PSL Ltd- Excess leverage may play spoilsport…ICICI Sec

Visit http://indiaer.blogspot.com/ for complete details �� ��


Excess leverage may play spoilsport…
PSL reported its Q2FY11 numbers that were in line with our estimates.
Revenues grew ~ 25% YoY despite sluggish growth QoQ (down ~14%)
against our estimates of | 780 crore due to lower shipments from the
0.3 MTPA plant in the US. EBITDA margins also improved (up ~100 bps
YoY and 130 bps QoQ) led by lower raw material cost (down ~11%
QoQ) and reduced employee expenses (down ~ 43% QoQ). PAT
remained under pressure due to excess leverage on the books (debt at
~ | 2295 crore), which led to a sharp spike in interest cost by ~100%
YoY. So far, the Q2FY11 results reported by pipe manufacturers have
not been encouraging. Also, based on order book visibility concerns, we
have revised down our target price to | 110/share with an ADD rating.

Week Ahead : Nifty has resistance at 6000 and 6100 levels:: ICICI Sec

Visit http://indiaer.blogspot.com/ for complete details �� ��

Previous Week : Nifty broke important support of 5930
	Profit booking continued for second week running in our markets in a very volatile week. The Nifty broke important support of 5930 and closed below it on weekly basis, shows some more pain is yet to come. Foreign portfolio investment in Indian equities has been subdued over last few sessions, displaying a cautious stance alongside global cues after jitters caused by Ireland's debt problems. China raised banks reserve requirements by 50 basis points, effective November 29, 2010 the second time in two weeks which showed early signs of slowdown affecting commodities market.
		Financials dropped as investors booked profits after the sharp gains
		so far this year
		The banking sector index BSEBANK was down 1.5% on Friday, but
		was still up 37.5 percent in 2010
		The fiercely competitive mobile phone industry has been beset by a
		new wave of regulatory uncertainty stemming from a possible probe into 2G spectrum license allocations that a government audit says were awarded too cheaply
		On weekly basis, Sensex was down 2.8% and closed at 19585 while
		Nifty gave up 3% to settle at 5890
		Selling in heavyweights like Reliance Industries, SBI, ICICI Bank
		showed the markets southern direction
Week Ahead : Nifty has resistance at 6000 and 6100 levels
	We may witness volatile days ahead as we approach towards lower end of our trading range between 5750-6400. The liquidity in global markets will stay high, but uncertainty over sustained economic recovery is affecting global indices. A brief rally in oil prices earlier in week also added to the fear.

Five megathemes which will dominate the next five years: Ambit

Visit http://indiaer.blogspot.com/ for complete details �� ��


The five megathemes that will characterize the Indian economy over the
next five years are the persistence of high inflation, the rise of the
“aspirational consumer”, a capex boom, the rise of financial intermediation
and the spread of social unrest and civil conflict. The sectors best placed to
benefit are NBFCs, Aspirational Consumer Goods manufacturers and
Capital Goods providers. The sectors which stand adversely exposed are
export oriented ones, particularly IT.

NTPC -HOLD- MAT or growth – A double-edged sword:: ICICI Sec

Visit http://indiaer.blogspot.com/ for complete details �� ��


We maintained NTPC to HOLD on account of: 1) Earnings downgrade of ~4%,
stemming from lower core return as NTPC becomes a MAT company (hence RoE
is grossed at a lower rate, resulting in a tax saving loss of Rs5.2bn) and 2) Lower
Unscheduled Interchange (UI) income, in line with our sectoral view of reducing
power deficit (we cut our UI revenues by Rs1-2bn for FY11-13). The company has
reported disappointing numbers for three consecutive quarters due to variety of
reasons – reducing other income, impact of MAT grossing up, higher maintenance
cost and higher operating expenses. The management’s conservative approach is
noteworthy as it rushes to sign 75GW power purchase agreements (PPAs) before
the mandatory competitive deadline sets in January ‘11 (62GW signed so far).
Given our negative sectoral view on merchant power, we continue to prefer NTPC
among the large-cap generation companies owing to regulated cashflow and
increased execution pace.

