Friends,
I gave a call on GMR Ferro Alloy Ltd at 34...it is still around that level .I didn't write on length why I like this stock...
I am doing it now....One of the reader has written that he read on moneycontrol site in news section that there will be a delisting offer at 34.90....I tried to find that link and ended up seeing a boader at mmb writing personally that he is the guy who knows that there will be an open offer for delisting of Cronimet Alloy Ltd at Rs 34.90....well, these are mere talks and with eps of 6 for 6 months.....even if the promoters give delisting open offer no one will sell it.......
My Rationale on GMR Ferro Alloy Ltd:
GMR Ferro Alloy Ltd was demerged from GMR Ind .....and promoters of GMR were holding 70% stake in it.The Co was making loss due to the Co not able to get Chrome Mines rights in Orissa and Tisco stopped selling Chrome Ore to Co as they need for themselves to make steel.
The Co was making loss and hence GMR promoters decided to sell their entire stake to conglomarate of Cronimet(Germany) and Mecron (of Dubai), Cronimet Mecron.
Cronimet holds Chrome Ore mines world over and hence the new management will have no problem in having raw material for the Co.Now Cronimet Mecron holds all 70% stake in GMR Ferro Alloy and the Co name is also going to get changed from GMR Ferro Alloy to Cronimet Alloy Ltd.
Moreover the Chrome Ore will also be at cheaper rate then other peers Co and that is showing in the bottomline since last 2 qr.With new promoters holding 70% stake in GMR Ferro , I feel this is a value buy and going dirt cheap while comparing it with Ferro Alloy Ltd which is quoting at 24 -1 fv, means 240-10 fv......so at 36-10 fv , GMR Ferro looks excellent pick for MT to LT.It seems that Cronimet Alloy is almost a debtfree co as I am seeing interest outgoing at almost "NIL"..in results section...if someone can write me about the debts I will be glad to read it and will give much more confidence to readers as well....
With Ferro Chrome prices going up due to demand in steel sector as Chrome Alloy is essential ingrediant for producing steel , I feel GMR Ferro is a buy at this rate....
Open Offer:
Keynote Corporate Services Ltd ("Manager to the Offer"), on behalf of Atlanta Natural Resources Pte Ltd ("Acquirer"), along with Mynah Industries Ltd (Formerly known as Rama Qualitex Ltd ("Person Acting in Concert" or "PAC"), has issued this Public Announcement ("PA") to the Equity Shareholders of Cronimet Alloys India Ltd (Formerly known as GMR Ferro Alloys & Industries Ltd) ("Target Company"), pursuant to Regulation 10 read with Regulation 12 of the Securities and Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 & subsequent amendments thereto ("Regulations" or "SEBI (SAST) Regulations").
The Offer:
The Acquirer is making an Open Offer to the shareholders of the Target Company to acquire 24,57,059 fully paid up equity shares of the face value of Rs 10 each ("Share"), representing 20% of the paid up equity share capital of the Target Company, from the public shareholders of the Target Company, at a price of Rs 39.40 per share ("Offer Price") payable in cash.
Schedule of Activities:
Specified Date - April 29, 2010
Date of Opening of the Offer - May 24, 2010
Date of Closing of the Offer - June 12, 2010
Comments:
I just read the open offer on bse which I have pasted here and Atlanta Natural Resources Ltd has made an open offer for 20% stake at 39.40.....
Now as Cronimet Mecron Ltd is taken over by Atlanta Natural the stake of GMR Ferro automatically comes under the new management, Atlanta Natural.
So with the open offer of 20%, the new management will have a stake of 70+20= 90% and hence all chances that they will go for delisting.
The offer closes on June 12, 2010 and hence if the price goes up then the open offer in market they can revise the open offer at higher price 7 days before the closing of open offer.
Now let us see, how the market reacts with this open offer.The offer is damn cheap as eps for 2 qrs is 6 and all chances it can end at 10 eps and they wants to purchase shares at 40....wherein the fair value can be atleast 80-100 giving an p/e ratio of 8 or 10....as the peers Co also have the same discounting.
I hope the market sees this and take the stock higher so that Atlanta Natural Resources Ltd has to revise the open offer...as it seems that the new management wants to delist this Co .
Let them pay the correct value for Cronimet for the REST OF THE 20% WHICH WILL TAKE THEIR HOLDING TO 90% FROM WHERE THEY CAN APPLY TO DELIST THE Co....
But I again reiterate that the fair value is not less then 80.......let us see how market reacts to this offer.....
CRONIMET press releases
Current press releases of the CRONIMET Group
[ 28/04/2008 ] > Germany / Karlsruhe
CRONIMET Mining GmbH announces a substantial investment in South Africa
Effective April 1, 2008, a consortium of German and South African companies, headed by the majority shareholder CRONIMET Mining GmbH, has acquired the mining rights to a substantial chrome ore deposit in South Africa.
The areal is located in the Western Limb of the Bushfeld Complex near the town of Northam. The Bushfeld Complex is home of some of the most substantial chrome ore deposits in the world with an average content of 48% of chromite in its ores. Purchasing price and other contractual information is withheld. The new venture has already been checked by the cartel authorities and has been granted.
The new South Africa company is working under the name of CRONIMET Chrome South Africa (PTY) Ltd. (CCSA). CCSA will develop to a reliable future supply source for chrome products required in steel production. Chrome is a product necessary for stainless steel production.
It is expected that the geological model of the deposit will become available in the third quarter 2008. It will be the basis for the mine plan. Mining will start as soon as the mine plan has been developed. The reserves will ensure a continuous supply of ores for the next 30 years. The first investments of the CCSA have been set aside for the machinery and production equipment for mining.
CCSA is pleased to report that the company fully complies with the legal requirements of the BEE laws through the participation of a Broad Based BEE as partner in the company. The Black Economic Empowerment Program is an important step for the domestic political stability and establishment of longterm economic and social development in South Africa. First goal of this legislation is to insure the active participation of the formerly disadvantaged population in the economy of South Africa. Through the shareholding of trusts in CCSA, representing the population living near the mining area, it is ensured that they take part in the economic success of the company.
Parallel to the investment in mining, CCSA guarantees on a longterm basis to assist financially in social and educational as well as infrastructural development in the region.
Wednesday, March 31, 2010
Tuesday, March 30, 2010
Dagger Frost-Tools....cmp 12....M&A SUP BY 66 % IN JAN-FEB....
Updates:
Couple of readers has come out with some interesting observation.It seems that not whole of Dagger Frost-Tools Ltd has been sold to Motherson gr and hence my call remains null and void.
I would say that ...only after further more clarification one can buy..............
I think I made a mistake to comeout with a buy call without looking at the finer prints properly......
So I put a HOLD on the call for Dagger Frost-Tools Ltd......
It is good that before the market has opened ..I got to know that.....so there should be no casualty....
M&A SUPBY66 % INJAN-FEB -The two main driving motivations are access to new markets and entry into new product lines...
TE NARASIMHAN Chennai
Merger and acquisition (M&A) activity involving Indian small and medium enterprises (SMEs) are on the rise. During the first two months of 2010 M&A transactions worth $155 million (around Rs 713 crore) have been concluded in the SME sector, up by 66 per cent over the $93 million (around Rs 427.8 crore) in transactions in the corresponding period of 2009.
Private equity (PE) investment, which has been the key for acquisitions, also witnessed a121 per cent increase during this period.
According to Venture Intelligence, a Chennai-based research firm focusing on M&A and PE transactions, there were 22 M&A deals in January-February 2010, compared to 16 deals during the corresponding period of last year — an increase of 55 per cent.
The research firm has included all unlisted companies and listed companies with a market capital of less than Rs 500 crore. All inbound transactions have also been excluded.
Some of the major M&A transactions of January-February 2010 include Dorf Ketal Chemicals’ acquisition of DuPont Chemicals and Fluoro Products (sale of assets) for $40 million (around Rs 184 crore) in January, followed by Greenko Group’s acquisition of Hemavathy Power Project for $33 million (around Rs 151.8 crore).
This was followed by VLCC’s acquisition of The Grooming Company for $32 million (around Rs 147.2 crore); Air Works India Engineering’s acquisition of Air Livery for $20 million (around Rs 92 crore); and Advanta India’s acquisition of Crosbyon Seed Company for $13 million (around Rs 59.8 crore).
Top M&A transactions of January-February 2009 include Nuziveedu Seeds’ acquisition of Yaaganti Seeds for $51 million (about Rs 234.6 crore); followed by Cosmo Films’ $17 million acquisition of GBC Commercial Print Finishing; INX Media’s acquisition by Indi Media for $10 million (around Rs 46 crore); the acquisition of Dagger Forst Tools by the Samvardhana Motherson Group for $9 million (around Rs 41.4 crore); and the acquisition of Nippon Express India by Nippon Express Company for $6 million (around Rs 27.6 crore).
What sets this wave of M&A deals apart from those of the past is that previous deals tended towards the expansion of production capacity, while this time the two main driving motivations are access to new markets and entry into new product lines, said industry observers.
For instance, in February Elgi Equipments Ltd (EEL), aCoimbatore-based manufacturer of industrial compressors, acquired Belair SA France, which is engaged in the assembly, sales and service of industrial compressors, piping, fittings and accessories. The acquisition was valued at euro 700,000 (around Rs 4.3 crore).
Jairam Varadaraj, managing director of EEL, said that the company follows a model of “multi- local” acquisition of small-to-medium companies with strong brand names and supports them with the ‘Elgi Inside’ strategy of providing key technologies and product extensions.
“In line with this strategy, we have purchased a 100 per cent shareholding in Belair SA, which supplies compressors to the industrial segment with about 3 per cent of the French market,” he added. Belair’s sales are euro 6.5 million (around Rs 40.3 crore) per year.
M&As have also been driven by the need for access to capacity and new products. SMEs, mainly manufacturers, are showing interest in acquiring factories in Europe, which would give them access to machinery and equipment.
“The recent downturn hit SMEs in Europe, and they are looking for buyers,” said S Murugan, a textile exporter from Tirupur, who is negotiating with two European manufacturers to acquire their assets.
“We are also looking for good acquisition opportunities for capacity enhancement, which a capacity of 1,500 tonnes per month to the company,” said T Pavithra, director, Pioneer Alloy Castings, which is planning to increase its capacity three-fold to 120,000 tonnes per annum with an investment of around Rs 150 crore.
Another example is EdServ, aChennai-based education and placement company, which has acquired SmartLearn WebTV for Rs 4.6 crore. It also acquired Hyderabad-based SchoolMATE, a CRM and ERP software solution provider to schools, for Rs 4 crore.
“This acquisition will help the company to go pan-India and will give us access to new product lines,” said S Giridharan, chairman and chief executive.
The company has got approval from its board to raise up to Rs 130 crore through the issue of equity shares through the QIP (Qualified Institutional Placement) route, which will be used for further acquisitions, he added.
The wave of M&A activity also reflects increasing strategic clarity. “M&As can be used to get a handle on new opportunities and new trends, and not just for expanding existing production capacities,” said a PE fund representative.
PE is a key source of funding for M&As. PE firms have begun exploring growth opportunities in the West for Indian SMEs in their portfolios, helping them to make overseas acquisitions that can benefit these small firms in the long run. Such PE fund companies include KKR India Advisors Pvt. Ltd, Bain Capital Advisors (India) Pvt. Ltd and Carlyle India Advisors Pvt. Ltd.
PE fund managers are of the opinion that entering into cross-border deals and diluting equity to help Indian SMEs acquire assets abroad will not only increase the company’s value, but also enable PE fund companies to get a higher return at the time of exit.
This had boosted PE investments to $126 million in January-February 2010 from $57 million in the year-ago period. However, the number of deals dropped to nine from 13 during the same period.
Major investments include $45 million by TA Associates in Micromax; $21 million by DAR Capital in Valuable Media; $15 million by a consortium of SVB, DFJ, Canaan Partners and SAP Ventures in iYogi; $12 million by Helion Ventures, Charles River Ventures and Globespan Capital Partners in SMS GupShup; and $10 million by Asiabridge in Alok H&A Textiles.
SMEs, mainly manufacturers, are showing interest in acquiring factories in Europe, which would give them access to machinery and equipment..
My Comments:
I have highlighted in RED letter that Motherson gr bought Dagger Frost Tools Ltd at Rs 41 cr...in the above post..
Now if we look at the Mcap then Dagger Frost Tools have 14 cr as Mcap ...means Motherson Gr gave 3 times more to acquire Dagger Frost Tools.....so we can very easily assume that Dagger Frost is a 3 bagger from here on.......With Motherson gr as management it can go up even more.......but it will take time.....those are ready to hold it with patience may buy it now.....It is going cheap at Rs 12......just like I recomended SNL Bearing at 11.....but can't give any guarentee it will move like SNL that too in ST.....but Dagger Frost looks good to me as of now......
Couple of readers has come out with some interesting observation.It seems that not whole of Dagger Frost-Tools Ltd has been sold to Motherson gr and hence my call remains null and void.
I would say that ...only after further more clarification one can buy..............
I think I made a mistake to comeout with a buy call without looking at the finer prints properly......
So I put a HOLD on the call for Dagger Frost-Tools Ltd......
It is good that before the market has opened ..I got to know that.....so there should be no casualty....
M&A SUPBY66 % INJAN-FEB -The two main driving motivations are access to new markets and entry into new product lines...
TE NARASIMHAN Chennai
Merger and acquisition (M&A) activity involving Indian small and medium enterprises (SMEs) are on the rise. During the first two months of 2010 M&A transactions worth $155 million (around Rs 713 crore) have been concluded in the SME sector, up by 66 per cent over the $93 million (around Rs 427.8 crore) in transactions in the corresponding period of 2009.
Private equity (PE) investment, which has been the key for acquisitions, also witnessed a121 per cent increase during this period.
According to Venture Intelligence, a Chennai-based research firm focusing on M&A and PE transactions, there were 22 M&A deals in January-February 2010, compared to 16 deals during the corresponding period of last year — an increase of 55 per cent.
The research firm has included all unlisted companies and listed companies with a market capital of less than Rs 500 crore. All inbound transactions have also been excluded.
Some of the major M&A transactions of January-February 2010 include Dorf Ketal Chemicals’ acquisition of DuPont Chemicals and Fluoro Products (sale of assets) for $40 million (around Rs 184 crore) in January, followed by Greenko Group’s acquisition of Hemavathy Power Project for $33 million (around Rs 151.8 crore).
This was followed by VLCC’s acquisition of The Grooming Company for $32 million (around Rs 147.2 crore); Air Works India Engineering’s acquisition of Air Livery for $20 million (around Rs 92 crore); and Advanta India’s acquisition of Crosbyon Seed Company for $13 million (around Rs 59.8 crore).
Top M&A transactions of January-February 2009 include Nuziveedu Seeds’ acquisition of Yaaganti Seeds for $51 million (about Rs 234.6 crore); followed by Cosmo Films’ $17 million acquisition of GBC Commercial Print Finishing; INX Media’s acquisition by Indi Media for $10 million (around Rs 46 crore); the acquisition of Dagger Forst Tools by the Samvardhana Motherson Group for $9 million (around Rs 41.4 crore); and the acquisition of Nippon Express India by Nippon Express Company for $6 million (around Rs 27.6 crore).
What sets this wave of M&A deals apart from those of the past is that previous deals tended towards the expansion of production capacity, while this time the two main driving motivations are access to new markets and entry into new product lines, said industry observers.
For instance, in February Elgi Equipments Ltd (EEL), aCoimbatore-based manufacturer of industrial compressors, acquired Belair SA France, which is engaged in the assembly, sales and service of industrial compressors, piping, fittings and accessories. The acquisition was valued at euro 700,000 (around Rs 4.3 crore).
Jairam Varadaraj, managing director of EEL, said that the company follows a model of “multi- local” acquisition of small-to-medium companies with strong brand names and supports them with the ‘Elgi Inside’ strategy of providing key technologies and product extensions.
“In line with this strategy, we have purchased a 100 per cent shareholding in Belair SA, which supplies compressors to the industrial segment with about 3 per cent of the French market,” he added. Belair’s sales are euro 6.5 million (around Rs 40.3 crore) per year.
M&As have also been driven by the need for access to capacity and new products. SMEs, mainly manufacturers, are showing interest in acquiring factories in Europe, which would give them access to machinery and equipment.
“The recent downturn hit SMEs in Europe, and they are looking for buyers,” said S Murugan, a textile exporter from Tirupur, who is negotiating with two European manufacturers to acquire their assets.
“We are also looking for good acquisition opportunities for capacity enhancement, which a capacity of 1,500 tonnes per month to the company,” said T Pavithra, director, Pioneer Alloy Castings, which is planning to increase its capacity three-fold to 120,000 tonnes per annum with an investment of around Rs 150 crore.
Another example is EdServ, aChennai-based education and placement company, which has acquired SmartLearn WebTV for Rs 4.6 crore. It also acquired Hyderabad-based SchoolMATE, a CRM and ERP software solution provider to schools, for Rs 4 crore.
