on bagging four major deals in Singapore, Australia and UAE for IT services and outsourcing. Two of these deals from the Singapore government are primarily outsourcing and IT services contracts. All these deals are among the largest hauls to-date in the specific regions following its participation in recent public and private tenders.
Wipro gained 1.25% to Rs 507. However Infosys slipped 0.07% to Rs 1,933.
Auto stocks saw profit booking after a recent rally, as crude oil headed towards $75 per barrel mark. Mahindra & Mahindra (M&M) slumped 2.46% to Rs 801, and was the top loser from the Sensex pack.
Tata Motors (down 1.70% to Rs 746.30) and Bajaj Auto (down 1.70% to Rs 2217) were the other losers from the auto sector. The BSE Auto Index lost 1.3% to 5,015.57.
Banking pivotals State Bank of India (down 2.37% to Rs 1,575.25) and HDFC Bank (down 1.55% to Rs 1,196.95) slipped on profit booking. The BSE Bankex slipped 0.4% at 8,353.68.
Shares of state-run banks declined on profit taking after a recent surge. Indian Overseas Bank (down 1.76% to Rs 133.80), Canara Bank (down 3% to Rs 285), Union Bank of India (down 3.23% to Rs 151.50), and Vijaya Bank (down 1.86% to Rs 55.45) edged lower. All these shares slipped sharply from their day’s highs.
Karnataka Bank (up 7.36% to Rs 197.60) and Allahabad Bank (up 1.35% to Rs 101.25) rallied.
Shares from the real-estate sector surged on the belief that interest rates have peaked and the Reserve Bank of India may not raise them further in its monetary policy review on 31 July 2007. The overall buoyancy was reflected from the BSE Realty index, which surged to its lifetime high of 8,144.94 in intra-day trade today, 17 July 2007.
Indiabulls Real Estate (up 5.62% to Rs 592.20), Akruti Nirman (up 4.68% to Rs 516.75), and DLF (up 0.91% to Rs 616.40) gained. Unitech lost 0.76% to Rs 555.40.
Metal stocks slipped on selling pressure. The BSE Metal Index declined 1.85% to 11,868.44, and was the top loser from sectoral indices on BSE.
Tata Steel (down 1.83% to Rs 681.55), Sterlite Industries (down 4.50% to Rs 635), JSW Steel (down 3.42% to Rs 697), and Sail (down 2.98% to Rs 153.25) edged lower from the metal pack.
The BSE Capital Goods Index lost 1.74% to 12,782.07. Siemens India (down 8.06% to Rs 1340), Praj Industries (down 3.35% to Rs 435), Bhel (down 2.23% to Rs 1,622), ABB (down 2.13% to Rs 1088), L&T (down 1.42% to Rs 2,379), and Alstom Projects (down 2.07% to Rs 838), declined on profit booking.
Celestial Labs settled at Rs 67.20 on BSE, a premium of 12% over the IPO price of Rs 60. The scrip debuted at Rs 70, touched a high of Rs 75 and a low of Rs 66.15 during the day. On BSE, 77.87 lakh shares were traded in the scrip.
Reliance Natural Resources (RNRL) rose 3.6% to Rs 43.15 on high volumes of 2.32 crore shares. The stock rose ahead of Bombay High Court's final verdict on the allocation of gas from Reliance Industries' (RIL) Krishna-Godavari block, due on 18 July 2007.
Tata Power declined 3.45% to Rs 670 on turning ex-dividend. It had distributed a dividend of Rs 9.50 a Rs 10 share. The company had announced the dividend on 30 May 2007
FCI OEN Connectors rose 2.63% to Rs 687 after parent FCI of France set an exit price of Rs 700 per share to delist the shares of the Indian unit.
Mastek rose 3.91% to Rs 343.05 after it acquired 90% stake in US-based Vector Insurance Services LLC, a technology solutions provider and third party administrator that focuses on the North American life and annuity insurance industry, on Monday, 16 July 2007. The acquisition is being funded through internal accruals.
Tata Tea slipped 3.80% to Rs 822 on reporting 3.50% fall in net profit in Q1 June 2007 to Rs 43.00 crore as against Rs 44.56 crore in Q1 June 2006. Sales rose 14.02% to Rs 290.01 crore (Rs 254.35 crore).