Adani Power SELL -Realisations drop; fuel costs pop:: ICICI Sec

Visit http://indiaer.blogspot.com/ for complete details �� ��


Adani Power’s (APL) Q2FY11 results were significantly below expectations with
PAT at Rs1.25bn (I-Sec: Rs1.82bn), primarily due to lower realisation at
Rs2.96/KwHr versus Rs3.37/KwHr in Q1FY11. Blended realisation decreased due to
lower merchant volumes (7% of total sales based on Rs5/KwHr merchant rate
assumption) and lower merchant realisation at Rs5/KwHr. Further, fuel cost rose
QoQ to Rs1.05/KwHr from Rs0.95/KwHr in Q1FY11. Q2FY11 performance lends
further credence to our view that merchant prices will likely reduce (the monsoons
might have been an aiding factor, but the YoY trend also supports our view) and
that low-cost coal supply from Adani Enterprises (AEL) to APL is unsustainable.

JSW Energy -SELL -Fuel cost takes a toll:: ICICI Sec

Visit http://indiaer.blogspot.com/ for complete details �� ��


JSW Energy (JSWEL) reported Q2FY10 numbers below expectations, with PAT at
Rs1.84bn (I-Sec: Rs 1.95bn; consensus: Rs2.47bn) primarily led by higher fuel cost
at Rs2.6/KwHR (I-Sec: Rs2.34/KwHR) and continuing issues at Barmer. Adjusting
for project management income on group companies, power project (one-time)
PAT stood at Rs1.47bn, 40% below the Street’s consensus for Q2FY11. We trim our
FY11-13E earnings 2-4%, consequently reducing our target price to Rs105/share
from Rs107/share. The management guides for FY11 merchant realisation at Rs4.8-
5.2/KwHR despite a weak environment as it has signed merchant power contract
till May ‘11. We maintain SELL on the back of JSWEL’s: 1) highest merchant
exposure in the sector, in line with our negative sectoral view on merchant power;
and 2) high exposure to international coal prices in a non-pass-through regime; the
current quarter negative cost surprise validates our concern. Our DCF valuation
suggests a downside of 8% from current levels.

Reliance Infrastructure:Buy- Gaining from Mumbai tariff hike: ICICI Sec

Visit http://indiaer.blogspot.com/ for complete details �� ��


Reliance Infrastructure (RInfra) reported a strong improvement in Mumbai Discom
profitability with the removal of MERC’s stay on tariff order. Consequently,
standalone PBIT surged 42% YoY and 84% QoQ, however the benefit was largely
offset by forex losses. EPC book bolstered 29% QoQ primarily on accrual of
Reliance Power’s (RPower) large power projects and the company maintained
FY11 guidance at Rs45bn. Delay in Delhi Metro Airport Expressway was caused by
host of factors including delay in structure handover by DMRC. The project is all
set for operations; awaiting safety and fire approvals it is likely to commence by
December ‘10. The road division continued to post lower-than-estimated traffic. We
maintain BUY given: i) Strong improvement in Mumbai Discom profitability; ii)
Comprehensive growth in infra portfolio; iii) Strong EPC order book accretion and;
iv) Attractive valuations. Our target price suggests 25% upside from current level.

CESC- BUY- Power shines; retail fine:: ICICI Sec

Visit http://indiaer.blogspot.com/ for complete details �� ��


CESC exceeded our expectations reporting excellent Q2FY11 results – PAT was
at Rs1.55bn (I-Sec: Rs1.28bn) as the company accounted for benefits from the
new tariff order in Q2FY11. Capex for the Kolkata distribution region was in line
with full year guidance of Rs5bn – CESC spent Rs2.3bn in H1FY11. Distribution
business’s operational performance was largely stable – T&D losses were steady
and plant load factor (PLF) declined marginally. We reiterate BUY on CESC owing
to: i) improvement in execution visibility for Haldia and Chadrapur projects
(Rs1.4bn invested in H1FY10), ii) better performance by retail operations, which
assuaged concerns over growth-led losses and iii) compelling valuations at
FY12E P/BV of 1.3x, the cheapest among private distribution companies.

Power sector- A blip or early signs of troubles?:: ICICI Sec

Visit http://indiaer.blogspot.com/ for complete details �� ��


In Q2FY11, the I-Sec Power universe performed below expectations – adjusted
PAT was at Rs33bn (7% below I-Sec and 5% below Street expectations). During
the quarter, the financial clout of state electricity boards (SEBs) waned – as was
evident in weakened financials, fall in power demand YoY, load shedding when
power was available, not fully honouring short-term contracts, fall in merchant
rates and below-expectations profits.

#BarkhaGate: Media Stock Impact: Bigg Boss = "We, the People" - Review

Visit http://indiaer.blogspot.com/ for complete details �� ��

BarkhaGate has struck.