“This acquisition will help the company to go pan-India and will give us access to new product lines,” said S Giridharan, chairman and chief executive.
The company has got approval from its board to raise up to Rs 130 crore through the issue of equity shares through the QIP (Qualified Institutional Placement) route, which will be used for further acquisitions, he added.
The wave of M&A activity also reflects increasing strategic clarity. “M&As can be used to get a handle on new opportunities and new trends, and not just for expanding existing production capacities,” said a PE fund representative.
PE is a key source of funding for M&As. PE firms have begun exploring growth opportunities in the West for Indian SMEs in their portfolios, helping them to make overseas acquisitions that can benefit these small firms in the long run. Such PE fund companies include KKR India Advisors Pvt. Ltd, Bain Capital Advisors (India) Pvt. Ltd and Carlyle India Advisors Pvt. Ltd.
PE fund managers are of the opinion that entering into cross-border deals and diluting equity to help Indian SMEs acquire assets abroad will not only increase the company’s value, but also enable PE fund companies to get a higher return at the time of exit.
This had boosted PE investments to $126 million in January-February 2010 from $57 million in the year-ago period. However, the number of deals dropped to nine from 13 during the same period.
Major investments include $45 million by TA Associates in Micromax; $21 million by DAR Capital in Valuable Media; $15 million by a consortium of SVB, DFJ, Canaan Partners and SAP Ventures in iYogi; $12 million by Helion Ventures, Charles River Ventures and Globespan Capital Partners in SMS GupShup; and $10 million by Asiabridge in Alok H&A Textiles.
SMEs, mainly manufacturers, are showing interest in acquiring factories in Europe, which would give them access to machinery and equipment..
My Comments:
I have highlighted in RED letter that Motherson gr bought Dagger Frost Tools Ltd at Rs 41 cr...in the above post..
Now if we look at the Mcap then Dagger Frost Tools have 14 cr as Mcap ...means Motherson Gr gave 3 times more to acquire Dagger Frost Tools.....so we can very easily assume that Dagger Frost is a 3 bagger from here on.......With Motherson gr as management it can go up even more.......but it will take time.....those are ready to hold it with patience may buy it now.....It is going cheap at Rs 12......just like I recomended SNL Bearing at 11.....but can't give any guarentee it will move like SNL that too in ST.....but Dagger Frost looks good to me as of now......
DQ Entertainment lists at 69% premium on BSE..........
DQ Entertainment lists at 69% premium on BSE
MUMBAI: Animation and gaming company DQ Entertainment (International) on Monday opened with a premium of nearly 69% at Rs 135 on the BSE over its issue price. Shares of DQ Entertainment, after opening firm on the Bombay Stock Exchange (BSE), jumped 75% over their issue price of Rs 80 to day’s high of Rs 140. It closed at Rs 108.55. A total of 42.93 lakh shares of DQ Entertainment changed hands on the BSE in opening trade. The company has listed with 7.92 crore shares on the BSE. It has proposed to utilise net proceeds of Rs 128 crore, raised from its initial public offer (IPO), to part fund general corporate expenditure, besides those for business expansion.
MUMBAI: Animation and gaming company DQ Entertainment (International) on Monday opened with a premium of nearly 69% at Rs 135 on the BSE over its issue price. Shares of DQ Entertainment, after opening firm on the Bombay Stock Exchange (BSE), jumped 75% over their issue price of Rs 80 to day’s high of Rs 140. It closed at Rs 108.55. A total of 42.93 lakh shares of DQ Entertainment changed hands on the BSE in opening trade. The company has listed with 7.92 crore shares on the BSE. It has proposed to utilise net proceeds of Rs 128 crore, raised from its initial public offer (IPO), to part fund general corporate expenditure, besides those for business expansion.
Spice Jet...Updates....
Just Yesterday I gave a call on Spice Jet and today in the headlines on the front page of ET I am seeing that there is an open offer for Spice Jet which the promoters has discarded....Even though the Mcap is 1380 cr and open offer for 51% stake is 700 cr which looks OK as of now....still management feels that it is less....whatever the analyst speaks about valuation or whatever Williams Ross wants to do to sell his stake......I remain bullish on Spice Jet ........
Kalanithi’s Rs 700-cr offer not too hot for SpiceJet owners
Manisha Singhal MUMBAI
KALANITHI Maran, media baron and promoter of Sun TV, and the promoters of Spice-Jet are sparring over the price being offered for a majority stake in the budget carrier, with Mr Maran’s proposal of Rs 700 crore for a 51% stake finding few takers among the airline’s shareholders.
Mr Maran, whose interests have now spread from media to aviation, has completed due diligence and is believed to have made an offer of Rs 700 crore, or Rs 55 per share. This is not acceptable to the SpiceJet shareholders, as the offer is at a discount to the ruling market price of the stock. The SpiceJet stock fell marginally to Rs 57.55 on Monday. At current market price, SpiceJet is valued at about Rs 1,388 crore.
“There are differences on the valuation. If that is over, a deal may be announced in a fortnight,” said an investment banker requesting anonymity. Kenyabased Kansagra family is the promoter of SpiceJet with a 13% stake. SpiceJet director Ajay Singh holds 5%.
The deal, if it goes through, will be a combination of share sale by existing shareholders and issue of new shares to Mr Maran, who has been looking for an opportunity to enter the aviation industry. He held discussions to buy Star Aviation, an yet-to-be-launched regional airline in South India. Attempts to reach Mr Maran and Sanjay Aggarwal, SpiceJet’s chief executive officer, failed. SpiceJet’s chief operating officer Samyukta Sridharan, in response to an ET query, said, “As a policy, we do not comment on market rumours and speculation.”
Financial services group Religare is also in the race, but yet to do the due diligence, said a person having direct knowledge of the development. The Anil Ambani Group had showed some initial interest.
Advisory firm Ernst & Young (E&Y) is doing the financial due diligence for SpiceJet and law firm Amarchand & Mangaldas & Suresh A Shroff & Co is advising Mr Maran on legal issues.
Wilbur Ross also seen keen to sell Spice stake
FINANCIAL services firm Edelweiss is advising SpiceJet on the deal. Key executives within the airline said the Maran group had done initial reference check on the SpiceJet management some time ago.
Aviation analysts and experts, who have been tracking Spice-Jet, said valuations for the airline can be the deal breaker. “SpiceJet is one of the most expensive airlines in the country,” said a source from one of the major advisory firms in the country, not wanting to be identified.
“If one compares on the basis of number of aircraft, Kingfisher Airlines with 65 aircraft has a market cap of Rs 1,286 crore whereas SpiceJet with only 20 aircraft has a market cap of Rs 1,390 crore,” he said. The stock has seen as much as 60% rise over the past six months, compared to peers like Jet Airways, which saw an increase of 42% over the same period.
US-based billionaire private equity investor Wilbur Ross has also invested in the airline and is believed to looking to sell his stake. Mr Ross invested $80 million in SpiceJet in July 2008 through foreign currency convertible bonds. In December this year, Mr Ross will either have to convert or redeem the bonds.
Mr Ross’ stake will go up to 31% if he converts the bonds, forcing him to launch the mandatory 20% open offer, which, he does not want to, sources said. “This is why Wilbur Ross is looking to sell his stake in the company,” said the person having direct knowledge of the matter. Wilbur Ross could not be contacted for comment.
People close to the situation also said that SpiceJet is not too keen on redemption, as this would mean a cash outflow of Rs 450 crore.
SpiceJet has been struggling to get a stable promoter since inception. One of its anchor investors, Dubai-based investment firm Istithmar, sold its 13% for Rs 160 crore in February.
SpiceJet had recently appointed Edelweiss to raise $50-75 million for fleet induction and expansion on international routes. The airline recently got approval to fly international. It has also announced that it would expand its fleet by adding nine more aircraft by 2012. The airline currently flies 20 Boeing aircraft. It has a market share of over 12%.
Kalanithi’s Rs 700-cr offer not too hot for SpiceJet owners
Manisha Singhal MUMBAI
KALANITHI Maran, media baron and promoter of Sun TV, and the promoters of Spice-Jet are sparring over the price being offered for a majority stake in the budget carrier, with Mr Maran’s proposal of Rs 700 crore for a 51% stake finding few takers among the airline’s shareholders.
Mr Maran, whose interests have now spread from media to aviation, has completed due diligence and is believed to have made an offer of Rs 700 crore, or Rs 55 per share. This is not acceptable to the SpiceJet shareholders, as the offer is at a discount to the ruling market price of the stock. The SpiceJet stock fell marginally to Rs 57.55 on Monday. At current market price, SpiceJet is valued at about Rs 1,388 crore.
“There are differences on the valuation. If that is over, a deal may be announced in a fortnight,” said an investment banker requesting anonymity. Kenyabased Kansagra family is the promoter of SpiceJet with a 13% stake. SpiceJet director Ajay Singh holds 5%.
The deal, if it goes through, will be a combination of share sale by existing shareholders and issue of new shares to Mr Maran, who has been looking for an opportunity to enter the aviation industry. He held discussions to buy Star Aviation, an yet-to-be-launched regional airline in South India. Attempts to reach Mr Maran and Sanjay Aggarwal, SpiceJet’s chief executive officer, failed. SpiceJet’s chief operating officer Samyukta Sridharan, in response to an ET query, said, “As a policy, we do not comment on market rumours and speculation.”
Financial services group Religare is also in the race, but yet to do the due diligence, said a person having direct knowledge of the development. The Anil Ambani Group had showed some initial interest.
Advisory firm Ernst & Young (E&Y) is doing the financial due diligence for SpiceJet and law firm Amarchand & Mangaldas & Suresh A Shroff & Co is advising Mr Maran on legal issues.
Wilbur Ross also seen keen to sell Spice stake
FINANCIAL services firm Edelweiss is advising SpiceJet on the deal. Key executives within the airline said the Maran group had done initial reference check on the SpiceJet management some time ago.
Aviation analysts and experts, who have been tracking Spice-Jet, said valuations for the airline can be the deal breaker. “SpiceJet is one of the most expensive airlines in the country,” said a source from one of the major advisory firms in the country, not wanting to be identified.
“If one compares on the basis of number of aircraft, Kingfisher Airlines with 65 aircraft has a market cap of Rs 1,286 crore whereas SpiceJet with only 20 aircraft has a market cap of Rs 1,390 crore,” he said. The stock has seen as much as 60% rise over the past six months, compared to peers like Jet Airways, which saw an increase of 42% over the same period.
US-based billionaire private equity investor Wilbur Ross has also invested in the airline and is believed to looking to sell his stake. Mr Ross invested $80 million in SpiceJet in July 2008 through foreign currency convertible bonds. In December this year, Mr Ross will either have to convert or redeem the bonds.
Mr Ross’ stake will go up to 31% if he converts the bonds, forcing him to launch the mandatory 20% open offer, which, he does not want to, sources said. “This is why Wilbur Ross is looking to sell his stake in the company,” said the person having direct knowledge of the matter. Wilbur Ross could not be contacted for comment.
People close to the situation also said that SpiceJet is not too keen on redemption, as this would mean a cash outflow of Rs 450 crore.
SpiceJet has been struggling to get a stable promoter since inception. One of its anchor investors, Dubai-based investment firm Istithmar, sold its 13% for Rs 160 crore in February.
SpiceJet had recently appointed Edelweiss to raise $50-75 million for fleet induction and expansion on international routes. The airline recently got approval to fly international. It has also announced that it would expand its fleet by adding nine more aircraft by 2012. The airline currently flies 20 Boeing aircraft. It has a market share of over 12%.
California Softwware CoLtd...cmp...42.35....
Friends,
I am tracking this co recently and got to read that the Open offer was made in 2007 by Kemoil Ltd at Rs 100 and they tookover Calsoft Ltd at that time.They hold 66% stake in Calsoft as of now....but what has surprised me recently is ,I again saw open offer annoucement in bse site by Singfuel Investment Pte. Ltd at Rs 45.03.....Why more and more people are ready to take stake in Calsoft?What is there in the Co.....!
The Offer:
"This Open Offer is being made by the Acquirer to shareholders of the Target Company other than Kemoil ("Public Shareholders") to acquire 24,73,002 Equity Shares, being 20% of the Voting Capital of the Target Company ("Open Offer Shares"). This Open Offer is being made at a price of Rs. 45.03 per fully paid up Equity Share ("Open Offer Price"), aggregating Rs. 11,13,59,280.06 (Rupees Eleven Crores Thirteen Lacs Fifty-Nine Thousand Two Hundred and Eighty and Six paise only) ("Open Offer Size"), payable in cash in accordance with the SEBI (SAST) Regulations and subject to the terms and conditions mentioned in PA."
Calsoft has given a very positive np in last Dec qr.....np was 2.87 cr on an eq base of 12 cr....as 66% stake is held by Kemoils Ltd and 15% is held by corp entities means almost 81% is held by strong hannds and as I wrote , there is already an open offer for 20% stake at Rs 45.....I think Calsoft is a momentum as well as value buy at this juncture.....
Seems more and more people are interested in the Co stake and it seems that promoters are not ready to dilute the stake , we are seeing open offer for 20% stake.....
While going through all the annoucement for last 2 yrs , it seems Calsoft is on a growth path.....partnering with Oracle , making inroads in Digital Home Market:
Here is the Press Release:
Announces Entry into Digital Home Market with New Services.Chennai, India - (March 29, 2010) Calsoft is pleased to announce that its wholly owned subsidiary Calsoftlabs, announces the availability of additional software services targeted towards the Digital Home Market. New service offering include browser porting and multimedia application development for digital home devices such as set-top box, IPTV, networked media and CE devices.
Calsoft will be targeting services towards software platforms based on embedded Linux, Windows CE and Android. Calsoftlabs already provides Flash 10 and Flash Lite 4 based solutions for the Digital Home Market as Adobe's distributor. Calsoftlabs also has significant expertise in wired and wireless protocols such as 802.11n that enable networked devices to communicate with each other.
The Digital Home technology, in which all devices in the home are connected to one another, promises to change the way things work in every household. Digital Home devices are a leading innovation in the consumer electronic area and a wide range of these are expected to provide browsing and multimedia capability.
"Calsoftlabs's combined expertise in embedded, networking and multimedia technology provides a very attractive value proposition to OEMs developing digital home devices" said Anand Joshi, VP of Digital Home Technology. "With over 100 delivered projects to date we are well positioned to build on our existing customer portfolio."
For more information on the available services, please visit
www.calsoftlabs.com/digital/home.html
For additional details please contact your local sales representative.
About Calsoft: California Software Company Limited (Calsoft) is a product engineering and enterprise solutions company with a strong background in development and implementation. Headquartered in Chennai, Calsoft has a presence in 12 global locations. For additional information about Calsoft, please visit www.calsoftgroup.com For more information on Calsoft Labs please visit www.calsoftlabs.com "
If someone wants to look at more information one can go for all annoucement and read it on bse site or go to the website and look for that...........
I think there are many readers who are in IT field and hence it would be prudent for then to take a look at it and write here about Calsoft........what is the prospect and how good it is as a growth Co.....
I am tracking this co recently and got to read that the Open offer was made in 2007 by Kemoil Ltd at Rs 100 and they tookover Calsoft Ltd at that time.They hold 66% stake in Calsoft as of now....but what has surprised me recently is ,I again saw open offer annoucement in bse site by Singfuel Investment Pte. Ltd at Rs 45.03.....Why more and more people are ready to take stake in Calsoft?What is there in the Co.....!
The Offer:
"This Open Offer is being made by the Acquirer to shareholders of the Target Company other than Kemoil ("Public Shareholders") to acquire 24,73,002 Equity Shares, being 20% of the Voting Capital of the Target Company ("Open Offer Shares"). This Open Offer is being made at a price of Rs. 45.03 per fully paid up Equity Share ("Open Offer Price"), aggregating Rs. 11,13,59,280.06 (Rupees Eleven Crores Thirteen Lacs Fifty-Nine Thousand Two Hundred and Eighty and Six paise only) ("Open Offer Size"), payable in cash in accordance with the SEBI (SAST) Regulations and subject to the terms and conditions mentioned in PA."
Calsoft has given a very positive np in last Dec qr.....np was 2.87 cr on an eq base of 12 cr....as 66% stake is held by Kemoils Ltd and 15% is held by corp entities means almost 81% is held by strong hannds and as I wrote , there is already an open offer for 20% stake at Rs 45.....I think Calsoft is a momentum as well as value buy at this juncture.....
Seems more and more people are interested in the Co stake and it seems that promoters are not ready to dilute the stake , we are seeing open offer for 20% stake.....