Dolphin Offshore 10.52% to Rs 250 after it posted a 59.24% fall in net profit to Rs 2.47 crore in Q1 June 2007 as against Rs 6.06 crore in Q1 June 2006
Indiabulls Financial Services surged 4.46% to Rs 674 after 13.7 lakh shares changed hands in a block deal on the BSE at Rs 655.50 each
Bharat Earth Movers (BEML) slipped 2.19% to Rs 1,197 after 49 lakh shares issued in its recently concluded follow-on public offer (FPO), were admitted to trading on the bourses today, 17 July 2007. BEML had priced its FPO at Rs 1,075 per share. The FPO received a good investor response. The FPO was subscribed 30.65 times. The issue closed on Tuesday, 3 July 2007.
Zee News jumped 10.75% to Rs 49.95 after reporting a net profit of Rs 6.38 crore on sales of Rs 74.46 crore in Q1 June 2007. Figures for the corresponding period in the previous quarter were not available. Its operating profit stood at Rs. 11.91 crore. During this period, advertisement revenue was Rs 59.24 crore and the subscription revenue was at Rs 13.64 crore. The company had declared the results after market hours, yesterday, 16 July 2007.
Lanco Infratech declined 1.43% to Rs 251 following two special purpose vehicles of the company bagging contract for construction and operation of two road projects in Karnataka under the national highways development project. The project involves six laning of 16 km stretch and four laning of the remaining stretches. The total project cost is estimated at Rs 1,006 crore. The concession periods are 20 and 25 years for the two projects, respectively, including 30 months of construction period.
Asian markets were mixed today, 17 July 2007, with Japanese shares of insurers such as Mitsui Sumitomo Insurance and electricity generators such as Tokyo Electric Power Co. slipping after a powerful earthquake rocked northwestern Japan on Monday, 16 July 2007. Nikkei slipped 0.12% at 18,217.27.
However, Hong Kong's Hang Seng (up 0.45% at 23,057.30), Taiwan's Taiwan Weighted (up 0.98% to 9,509.73) and Shanghai Composite (up 1.94% to 3,896.19) edged higher.
All the European markets were trading with losses, except Spain’s Madrid General which rose 0.59%.
US blue chip stocks gained on Monday, 16 July 2007, as news of a potential big telecom deal involving Verizon pushed the Dow Jones Industrial Average to a new record close, and put the index closer to 14,000. The Dow rose 43.73 points, or 0.31%, to 13,950.98. The benchmark index again set a high of 13,989.11, less than 11 points from 14,000.
Broader stock indicators, however, slipped. The Standard & Poor's 500 index slipped 2.98 points, or 0.19%, to 1,549.52. The S&P also set a fresh trading high of 1,555.90. The Nasdaq Composite index fell 9.67 points, or 0.36%, to 2,697.33.
Oil prices rose above $74 a barrel on concerns arising from closure of a North Sea pipeline and a sense that more operating refineries will increase demand for oil. On the Nymex, light, sweet crude for August delivery gained 22 cents to settle at $74.15 a barrel.
The Prime Minister’s Economic Advisory Council, on Monday, 16 July 2007 projected India’s GDP growth at 9% in 2007-08. It has warned that the constraints posed by farm and power sectors may make sustaining this level difficult in the years ahead. In its report, the Council expected inflation to remain close to 4%
Cluster: Emerging Star
Price target: Rs725
Current market price: Rs645
Price target revised to Rs725
- UTI Bank's Q1FY2008 profit after tax (PAT) was slightly lower than our expectations of Rs188 crore at Rs175 crore, up 45.2% year on year (yoy). The PAT was lower than expected due to higher than expected operating expenses during the quarter.
- The net interest income (NII) was up by 38.8% to Rs446.8 crore compared with our estimate of Rs471 crore. UTI Bank's reported net interest margin (NIM) expanded by four basis points yoy but declined by 34 basis points quarter on quarter (qoq). A sequential fall in the NIM was expected as the bank had invested in low yielding priority sector securities. However, the sequential increase in the cost of funds has been sharp which has resulted in a lower than expected NII.
- The bank has again reported a robust growth, with assets up by 49% yoy and 8% qoq, driven by a strong advances growth of 60% yoy and 12% qoq. The deposits have grown by 45% yoy and 3.9% qoq with an improvement in the current and savings account (CASA) ratio on a year-on-year (y-o-y) basis.
- The non-interest income was up 70.8% yoy and 13.7% qoq to Rs342.3 crore, much above the expectations of Rs273 crore mainly driven by a higher trading income of Rs70 crore, which grew by 346% yoy and 64% qoq. The core fee income was up 67.6% yoy.