Even though conventional media has blacked it out. Its the the #1 trending topic in twitter India. Facebook has a BarkhaGate page with over 320 supporters in almost no time.

Calls to boycott media houses and ask for senior reports to resign. What will the stock impact be for media shares? Please post your views

1. NDTV: 
At the center of the controversy. Shares likely to plunge coming Monday. Do not hold any shares. Sell/ short. Later the week may be a good time to buy again after its fallen a lot.
**Will make NEW 52-WEEK LOW***

2. HT Media
Both Barkha Dutt and Vir Sanghvi have columns in Hindustan Times. HT has distanced itself from these two. Action is likely to be more muted than NDTV. Stay away from stock in near term

3. IBN18
In the news for not telecasting any news and views on the issue. Some tapes of Rajdeep Sardesai also out.Stock likely to be negatively impacted also. Stay away from stock in near term

4. Zee News
Only TV Channel to have news on the scandal!! Kudos to Zee News. This may see rise in TRP near term which will be good for stock

5. TV Today Network Ltd
It posted the transcripts in the India Today website. But no mention in Aaj Tak and Headlines Today. 
Likely to face a negative reaction also. Stay away from the stock



More detailed update coming soon...

India Market Strategy- Staying positive - Buy on weakness:: UBS

Visit http://indiaer.blogspot.com/ for complete details �� ��


UBS Investment Research
India Market Strategy
Staying positive - Buy on weakness
􀂄 India related concerns has led to sharp correction
The recent correction on the Indian stock market (3.6% in the last 4 days) has been
due to worries around 1) Concerns on microfinance (MFI) exposure leading to
correction in bank stocks 2) worries on political stability caused by the 2G scam 3)
misconception about LIC being a forced seller in the market due to running a
valuation deficit of around Rs140bn in its guaranteed-return annuity policies. We
have looked at these issues & do not believe they warrant too much concern.

Dena Bank-Core operations improving; valuations attractive:: Religare

Visit http://indiaer.blogspot.com/ for complete details �� ��


Dena Bank
Core operations improving; valuations attractive


We initiate coverage on Dena Bank (DBNK) with a BUY rating and a target price
of Rs 170/sh. We like DBNK for its strong presence in western India and robust
liability franchise, marked by a CASA ratio of ~39%. Core operations have
remained weak historically due to poor asset quality, higher reliance on the
wholesale business and capital constraints. Going forward, though, we expect a
stronger performance with an NII and earnings CAGR of 29% and 16%
respectively over FY10-FY13, driven by (1) NIM expansion with a change in asset
mix and thrust on CASA mobilisation, (2) improving asset quality, (3) a pick-up in
fee income, and (4) a likely capital infusion. We expect core ROA (adjusted for
trading gains) to improve from 0.7% over FY07-FY10 to 0.9% over FY11-FY13.

Crisil-Outlook Promising, but valuations steep! PPFAS

Visit http://indiaer.blogspot.com/ for complete details �� ��


Outlook Promising, but valuations steep!
CRISIL Limited has reported a good performance by clocking 19.5% Y-Y rise in its consolidated total income for the
quarter ended September 2010 to Rs. 1,585.5Mn from Rs. 1,326Mn in September 2009. The growth mainly came
from rating and research businesses. Operating margins have declined on account of increased headcounts & rental
costs. We expect the momentum in revenue growth to sustain in the coming quarters. But, valuations are steep at 25x
CY10E and 23x CY11E earnings. We maintain our REDUCE rating on the scrip.

Grey Market Premium Prices for India IPO: 21st Nov, 2010

Visit http://indiaer.blogspot.com/ for complete details �� ��

Company Name	Offer Price	Premium
	(Rs.)	(Rs.)
Power Grid FPO	90 (+ 5% retail discount)	6 to 8
RPP Infra Projects	68 to 75	3 to 5
Manganese Ore (MOIL)	600-660 (rumor)  (+ 5% retail discount)	175 to 195

India Mobile Sector-2G spectrum scam implications:: UBS

Visit http://indiaer.blogspot.com/ for complete details �� ��


UBS Investment Research
India Mobile Sector
2G spectrum scam implications
􀂄 Telecom minister's departure could resolve regulatory issues
We believe that the 2G spectrum scam related news flow (from the CAG report
that is in public domain) and the resignation of the former telecom minister A Raja
could result in speedy resolution of the outstanding regulatory issues in the Indian
mobile sector such as 1) one-time payment of spectrum fees 2) M&A policy that
will aid consolidation 3) Future of new entrants who have got spectrum but have
not rolled out services

Exide Industries: Buy: Business Line

Visit http://indiaer.blogspot.com/ for complete details �� ��

Parvatha Vardhini C

Investors with a two-to-three-year perspective can invest in Exide Industries. Robust demand for automotive batteries, capacity expansions, limited exposure to the telecom batteries segment and increased sourcing of raw material from captive units signal good earnings prospects over the given time-frame.