While going through all the annoucement for last 2 yrs , it seems Calsoft is on a growth path.....partnering with Oracle , making inroads in Digital Home Market:
Here is the Press Release:
Announces Entry into Digital Home Market with New Services.Chennai, India - (March 29, 2010) Calsoft is pleased to announce that its wholly owned subsidiary Calsoftlabs, announces the availability of additional software services targeted towards the Digital Home Market. New service offering include browser porting and multimedia application development for digital home devices such as set-top box, IPTV, networked media and CE devices.
Calsoft will be targeting services towards software platforms based on embedded Linux, Windows CE and Android. Calsoftlabs already provides Flash 10 and Flash Lite 4 based solutions for the Digital Home Market as Adobe's distributor. Calsoftlabs also has significant expertise in wired and wireless protocols such as 802.11n that enable networked devices to communicate with each other.
The Digital Home technology, in which all devices in the home are connected to one another, promises to change the way things work in every household. Digital Home devices are a leading innovation in the consumer electronic area and a wide range of these are expected to provide browsing and multimedia capability.
"Calsoftlabs's combined expertise in embedded, networking and multimedia technology provides a very attractive value proposition to OEMs developing digital home devices" said Anand Joshi, VP of Digital Home Technology. "With over 100 delivered projects to date we are well positioned to build on our existing customer portfolio."
For more information on the available services, please visit
www.calsoftlabs.com/digital/home.html
For additional details please contact your local sales representative.
About Calsoft: California Software Company Limited (Calsoft) is a product engineering and enterprise solutions company with a strong background in development and implementation. Headquartered in Chennai, Calsoft has a presence in 12 global locations. For additional information about Calsoft, please visit www.calsoftgroup.com For more information on Calsoft Labs please visit www.calsoftlabs.com "
If someone wants to look at more information one can go for all annoucement and read it on bse site or go to the website and look for that...........
I think there are many readers who are in IT field and hence it would be prudent for then to take a look at it and write here about Calsoft........what is the prospect and how good it is as a growth Co.....
Monday, March 29, 2010
Heidelberg Cement....52 week high...63.10..Updates..
Friends,
I have been recomending Heidelberg Cement and Prism Cement since long and when they were in early 40's...Many readers kept on asking me why they are not running......perticularly for Heidelberg Cement....and today it made a 52 week high of 63.10 and settled at 62....actually within a week it has shoot up from 48 to 62......so stock can remain dorment for long time and then can move fast , actually very fast once the game starts.......
Actually Hiedelberg has overtaken Prism Cement also........There were many doubts about cement sector overcapacity and analyst were giving downgrade to this sector but I stick with my pick......
All I can say here is , this is just the start........huge upside can be seen in both this counter in times to come....
Readers keep asking me about LT picks.....Isn't these LT picks.....?But the problem I think here is they are not convinced about my pick and hence keep on asking me about it....I can't help that...I keep on recomending stock here in the best way I can do......then it is upto you to decide whether to go with it or not.....
Updates on Jayaswal Neco:
I have been recomending Jayaswal Neco since long.......it made a 52 week high yesterday at 44....and read tha Ril MF bought 5.66% stake at 33.80......and friends ,I have not to explain now what to do and what can happen in this counter......
I have been recomending Heidelberg Cement and Prism Cement since long and when they were in early 40's...Many readers kept on asking me why they are not running......perticularly for Heidelberg Cement....and today it made a 52 week high of 63.10 and settled at 62....actually within a week it has shoot up from 48 to 62......so stock can remain dorment for long time and then can move fast , actually very fast once the game starts.......
Actually Hiedelberg has overtaken Prism Cement also........There were many doubts about cement sector overcapacity and analyst were giving downgrade to this sector but I stick with my pick......
All I can say here is , this is just the start........huge upside can be seen in both this counter in times to come....
Readers keep asking me about LT picks.....Isn't these LT picks.....?But the problem I think here is they are not convinced about my pick and hence keep on asking me about it....I can't help that...I keep on recomending stock here in the best way I can do......then it is upto you to decide whether to go with it or not.....
Updates on Jayaswal Neco:
I have been recomending Jayaswal Neco since long.......it made a 52 week high yesterday at 44....and read tha Ril MF bought 5.66% stake at 33.80......and friends ,I have not to explain now what to do and what can happen in this counter......
Sunday, March 28, 2010
Spice Jet.....A Star in making....Rs 57.85
Sun, Mar 28 04:54 AM
Over a month after they applied, the decks have been cleared for an in-principle approval to low-cost carriers IndiGo and SpiceJet to fly abroad.
The Sunday Express has learnt that the Civil Aviation Ministry has given its go-ahead and procedural formalities will now be completed by the Directorate General of Civil Aviation.
While SpiceJet completes its stipulated five years of domestic operations on May 23, IndiGo meets this condition only on August 4, 2011.
Both wanted time to get their requisite infrastructure in place — and approach foreign governments — so they moved requests for in-principle approvals.
Until now, Jet Airways and Kingfisher Airlines are the only two private carriers flying abroad. When the government first gave its nod for private carriers to fly abroad, only Jet Airways and the former Air Sahara were eligible. However, Jet took over Air Sahara and similarly, Kingfisher Airlines benefited from Air Deccan's rights, once it qualified, after the merger.
The criteria laid down for a private carrier to be eligible for consideration to fly abroad is a five-year track record of uninterrupted domestic operations with a minimum fleet size of 20 aircraft. Both these airlines already have the necessary fleet size and will, in due course, meet other criteria. Taking note of this, sources said, the government agreed to give in-principle clearances.
While Jet, Kingfisher and Air India have faced heavy losses over the past few years due to high operation costs, IndiGo and SpiceJet have been among the better performers and even generated some operating profits. Both these airlines have a little over 20 aircraft in their fleet with IndiGo planning to acquire some more aircraft this year.
Unlike Jet and Kingfisher, the two airlines are not looking at long haul operations to Europe and the US. Restricting themselves to a fleet of narrow-bodied aircraft — SpiceJet has a predominantly Boeing 737s-800 while IndiGo has Airbus 320s — the two airlines have targeted the South Asia region and slightly beyond.
In fact, SpiceJet, which plans to start operations from June 1, is looking only at Kathmandu, Dhaka and Colombo to begin with even though its earlier plans included the Middle-East. IndiGo is looking not just at the SAARC region but also ASEAN and Middle-East.
Government sources pointed out that in the past few years there has been a proliferation of low-cost carriers in these sectors, particularly from the Gulf. Relatively new carriers like Air Arabia, Jazeera Airways, Mihin airlines of Sri Lanka, UAE-based RAK Airways and now even FlyDubai airlines — some with even less than five years of domestic experience — have made a significant impact on the market. Most of these are clocking over 80 per cent passenger load factor.
Delaying the entry of better established Indian low-cost carriers, sources said, may see the market move decisively in favour of foreign airlines like these. Given that India has worked hard over the past few years to either rework or negotiate afresh its air bilateral agreements to cater for multiple designation of airlines, operationalising these decisions may be less cumbersome than when it was first implemented.
Pranab Dhal Samanta
My Comments:
I feel that Spice Jet is a very good LT pick for multiple returns.....Those who can hold it and not get perturbed by the fluctuation of the price......I think Spice Jet is worth a bet.....I am bullish on Spice Jet........
Over a month after they applied, the decks have been cleared for an in-principle approval to low-cost carriers IndiGo and SpiceJet to fly abroad.
The Sunday Express has learnt that the Civil Aviation Ministry has given its go-ahead and procedural formalities will now be completed by the Directorate General of Civil Aviation.
While SpiceJet completes its stipulated five years of domestic operations on May 23, IndiGo meets this condition only on August 4, 2011.
Both wanted time to get their requisite infrastructure in place — and approach foreign governments — so they moved requests for in-principle approvals.
Until now, Jet Airways and Kingfisher Airlines are the only two private carriers flying abroad. When the government first gave its nod for private carriers to fly abroad, only Jet Airways and the former Air Sahara were eligible. However, Jet took over Air Sahara and similarly, Kingfisher Airlines benefited from Air Deccan's rights, once it qualified, after the merger.
The criteria laid down for a private carrier to be eligible for consideration to fly abroad is a five-year track record of uninterrupted domestic operations with a minimum fleet size of 20 aircraft. Both these airlines already have the necessary fleet size and will, in due course, meet other criteria. Taking note of this, sources said, the government agreed to give in-principle clearances.
While Jet, Kingfisher and Air India have faced heavy losses over the past few years due to high operation costs, IndiGo and SpiceJet have been among the better performers and even generated some operating profits. Both these airlines have a little over 20 aircraft in their fleet with IndiGo planning to acquire some more aircraft this year.
Unlike Jet and Kingfisher, the two airlines are not looking at long haul operations to Europe and the US. Restricting themselves to a fleet of narrow-bodied aircraft — SpiceJet has a predominantly Boeing 737s-800 while IndiGo has Airbus 320s — the two airlines have targeted the South Asia region and slightly beyond.
In fact, SpiceJet, which plans to start operations from June 1, is looking only at Kathmandu, Dhaka and Colombo to begin with even though its earlier plans included the Middle-East. IndiGo is looking not just at the SAARC region but also ASEAN and Middle-East.
Government sources pointed out that in the past few years there has been a proliferation of low-cost carriers in these sectors, particularly from the Gulf. Relatively new carriers like Air Arabia, Jazeera Airways, Mihin airlines of Sri Lanka, UAE-based RAK Airways and now even FlyDubai airlines — some with even less than five years of domestic experience — have made a significant impact on the market. Most of these are clocking over 80 per cent passenger load factor.
Delaying the entry of better established Indian low-cost carriers, sources said, may see the market move decisively in favour of foreign airlines like these. Given that India has worked hard over the past few years to either rework or negotiate afresh its air bilateral agreements to cater for multiple designation of airlines, operationalising these decisions may be less cumbersome than when it was first implemented.
Pranab Dhal Samanta
My Comments:
I feel that Spice Jet is a very good LT pick for multiple returns.....Those who can hold it and not get perturbed by the fluctuation of the price......I think Spice Jet is worth a bet.....I am bullish on Spice Jet........
PSL bets big on new units...........
PSL bets big on new units:
LEADING pipe manufacturer PSL has announced ramp-up of its pipe manufacturing capacity through new production units in Tamil Nadu and Andhra Pradesh, which have been set up with an investment of about Rs 270 crore. The new facilities were commissioned a couple of days ago.
The two new facilities have been strategically positioned in these locations to enhance the company's regional manufacturing presence near energy and infrastructure projects coming up in the eastern and southern regions.
The company expects an upward trend in demand for steel pipes from various projects being implemented by large companies such as GAIL, RIL, Cairn Energy, GMR and others.
The company, which makes high-grade large-diameter Helical Submerged Arc Welded pipes, has already set up units at Visakhapatnam and Madhuranthakam, about 75 km from Chennai, with 300,000 tonnes and 150,000 tonnes annual capacities, respectively. The expansion comes after the company successfully met the requirements of KG Basin gas offtake pipeline projects. The Rs 3,550 crore company has funded the expansion through the funds it raised last year about Rs 360 crore via QIP and ECB.
“By commissioning the two facilities on schedule, and within close proximity to the Krishna-Godavari Basin, both PSL and its clients will gain from the freight-savings that will accrue by eliminating the costly transportation of pipes that otherwise would have been necessary from other, more distant pipe supply-centres.
LEADING pipe manufacturer PSL has announced ramp-up of its pipe manufacturing capacity through new production units in Tamil Nadu and Andhra Pradesh, which have been set up with an investment of about Rs 270 crore. The new facilities were commissioned a couple of days ago.
The two new facilities have been strategically positioned in these locations to enhance the company's regional manufacturing presence near energy and infrastructure projects coming up in the eastern and southern regions.
The company expects an upward trend in demand for steel pipes from various projects being implemented by large companies such as GAIL, RIL, Cairn Energy, GMR and others.
The company, which makes high-grade large-diameter Helical Submerged Arc Welded pipes, has already set up units at Visakhapatnam and Madhuranthakam, about 75 km from Chennai, with 300,000 tonnes and 150,000 tonnes annual capacities, respectively. The expansion comes after the company successfully met the requirements of KG Basin gas offtake pipeline projects. The Rs 3,550 crore company has funded the expansion through the funds it raised last year about Rs 360 crore via QIP and ECB.
“By commissioning the two facilities on schedule, and within close proximity to the Krishna-Godavari Basin, both PSL and its clients will gain from the freight-savings that will accrue by eliminating the costly transportation of pipes that otherwise would have been necessary from other, more distant pipe supply-centres.
INDIA MOVING Rs 7,00,000 cr BIG BANG & that is $ 155.55 bn....
That's India's capex next fiscal year. Where will this money come from? FDI, ECBs, Japanese banks, domestic markets, local banks, mutual funds and your pocket...
INDIA is roaring towards an infrastructure boom and plenty of jobs will be created like never before as capital expenditure in the next financial year is expected to double to a whopping Rs 7,00,000 crore, or about 10 per cent of the expected gross domestic product of about Rs 70,00,000 crore.
Companies in auto, power, railways, irrigation, airports and ports sectors are on a major expansion spree and Indian banks and financial institutions are pooling in resources.
But this may not be enough and some bankers expect companies to access other financing avenues such as capital markets and overseas borrowing. Yet others feel that financial closure of many projects might have already been achieved and the implementation might not lead to fresh sanctions.
There is an overall economic recovery, thanks to improving operating profits and favourable equity market conditions this year. Almost every infrastructure sector is witnessing investments driven largely due to government support.
Both Crisil and the Centre for Monitoring Indian Economy have nearly doubled their capital expenditure (capex) estimates for the next fiscal year to a whopping Rs 6,60,000 crore and Rs 7,00,000 crore, respectively.
“Every capacity addition activity leads to job creation, it cannot be a jobless growth. I cannot put a number on how many jobs would be created from the projected Rs 7,00,000 crore capex spending during 2010-11, but for every industrial job created, the multiplier effect in the form of other jobs like contracts, etc, is 1:4,“ says Ajit Ranade, chief economist of Aditya Birla group.
A recent Morgan Stanley report titled `The Next Theme: Shift from Consumption to Investment' said several indicators, such as a widening trade deficit, rising industrial growth, low capital spending, low cost of capital, improving corporate profits and strong corporate balance sheets, suggest that the capex cycle is coming back.
According to the Morgan Stanley report, the growth cycle has been led by consumption and stock performance has been skewed towards the consumer discretionary sector compared with industrials or stocks exposed to the investment cycle. “The key debate is whether the relative performance between the two is likely to shift in favour of industrials,“ the report added.
“In the previous ratehike cycle of 2004, industrials were the second best performing sector behind banks. We expect a repetition of this in 2010, as growth is strong, and indications are that the Reserve Bank of India has made its move to anchor inflation expectations,“ the report added.
Auto and power sector lead the pack of sectors setting up new projects. NTPC said it aims to expand coalbased capacity by 4,100 mw in the next financial year for about Rs 16,400 crore. Manoj Mohta, head of Crisil Research, said new capacities are expected to be added in the auto sector due to improvement in business and economic environment.
Mahindra & Mahindra has just completed a plant at Chakan, near Pune, to make three lakh vehicles a year with an investment of Rs 2,500 crore while Tata Motors is fast moving with its small car project at Sanand in Gujarat where the investment is about Rs 1,500 crore. French carmaker Renault Nissan is investing $990 million to make four lakh vehicles a year at full capacity in Chennai.
Maruti Suzuki has announced an investment of around Rs 2,500 crore to supplement engine and plant capacities and set up a research and development centre at Rohtak in Haryana. The company also plans to invest Rs 1,750 crore to expand capacity of its Manesar plant in Haryana to 2.5 lakh units a year in two years. At present, Maruti makes 10 lakh cars a year in Manesar and Gurgaon.
Companies are also fast completing financial closures of their projects.
Some recent financial closure announcements covered JSW Energy's Rs 4,200 crore power projects, GVK Power's Rs 3,200 crore Goindal power project in Punjab and Tata Realty and Infrastructure's Rs 1,370 crore maiden venture into highways. IRB Infrastructure on Tuesday announced Rs 1,824 crore financial closure for two highway projects.
“Orders that were not executed for want of financial closures in the last quarter would implemented in the coming year,“ said V V Paranjape, director at Siemens India. However, he is cautious on a full-fledged investment. “The demand would pick up, but with a time lag of 6-12 months, as companies would wait for consistent and full capacity utilisation before they go for huge capex,“ Paranjape said.
“Order books of companies in capital goods space are piling up,“ said Riyaz Ahmed Khan, a macroeconomist at CMIE. For instance, the governmentowned Bhel's current order book is worth Rs 140,000 crore.
But the steel sector presents a mixed bag. Posco and ArcelorMittal's inability to start their mega projects on time has not deterred others from making Orissa as their most-favoured destination.
In the past 24 hours, Tata Steel and Jindal Steel and Power have announced intentions to invest in the state. While Jindal has decided to invest Rs 47,000 crore in Orissa in a coal-toliquid fuel plant and a 2,000 mw thermal power plant, Tata will invest close to Rs 21,000 crore in a four-yearold project in Kalinganagar.