- The operating expenses were up by 76% yoy to Rs421.2 crore mainly driven by higher staff expenses, which reported an 85.6% y-o-y and 66.3% sequential growth.
- Although UTI Bank has grown at a robust pace in the last couple of years, yet there are no alarming signs of any deterioration in its asset quality. The net non-performing asset (NPA) level (as a percentage of its net customer assets) improved to 0.59% from 0.61% in Q4FY2007.
- UTI Bank has announced its plan to come out with a follow-on public offer (FPO) for 7.43 crore equity shares (26.3% of its existing equity base) to raise around $1 billion. We have assumed the FPO price to be Rs600 per share, up from Rs550 assumed earlier (as the minimum or floor price for the FPO has been decided at Rs575 per share). This would help the bank to raise around Rs4,459 crore.
- The NIM normally dips for the bank in the first quarter and then gradually picks up. The fee income, business growth and asset quality remain healthy, hence there is no major concern for the bank on the operational side. The capital raising would allow the bank to grow for the next three years without any further dilution. We feel UTI Bank has excellent growth potential which coupled with its strong management and earnings quality should allow it to trade at a slightly higher than its historical book value (BV) valuation band of 2.5-2.7x, as all the parameters that decide the valuations have improved considerably. At the current market price of Rs645 the stock is quoting at 20x its FY2009E earnings per share (EPS), 8.9x its FY2009E pre-provisioning profits (PPP) and 2.4x its FY2009E BV. We maintain our Buy recommendation on the stock with a revised price target of Rs725 at which level it will trade at 2.74x FY2009E BV.
Tata Consultancy Services
Price target: Rs1,425
Current market price: Rs1,128
Price target revised to Rs1,425
- Tata Consultancy Services (TCS) has reported a growth of 1.1% quarter on quarter (qoq) and 25.5% year on year (yoy) in its consolidated revenues to Rs5,202.8 crore during Q1FY2008. The sequential revenue growth was largely driven by a 7.6% volume growth in the international business and a 2.2% improvement in the billing rates and employee productivity. On the other hand, the appreciation in the rupee adversely affected the revenue growth by 6.4% on a sequential basis.
- The earnings before interest and tax (EBIT) margin declined by 250 basis points to 23.1% sequentially, largely due to the adverse impact of the rupee's appreciation (an impact of 258 basis points) and wage hikes (an impact of 208 basis points). On the other hand, the improvement of 220 basis points in the billing rates and productivity gains limited the decline in the margins. The operating profit declined by 9% qoq to Rs1,199.9 crore.
- The other income jumped by 68.9% qoq and 129.8% yoy to Rs151.6 crore. If the one-time income of Rs66.3 crore from the stake sale in SITEL is excluded from the other income of Q4FY2007, the other income has leapfrogged by 545.5% on a sequential basis. The jump in the other income component was aided by the gain of Rs107 crore on the foreign exchange (forex) cover during the quarter.
- The high other income and lower tax rate (due to a write-back of Rs29.3 crore of provision made earlier) enabled the company to report a 3.5% quarter-on-quarter (q-o-q) and a 34% year-on-year (y-o-y) growth in its consolidated earnings (adjusted for one-time items) to Rs1,156.2 crore.
- In terms of the outlook, the company doesn't give any specific growth guidance. However, it re-iterated that the demand environment continues to be robust and the gross employee addition would be higher than 32,462 reported in FY2007 (11,000 gross additions in Q2). The TCS management also expects to maintain the net margins on a full year basis, in spite of the steep appreciation in the rupee and the aggressive salary hikes in FY2008 (12-15% for the offshore employees and around 3% for the onsite employees). The loss at the operating level due to the pressure on the margins is expected to be offset by a higher other income resulting from the gains on the forex cover.
- The key operational highlights of Q1 are: (1) an addition of 54 clients; (2) a healthy mining of the existing client base in terms of a robust jump in the number of clients in all categories over the annual revenue run rate of $1 million; (3) a sequential growth of 4.3% in the revenues from the Top 10 clients (in spite of the adverse impact of the rupee appreciation); (4) the attrition rate in the information technology (IT) service business at a comfortable level of 11%; and (5) the closure of one large deal worth over $100 million and three deals of over $20 million each. On the flip side, there has been a slowdown in the sequential growth of revenues from the manufacturing industry vertical and global consulting practice.
