|FII DERIVATIVES STATISTICS FOR 05-Oct-2010|
|BUY||SELL||OPEN INTEREST AT THE END OF THE DAY|
|No. of contracts||Amt in Crores||No. of contracts||Amt in Crores||No. of contracts||Amt in Crores|
05 October 2010
|FII trading activity on NSE and BSE on Capital Market Segment|
|The following is combined FII trading data across NSE and BSE collated on the basis of trades executed by FIIs on 05-Oct-2010.|
COMMERCIAL ENGINEERS & BODY BUILDERS CO LTD
|Total Issue Size||11324938|
|Total Bids Received||23433630|
|Total Bids Received at Cut-off Price||1327315|
|No. of times issue is subscribed||2.07|
|Sr.No.||Category||No.of shares offered/reserved||No. of shares bid for||No. of times of total meant for the category|
|1||Qualified Institutional Buyers (QIBs)||5817503||21386970||3.68|
|1(a)||Foreign Institutional Investors (FIIs)||18246470|
|1(b)||Domestic Financial Institutions(Banks/ Financial Institutions(FIs)/ Insurance Companies)||0|
|2||Non Institutional Investors||1376859||464420||0.34|
|2(b)||Individuals (Other than RIIs)||149765|
|3||Retail Individual Investors (RIIs)||4130576||1582240||0.38|
Updated as on 05 October 2010 at 1730 hrs
Margin tailwinds gather more steam
Visibility of a sustained reduction in ethanol prices has improved with the first advance estimates of
the government projecting 17% YoY increase in sugarcane output. We estimate ethanol supply will
exceed demand by c400m litres in 2011, despite an increase in ethanol blending with petrol. Surplus
ethanol left over from 2010, would further add to supply. As a result, ethanol prices will likely remain
benign over FY11-12 driving 450bps EBITDA margin expansion for United Spirits (USL) over FY10-12.
An increase in marketing spends would only marginally offset the raw-material cost savings. We
increase our EPS estimates for FY11-13 by 4-6% and revise our target price to Rs1,705. Retain BUY.
Ethanol supply will exceed demand: We estimate ethanol production of 3,500m litres in FY11, as
compared to 3,000m litres in FY10. However, demand in FY11 is likely to be just over 3,000m litres, even
after factoring in 900m litres for blending with petrol (additional 500m litres over FY10). The surplus carried
forward from FY10 would also add to supply. USL’s cost of wet goods has already decreased from
Rs150/case in FY10 to Rs135/case at present. With the crushing season starting in November, this cost
could see further decline in the near term.
Sharp expansion in EBITDA margin over FY10-12, despite possible increase in marketing spends:
We expect EBITDA margin to expand by 450bps over FY10-12, despite a 50bps increase in marketing spends.
Cheaper brands will likely increase trade margins, thus forcing USL to also increase marketing spends.
2QFY11 results likely to be strong: We expect USL to report strong volume growth of c15% YoY in
2QFY11, driven by a volume bounce-back in Andhra Pradesh (USL’s largest contributing state). Volumes in
the state had declined in 1QFY11, on account of retail licence renewal. EBITDA margin will also significantly
expand, as the raw-material cost per case would likely be lower by c10% YoY.
In this note we provide comprehensive feedback from our meetings with
Bharti's competitors in Nigeria, the regulator, infrastructure providers, tower
companies and others. We believe that Bharti in Africa will likely face more
challenges over the next 1-2 years than is being currently factored in, though
we continue to believe that the longer term growth potential in the market is
strong. We remain Neutral on Bharti within our cautious stance on the sector.
• Operational challenges aplenty: A poor electrical grid, security issues,
expense relating to expats and equipment issues translate into higher capital
and operating costs, suggesting little room for efficiency gains. Our sense
from conversations with most industry players is that Bharti may be
underestimating these challenges.
• Competition big and eager: Pricing has moved in several countries already
(Etisalat Nigeria, VOD Ghana, Warid Uganda, all in Kenya), while others
are ready to respond to Bharti. In Nigeria, relative to Bharti/Zain, MTN’s
revenue is 3x larger, its network is 1.5-2x bigger, distribution is its
advantage and it is well placed to invest more if required. Etisalat (#4) is
eager to protect/grow share in our view. On a positive note, usage is low in
Nigeria (1/3rd vs. Ghana) and elasticity is improving (~1 currently).
• Higher capex potential till infrastructure sharing matures: Tower
sharing conversations are becoming more common in Nigeria which we
believe is positive for Bharti. However, we expect this to take time to
mature, since MTN, for strategic reasons, currently prefers a barter system
or rural expansion opportunities.
• Market growth expected: On data, while it is still early days in Nigeria, we
expect lower access charges, better user experience and declining handset
prices to drive strong growth in the next few years.
• Forecast changes: We reduce our already conservative FY11/12E Bharti
Africa revenue by 2%/3% and EBITDA margin by 150bp/210bp. We also
reduce our Q2FY11 estimates slightly for the India business. The impact on
consolidated FY11/FY12 EPS is -6%/-5%.