Tata Steel's chief of corporate communications Sanjay Chowdhary said, “We have received 80 per cent of the required land from the state government and the balance will be received soon. We will start construction work next month.“
Jindal Steel managing director Naveen Jindal said in Bhubaneshwar on Tuesday, after meeting Orissa chief minister Naveen Patnaik, that an agreement would be signed with the state government in two to three months. According to him, different processes and technology would be used to convert coal into liquid fuels such as gasoline and diesel.
Another Jindal official said they were also building a 12.5 million-tonne steel plant, a 1,320mw power plant and an industrial complex in Angul, Orissa.
A senior Orissa government official told Financial Chronicle that his state has received an investment proposal worth Rs 101,100 crore from Jindal. He said the company has been allocated a coal block in Angul district by the central government and the company is now seeking about 2,000 hectares for the project.
“The company has already placed orders worth Rs 6,373 crore for equipment and civil structures. The first consignment of equipment has reached Kalinganagar from Germany recently,“ Chowdhary said, adding that “more equipment will arrive in the next three to four days.“ Vipul Sanghvi, president of institutional equity sales at Religare Capital Markets, said major parts of unexecuted orders of the current five-year plan are expected to be executed in coming months.
“The focus will be on execution. Companies in sectors such as capital goods, banks and heavy engineering will benefit,“ he said.
For such huge capital expenditure, funding is not going to be a problem for India Inc.
“There would be huge money coming as foreign direct investment in the next fiscal while the external commercial borrowing norms are expected to be relaxed further. Besides, India's savings rate is 34-35 per cent of GDP , which translates into huge savings at the projected Rs 70,00,000 crore GDP for fiscal 2010-11. Hence I think, despite having high borrowing plans from the India Inc, capex spending by private and public sectors could be easily absorbed,“ says Ranade of Aditya Birla.
Mohta of Crisil expects credit growth from banks to grow from 16 per cent this year to 19 per cent in the next. “Further, companies with stronger balance sheets will have other avenues such as ECBs and equity markets to raise funds due to improvement in market conditions.“
Bankers, however, said domestic credit may be insufficient to fund huge capex programmes. “Japanese banks are flush with funds and Indian companies are tapping them significantly,“ a Bank of Baroda official said, adding that they only fund highly rated firms.
A senior IDFC official echoed the view: “Companies will actively tap the ECB route to raise money as it may not be possible to fund the requirements entirely from domestic resources.“
“Obviously, when capex goes up, there will be higher offtake of credit from the banking system,“ M D Mallya, chairman and managing director of Bank of Baroda, toldFinancial Chronicle. He, however, said that many projects might be long-gestation ones where withdrawals would be spread over a period of time and thus might not lead to a sudden surge in offtake.
S A Bhat, chairman and managing director of Indian Overseas Bank, said a large number of projects, especially in the infrastructure sector, might have already achieved financial closure, and hence such capex might not reflect in fresh sanctions during 2010-11.
“Capital expenditure starts when projects get implemented on the ground. A number of these projects, especially in the infrastructure sector, have achieved financial closure, where actual disbursement has not started. If this constitutes the bulk of the Rs 700,00 crore, there will be no fresh sanctions and hence no major impact on credit offtake figures for the year. It will be necessary to have a break-up of the Rs 700,000 crore to get a clear picture,“ he said.
Arun Kaul, executive director of Central Bank of India, pointed out that promoters might access sources other than bank financing.“The demand for funds will be there but not necessarily from the banking system. It could be raised from the capital market, the debt market and overseas funding. Some companies are taking loans from mutual funds,“ he said.
He pointed out that even if the Rs 350,000 crore capex for the current financial year was taken into consideration, it was not reflecting in higher credit offtake.
“If the estimate is that Rs 350,000 crore capex is taking place this year, we are not seeing much demand,“ Kaul added. But IOB's Bhat and Central Bank's Kaul also said credit offtake next year would be higher.
“We will end up this year with credit growth lower than the industry average.
However, we are expecting the growth to be much higher next year compared to this year growth,“ Bhat said, without indicating any figures.
“Overall, we expect demand for credit to show a healthy pick up. Next year would be better than this year,“ Kaul added.
R S Reddy, chairman and managing director of Andhra Bank, said a true picture of credit offtake would come from RBI. “The issue is not very clear. A clearer picture will emerge in RBI's credit policy in April.“
“In our bank, we expect 25 per cent credit growth at the end of March 2010. An increase in credit offtake in the region of 25-30 per cent can be anticipated next year,“ Reddy said.
However, he pointed out that corporate credit offtake has been slow. “We are seeing healthy credit offtake in retail, agricultural and MSME (micro small and medium enterprises) loans.
Corporate credit has not reached a level where we can call it significant,“ he added.
(With inputs from Rupesh Subhash Janve, Manju AB, Sarita C Singh & Sanjeev Sharma)
rajeshabraham @mydigitalfc.com
EMAIL
rajeshabraham @mydigitalfc.com
My Comments:
INDIA MOVING Rs 7,00,000 cr BIG BANG & that is $ 155.55 bn......that is what I wrote at the heading...$155.55 bn...Wow!.....so what to speak about $17 bn invested last year?It is just peanuts.....and how it is going to come?
FDI, ECBs, Japanese banks, domestic markets, local banks, mutual funds and your pocket.......so it means that we have not enough money to lend and invest hence overseas money will be coming in to help built our economy......
Power and Infra sector is going to be the front runner.......and in comes..all sectors.....Capital Goods,Steel, Cement,Auto etc etc.....
INDIA is roaring towards an infrastructure boom and plenty of jobs will be created like never before as capital expenditure in the next financial year is expected to double to a whopping Rs 7,00,000 crore, or about 10 per cent of the expected gross domestic product of about Rs 70,00,000 crore.
Companies in auto, power, railways, irrigation, airports and ports sectors are on a major expansion spree and Indian banks and financial institutions are pooling in resources.
But this may not be enough and some bankers expect companies to access other financing avenues such as capital markets and overseas borrowing. Yet others feel that financial closure of many projects might have already been achieved and the implementation might not lead to fresh sanctions.
There is an overall economic recovery, thanks to improving operating profits and favourable equity market conditions this year. Almost every infrastructure sector is witnessing investments driven largely due to government support.
Both Crisil and the Centre for Monitoring Indian Economy have nearly doubled their capital expenditure (capex) estimates for the next fiscal year to a whopping Rs 6,60,000 crore and Rs 7,00,000 crore, respectively.
“Every capacity addition activity leads to job creation, it cannot be a jobless growth. I cannot put a number on how many jobs would be created from the projected Rs 7,00,000 crore capex spending during 2010-11, but for every industrial job created, the multiplier effect in the form of other jobs like contracts, etc, is 1:4,“ says Ajit Ranade, chief economist of Aditya Birla group.
A recent Morgan Stanley report titled `The Next Theme: Shift from Consumption to Investment' said several indicators, such as a widening trade deficit, rising industrial growth, low capital spending, low cost of capital, improving corporate profits and strong corporate balance sheets, suggest that the capex cycle is coming back.
According to the Morgan Stanley report, the growth cycle has been led by consumption and stock performance has been skewed towards the consumer discretionary sector compared with industrials or stocks exposed to the investment cycle. “The key debate is whether the relative performance between the two is likely to shift in favour of industrials,“ the report added.
“In the previous ratehike cycle of 2004, industrials were the second best performing sector behind banks. We expect a repetition of this in 2010, as growth is strong, and indications are that the Reserve Bank of India has made its move to anchor inflation expectations,“ the report added.
Auto and power sector lead the pack of sectors setting up new projects. NTPC said it aims to expand coalbased capacity by 4,100 mw in the next financial year for about Rs 16,400 crore. Manoj Mohta, head of Crisil Research, said new capacities are expected to be added in the auto sector due to improvement in business and economic environment.
Mahindra & Mahindra has just completed a plant at Chakan, near Pune, to make three lakh vehicles a year with an investment of Rs 2,500 crore while Tata Motors is fast moving with its small car project at Sanand in Gujarat where the investment is about Rs 1,500 crore. French carmaker Renault Nissan is investing $990 million to make four lakh vehicles a year at full capacity in Chennai.
Maruti Suzuki has announced an investment of around Rs 2,500 crore to supplement engine and plant capacities and set up a research and development centre at Rohtak in Haryana. The company also plans to invest Rs 1,750 crore to expand capacity of its Manesar plant in Haryana to 2.5 lakh units a year in two years. At present, Maruti makes 10 lakh cars a year in Manesar and Gurgaon.
Companies are also fast completing financial closures of their projects.
Some recent financial closure announcements covered JSW Energy's Rs 4,200 crore power projects, GVK Power's Rs 3,200 crore Goindal power project in Punjab and Tata Realty and Infrastructure's Rs 1,370 crore maiden venture into highways. IRB Infrastructure on Tuesday announced Rs 1,824 crore financial closure for two highway projects.
“Orders that were not executed for want of financial closures in the last quarter would implemented in the coming year,“ said V V Paranjape, director at Siemens India. However, he is cautious on a full-fledged investment. “The demand would pick up, but with a time lag of 6-12 months, as companies would wait for consistent and full capacity utilisation before they go for huge capex,“ Paranjape said.
“Order books of companies in capital goods space are piling up,“ said Riyaz Ahmed Khan, a macroeconomist at CMIE. For instance, the governmentowned Bhel's current order book is worth Rs 140,000 crore.
But the steel sector presents a mixed bag. Posco and ArcelorMittal's inability to start their mega projects on time has not deterred others from making Orissa as their most-favoured destination.
In the past 24 hours, Tata Steel and Jindal Steel and Power have announced intentions to invest in the state. While Jindal has decided to invest Rs 47,000 crore in Orissa in a coal-toliquid fuel plant and a 2,000 mw thermal power plant, Tata will invest close to Rs 21,000 crore in a four-yearold project in Kalinganagar.
Tata Steel's chief of corporate communications Sanjay Chowdhary said, “We have received 80 per cent of the required land from the state government and the balance will be received soon. We will start construction work next month.“
Jindal Steel managing director Naveen Jindal said in Bhubaneshwar on Tuesday, after meeting Orissa chief minister Naveen Patnaik, that an agreement would be signed with the state government in two to three months. According to him, different processes and technology would be used to convert coal into liquid fuels such as gasoline and diesel.
Another Jindal official said they were also building a 12.5 million-tonne steel plant, a 1,320mw power plant and an industrial complex in Angul, Orissa.
A senior Orissa government official told Financial Chronicle that his state has received an investment proposal worth Rs 101,100 crore from Jindal. He said the company has been allocated a coal block in Angul district by the central government and the company is now seeking about 2,000 hectares for the project.
“The company has already placed orders worth Rs 6,373 crore for equipment and civil structures. The first consignment of equipment has reached Kalinganagar from Germany recently,“ Chowdhary said, adding that “more equipment will arrive in the next three to four days.“ Vipul Sanghvi, president of institutional equity sales at Religare Capital Markets, said major parts of unexecuted orders of the current five-year plan are expected to be executed in coming months.
“The focus will be on execution. Companies in sectors such as capital goods, banks and heavy engineering will benefit,“ he said.
For such huge capital expenditure, funding is not going to be a problem for India Inc.
“There would be huge money coming as foreign direct investment in the next fiscal while the external commercial borrowing norms are expected to be relaxed further. Besides, India's savings rate is 34-35 per cent of GDP , which translates into huge savings at the projected Rs 70,00,000 crore GDP for fiscal 2010-11. Hence I think, despite having high borrowing plans from the India Inc, capex spending by private and public sectors could be easily absorbed,“ says Ranade of Aditya Birla.
Mohta of Crisil expects credit growth from banks to grow from 16 per cent this year to 19 per cent in the next. “Further, companies with stronger balance sheets will have other avenues such as ECBs and equity markets to raise funds due to improvement in market conditions.“
Bankers, however, said domestic credit may be insufficient to fund huge capex programmes. “Japanese banks are flush with funds and Indian companies are tapping them significantly,“ a Bank of Baroda official said, adding that they only fund highly rated firms.
A senior IDFC official echoed the view: “Companies will actively tap the ECB route to raise money as it may not be possible to fund the requirements entirely from domestic resources.“
“Obviously, when capex goes up, there will be higher offtake of credit from the banking system,“ M D Mallya, chairman and managing director of Bank of Baroda, toldFinancial Chronicle. He, however, said that many projects might be long-gestation ones where withdrawals would be spread over a period of time and thus might not lead to a sudden surge in offtake.
S A Bhat, chairman and managing director of Indian Overseas Bank, said a large number of projects, especially in the infrastructure sector, might have already achieved financial closure, and hence such capex might not reflect in fresh sanctions during 2010-11.
“Capital expenditure starts when projects get implemented on the ground. A number of these projects, especially in the infrastructure sector, have achieved financial closure, where actual disbursement has not started. If this constitutes the bulk of the Rs 700,00 crore, there will be no fresh sanctions and hence no major impact on credit offtake figures for the year. It will be necessary to have a break-up of the Rs 700,000 crore to get a clear picture,“ he said.
Arun Kaul, executive director of Central Bank of India, pointed out that promoters might access sources other than bank financing.“The demand for funds will be there but not necessarily from the banking system. It could be raised from the capital market, the debt market and overseas funding. Some companies are taking loans from mutual funds,“ he said.
He pointed out that even if the Rs 350,000 crore capex for the current financial year was taken into consideration, it was not reflecting in higher credit offtake.
“If the estimate is that Rs 350,000 crore capex is taking place this year, we are not seeing much demand,“ Kaul added. But IOB's Bhat and Central Bank's Kaul also said credit offtake next year would be higher.
“We will end up this year with credit growth lower than the industry average.
However, we are expecting the growth to be much higher next year compared to this year growth,“ Bhat said, without indicating any figures.
“Overall, we expect demand for credit to show a healthy pick up. Next year would be better than this year,“ Kaul added.
R S Reddy, chairman and managing director of Andhra Bank, said a true picture of credit offtake would come from RBI. “The issue is not very clear. A clearer picture will emerge in RBI's credit policy in April.“
“In our bank, we expect 25 per cent credit growth at the end of March 2010. An increase in credit offtake in the region of 25-30 per cent can be anticipated next year,“ Reddy said.
However, he pointed out that corporate credit offtake has been slow. “We are seeing healthy credit offtake in retail, agricultural and MSME (micro small and medium enterprises) loans.
Corporate credit has not reached a level where we can call it significant,“ he added.
(With inputs from Rupesh Subhash Janve, Manju AB, Sarita C Singh & Sanjeev Sharma)
rajeshabraham @mydigitalfc.com
rajeshabraham @mydigitalfc.com
My Comments:
INDIA MOVING Rs 7,00,000 cr BIG BANG & that is $ 155.55 bn......that is what I wrote at the heading...$155.55 bn...Wow!.....so what to speak about $17 bn invested last year?It is just peanuts.....and how it is going to come?
FDI, ECBs, Japanese banks, domestic markets, local banks, mutual funds and your pocket.......so it means that we have not enough money to lend and invest hence overseas money will be coming in to help built our economy......
Power and Infra sector is going to be the front runner.......and in comes..all sectors.....Capital Goods,Steel, Cement,Auto etc etc.....
Saturday, March 27, 2010
The Next 10 Years Could See The Indian Economy Growing By Four Times, With Domestic Capital Leading The Growth ..........
GROWTH MAY SURPRISE FORECASTERS
The Next 10 Years Could See The Indian Economy Growing By Four Times, With Domestic Capital Leading The Growth
Naresh Kothari
INDIA has come a long way since the economic reforms in 1991, moving from rates of 5% into the orbit of 7-9% growth rates. However, how many of us really know the scope and scale of this story and how it pans out over the next 10 years? At Edelweiss, we tried to estimate this growth, and the numbers are staggering.
We have assumed Indian gross-domestic savings at around 35%, an incremental capital output ratio of four as in the past decade, inflation of 4% and a marginal current account deficit of 2%. These assumptions lead us to a real GDP growth rate of 9% and a nominal growth of 13%. By 2020, India’s GDP is likely to quadruple from the current $1.1 trillion to about $4.5 trillion. Per capita income is likely to triple from the current approximately Rs 50,000 to over Rs 1.5 lakh. The number of households with income of more than Rs 16 lakh will be over 18 million, while the number of middle class households (income between Rs 1.5 lakh and Rs 16 lakh) would grow by 50% to 180 million. Number of deprived households (with income below Rs 1.5 lakh) is likely to be reduced by almost 25% to 100 million. Indian consumption is likely to increase 3.7 times to about Rs 113 trillion, with discretionary expenditure likely to increase significantly. According to our estimates, the education sector will grow 5.7 times, domestic pharma and healthcare six times, media and entertainment five times and organised retail 6.3 times. The automobile sector is likely to grow 4.8 times, while urban premium housing will grow 6.5 times.