- To factor in the exchange rate assumption of Rs40 for FY2008 and FY2009, we have revised down the FY2008 and FY2009 earnings estimates by 2.5% and 3% respectively. We maintain the Buy call on the stock with a revised price target of Rs1,425 (around 23x FY2009 earning per share [EPS]).
Cluster: Ugly Duckling
Price target: Rs484
Current market price: Rs330
Q1FY2008 results: First-cut analysis
- Zensar Technologies has announced a 9.7% quarter-on-quarter and 36.4% year-on-year growth in its consolidated Q1FY2008 revenue to Rs187.9 crore. The same is slightly lower than our estimates.
- However, the performance was disappointing on the margin front. The operating profit margin (OPM) plummeted by over 450 basis points to 9.7% on a sequential basis. The gross profit margin (GPM) declined by around 300 basis points due to the negative impact of wage hikes and appreciation of the rupee. The sequential increase of 19.8% in the selling, general and administration expenses to Rs34.5 crore further added to the 150-basis-point decline in the margin at the operating level. We suspect that the company could have also been affected by a one-time item related to the integration of the recently acquired ThoughtDigital or the setting up of a development centre in Poland during the quarter. Consequently, the operating profit declined by 25.3% quarter on quarter (qoq) and 8.9% year on year (yoy) to Rs18.2 crore.
- In line with the operating profit, the consolidated earnings also declined by 22% qoq and 8.6% yoy to Rs13.4 crore, which is much lower than our expectations of Rs15.8 crore for the quarter.
- At the current market price the stock trades at 10.1x FY2008 and 7.8x FY2009 earning estimates. We maintain our Buy call on the stock and would come out with a detailed update after the investor conference call tomorrow.
|iGate Global Solutions|
Reco price: Rs 286
Current market price: Rs 280
Broking firm: Edelweiss
|iGate Solutions exceeded analysts’ expectations for its first quarter FY08 results, where concerns had risen due to slow-down in the sub-prime mortgage market in the US and erosion of operating margins due to rupee appreciation.|
|The impact has been mitigated as the company has been able to manage costs, drive productivity, and increase its offshore contribution. As a result, revenues have been down 5.1 per cent q-o-q to Rs 200 crore for Q1FY08, marginally better than analysts’ expectation of a 6.5 per cent decline.|
|Owing to better realisation, improved utilisation, and increased proportion of offshore revenues, iGate’s operating margins were at 13.2 per cent, as against an expected 11.2 per cent, reporting a decline of 210 bps q-o-q. At Rs 286, the stock trades at 13.4 times and 8.8 times its estimated FY08 and FY09 earnings, respectively.|
Reco price: Rs 1930
Target price: Rs 1928
Current market price: Rs 1935.95
Broking firm: Man Financial
|Man Financial downgraded its recommendation from “Buy” to “Neutral”, revising its earnings estimates for Infosys. Infosys’ revenues remained flat sequentially in rupee terms during Q1FY08, while its operating margins declined 300 basis points sequentially, on account of the impact of rupee appreciation, seasonal salary hikes, and visa costs. Net profit too, declined q-o-q by 5.7 per cent to Rs 1,079 crore in spite of higher other income and lower effective taxes.|
|Man Financial expects earnings growth momentum to further slow down, as earnings may grow at a compounded annual rate of 19.3 per cent between FY07-FY09, as against a compounded growth of 42.3 per cent between FY07-FY07.|
|As a result, the earnings estimates are revised downward by approximately 7 per cent and 16 per cent for FY08 and FY09 respectively. At Rs 1928, Infosys trades at 23.9 times and 20 times its estimated FY08 and FY09 earnings, respectively.|
Reco price: Rs 2,195
Current market price: Rs 2171
Broking firm: ASK Securities
|Bajaj Auto reported topline of Rs 2,110 crore, a drop of 4.2 per cent y-o-y, weakest in the last five years. This weak performance could be attributed to the drop in volumes, which fell 11.8 per cent y-o-y on account of high interest rates and slowdown in lending.|
|The decline in revenues was arrested due to better than expected realizations. Operating margins during the quarter declined by 330 bps y-o-y to 13.1 per cent leading to an 18 per cent y-o-y fall in net profit to Rs 226 crore.|
|Going forward, ASK Securities expects higher volume growth from second half of FY08, riding on successful launch of the new platform and correction in dealer inventory pipeline. Further, higher contribution from the executive and premium segments and price hikes on Platina and Discover recently are expected to improve the overall profitability.|