For the quarter ended September 2010, the company posted an 18 per cent year-on-year growth in net sales to Rs 1,127 crore and an adjusted growth of 17 per cent in net profits to Rs 166 crore

Although still healthy, operating margins declined from 26 per cent in the same quarter last year to about 22 per cent currently. At the current market price of Rs 163, the stock trades at a PE of 18 times its estimated FY-12 earnings, at a justifiable premium over its small-cap peer, Amara Raja Batteries.

Positive outlook for autos

 

IDFC- In for the long haul:: RBS

Visit http://indiaer.blogspot.com/ for complete details �� ��


IDFC
In for the long haul
Core earnings momentum and business growth appear on track. Spreads will
likely come under marginal pressure in a rising rate environment. We adjust our
earnings forecasts for interest on zero-coupon bonds. We continue to find IDFC a
good way to gain exposure to the infra growth story in India. New TP Rs223; Buy.

J&K Bank: Buy: Business Line

Visit http://indiaer.blogspot.com/ for complete details �� ��

M. V. S. Santosh Kumar

Fresh investments can be considered in the stock of J&K Bank, which is promoted by the Government of Jammu and Kashmir but has characteristics of a private bank. J&K Bank is a development finance institution in Jammu and Kashmir and banker of the State. Even amidst political turmoil in J&K, the bank has managed to contain the asset quality slippages. The bank also provides various cash management services to the State.

At the current price of Rs 825, the stock trades at around one time its FY-12 estimated book value and discounts its estimated earnings (FY12) by 5.8 times. Given its historically slow rate of growth, some discount is warranted, but the discount is currently very high compared with public sector banks (which are trading at an average of two times their price-to-book value).

Educomp Solutions: Buy: Business Line

Visit http://indiaer.blogspot.com/ for complete details �� ��

Investors with a two-year horizon can buy the shares of Educomp Solutions, a leading player in the school education space.

Continuing strength in its high-margin SmartClass business, selective participation in pure hardware deals and increasing visibility in its pre-school and K-12 segments are key positives for the company.

At Rs 605, the share trades at 14 times its likely FY12 per share earnings. This is well below the company's own historic valuations and at a discount to Everonn, despite Educomp's much larger scale of operations.

In the second quarter of this fiscal, the company saw its revenues expand by 21.5 per cent sequentially to Rs 276.8 crore, while net profits increased by 59.2 per cent to Rs 58.2 crore.

RPP Infra Projects IPO: Avoid:: Busines Line

Visit http://indiaer.blogspot.com/ for complete details �� ��


RPP Infra Projects IPO: Avoid

---

The company has no distinguishing model to justify a premium to peers.

---

Bhavana Acharya

Investors can avoid the Initial Public Offer of RPP Infraprojects, a South-based construction contractor, given the high asking price relative to peers. The company does not have any distinguishing business model to command a premium to peers. In magnitude of order book and revenues, it lags well behind listed construction peers. Given its small-sized business, the execution risks in its efforts to scale up to a developer may be significantly higher. At the upper end of its price band of Rs 68-75, the offer is valued at 13 times the estimated FY-11 earnings. Peers such as Unity Infraprojects, Pratibha Industries and ARSS Infrastructure are available at valuations of 8 to 13 times trailing 12- month earnings. Other detracting factors include geographic concentration of the order book and stiff competition in other states.

Greater China Inflation: a double whammy:: Nomura

Visit http://indiaer.blogspot.com/ for complete details �� ��


􀁾 Action
The announcement today by China to raise RRR by 50bp after recently raising interest
rates and introducing price controls alongside HK’s introduction of a Special Stamp duty
highlights the deepening concerns of both authorities about an inflation spike. While the
RRR is designed to mop up excess liquidity resulting from the surging BoP, it will have
little effect on earnings or economic growth. The surprise move suggests that the
authorities have been behind the curve. HK appears to have somewhat pre-emptively
curbed further asset bubble inflation as real interest rates are set to turn sharply
negative by the end of 1Q11.