By 2020, we expect total savings to be about $1.4 trillion — more than our current GDP. The massive growth in savings will propel a 5.3 times growth in banking, 4.7 times in broking, 5.7 times in asset management and 4.7 times in life insurance. There are three key risks to achieving and managing this growth. Execution of planned infrastructure projects remains an area of concern, inflation is another. The third risk to growth is the inclusion of lower income segments. With a Gini index of 36, the income disparity levels in India are amongst the highest in the world. It’s important that the bottom of the pyramid participates in the growth process.
However, in the past decade, we have grown at 7.2% with 5% inflation and carried out significant reforms despite pulls and pressures of a democracy. We see no reason why this can’t continue for the next 10 years. In fact, I am personally confident that our projections may well prove to be underestimates.
(The author is president at Edelweiss Capital)
My Comments:
Can anyone imagine what can be the ratio for Industries if Indian economy grows 4 times in just a decade?Where can be the Ind earnings and where can be the SENSEX?
This is written by no other then the president of a very reputed and wellknown brokerage firm.....
I just read the news that , in Feb ,Core sector growth was just 4.5% lowest in last 4 months.... and now I am expecting our beloved bear...Mr.Shankar Sharma should come on CNBC anytime to repeat again his target of 12k any time soon..!!!!!!!!.............???????????I bet, he will be coming soon on CNBC ........he is just waiting for such news......I have not seen him since long....
I don't know what analyst thinks and what people tends to believe.....I have always written, read as much as you can and make your own view....for how much long you will follow others?
Create your own conviction and for that do whatever needs to be done ....read, explore through internet......but when readers here do not able to read my blog properly how I can expect them to read something else?I write this because ,I still see them asking about my LT picks or my favourite picks......asking about stocks which I have already discussed.......
Well, one need to be very focused.....that is the bottomline....
One more thing I would like to write it here.....about Srei Infra.....The news of Quippo merging with Srei Infra was brewing since long ..we may not be knowing that but it must be there in the market....now I would like to ask...who were the sellers in Srei Infra around that time?
While going through the bulk deal around Jan/Feb/Mar 2010....I am seeing the name of
1)Pca India Infrastructure Equityopen Limited SELL( 9,40,972 /Shares) @69.69
2)Prudential Asset Management (singapore) Ltd A/c Pca India In SELL (10,00,000/Shares)@ 69.25
These 2 bulk selling took place on 29 th Jan '10 .....so the total selling by these 2 funds were of 19.40 lacs shares...
and
29-Jan-2010 SREI Infra (NSE) Ashika Credit Capital Limited BUY 600000 70.32
27-Jan-2010 SREI Infra (NSE) Ashika Credit Capital Limited BUY 825000 80.74
and Ashika Credit bought around same time 14.25 lacs shares around same tiime.......
and after that Rakesh Jhunjhunwala bought Srei Infra in 2 traches of 6.25 lacs shares...on 26 feb 10 and 2nd Mar'10..means on Fri and Monday the next trading day......
I would like to know what was the reason that those two funds found wrong in Srei Infra?Was something wrong in the merger ratio?Was the Valuation of Quippo was estimated high by the managment?Why they sold it in such a big quantity and making loss of future as we all know when RJ buys, it usually is a multibagger...then what was the reason those fund sold Srei Infra?Who took that foolish decision to sell Srei Infra in that fund and that too in such a big quantity?
What I wants to convey is,don't rely on anyone........
The Next 10 Years Could See The Indian Economy Growing By Four Times, With Domestic Capital Leading The Growth
Naresh Kothari
INDIA has come a long way since the economic reforms in 1991, moving from rates of 5% into the orbit of 7-9% growth rates. However, how many of us really know the scope and scale of this story and how it pans out over the next 10 years? At Edelweiss, we tried to estimate this growth, and the numbers are staggering.
We have assumed Indian gross-domestic savings at around 35%, an incremental capital output ratio of four as in the past decade, inflation of 4% and a marginal current account deficit of 2%. These assumptions lead us to a real GDP growth rate of 9% and a nominal growth of 13%. By 2020, India’s GDP is likely to quadruple from the current $1.1 trillion to about $4.5 trillion. Per capita income is likely to triple from the current approximately Rs 50,000 to over Rs 1.5 lakh. The number of households with income of more than Rs 16 lakh will be over 18 million, while the number of middle class households (income between Rs 1.5 lakh and Rs 16 lakh) would grow by 50% to 180 million. Number of deprived households (with income below Rs 1.5 lakh) is likely to be reduced by almost 25% to 100 million. Indian consumption is likely to increase 3.7 times to about Rs 113 trillion, with discretionary expenditure likely to increase significantly. According to our estimates, the education sector will grow 5.7 times, domestic pharma and healthcare six times, media and entertainment five times and organised retail 6.3 times. The automobile sector is likely to grow 4.8 times, while urban premium housing will grow 6.5 times.
By 2020, we expect total savings to be about $1.4 trillion — more than our current GDP. The massive growth in savings will propel a 5.3 times growth in banking, 4.7 times in broking, 5.7 times in asset management and 4.7 times in life insurance. There are three key risks to achieving and managing this growth. Execution of planned infrastructure projects remains an area of concern, inflation is another. The third risk to growth is the inclusion of lower income segments. With a Gini index of 36, the income disparity levels in India are amongst the highest in the world. It’s important that the bottom of the pyramid participates in the growth process.
However, in the past decade, we have grown at 7.2% with 5% inflation and carried out significant reforms despite pulls and pressures of a democracy. We see no reason why this can’t continue for the next 10 years. In fact, I am personally confident that our projections may well prove to be underestimates.
(The author is president at Edelweiss Capital)
My Comments:
Can anyone imagine what can be the ratio for Industries if Indian economy grows 4 times in just a decade?Where can be the Ind earnings and where can be the SENSEX?
This is written by no other then the president of a very reputed and wellknown brokerage firm.....
I just read the news that , in Feb ,Core sector growth was just 4.5% lowest in last 4 months.... and now I am expecting our beloved bear...Mr.Shankar Sharma should come on CNBC anytime to repeat again his target of 12k any time soon..!!!!!!!!.............???????????I bet, he will be coming soon on CNBC ........he is just waiting for such news......I have not seen him since long....
I don't know what analyst thinks and what people tends to believe.....I have always written, read as much as you can and make your own view....for how much long you will follow others?
Create your own conviction and for that do whatever needs to be done ....read, explore through internet......but when readers here do not able to read my blog properly how I can expect them to read something else?I write this because ,I still see them asking about my LT picks or my favourite picks......asking about stocks which I have already discussed.......
Well, one need to be very focused.....that is the bottomline....
One more thing I would like to write it here.....about Srei Infra.....The news of Quippo merging with Srei Infra was brewing since long ..we may not be knowing that but it must be there in the market....now I would like to ask...who were the sellers in Srei Infra around that time?
While going through the bulk deal around Jan/Feb/Mar 2010....I am seeing the name of
1)Pca India Infrastructure Equityopen Limited SELL( 9,40,972 /Shares) @69.69
2)Prudential Asset Management (singapore) Ltd A/c Pca India In SELL (10,00,000/Shares)@ 69.25
These 2 bulk selling took place on 29 th Jan '10 .....so the total selling by these 2 funds were of 19.40 lacs shares...
and
29-Jan-2010 SREI Infra (NSE) Ashika Credit Capital Limited BUY 600000 70.32
27-Jan-2010 SREI Infra (NSE) Ashika Credit Capital Limited BUY 825000 80.74
and Ashika Credit bought around same time 14.25 lacs shares around same tiime.......
and after that Rakesh Jhunjhunwala bought Srei Infra in 2 traches of 6.25 lacs shares...on 26 feb 10 and 2nd Mar'10..means on Fri and Monday the next trading day......
I would like to know what was the reason that those two funds found wrong in Srei Infra?Was something wrong in the merger ratio?Was the Valuation of Quippo was estimated high by the managment?Why they sold it in such a big quantity and making loss of future as we all know when RJ buys, it usually is a multibagger...then what was the reason those fund sold Srei Infra?Who took that foolish decision to sell Srei Infra in that fund and that too in such a big quantity?
What I wants to convey is,don't rely on anyone........
Tuesday, March 23, 2010
Kalyani Forge and Excel Crop...my old call...updates..
Friends,
I recomended Kalyani Forge at 87 in last Aug 09 and Excel Crop at 115 and Aries Agro around 40 range...
I am seeing that Kalyani Forge is making new high at 215 and Excel Crop inching up to 175 and Aries Agro crossing 125.....these all is happening within 1 year.
I again reiterate, keep a watch on GMR Ferro,Sabero Agro, LT Foods,Lumax Ind, Hitech Gear( new pick ),Super Spinning,Super Sales etc which looks still excellent for 1-2 yrs..and more....I am bulliish on Vijay Shanti Builders as well in realty play.
Read that MD of Ennore Coke is planning to buy Coke mines in Australia and Newzealand at Retures....and that is the reason we are seeing upward movement in Ennore Coke as if that materialize then there will no looking back for Ennore Coke.....and can turn out to be a real multibagger even from hereon.......
I recomended Kalyani Forge at 87 in last Aug 09 and Excel Crop at 115 and Aries Agro around 40 range...
I am seeing that Kalyani Forge is making new high at 215 and Excel Crop inching up to 175 and Aries Agro crossing 125.....these all is happening within 1 year.
I again reiterate, keep a watch on GMR Ferro,Sabero Agro, LT Foods,Lumax Ind, Hitech Gear( new pick ),Super Spinning,Super Sales etc which looks still excellent for 1-2 yrs..and more....I am bulliish on Vijay Shanti Builders as well in realty play.
Read that MD of Ennore Coke is planning to buy Coke mines in Australia and Newzealand at Retures....and that is the reason we are seeing upward movement in Ennore Coke as if that materialize then there will no looking back for Ennore Coke.....and can turn out to be a real multibagger even from hereon.......
Saturday, March 20, 2010
Aegis Logistic.....A Growth Play....cmp..195.50.....
Friends,
I have been tracking this Co since long and I liked it too but somehow was not able to get convinced about the growth of this Co but after looking at it's takeover of Shell GasLPG India , I think the management is doing the right thing to deliver the growth of future.....
Well, the taking over Shell Gas LPG India is an old news which I read in Dec 2009 and at that time the share was around 171 and after the annoucement of taking over Shell Gas the stock made a new high of 242 .....and is back at 195.....so after taking over Shell Gas LPG the price has not gone up much and hence feels that it is a good value buy.....
But other thing to take note of it here is the Co has buy back some 10 lacs shares from the open market at 143 price and the buy back has closed now......
The promoters already hold 66% and after the buyback the eq will be less by over 1 cr or 10 lacs shares....That will enhance the eps as well...The Mcap and Sales ratio is almost 1:1 and hence gives ample scope for growth....Moreover Aegis Logistic seems to be a Cash Rich Co otherwise there is no way they can go for a Buy Back......
Moreover Aegis has Gas terminals in various states and intend to open more.Apart from being a storage Co Aegis seems to me a very good Logistic play perticularly for LPG......
I feel that at this price with buy back just completed looks a value buy for LT.....as the P/E is almost at par, means available at 10 P/E.....so if Co grows as per my view and hence eps also goes higher then price should also go up with the earnings going up.....what one need to look is what the growth remains...but I am optimist about the growth....so after DD one can take exposer here and try to buy more on dips if market gives opportunity......
Aegis Logistics acquires Shell Gas (LPG) India
Press Trust of India
Monday, December 21, 2009 (Mumbai)
Oil and gas logistics provider, Aegis Logistics, has acquired Shell Gas (LPG) India and expects the whole acquisition process to be completed in the next 90-days, a top company official said.
"We have taken over Shell Gas's LPG business," Aegis Logistics' Vice-Chairman and Managing Director, Raj Chandaria, told PTI here today.
Citing a confidentiality clause, he declined to reveal the sum at which the acquisition is being effected. "The acquisition is being funded through our internal resources—we have ample liquid resources," Chandaria said.
Post the acquisition, Shell Gas (LPG) India will become a 100 per cent subsidiary of Aegis Logistics.
Shell Gas has been primarily active in Gujarat and Maharashtra and in a smaller way in other regions. "Its two key assets--a terminal at Pipavav Port and a filling plant at Kheda, are of great importance to us," he said.
The terminal has a capacity of 2,700 metric tonnes of gas, he said, adding "this acquisition will considerably beef-up our marketing and importing of LPG."
The company's shares closed today at Rs 185,marginally up over the previous close.
Aegis presently has two terminals at Mumbai and one in Kochi. "Our aim is to have a necklace of terminals all over India's coastline," Chandaria said.
The company was interested in adding more terminals through acquisitions when the right opportunity presented itself, he said.
Asked what advantages would accrue to Aegis after this acquisition, Chandaria said that "it will strengthen our presence in the industrial and commercial segments besides giving us an entry into the cylinder market. With Shell now out of the business, it only makes our position stronger," he said.
I have been tracking this Co since long and I liked it too but somehow was not able to get convinced about the growth of this Co but after looking at it's takeover of Shell GasLPG India , I think the management is doing the right thing to deliver the growth of future.....
Well, the taking over Shell Gas LPG India is an old news which I read in Dec 2009 and at that time the share was around 171 and after the annoucement of taking over Shell Gas the stock made a new high of 242 .....and is back at 195.....so after taking over Shell Gas LPG the price has not gone up much and hence feels that it is a good value buy.....
But other thing to take note of it here is the Co has buy back some 10 lacs shares from the open market at 143 price and the buy back has closed now......
The promoters already hold 66% and after the buyback the eq will be less by over 1 cr or 10 lacs shares....That will enhance the eps as well...The Mcap and Sales ratio is almost 1:1 and hence gives ample scope for growth....Moreover Aegis Logistic seems to be a Cash Rich Co otherwise there is no way they can go for a Buy Back......
Moreover Aegis has Gas terminals in various states and intend to open more.Apart from being a storage Co Aegis seems to me a very good Logistic play perticularly for LPG......
I feel that at this price with buy back just completed looks a value buy for LT.....as the P/E is almost at par, means available at 10 P/E.....so if Co grows as per my view and hence eps also goes higher then price should also go up with the earnings going up.....what one need to look is what the growth remains...but I am optimist about the growth....so after DD one can take exposer here and try to buy more on dips if market gives opportunity......
Aegis Logistics acquires Shell Gas (LPG) India
Press Trust of India
Monday, December 21, 2009 (Mumbai)
Oil and gas logistics provider, Aegis Logistics, has acquired Shell Gas (LPG) India and expects the whole acquisition process to be completed in the next 90-days, a top company official said.
"We have taken over Shell Gas's LPG business," Aegis Logistics' Vice-Chairman and Managing Director, Raj Chandaria, told PTI here today.
Citing a confidentiality clause, he declined to reveal the sum at which the acquisition is being effected. "The acquisition is being funded through our internal resources—we have ample liquid resources," Chandaria said.
Post the acquisition, Shell Gas (LPG) India will become a 100 per cent subsidiary of Aegis Logistics.
Shell Gas has been primarily active in Gujarat and Maharashtra and in a smaller way in other regions. "Its two key assets--a terminal at Pipavav Port and a filling plant at Kheda, are of great importance to us," he said.
The terminal has a capacity of 2,700 metric tonnes of gas, he said, adding "this acquisition will considerably beef-up our marketing and importing of LPG."
The company's shares closed today at Rs 185,marginally up over the previous close.
Aegis presently has two terminals at Mumbai and one in Kochi. "Our aim is to have a necklace of terminals all over India's coastline," Chandaria said.
The company was interested in adding more terminals through acquisitions when the right opportunity presented itself, he said.
Asked what advantages would accrue to Aegis after this acquisition, Chandaria said that "it will strengthen our presence in the industrial and commercial segments besides giving us an entry into the cylinder market. With Shell now out of the business, it only makes our position stronger," he said.
Thursday, March 18, 2010
"Quippo-WTTIL Acquires Tower Business of Tata Teleservices(Maharashtra) Ltd."
It will sell its 2,535 telecom towers to WTTIL that would bring cash inflow of Rs 900 crore.
Tata Teleservices Maharashtra (TTML), the listed arm of telecom services operator Tata Teleservices, is selling its telecom towers for an enterprise value of Rs 1,318 crore to Wireless-TT Info Services (WTTIL).
WTTIL is the joint venture between Tata Tele and Srei group’s Quippo where the Tata group’s privately held telecom business owns 51% stake.
TTML currently operates services in Mumbai, Maharashtra and Goa circles and, as per the deal, will sell its 2,535 telecom towers, being run by its subsidiary 21st Century Infra Tele, to WTTIL that would bring cash inflow of Rs 900 crore.
This transaction values the towers at Rs 52 lakh per unit, around 10% more than the Rs 48 lakh per tower paid by GTL Infrastructure for acquiring Aircel Cellular’s towers earlier this year. As part of this deal, WTTIL has also received a commitment from 21st Century Tele of around 4,000 towers to be rolled out over five years in Mumbai, Maharashtra and Goa.