|ASK Securities upgraded the stock from “Sell” to “Hold”, as it arrived at a sum-of-the-parts valuation of Rs 2,260 per share for the company. At Rs 2,195, the stock is valued at 11.6 times and 9.8 times its estimated FY08 and FY09 earnings respectively.|
Reco price: Rs 555
Current market price: Rs 583
Target price: Rs 652
Broking firm: Pranav Securities
|KEC International, a player in the power transmission segment, has witnessed a compounded growth of 36.7 per cent annually in its topline, over the past three years. Currently, the company has an order book worth Rs 3,000 crore, around 1.4 times its FY07 sales.|
|For the coming three years, Pranav Securities expects KEC to record a topline growth of a compounded 23 per cent, while the bottomline is expected to grow at a compounded 29.3 per cent. Internationally transmission and distribution sector is expected to witness an investment of $ 424 billion in next five years. KEC International with more than 70 per cent of its order book from international business seems well set to take advantage of the available opportunity.|
|Further, the domestic power transmission sector has seen a boom in last few years and Pranav Securities expects it to sustain for the coming 4-5 years driven by government plans to add more than 1,00,000 MWs power generating capacity till 2012. At Rs 555, the stock traded at 15.7 times and 11.9 times its estimated FY08 and FY09 earnings respectively.|
Reco price: Rs 1,110
Current market price: Rs 1189.35
Target price: Rs 1,337
Broking firm: Prabhudas Lilladher
|Reliance Capital’s foray into insurance and asset management are expected to be the major contributors to its value. Further, the company’s entry into high growth ventures like broking and consumer finance to act as a catalyst for future growth.|
|Life insurance premium for the company is expected to grow by 4.6 times during FY07-FY09, increasing its market share from 4.8 per cent in FY07 to 8.25 per cent in FY09, amongst private insurers.|
|Add to this, its asset management business is expected to continue growing significantly, registering a compounded growth of 48 per cent over FY07-FY09. Again, its forays into broking, distribution and consumer finance would offer the company a huge opportunity to cross-sell its products.|
|Summing up the parts – life insurance, asset management, broking and consumer finance – Prabhudas Lilladher arrived at a valuation of Rs 1,337 per share for Reliance Capital, which implies a potential upside of over 20 per cent from the current levels.|
The market is expected to consolidate at higher levels. The 30-share BSE Sensex gained 38.50 points, or 0.25%, to 15,311.22, an all time closing high, on Monday, 16 July 2007. It also rallied to strike a lifetime high of 15,341.38 on the same day.
Asian markets were mixed today, 17 July 2007, with Japanese shares slipping on insurers such as Mitsui Sumitomo Insurance and electricity generators such as Tokyo Electric Power Co., after a powerful earthquake rocked northwestern Japan on Monday, 16 July 2007. Nikkei slipped 0.25% at 18,193.25.
However, Hong Kong's Hang Seng (up 0.06% at 22,968.80), Taiwan's Taiwan Weighted (up 0.12% to 9,428.41) and Shanghai Composite (up 0.54% to 3,842.73) edged higher.
US blue chip stocks gained on Monday, 16 July 2007, as news of a potential big telecom deal involving Verizon pushed the Dow Jones Industrial Average to a new record close, and put the index closer to 14,000. The Dow rose 43.73 points, or 0.31%, to 13,950.98. The benchmark index again set a high of 13,989.11, less than 11 points from 14,000.
Broader stock indicators however slipped. The Standard & Poor's 500 index slipped 2.98 points, or 0.19%, to 1,549.52. The S&P also set a fresh trading high of 1,555.90. The Nasdaq Composite index fell 9.67 points, or 0.36%, to 2,697.33.
As per provisional data, foreign institutional investors (FIIs) bought shares worth a net Rs 306.53 crore, while domestic institutional investors (DIIs) were net sellers of shares worth Rs 408.53 crore on Monday, 16 July 2007.
The Market may log gains due to optimism amongst the investors. The mixed trend in US markets, gain in European markets and rise in Asian indices trend in the present trades could move up the local indices in early trades. On Monday the Sensex reached its new intra-high of 15341 during intra-day trades and finally closed at 15311. Among the indices, the Nifty could test higher levels around the 4550-4660 range, while on the downside it has a key support around 4450-4385. The Sensex has a likely support at 15220 and may face resistance at 15365. Key announcements like Aventis Pharma, LIC Housing Finance, MTNL, NDTV, Zee Enterprises, Aztecsoft, Jubliant Organics, KPIT Cummins and Madras Aluminium are expected to announced their figures.
US Indices posted gains on Monday as news of a potential big telecom deal involving Verizon pushed with the Dow Jones to close at 13,950.98 - its 30th record close since the start of the year, before setting a new intra day high of 13,989.11, less than 11 points from 14k. The previous high of 13,932.29 came in Friday's session, which also saw a record close. However the Tech heavy weight Nasdaq closed at 2697, 10 points down.
Most of the Indian ADRs posted gains on the US bourses. Patni Computer led the pack with the gains of 4.58%, while Sterlite and MTNL gained around 2% each. VSNL and Infosys gained 1% each Rediff was the major losser and was down by 8.3% followed by Satyam, Wipro, Dr Reddy's, Tata Motors, ICICI Bank and HDFC Bank which fell around 1% each.
Crude oil prices moved up marginally, with the Nymex Light Crude oil for August delivery gaining 22 cents to close at $74.15 a barrel. In the Commodity space, the Comex gold for August delivery shed $1 to settle at $666.30 an troy ounce.
Market Grape Wine :
In House :
Nifty at a support of 4480 and 4451 levels with resis at 4530 and 4557
Intra day calls: Buy Parsavnath above 387.50 with a TGT of 405 and a SL of 381
Buy Reliance above 1791 with a TGT of 1825 and a SL of 1781
Buy Can Bank above 298 with a TGT of 308 and a SL of 294
Buy ACC above 1125 with a TGT of 1150 and a SL of 1115
Out House :
Markets at a support of 15055 & 15151 levels with resistance at 15342 & 15432 levels .
Buy : IciciBank & SBIN
Buy : RIL & RelCap
Buy : IndiaInfo bullet
Buy : Siemens & NTPC
Buy : PFC & REL
Buy : Hindalco & Sterlite
Buy : Sail & JSW
Buy : DLF & IBulls & IbullReal
Buy : Ankurdrugs & Aptech
Dark Horse : Century ,IBulls , IndiaInfo ,Sterlite , SBIN , REL , IciciBank & Century
Bullet for the Day : IbullRealty & NTPC with strict stop loss
NIFTY (4512) Supp 4489 Res 4532
BUY Biocon (456) SL 451 Target 466, 469
BUY Bombay Dyeing (644) SL 638 Target 655, 658
BUY Cairn (161) SL 157 Target 167, 170
SELL M&M (825) SL 831 Target 814, 810
SELL HPCL (260) SL 265 Target 252, 249
Action makes more fortune than caution
The bulls are on the rampage these days and caution has literally gone for a toss. Bulls remain in action as foreign capital inflows continue unabated. In fact, FII inflows have crossed last year's figure of $8bn in just under seven months! Of late, the surge has been mainly due to the big-ticket issues of DLF, ICICI Bank and Sterlite Industries. There's more to come as more and more issues hit the primary market, given the current bullishness in the secondary market. The relentless FII inflows have also got the government and the central bank worried, and has sent the rupee to a nine-year high. In a nutshell, the ongoing boom in the stock market is being driven largely by the unprecedented foreign inflows.
A moderation or a correction, which is desirable at this stage, can only take place when the pace of the inflows slows down substantially. Given the government's upbeat assessment of the economy, which is likely to grow by 9%, the inflows are unlikely to stop in a jiffy. It will take some untoward development to soften the current rally. Right now there are more chances of it happening globally then in India. Till then, we do not see the bulls easing their grip on the market. Having said that, the record level of open interest in F&O segment, coupled with concerns on valuations could pose a few problems. Today, we expect the market to open on a cautious note on the back of the mixed cues from the global markets. But any correction may be short-lived.
The equity shares of Celestial Labs will get listed on the bourses today.
The Dow Jones Industrial Average finished at a new record for the third straight session, but the broader market struggled ahead of the week's key earnings reports and inflation reports.
Almost eight stocks declined for every three that gained on the New York Stock Exchange after natural gas tumbled to a six-month low. Oil producers and power companies led the fall, after forecasts for cooler weather stoked concern that demand for electricity will drop.
The S&P 500 slipped from a record, falling 2.98, or 0.2%, to 1549.52. The Dow added 43.73, or 0.3%, to 13,950.98. The Nasdaq Composite Index dropped 9.67, or 0.4%, to 2697.33.