WTTIL that was formed last year through a merger of the telecom tower operations of Tata Teleservices — in which Japan’s NTT DoCoMo holds 26% — and Quippo, will now have over 38,000 towers. At the same tower valuation, WTTIL would be worth Rs 19,760 crore or $ 4.4 billion. In January 2009, the combined entity had about 18,000 towers, which gave it an enterprise value of Rs 13,000 crore ($2.82 billion).
The transaction will give strategic advantage to WTTIL with lucrative towers network in Mumbai, Maharashtra and Goa. In a statement, the company said, "this transaction will also bring immense benefit to Tata-Quippo with the 3G and WiMax auctions to be conducted shortly and hence the additional requirements for towers in these strategically important geographies."
Although TTML has not stated what it will do with the cash infusion, the money will allow it to get ready to bid for 3G spectrum allowing the firm to offer next generation mobile services.
The acquisition of TFCITL will give QUIPPO-WTTIL a strong countrywide footprint by strengthening its presence in the new geographies. Mumbai being a metro is one of the most attractive circles, where site acquisition is difficult & therefore inorganic strategy will help the company in gaining a ready presence in this market. This transaction will also bring immense benefit to QUIPPO-WTTIL with the 3G and WiMax auctions to be conducted shortly and hence the additional requirements for towers in these strategically important geographies, especially Mumbai. The deal will help QUIPPO-WTTIL leverage the combined network strength and capture new customers, thereby enhancing the tenancy further.
Announcing the deal, Sunil Kanoria, Director, QUIPPO-WTTIL said, “With a modest beginning in 2005, and subsequent to our partnership with Tata Teleservices last year, today we are the world’s largest independent telecom infrastructure company. It has been an extremely exciting and gratifying journey within a short duration. The acquisition complements our tower portfolio in the strategically important markets, at the same time providing us a contiguous network nationally. The proposed transaction will result in a renewed robust organisation with enhanced product profile in new geographies, economies of scale with numerous cost benefits due to operational synergies and a stronger financial position, thereby resulting in greater shareholder value”.
As part of this deal, QUIPPO-WTTIL has also received a confirmed commitment of approx. 4000 towers roll-out over a period of five years from TFCITL in Mumbai, Maharashtra and Goa. The deal takes the partnership of Quippo with Tata Teleservices, which began last year, to the next level. This is a classic example of the endeavour of two like-minded partners coming together to create an independent world-class telecom infrastructure company.
Speaking on the occasion, Dr. Mukund Govind Rajan, Managing Director, Tata Teleservices (Maharashtra) Ltd. (TTML), said, “We are delighted with the recognition of the value that TTML has created in TFCITL. Going forward, this transaction allows us to focus on our core business priorities of strengthening our market leadership in the voice and data segments. The cash inflow from this transaction in excess of Rs 900 Crores will support our ambitious investment and growth plans”.
Tata Teleservices Maharashtra (TTML), the listed arm of telecom services operator Tata Teleservices, is selling its telecom towers for an enterprise value of Rs 1,318 crore to Wireless-TT Info Services (WTTIL).
WTTIL is the joint venture between Tata Tele and Srei group’s Quippo where the Tata group’s privately held telecom business owns 51% stake.
TTML currently operates services in Mumbai, Maharashtra and Goa circles and, as per the deal, will sell its 2,535 telecom towers, being run by its subsidiary 21st Century Infra Tele, to WTTIL that would bring cash inflow of Rs 900 crore.
This transaction values the towers at Rs 52 lakh per unit, around 10% more than the Rs 48 lakh per tower paid by GTL Infrastructure for acquiring Aircel Cellular’s towers earlier this year. As part of this deal, WTTIL has also received a commitment from 21st Century Tele of around 4,000 towers to be rolled out over five years in Mumbai, Maharashtra and Goa.
WTTIL that was formed last year through a merger of the telecom tower operations of Tata Teleservices — in which Japan’s NTT DoCoMo holds 26% — and Quippo, will now have over 38,000 towers. At the same tower valuation, WTTIL would be worth Rs 19,760 crore or $ 4.4 billion. In January 2009, the combined entity had about 18,000 towers, which gave it an enterprise value of Rs 13,000 crore ($2.82 billion).
The transaction will give strategic advantage to WTTIL with lucrative towers network in Mumbai, Maharashtra and Goa. In a statement, the company said, "this transaction will also bring immense benefit to Tata-Quippo with the 3G and WiMax auctions to be conducted shortly and hence the additional requirements for towers in these strategically important geographies."
Although TTML has not stated what it will do with the cash infusion, the money will allow it to get ready to bid for 3G spectrum allowing the firm to offer next generation mobile services.
The acquisition of TFCITL will give QUIPPO-WTTIL a strong countrywide footprint by strengthening its presence in the new geographies. Mumbai being a metro is one of the most attractive circles, where site acquisition is difficult & therefore inorganic strategy will help the company in gaining a ready presence in this market. This transaction will also bring immense benefit to QUIPPO-WTTIL with the 3G and WiMax auctions to be conducted shortly and hence the additional requirements for towers in these strategically important geographies, especially Mumbai. The deal will help QUIPPO-WTTIL leverage the combined network strength and capture new customers, thereby enhancing the tenancy further.
Announcing the deal, Sunil Kanoria, Director, QUIPPO-WTTIL said, “With a modest beginning in 2005, and subsequent to our partnership with Tata Teleservices last year, today we are the world’s largest independent telecom infrastructure company. It has been an extremely exciting and gratifying journey within a short duration. The acquisition complements our tower portfolio in the strategically important markets, at the same time providing us a contiguous network nationally. The proposed transaction will result in a renewed robust organisation with enhanced product profile in new geographies, economies of scale with numerous cost benefits due to operational synergies and a stronger financial position, thereby resulting in greater shareholder value”.
As part of this deal, QUIPPO-WTTIL has also received a confirmed commitment of approx. 4000 towers roll-out over a period of five years from TFCITL in Mumbai, Maharashtra and Goa. The deal takes the partnership of Quippo with Tata Teleservices, which began last year, to the next level. This is a classic example of the endeavour of two like-minded partners coming together to create an independent world-class telecom infrastructure company.
Speaking on the occasion, Dr. Mukund Govind Rajan, Managing Director, Tata Teleservices (Maharashtra) Ltd. (TTML), said, “We are delighted with the recognition of the value that TTML has created in TFCITL. Going forward, this transaction allows us to focus on our core business priorities of strengthening our market leadership in the voice and data segments. The cash inflow from this transaction in excess of Rs 900 Crores will support our ambitious investment and growth plans”.
4-M's.....Man Ind, MSK Project, Mcnally Bharat & Marg ......
Friends,
These are the 4 M's I have recomended here and from that Mcnally Bharat, MSK Pro and Marg Ltd has been my very old call.All 3 I have recomended in the range of 50........and the last Man Ind I recomended it at 55......
Mcnally Bharat is now at 275, MSK pro is now at 128 ,Marg is at 178 and last Man Ind is at 76.....
Among them I still feel that Man Ind, MSK Pro and Marg Ltd are still a good buy......so I am just updating my calls ......do DD and if feel comfortable then buy...........
These are the 4 M's I have recomended here and from that Mcnally Bharat, MSK Pro and Marg Ltd has been my very old call.All 3 I have recomended in the range of 50........and the last Man Ind I recomended it at 55......
Mcnally Bharat is now at 275, MSK pro is now at 128 ,Marg is at 178 and last Man Ind is at 76.....
Among them I still feel that Man Ind, MSK Pro and Marg Ltd are still a good buy......so I am just updating my calls ......do DD and if feel comfortable then buy...........
Wednesday, March 17, 2010
PAE Ltd...my old call...& ABC India....
One of the stock that was there on my pick on 2nd March, PAE Ltd......I just saw an interview from PAE's ED& CEO Mr.Pritam Doshi......
UPDATE:
I just saw that PAE was in Upper Circuit at 46.60 yesterday and making 52 week high and also saw that my recent pick DHP India also made a 52 week high at 31 which was recomended here at 22!I remember my call on ABC India from my mmb days and someone has bought as well and was asking me here maybe a year or so back that as ABC is not moving at all what needs to be done!and I remember I suggested to hold it as the fundamentals was intact and today I am seeing that it made a 52 week high of RS 91.25......
Here is the transcript.....
Q: There are some developments in your company, you are currently into distribution of solar panels and you are looking to get into installation of solar panels because of which you have converted your associate company into a 100% subsidiary - what is the eventual plan from here on and when would you rollout all of this?
A: Basically we want to start out in Maharashtra, we want to target the mid-market segment which is the 10 kilowatt to 1 MW segment, roof tops, farm houses any sort of companies, businesses that want solar installations or enabling installations on their roof top or in their backyards.
There is a huge market in India and the National Solar Mission provides for higher rates in terms of per unit price that one can generate power and do something called net metering or generate something called feed-in-tariff.
So the plan is for these companies to do the installations for the mid market to begin with in Maharashtra and we are going to do this for the next 12 months or so and build this business up and focus only in this state.
Q: Are there plans to eventually list this other company PAER as well?
A: We don’t know right now. We will see how that goes.
Q: What is the kind of revenue share that you are looking at from this company because there is increasing focus on renewable energy and you were talking about price per unit, so could you give us a ballpark figure?
A: We are targeting Rs 5-10 crore from this business from Maharashtra this year in 2010-11. The business has high gross margins than PAE does. Therefore we thought it makes more sense for us to focus on this business in a separate company rather than do it inside or within PAE.
Q: This solar installation business is a new venture for you, so would you be investing in this and to the tune of how much?
A: We are probably going to invest up to Rs 1 crore at this point to start of with; it’s not a high capex business. It is mainly the man power that we need to get trained and recruit is obviously high quality and we will be mainly investing this money in working capital and building our infrastructure for deployment of installations.
Q: And where would you start the rollout, what are the states you are targeting?
A: It will be only in Maharashtra at the moment: From Vashi, Pune, Kolhapur and Nagpur. We already have locations and establishments in PAE. So we will share the infrastructure that PAE offers in the state.
Q: What is your market share?
A: We will be starting off in this business right now. So it is non existing.
Previous Interview of 3rd Mar'10
Q: Take us through what benefits you directly get, you told us that in any case solar segment forms a very small part of your business just yet, do you benefit from the Budget excise duty cuts at all or do you benefit form the Budget in any way at all?
A: We benefit from the Budget that it opens up a huge market for us in terms of solar panels and our power electronics for the solar market. When it was announced that the Rs 500 crore fund would be allocated towards the Jammu Kashmir and Laddakh region for solar power plants there, so I think that really conveys the national solar mission and puts figure to what’s going to be allocated to the region and that’s going to be a very favorable thing for people like us.
Q: You said it contributes to about Rs 12 or 15 crore which is what 10% of your business now?
A: Actually lower than 10% of our business currently.
Q: What do you see it growing to, say in 2011 or 2012?
A: Shurjo Energy is a solar panel company that we have acquired that should be growing at about 40-50% next year. However, in PAE, we have also building a distribution and service network for solar components, panels and installations, so we believe that that business should contribute about Rs 15-20 crore of our topline next year.
We have also signed a distribution agreement with Schneider Electric which is going to compliment our existing business of batteries and panels to give us the balance of system that is required for any systems integrator to install a solar outlet.
Q: What did Shurjo Energy report as their revenue as of December 31st 2009?
A: Shurjo was not 57% owned by us in December.
Q: So what is the revenue at the moment?
A: The revenue is Rs 9 crore.
Q: What exact revenue you get out of this business because your own margins are about 2% that means you end up getting Rs 7-8 lakh?
A: Basically the product we are in is CIGS which is a photovoltaic product, it's just not silicon based. The material is spray painted on a stainless steel foil, so that is made in India and exported and Shurjo has been exporting for the last 3-4 years. We believe that these low cost panels will become a huge market especially in India and such places where there are demand for low cost solar installations. We are poised for that in terms of the panel range.
UPDATE:
I just saw that PAE was in Upper Circuit at 46.60 yesterday and making 52 week high and also saw that my recent pick DHP India also made a 52 week high at 31 which was recomended here at 22!I remember my call on ABC India from my mmb days and someone has bought as well and was asking me here maybe a year or so back that as ABC is not moving at all what needs to be done!and I remember I suggested to hold it as the fundamentals was intact and today I am seeing that it made a 52 week high of RS 91.25......
Here is the transcript.....
Q: There are some developments in your company, you are currently into distribution of solar panels and you are looking to get into installation of solar panels because of which you have converted your associate company into a 100% subsidiary - what is the eventual plan from here on and when would you rollout all of this?
A: Basically we want to start out in Maharashtra, we want to target the mid-market segment which is the 10 kilowatt to 1 MW segment, roof tops, farm houses any sort of companies, businesses that want solar installations or enabling installations on their roof top or in their backyards.
There is a huge market in India and the National Solar Mission provides for higher rates in terms of per unit price that one can generate power and do something called net metering or generate something called feed-in-tariff.
So the plan is for these companies to do the installations for the mid market to begin with in Maharashtra and we are going to do this for the next 12 months or so and build this business up and focus only in this state.
Q: Are there plans to eventually list this other company PAER as well?
A: We don’t know right now. We will see how that goes.
Q: What is the kind of revenue share that you are looking at from this company because there is increasing focus on renewable energy and you were talking about price per unit, so could you give us a ballpark figure?
A: We are targeting Rs 5-10 crore from this business from Maharashtra this year in 2010-11. The business has high gross margins than PAE does. Therefore we thought it makes more sense for us to focus on this business in a separate company rather than do it inside or within PAE.
Q: This solar installation business is a new venture for you, so would you be investing in this and to the tune of how much?
A: We are probably going to invest up to Rs 1 crore at this point to start of with; it’s not a high capex business. It is mainly the man power that we need to get trained and recruit is obviously high quality and we will be mainly investing this money in working capital and building our infrastructure for deployment of installations.
Q: And where would you start the rollout, what are the states you are targeting?
A: It will be only in Maharashtra at the moment: From Vashi, Pune, Kolhapur and Nagpur. We already have locations and establishments in PAE. So we will share the infrastructure that PAE offers in the state.
Q: What is your market share?
A: We will be starting off in this business right now. So it is non existing.
Previous Interview of 3rd Mar'10
Q: Take us through what benefits you directly get, you told us that in any case solar segment forms a very small part of your business just yet, do you benefit from the Budget excise duty cuts at all or do you benefit form the Budget in any way at all?
A: We benefit from the Budget that it opens up a huge market for us in terms of solar panels and our power electronics for the solar market. When it was announced that the Rs 500 crore fund would be allocated towards the Jammu Kashmir and Laddakh region for solar power plants there, so I think that really conveys the national solar mission and puts figure to what’s going to be allocated to the region and that’s going to be a very favorable thing for people like us.
Q: You said it contributes to about Rs 12 or 15 crore which is what 10% of your business now?
A: Actually lower than 10% of our business currently.
Q: What do you see it growing to, say in 2011 or 2012?
A: Shurjo Energy is a solar panel company that we have acquired that should be growing at about 40-50% next year. However, in PAE, we have also building a distribution and service network for solar components, panels and installations, so we believe that that business should contribute about Rs 15-20 crore of our topline next year.
We have also signed a distribution agreement with Schneider Electric which is going to compliment our existing business of batteries and panels to give us the balance of system that is required for any systems integrator to install a solar outlet.
Q: What did Shurjo Energy report as their revenue as of December 31st 2009?
A: Shurjo was not 57% owned by us in December.
Q: So what is the revenue at the moment?
A: The revenue is Rs 9 crore.
Q: What exact revenue you get out of this business because your own margins are about 2% that means you end up getting Rs 7-8 lakh?
A: Basically the product we are in is CIGS which is a photovoltaic product, it's just not silicon based. The material is spray painted on a stainless steel foil, so that is made in India and exported and Shurjo has been exporting for the last 3-4 years. We believe that these low cost panels will become a huge market especially in India and such places where there are demand for low cost solar installations. We are poised for that in terms of the panel range.
Monday, March 15, 2010
SNL Bearing ......Updates...cmp..40.50
Friends,
My smallcap pick has hit a 52 week high of 41.80 recently.I recomended here at a throw away price of just Rs 11.00 on 24 Nov 09 and in less then 4 months the stock has quandrupoled to 40......from 11 to 40!....
I hope my readers must be reaping big returns from my calls.
I have been getting request to again give list of my pick which I do in Mar month but that I have already given in march...I gave a list on 2nd Mar some 13-14 stocks.Go through it again and find your pick.....
It makes no sense repeating same stocks every now and then......Go through that list again and see if any stock u have not bought from it.If it is so then after DD go ahead and buy it..........
I know there are certain readers who wants to have constant my stamp on my picks but that is not possible for me.....everytime....Even Ramesh Damani comes once a week......I am here everyday....