Oil prices edged higher. US light crude for August delivery added 22 cents to $74.15 a barrel on the New York Mercantile Exchange. The front-month contract was quoting unchanged at $74.15 a barrel in extended trading in Asia.
COMEX gold for August delivery slipped $1 to $666.30 an ounce. Treasury prices rose, lowering the yield on the benchmark 10-year note to 5.04% from around 5.09% late on Friday. The dollar held near record lows against the euro and remained steady versus the yen ahead of Bernanke's testimony before Congress on Wednesday.
European stocks traded in a tight range. The banking sector showed strength after a consortium led by Royal Bank of Scotland made a fresh offer for ABN Amro, while commodity-centered shares and Vodafone Group lost ground. The pan-European Dow Jones Stoxx 600 index gained 0.2% to 399.67.
The German DAX 30 closed up 0.2% at 8,105.69 and the French CAC-40 inched 0.1% higher to 6,125.60, while the UK's FTSE 100 slipped 0.3% to 6,697.70.
Mexican stocks closed lower, and Brazilian stocks slipped on the expiration of options. In Mexico City, the IPC index of 35 most-traded stocks fell 121 points, or 0.4%, to 32,266. In Sao Paulo, the benchmark Bovespa stocks index closed 270 points, or 0.5%, lower at 57,374.
Asian markets are trading mixed this morning. The Nikkei in Tokyo was down 45 points at 18,193 while the Hang Seng in Hong Kong was up 119 points at 23,073. The Straits Times in Singapore was flat at 3654.
The Morgan Stanley Capital International Asia-Pacific Index slid 0.2% to 158.90 as of 11:22 a.m. in Tokyo. Japan's markets were closed yesterday for a holiday. Markets in South Korea are shut today.
Despite flat closing benchmark Sensex managed to close above the 15300mark and NSE Nifty closed above the 4500mark. After opening on a flat note markets struggled to gain any specific direction and traded in a range for whole trading session. Yet again IT stocks had a disappointing session as Indian rupee further strengthened against the US Dollar, as the rupee closed at 9 year high. Pharma and FMCG stocks also were on the receiving end. On the other hand banks, Realty and PSU stocks were the pick of the day. Finally, the 30-share Sensex added 38 points to close at 15311. NSE-50 Nifty closed flat at 4512.
L&T gained by 0.6% to Rs2415 after the company’s consortium secured orders worth Rs10.70bn from Tata Steel. The scrip touched intra-day high of Rs2434 and a low of Rs2388 and recorded volumes of over 6,00,000 shares on NSE.
MTNL surged by over 4% to Rs168 after the company announced that they have secured Rs14.62bn tax refund and Rs20bn yet to be refunded. The scrip touched intra-day high of Rs171 and a low of Rs161 and recorded volumes of over 35,00,000 shares on NSE.
RPL dropped by 2.4% to Rs115. The company announced that it expects to start refinery by December 2008. The scrip touched intra-day high of Rs118 and a low of Rs114 and recorded volumes of over 1,00,00,000 shares on NSE.
Lanco Infratech surged nearly by 3% to Rs254 after reports stated that the company’s unit secured 2 orders worth Rs10.06bn. The scrip touched intra-day high of Rs259 and a low of Rs242 and recorded volumes of over 26,00,000 shares on NSE.
RS Software rallied by over 7% to Rs48 after the Board of Directors of the Company at its meeting held on July 12, 2007, approved the allotment of 700,000 Equity Warrants on a Preferential Basis to the Promoters at a price of Rs66/-. The scrip touched intra-day high of Rs51 and a low of Rs43 and recorded volumes of over 2,00,000 shares on NSE.
Indo Rama slipped by 1.4% to Rs51. The company declared its Q1 result with net profit at Rs22.7bn (up 4%) and revenue at Rs7.29bn (up 54%). The scrip touched intra-day high of Rs54 and a low of Rs51 and recorded volumes of over 83,000 shares on NSE.
Power stocks continued to trade firm on back of increase in Government spending for electricity generation. Reliance Energy surged by over 4% to Rs704, CESC spurred by over 10% to Rs499, Tata Power gained by 1% to Rs694. However, Suzlon pared its gains by 0.5% to Rs1463.