My smallcap pick has hit a 52 week high of 41.80 recently.I recomended here at a throw away price of just Rs 11.00 on 24 Nov 09 and in less then 4 months the stock has quandrupoled to 40......from 11 to 40!....
I hope my readers must be reaping big returns from my calls.
I have been getting request to again give list of my pick which I do in Mar month but that I have already given in march...I gave a list on 2nd Mar some 13-14 stocks.Go through it again and find your pick.....
It makes no sense repeating same stocks every now and then......Go through that list again and see if any stock u have not bought from it.If it is so then after DD go ahead and buy it..........
I know there are certain readers who wants to have constant my stamp on my picks but that is not possible for me.....everytime....Even Ramesh Damani comes once a week......I am here everyday....
Sunday, March 14, 2010
Stone India.....Rs 53.90....
Friends,
I have been going through the google and I found article written on Stone India in Out Look Profit.....Well, I went through that and liked it and hence pasting it here.
The reason I read was, Stone India was my first penny stock pick when I use to write at MMB and I remember I gave a call at Rs 7....and then Stone India went on to touch 250 something.....so any news or story on Stone India always facinates me.
I think one can think of taking a small exposer here in Stone India....ofcourse after DD....
On Turnaround Track
Fast-growing demand for high quality rail equipment from ongoing metro rail projects is opening up huge opportunities for Stone India
Pramod Bhat
Everybody loves a turnaround story. We know the ones in Bollywood because they’re the ones that are written about most. But there are many in real life that are perhaps more inspiring. It’s hard not to root for the underdog who beats the odds to come out a winner. Now, we have one from the stock markets that goes by the name of Stone India. After working its way through the economic slump, this G P Goenka group company seems to have readied its comeback script.
But what exactly is Stone India’s business? In a few words, it’s an engineering company which specialises in railway infrastructure and accessories. Stone India is hoping to become a one-stop shop for railway clients some day soon.
Today, its fortunes are closely intertwined with the spending plans of the Indian Railways, its biggest customer that accounts for about 90 per cent of the company’s sales. Going forward, there would be a continued surge in spending in this transport segment, taking into account the dedicated freight corridor or the metro rail projects across various cities. This should give the turnaround hero, Stone India, enough opportunity to surprise investors with a happy twist in the tale.
Cast in stone
First, a little bit about the industry that Stone India operates in. As economies expand, the demand for goods and commodities increases and so does the need to transport them from place to place. In India, the explosive economic expansion of the past few years has resulted in a shortage of various goods and transport modes.
On its part, Indian Railways, the largest railway operator in the country, has raised outlays for rolling stock. (See chart, On track) Rolling stock refers to all vehicles that move on the railway, powered and unpowered, like locomotives, railroad cars, coaches and wagons. In the past six years, the outlay has jumped by 17 per cent (compounded basis) and it currently stands at Rs 12,393 crore. In addition, the dedicated freight projects and expenditure on metropolitan rail transport projects are likely to lead to higher demand for rolling stock from public and private companies. For Stone India, therefore, a period of good growth is relatively assured.
Chugging along
The company’s fortunes are closely linked to the Indian Railways’ rolling stock outlay, which has grown at a good pace of 17 per cent CAGR since FY05
Stone India makes locomotive brake systems and offers a range of mechanical and electrical equipment for the railroad company. Says Amitava Mondal, managing director, Stone India, “At Stone, we have three main lines of business, namely carriage brake group, locomotive brake group and the train power group.” The carriage product group mainly deals with the supply of airbrake system for wagons and coaches and distributor valves. The locomotive product group deals with the supply of pneumatic braking equipment for the railways, as well as air dryers for locomotives and EMUs. The train power group supplies train lighting equipment for passenger coaches and pantographs. “In the brakes business, spread over carriage, diesel and electric locomotives, we have about 25 per cent of the market,” Mondal says.
The company has two plants, one in Kolkata (West Bengal) and the other in Nalagarh (Himachal Pradesh). Apart from the Indian Railways, Stone India’s other clients include Texmaco, Titagarh Wagons, Modern Industries, Hindustan Engineering Industries, Jupiter Wagon, and Jessop & Company. Its main competitors include companies like Knorr Bremse, Faively Transport, Kerala Electrics and Escorts.
Hitting a rough patch
After a good run, Stone India’s fortunes reversed in FY09 as raw material prices surged. Unable to pass on the costs to customers, it was forced to absorb most of the price hikes. “The main reason for a drop in profitably in 2008-09 was mainly on account of an unexpected rise in the steel prices and various input costs. Stone India takes up fixed-price tenders from various railway outfits, like Diesel Locomotive Works, Chittarajan Railway Works, Zonal Railways, and the input price increases could not be passed on for these tenders,” informs Mondal.
Total sales plunged to less than Rs 81 crore from nearly Rs 90 crore a year, a fall of almost 10 per cent. It also reported a loss of Rs 8.60 crore against a profit of more than Rs 9 crore in FY08. Of course, in FY08, profit was also inflated by the fact that it had transferred Rs 8.10 crore from the capital reserve account, and this accounted for a big chunk of the net income reported by Stone India. Without the transfer, the company would still have reported a profit, albeit a nominal figure, for the year. “However, off late the Indian Railways is allowing price variation clauses,” says Mondal.
Building scale
Going ahead, freight may throw up phenomenal opportunities for Stone India. If the talk of a dedicated freight corridor becomes a reality, the company’s fortunes will get a super-boost. With the dedicated freight corridor project becoming a reality in the near future, there is enough opportuity for the company to grow. The recently developed bogie mounted brake system is expected to lead growth and there is also the emerging opportunity to retrofit the same in the existing fleet of 2.5 lakh wagons.
The company inked a joint venture deal with US-based RailRunner NA Inc in September last year for making freight cars. The business is likely to be routed through a wholly-owned subsidiary called Stone Intermodal. Says Mondal, “Stone Intermodal will manufacture specially designed rolling stock bimodal vehicles which will have the flexibility to operate on the road as well as on rail without any terminal facility or with major material handling equipment.”
Earlier, the company had suggested that it could invest close to Rs 150 crore in this venture in two phases. The company is expected to retain a majority stake in the subsidiary even after the infusion of private equity. Debt levels in the subsidiary are expected to be minimal.
Another tie-up that has benefited the company is one with Japan’s Sumitomo Electric Industries, for making air springs. (Air Springs provide superior air cushion ride for passengers on trains running at higher speed. Sumitomo Electric Industries is a lead supplier of air springs for Bullet Trains in Japan.) The company expects to sell about Rs 12 crore of air springs per annum. Most of the newer products are produced at the Nalagarh plant (in Himachal).
The company is also expanding its capacity in Kolkata for which land has been acquired. About Rs 14-15 crore will be needed for the expansion. Company officials emphasise that the existing capacity and the expansion at Kolkata, which may come on-stream in a year, will be more than sufficient to service the growth plans of the company.
“In the first nine months of the current year, we have clocked Rs 71 crore in top line and Ebitda is at 9 per cent. With high value products from our new unit at Baddi, which also enjoys tax holidays, we expect to improve top line and margins in the coming years,” says Mondal.
Even margins are expected to look up and may stabilise at around 12 per cent on the Ebitda level, and at a net level they may remain in a band of 7-8 per cent on a net income basis in FY11. The company expects to return to the black with a net profit of Rs 5-6 crore in FY10.
Going cheap
The stock appears cheap at current levels, given the turnaround status of the company. On a price-to-sales (P/S) basis, the company is definitely undervalued compared with its peers. Stone India trades at a P/S ratio of 0.65 and a price-to-book ratio of 1.5, much lower than large engineering companies like L&T, Siemens, ABB, Alstom and Bharat Bijlee. (See table. Jewel stone)
So far, few institutional investors have shown interest in Stone India. The only large investor is National Insurance Company, which holds a 2.3 per cent stake in the company. The company has paid nominal dividends in three out of the past five years (it is unlikely to pay dividends for FY10), with the dividend payout ratio averaging 10 per cent.
The potential embedded in the growth of the railways has attracted interest from even the larger players like L&T, which bought a 14 per cent stake in Kalindee Rail Nirman (a turnkey project executor in railway track, signaling and telecommunication projects) in November 2008.
Stone India’s shares are trading at less than six times estimated earnings for FY11, rather low for a company operating in a stable growth environment. Buy with a 24-30 months horizon.
I have been going through the google and I found article written on Stone India in Out Look Profit.....Well, I went through that and liked it and hence pasting it here.
The reason I read was, Stone India was my first penny stock pick when I use to write at MMB and I remember I gave a call at Rs 7....and then Stone India went on to touch 250 something.....so any news or story on Stone India always facinates me.
I think one can think of taking a small exposer here in Stone India....ofcourse after DD....
On Turnaround Track
Fast-growing demand for high quality rail equipment from ongoing metro rail projects is opening up huge opportunities for Stone India
Pramod Bhat
Everybody loves a turnaround story. We know the ones in Bollywood because they’re the ones that are written about most. But there are many in real life that are perhaps more inspiring. It’s hard not to root for the underdog who beats the odds to come out a winner. Now, we have one from the stock markets that goes by the name of Stone India. After working its way through the economic slump, this G P Goenka group company seems to have readied its comeback script.
But what exactly is Stone India’s business? In a few words, it’s an engineering company which specialises in railway infrastructure and accessories. Stone India is hoping to become a one-stop shop for railway clients some day soon.
Today, its fortunes are closely intertwined with the spending plans of the Indian Railways, its biggest customer that accounts for about 90 per cent of the company’s sales. Going forward, there would be a continued surge in spending in this transport segment, taking into account the dedicated freight corridor or the metro rail projects across various cities. This should give the turnaround hero, Stone India, enough opportunity to surprise investors with a happy twist in the tale.
Cast in stone
First, a little bit about the industry that Stone India operates in. As economies expand, the demand for goods and commodities increases and so does the need to transport them from place to place. In India, the explosive economic expansion of the past few years has resulted in a shortage of various goods and transport modes.
On its part, Indian Railways, the largest railway operator in the country, has raised outlays for rolling stock. (See chart, On track) Rolling stock refers to all vehicles that move on the railway, powered and unpowered, like locomotives, railroad cars, coaches and wagons. In the past six years, the outlay has jumped by 17 per cent (compounded basis) and it currently stands at Rs 12,393 crore. In addition, the dedicated freight projects and expenditure on metropolitan rail transport projects are likely to lead to higher demand for rolling stock from public and private companies. For Stone India, therefore, a period of good growth is relatively assured.
Chugging along
The company’s fortunes are closely linked to the Indian Railways’ rolling stock outlay, which has grown at a good pace of 17 per cent CAGR since FY05
Stone India makes locomotive brake systems and offers a range of mechanical and electrical equipment for the railroad company. Says Amitava Mondal, managing director, Stone India, “At Stone, we have three main lines of business, namely carriage brake group, locomotive brake group and the train power group.” The carriage product group mainly deals with the supply of airbrake system for wagons and coaches and distributor valves. The locomotive product group deals with the supply of pneumatic braking equipment for the railways, as well as air dryers for locomotives and EMUs. The train power group supplies train lighting equipment for passenger coaches and pantographs. “In the brakes business, spread over carriage, diesel and electric locomotives, we have about 25 per cent of the market,” Mondal says.
The company has two plants, one in Kolkata (West Bengal) and the other in Nalagarh (Himachal Pradesh). Apart from the Indian Railways, Stone India’s other clients include Texmaco, Titagarh Wagons, Modern Industries, Hindustan Engineering Industries, Jupiter Wagon, and Jessop & Company. Its main competitors include companies like Knorr Bremse, Faively Transport, Kerala Electrics and Escorts.
Hitting a rough patch
After a good run, Stone India’s fortunes reversed in FY09 as raw material prices surged. Unable to pass on the costs to customers, it was forced to absorb most of the price hikes. “The main reason for a drop in profitably in 2008-09 was mainly on account of an unexpected rise in the steel prices and various input costs. Stone India takes up fixed-price tenders from various railway outfits, like Diesel Locomotive Works, Chittarajan Railway Works, Zonal Railways, and the input price increases could not be passed on for these tenders,” informs Mondal.
Total sales plunged to less than Rs 81 crore from nearly Rs 90 crore a year, a fall of almost 10 per cent. It also reported a loss of Rs 8.60 crore against a profit of more than Rs 9 crore in FY08. Of course, in FY08, profit was also inflated by the fact that it had transferred Rs 8.10 crore from the capital reserve account, and this accounted for a big chunk of the net income reported by Stone India. Without the transfer, the company would still have reported a profit, albeit a nominal figure, for the year. “However, off late the Indian Railways is allowing price variation clauses,” says Mondal.
Building scale
Going ahead, freight may throw up phenomenal opportunities for Stone India. If the talk of a dedicated freight corridor becomes a reality, the company’s fortunes will get a super-boost. With the dedicated freight corridor project becoming a reality in the near future, there is enough opportuity for the company to grow. The recently developed bogie mounted brake system is expected to lead growth and there is also the emerging opportunity to retrofit the same in the existing fleet of 2.5 lakh wagons.
The company inked a joint venture deal with US-based RailRunner NA Inc in September last year for making freight cars. The business is likely to be routed through a wholly-owned subsidiary called Stone Intermodal. Says Mondal, “Stone Intermodal will manufacture specially designed rolling stock bimodal vehicles which will have the flexibility to operate on the road as well as on rail without any terminal facility or with major material handling equipment.”
Earlier, the company had suggested that it could invest close to Rs 150 crore in this venture in two phases. The company is expected to retain a majority stake in the subsidiary even after the infusion of private equity. Debt levels in the subsidiary are expected to be minimal.
Another tie-up that has benefited the company is one with Japan’s Sumitomo Electric Industries, for making air springs. (Air Springs provide superior air cushion ride for passengers on trains running at higher speed. Sumitomo Electric Industries is a lead supplier of air springs for Bullet Trains in Japan.) The company expects to sell about Rs 12 crore of air springs per annum. Most of the newer products are produced at the Nalagarh plant (in Himachal).
The company is also expanding its capacity in Kolkata for which land has been acquired. About Rs 14-15 crore will be needed for the expansion. Company officials emphasise that the existing capacity and the expansion at Kolkata, which may come on-stream in a year, will be more than sufficient to service the growth plans of the company.
“In the first nine months of the current year, we have clocked Rs 71 crore in top line and Ebitda is at 9 per cent. With high value products from our new unit at Baddi, which also enjoys tax holidays, we expect to improve top line and margins in the coming years,” says Mondal.
Even margins are expected to look up and may stabilise at around 12 per cent on the Ebitda level, and at a net level they may remain in a band of 7-8 per cent on a net income basis in FY11. The company expects to return to the black with a net profit of Rs 5-6 crore in FY10.
Going cheap
The stock appears cheap at current levels, given the turnaround status of the company. On a price-to-sales (P/S) basis, the company is definitely undervalued compared with its peers. Stone India trades at a P/S ratio of 0.65 and a price-to-book ratio of 1.5, much lower than large engineering companies like L&T, Siemens, ABB, Alstom and Bharat Bijlee. (See table. Jewel stone)
So far, few institutional investors have shown interest in Stone India. The only large investor is National Insurance Company, which holds a 2.3 per cent stake in the company. The company has paid nominal dividends in three out of the past five years (it is unlikely to pay dividends for FY10), with the dividend payout ratio averaging 10 per cent.
The potential embedded in the growth of the railways has attracted interest from even the larger players like L&T, which bought a 14 per cent stake in Kalindee Rail Nirman (a turnkey project executor in railway track, signaling and telecommunication projects) in November 2008.
Stone India’s shares are trading at less than six times estimated earnings for FY11, rather low for a company operating in a stable growth environment. Buy with a 24-30 months horizon.
Friday, March 12, 2010
Supreme Petro new high @43.75...Updates....
Friends,
I gave a call on Supreme Petro in past many times but came out with more information on 9th Dec '09.At that time it was still at 27.55 and now I am seeeing that it has made a new high of 43.75 couple of days back.
Supreme Petro still looks good to me as the growth due to MOU has still to come.
Rest your take.......but in 3 months from 27 to 43 is a great return......These are such stocks which will come in those category where no one is tracking and they are making a very silent upmove and when one remembers to have a look after 2-3 months it has alreaddy doubled.......
See , in 3 months Supreme Petro has moved very sliently.......and no one knows about it......
I gave a call on Supreme Petro in past many times but came out with more information on 9th Dec '09.At that time it was still at 27.55 and now I am seeeing that it has made a new high of 43.75 couple of days back.
Supreme Petro still looks good to me as the growth due to MOU has still to come.
Rest your take.......but in 3 months from 27 to 43 is a great return......These are such stocks which will come in those category where no one is tracking and they are making a very silent upmove and when one remembers to have a look after 2-3 months it has alreaddy doubled.......
See , in 3 months Supreme Petro has moved very sliently.......and no one knows about it......
Ramesh Damani latest Interview.....worth reading....
Friends,
I have pasted the interview of RD.I know he went wrong in 2009 but then I have always have great respect for him apart from RJ , JayKumar of Prime Sec(He is with other insti now)..........These are the personalities who have clear vision and know what is going on in India and how the Indian economy is going to prosper.....
If someone will read this transcript then I think one can get almost all answer for any doubts....
Read on:
In an interview with CNBC-TV18, market veteran Ramesh Damani, Member of BSE, reminisces over the last one year and looks into the future of the markets.
Here is a verbatim transcript of the interview. Also watch the accompanying video.
Q: What a year it has been from where we were on March 9th last year to where we are today not just in India but across global markets. What do you make of it?
A: It actually was a near death experience for financial markets. I remember it so vividly, it seemed like the bloodletting, the price falling would never stop. It has truly been astounding how much the market has rallied since then and how much blust has come back into the market whether it is in terms of price appreciation, whether it is in terms of bonuses given to employees or whether feeling that no matter what happens we are okay.
You are right. It’s been two complete opposite ends of the spectrum; near death and near normalcy. The thing of course I am reminded is what Mark Twain once said, "What we learn from history is that we never learn from history."
Q: Tell me if these market levels are justified anywhere else in the world for instance if I was to draw very simplistic comparison, the Sensex is up over a 100%. Do you think that the underlying economic fundamentals have improved over a 100% from where they were in March last year or have we gotten ahead of ourselves in these markets? Is it a case of extreme exuberance as compared to extreme fear and nervousness last year? What do you make of where we stand today and where this takes us next 12 months down the line?
A: Interesting question and for once I will isolate India out. I do not want to answer the question being centre of the universe, I want to take India out. The first thing you have to understand is what is happening in the US markets because those still are the primary markets.
What has happened there is that the US government has created a great moral hazard and the principle that everyone in the West or Europe or other markets know is that no matter what happens there is a textbook template on how to handle a crisis. You open the gates of monetary policy, flood the market with money, lower interest rates out there, give the financial market a case of steroid, markets will jump back and everything will be okay.
And that’s like saying you are going to have religion, you are going to have Bible without heaven and hell is like in capitalism you won’t have reward or failures or punishment or bankruptcy. It seems almost too good to be true that the worst single crisis we have seen since the Great Depression could be over by just opening up the money spigots.
That has created a moral hazard and somewhere down the road the economies of the West are in my opinion going to pay a price for that. There are definite problems in their society in terms of rising costs, lower exports, great current account deficits that need to be addressed with some hard economic decisions which I do not see happening. All that the Fed has done successfully is to open the money taps.
Coming to your question about India, I think actually we have escaped the bullet because we never had the kind of crazy inflated values that the Western societies had. There were excesses in our stock market, which the correction took care of. So fortunately for us India seems to be on a level path.
Is the case justified in India from the bottom, 112% here. In many ways yes because you go back and look at the data numbers whether it is automobiles sales, whether it is cement shipments they all are very strong. The index is not trading at any lofty multiple but maybe 15-16 times earnings. So India case is justified. Globally, all around me I just see huge amounts of moral hazards.
Q: How is that moral hazard likely to impact India down the line? I understand that on our own we seem to be far better off as you have drawn out in contrast to what some of the Western economies are going through but this sovereign debt problem overhang and if at all it goes from just being an overhang to being an actual crises can we escape the worst of it. I recall very sharply right now the comments that Samir Arora was making right after the Budget speech where we said that we are being a little too sanguine about the kind of impact that could chance upon India just like we were being little too sanguine just before the Lehman bust happened or we kept talking about decoupling and we couldn’t escape the implications of that crisis. What will happen to India if we actually see one of these sovereign debt problems turn into a crisis?
A: There is no doubt that if we have a sovereign debt crisis - the first leg of the fall we will be down. It will be led by Hang Seng, as it usually is in emerging markets and India will follow suite, along with Singapore, Taiwan, and Bangladesh etc. The point here is that growth covers a multitude of sins.
If your inherent economy is growing at 8-8.5% and there is reason to believe that you will do that over the next two-three years that covers for a lot of sins and excesses that take place in the market. And there is historical precedence to that.
When Japan was growing at 8-9% double digit rates and we had a great crash in the US when the market fell 27%, 22.5% at a single trading session; Japan fell along with the US but recovered right away because of the inherent strength of the Japanese economy.
We might see a similar situation unfold out here. the Reserve Bank of India has done great job as well know, asset prices except for few isolated cases of real estate are in line. There is reason to believe that we will be able to decouple not withstanding what the cynics say.
Q: What will it do in terms of appetite for emerging markets when it comes to foreign investment money? I am told by one figure roughly USD 20 billion come into the cash market in the last one year. This is foreign institutional investors (FII) money that I am referring to. A lot of it is also going into support some of the corporate fund raising activity that we have seen in the course of the last one year. If we see an explosion of that sovereign debt crisis of any sort, how is it going to impact FII inflow and therefore can it have longer-term implications for us?
A: It’s very hard to diagnose that because typically in such crisis there is a flight to the dollar. But at some point, the dollar's poor fundamentals will take over and people will move to hard assets like gold and metals.
But at the end of the day investors want return and they do not want to see that in gold. They want return in equities, dividends in equities, price appreciation. Money will come back to emerging markets if that growth is pure and growth is pegged at maybe 2 times GDP growth. Ultimately money chases growth the world over.
So if we do our correct policies in-house, we take care of our fiscal problems, we take care of our naxalites problems, I think India could be a shining example for the next few years of money flowing in and good productive growth for years to come.
Q: Global factors aside from a local point of view, what are some of the challenges that you put down as key challenges when you invest or trade in this market?
A: Challenge is always the same, you want to look for value. At 16000-17000, it gets no easier to find value, but all bull markets begin with some sort of intellectual theorem, you have to be in some sort of hypothesis. In ’92 bull market hypothesised that India was going to be a liberalised country and that’s what exactly happened a decade later. The 2000 bull market foresaw that India was a technological superpower, it came out right.
What is this bull market telling you? This bull market telling you there is something extraordinary happening in this country that we are going to go from a nation of 50 million middleclass to about 500 million middleclass in a period of ten years. If you believe that intellectual hypothesis, if you believe that we are creating a BRIC (Brazil, Russia, India and China) country with 500 million consuming Indians suddenly the investment paradise becomes very simple; you want to invest in domestic consumption, you want to invest in entertainment, in housing, in two-wheelers, in autos, cement because all these things are going to be in great demand once that middle class surges up to 500 mn.
If you think you track the auto numbers, that’s just a trailer of what is happening; demand is so strong, there was a backlog in automobiles for three-six months that is going to percolate to other sectors in the economy be it housing, be it entertainment, be it two-wheelers, be it consumer durables.( Understand this theory, that is the view I have been writing since long....)
So the trick is sometimes you tend to look at quarterly earnings or one bad fall in global markets and tend to panic, but maybe sometimes you want to take a longer view, maybe the winner in this market will not be the person who passes the pillow, but one who holds it till the end.
Q: You sound very bullish. Is there nothing that you worry about? Where would you think that this market would be March, 2011?
A: Peter Lynch said if you want to spend 10 minutes on a conversation you spend 10 seconds on predicting where the market is going. Nobody knows. I am not that smart enough, but my sense is the undertone is buoyant in India, stocks are looking good, corporate outlook is good, managements are talking about expansion, they are not talking of degrowth. So it's a good time to remain invested.
Bull markets will have corrections, it may start tomorrow, may start next week. You just have to ride the pain. Look at the broader picture, a country that’s changed in about 10-15 years time. It’s like investing in America in the 1950s, you want to hold on despite wars, Korean War, Vietnam War, Watergatel, any number or events that took place in America. The people who won were the people who held on to the Johnson & Johnsons and IBMs. So may be we are in a similar trajectory in history. It seems to me that the risk reward still favour the buyer.
Q: Do you think this bullishness has crept down the retail investor level as well?
A: Not entirely. I think they have become more of traders, in and out of market everyone wants to sell out on Friday in case something happens over the weekend. I think in that opinion I have a strong opinion about this is what the government should do, the government should have a full fledge policy to disinvest public sector undertakings (PSU) investors among retail investors.
They should hire some from the telecom guys who took penetration rates of telecom from 1 per 100 to 50 per 100 and say I want to get Indian public excited about PSU stocks, there are some great companies, I am going to offer them some great valuations. If they do that the whole equity cult around this country and that’s what the government can do. It’s essentially taking taxpayer money, building these assets and now returning it back to the taxpayer in terms of stock certificates. If I think they do that we will see huge retail surge in India.
I have pasted the interview of RD.I know he went wrong in 2009 but then I have always have great respect for him apart from RJ , JayKumar of Prime Sec(He is with other insti now)..........These are the personalities who have clear vision and know what is going on in India and how the Indian economy is going to prosper.....
If someone will read this transcript then I think one can get almost all answer for any doubts....
Read on:
In an interview with CNBC-TV18, market veteran Ramesh Damani, Member of BSE, reminisces over the last one year and looks into the future of the markets.
Here is a verbatim transcript of the interview. Also watch the accompanying video.
Q: What a year it has been from where we were on March 9th last year to where we are today not just in India but across global markets. What do you make of it?
A: It actually was a near death experience for financial markets. I remember it so vividly, it seemed like the bloodletting, the price falling would never stop. It has truly been astounding how much the market has rallied since then and how much blust has come back into the market whether it is in terms of price appreciation, whether it is in terms of bonuses given to employees or whether feeling that no matter what happens we are okay.
You are right. It’s been two complete opposite ends of the spectrum; near death and near normalcy. The thing of course I am reminded is what Mark Twain once said, "What we learn from history is that we never learn from history."
Q: Tell me if these market levels are justified anywhere else in the world for instance if I was to draw very simplistic comparison, the Sensex is up over a 100%. Do you think that the underlying economic fundamentals have improved over a 100% from where they were in March last year or have we gotten ahead of ourselves in these markets? Is it a case of extreme exuberance as compared to extreme fear and nervousness last year? What do you make of where we stand today and where this takes us next 12 months down the line?
A: Interesting question and for once I will isolate India out. I do not want to answer the question being centre of the universe, I want to take India out. The first thing you have to understand is what is happening in the US markets because those still are the primary markets.
What has happened there is that the US government has created a great moral hazard and the principle that everyone in the West or Europe or other markets know is that no matter what happens there is a textbook template on how to handle a crisis. You open the gates of monetary policy, flood the market with money, lower interest rates out there, give the financial market a case of steroid, markets will jump back and everything will be okay.
And that’s like saying you are going to have religion, you are going to have Bible without heaven and hell is like in capitalism you won’t have reward or failures or punishment or bankruptcy. It seems almost too good to be true that the worst single crisis we have seen since the Great Depression could be over by just opening up the money spigots.
That has created a moral hazard and somewhere down the road the economies of the West are in my opinion going to pay a price for that. There are definite problems in their society in terms of rising costs, lower exports, great current account deficits that need to be addressed with some hard economic decisions which I do not see happening. All that the Fed has done successfully is to open the money taps.
Coming to your question about India, I think actually we have escaped the bullet because we never had the kind of crazy inflated values that the Western societies had. There were excesses in our stock market, which the correction took care of. So fortunately for us India seems to be on a level path.
Is the case justified in India from the bottom, 112% here. In many ways yes because you go back and look at the data numbers whether it is automobiles sales, whether it is cement shipments they all are very strong. The index is not trading at any lofty multiple but maybe 15-16 times earnings. So India case is justified. Globally, all around me I just see huge amounts of moral hazards.
Q: How is that moral hazard likely to impact India down the line? I understand that on our own we seem to be far better off as you have drawn out in contrast to what some of the Western economies are going through but this sovereign debt problem overhang and if at all it goes from just being an overhang to being an actual crises can we escape the worst of it. I recall very sharply right now the comments that Samir Arora was making right after the Budget speech where we said that we are being a little too sanguine about the kind of impact that could chance upon India just like we were being little too sanguine just before the Lehman bust happened or we kept talking about decoupling and we couldn’t escape the implications of that crisis. What will happen to India if we actually see one of these sovereign debt problems turn into a crisis?
A: There is no doubt that if we have a sovereign debt crisis - the first leg of the fall we will be down. It will be led by Hang Seng, as it usually is in emerging markets and India will follow suite, along with Singapore, Taiwan, and Bangladesh etc. The point here is that growth covers a multitude of sins.
If your inherent economy is growing at 8-8.5% and there is reason to believe that you will do that over the next two-three years that covers for a lot of sins and excesses that take place in the market. And there is historical precedence to that.
When Japan was growing at 8-9% double digit rates and we had a great crash in the US when the market fell 27%, 22.5% at a single trading session; Japan fell along with the US but recovered right away because of the inherent strength of the Japanese economy.
We might see a similar situation unfold out here. the Reserve Bank of India has done great job as well know, asset prices except for few isolated cases of real estate are in line. There is reason to believe that we will be able to decouple not withstanding what the cynics say.
Q: What will it do in terms of appetite for emerging markets when it comes to foreign investment money? I am told by one figure roughly USD 20 billion come into the cash market in the last one year. This is foreign institutional investors (FII) money that I am referring to. A lot of it is also going into support some of the corporate fund raising activity that we have seen in the course of the last one year. If we see an explosion of that sovereign debt crisis of any sort, how is it going to impact FII inflow and therefore can it have longer-term implications for us?
A: It’s very hard to diagnose that because typically in such crisis there is a flight to the dollar. But at some point, the dollar's poor fundamentals will take over and people will move to hard assets like gold and metals.
But at the end of the day investors want return and they do not want to see that in gold. They want return in equities, dividends in equities, price appreciation. Money will come back to emerging markets if that growth is pure and growth is pegged at maybe 2 times GDP growth. Ultimately money chases growth the world over.
So if we do our correct policies in-house, we take care of our fiscal problems, we take care of our naxalites problems, I think India could be a shining example for the next few years of money flowing in and good productive growth for years to come.
Q: Global factors aside from a local point of view, what are some of the challenges that you put down as key challenges when you invest or trade in this market?
A: Challenge is always the same, you want to look for value. At 16000-17000, it gets no easier to find value, but all bull markets begin with some sort of intellectual theorem, you have to be in some sort of hypothesis. In ’92 bull market hypothesised that India was going to be a liberalised country and that’s what exactly happened a decade later. The 2000 bull market foresaw that India was a technological superpower, it came out right.
What is this bull market telling you? This bull market telling you there is something extraordinary happening in this country that we are going to go from a nation of 50 million middleclass to about 500 million middleclass in a period of ten years. If you believe that intellectual hypothesis, if you believe that we are creating a BRIC (Brazil, Russia, India and China) country with 500 million consuming Indians suddenly the investment paradise becomes very simple; you want to invest in domestic consumption, you want to invest in entertainment, in housing, in two-wheelers, in autos, cement because all these things are going to be in great demand once that middle class surges up to 500 mn.
If you think you track the auto numbers, that’s just a trailer of what is happening; demand is so strong, there was a backlog in automobiles for three-six months that is going to percolate to other sectors in the economy be it housing, be it entertainment, be it two-wheelers, be it consumer durables.( Understand this theory, that is the view I have been writing since long....)
So the trick is sometimes you tend to look at quarterly earnings or one bad fall in global markets and tend to panic, but maybe sometimes you want to take a longer view, maybe the winner in this market will not be the person who passes the pillow, but one who holds it till the end.
Q: You sound very bullish. Is there nothing that you worry about? Where would you think that this market would be March, 2011?
A: Peter Lynch said if you want to spend 10 minutes on a conversation you spend 10 seconds on predicting where the market is going. Nobody knows. I am not that smart enough, but my sense is the undertone is buoyant in India, stocks are looking good, corporate outlook is good, managements are talking about expansion, they are not talking of degrowth. So it's a good time to remain invested.
Bull markets will have corrections, it may start tomorrow, may start next week. You just have to ride the pain. Look at the broader picture, a country that’s changed in about 10-15 years time. It’s like investing in America in the 1950s, you want to hold on despite wars, Korean War, Vietnam War, Watergatel, any number or events that took place in America. The people who won were the people who held on to the Johnson & Johnsons and IBMs. So may be we are in a similar trajectory in history. It seems to me that the risk reward still favour the buyer.
Q: Do you think this bullishness has crept down the retail investor level as well?
A: Not entirely. I think they have become more of traders, in and out of market everyone wants to sell out on Friday in case something happens over the weekend. I think in that opinion I have a strong opinion about this is what the government should do, the government should have a full fledge policy to disinvest public sector undertakings (PSU) investors among retail investors.
They should hire some from the telecom guys who took penetration rates of telecom from 1 per 100 to 50 per 100 and say I want to get Indian public excited about PSU stocks, there are some great companies, I am going to offer them some great valuations. If they do that the whole equity cult around this country and that’s what the government can do. It’s essentially taking taxpayer money, building these assets and now returning it back to the taxpayer in terms of stock certificates. If I think they do that we will see huge retail surge in India.
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