Metal stocks shined brightly on talks of consolidation in the global metal industry, firm metal prices takeovers in the metals industry and higher commodity prices have been driving up metal stocks. Nalco surged by over 4% to Rs299, Hindalco advanced by 3.6% to Rs180. However, SAIL was down by 1.2% to Rs157 and Tata Steel edged lower 0.2% to Rs694.
Banking stocks were on the move on hopes that RBI would not tinker with Interest rates. SBI surged by 3.3% to Rs1611. Syndicate Bank rose by over 6.5% to Rs88, Union Bank advanced by 3.5% to Rs156 and Bank of Baroda added 5.5% to Rs300 were the major gainers among the Mid-Cap stocks.
Realty stocks are a mixed bag. DLF advanced by 1.6% to Rs610. However, Akruti slipped by 1% to Rs492 and Sobha was down by 0.2% to Rs927.
IT stocks were on the receiving end as dollar closed at 9 year high. Satyam Computer declined by 2.3% to Rs481, Wipro was down by 2% to Rs502 and Infosys edged lower 0.3% to Rs1935. Mphasis, HCL Tech and NIIT Ltd were among the major losers among the Mid-Cap stocks.
Pharma stocks also ended lower led by fall in the heavy weight Ranbaxy as the scrip was down by 2% to Rs345, Cipla was down by 1.6% to Rs208, Dr Reddy’s Lab declined 1.5% to Rs662 and Cadila marginally slipped 0.2% to Rs360.
Aventis Pharma, Aztecsoft, Bayer Cropscience, Diamond Cables, Garware Offshore, Gateway Distriparks, Jubilant Organosys, KPIT Cummins, LIC Housing Finance, Madras Aluminium, MTNL, Morepen Labs, NDTV, Noida Toll Bridge, S. Kumars Nationwide, Tata Tea, Ucal Fuel and Zee Entertainment.
FIIs were net buyers of Rs3.06bn (provisional) in the cash segment on Monday. On the other hand, local institutions were net sellers at Rs4.08bn. From the F&O segment, FIIs pulled out Rs640.3mn on the same day.
On Friday, FIIs poured in Rs23.46bn in the cash segment. Mutual Funds were net buyers of Rs2.91bn.
Major bulk Deals:
Morgan Stanley has bought Mastek; HSBC Financial has picked up Nitco Tiles; Citigroup has sold Emkay; Bear Stearns has sold Micro Tech and SB&T International; Macquarie Bank has also sold SB&T International; UBS Securities has purchased Srinivasa Shipping & Property Development and Goldman Sachs has sold Sujana Metal.
Goldstone Technologies Ltd: Standard Chartered Premier Equity Fund (Scheme of Standard Chartered Mutual Fund) has purchased from open market 433500 equity shares of the company on 13th July, 2007.
Hindalco Industries Ltd: Life Insurance Corporation of India has purchased from open market 2043663 equity shares of the company on 11th July, 2007.
Tripex Overseas, TCI Finance, Bilcare, Empire Industries and Zenith Infotech.
Wire & Wireless, Kothari Products, Goldstone Tech, PBA Infrastructure, GVK Power, Carol Info, Yashraj Containers, Swan Mills, Pearl Global, Adhunik Metalik, Diamond Cable, Godawari Power, Zenotech Lab and IID Forgings.
Delivery Delight (Rising Price & Rising Delivery):
Andhra Bank, Arvind Mills, Bajaj Hindustan, CESC, Gammon India, Gitanjali Gems, GTC Industries, Hero Honda, LIC Housing, MRPL, Mastek, ONGC, Tata Chemicals and VSNL.
Gujarat Alkalies, HDFC, Century Textiles, Moser Baer, Patel Engineering, IOC, Patni, Nicholas Piramal, RPL and TTML.
Major News & Announcements:
India’s economy to grow by 9% in FY08, PM's advisory panel says
TCS Q1 profit at Rs11.8bn (up 37% yoy), revenues at Rs52bn (up 26% yoy)
L&T consortium secures orders worth Rs10.70bn from Tata Steel
RPL expects to start refinery by Dec 2008
MTNL gets Rs14.62bn tax refund; Rs20bn yet to be refunded
South Indian Bank to sell shares to large investors
Lanco Infratech unit gets 2 road projects worth Rs10.06bn
R Com to buy Yipes for $300mn; added 20mn users in last one year
Parsvnath to invest Rs4bn in Hyderabad SEZ
Ashok Leyland & Siemens VDO forms joint venture in infotronics