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India Equity Research Reports, IPO and Stock News
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Reliance Industries: Another foray in financial services [Harshad Katkar]
RIL and Reliance Industrial Infrastructure Limited (RIIL), has agreed to acquire a 74% stake in Bharti-Axa Life Insurance Co and Bharti-Axa General Insurance Co by buying out Bharti Enterprises’ shareholding in the joint ventures (JV). This transaction is subject to obtaining necessary approvals from the insurance regulator IRDA and other relevant parties. On completion of the proposed transaction, RIL and RIIL (RIL has 45.4% stake in RIIL) would effectively own 57% and 17% respectively in the JVs while AXA would retain its current 26% shareholding and would continue to manage the day to day operations. Moreover, AXA would likely have an option to acquire upto 24% additional shareholding in the JVs from RIL and RIIL, as and when the FDI regulations permit. The shareholdings will then be – RIL (45%), RIIL (5%) and AXA (50%). In FY11, Bharti AXA Life collected premiums of INR7.9 bn and Bharti AXA GI collected gross direct premiums of INR5.5bn.
India Equity Strategy: Another boost for farm incomes [Abhay Laijawala]
The government of India has announced an increase in the minimum support prices (MSPs) of several kharif (autumn harvest) crops. The increase in MSP ranges from 8% (for rice – with further hike likely closer to the harvesting season in September) to 17- 19% (for oilseeds like sunflower seeds and groundnut). While we concede that these hikes could impact elevated food inflation, it is a further endorsement of the government’s thrust on inclusive growth and rural economy. This move, along with continued focus on rural employment and infrastructure – will continue to boost farm income.
India Property: On the cusp of a bounce-back; upgrading to Outperform [Abhay Shanbhag]
After the sector’s near-100% underperformance (worst-performing sector) since Jan'09, we believe pessimism is overdone, even discounting further short-term macroeconomic deterioration. With risk-return turning favourable after a long gap, we upgrade the sector to Outperform. A peaking interest rate cycle (we expect a 75bps increase after the 250bps hike in the past 15 months) and property price cuts, which will bring back demand, should be key sector catalysts (as in 2009). We upgrade DLF to Buy and Unitech to Hold; we prefer Sobha, a low-beta stock.
US Daily Economic Notes: With retail sales, the trend is still our friend [Joseph LaVorgna]
Retail sales are the most important of this morning’s three economic releases because they provide us with key information on the state of the consumer, which accounts for approximately 70% of expenditures-based GDP. Specifically, retail sales cover about 30% of total consumption (or 21% of GDP ). Remember that it is the “retail control” subcomponent that is used in the GDP accounts—retail control excludes automobiles and building materials. The Bureau of Economic Analysis uses other source data to estimate these two series’ impact on consumption. Last quarter, total real consumer spending (goods and services) grew 2.2%, down from 4.0% in the previous quarter.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Reliance Industries: Another foray in financial services [Harshad Katkar]
RIL and Reliance Industrial Infrastructure Limited (RIIL), has agreed to acquire a 74% stake in Bharti-Axa Life Insurance Co and Bharti-Axa General Insurance Co by buying out Bharti Enterprises’ shareholding in the joint ventures (JV). This transaction is subject to obtaining necessary approvals from the insurance regulator IRDA and other relevant parties. On completion of the proposed transaction, RIL and RIIL (RIL has 45.4% stake in RIIL) would effectively own 57% and 17% respectively in the JVs while AXA would retain its current 26% shareholding and would continue to manage the day to day operations. Moreover, AXA would likely have an option to acquire upto 24% additional shareholding in the JVs from RIL and RIIL, as and when the FDI regulations permit. The shareholdings will then be – RIL (45%), RIIL (5%) and AXA (50%). In FY11, Bharti AXA Life collected premiums of INR7.9 bn and Bharti AXA GI collected gross direct premiums of INR5.5bn.
India Equity Strategy: Another boost for farm incomes [Abhay Laijawala]
The government of India has announced an increase in the minimum support prices (MSPs) of several kharif (autumn harvest) crops. The increase in MSP ranges from 8% (for rice – with further hike likely closer to the harvesting season in September) to 17- 19% (for oilseeds like sunflower seeds and groundnut). While we concede that these hikes could impact elevated food inflation, it is a further endorsement of the government’s thrust on inclusive growth and rural economy. This move, along with continued focus on rural employment and infrastructure – will continue to boost farm income.
India Property: On the cusp of a bounce-back; upgrading to Outperform [Abhay Shanbhag]
After the sector’s near-100% underperformance (worst-performing sector) since Jan'09, we believe pessimism is overdone, even discounting further short-term macroeconomic deterioration. With risk-return turning favourable after a long gap, we upgrade the sector to Outperform. A peaking interest rate cycle (we expect a 75bps increase after the 250bps hike in the past 15 months) and property price cuts, which will bring back demand, should be key sector catalysts (as in 2009). We upgrade DLF to Buy and Unitech to Hold; we prefer Sobha, a low-beta stock.
US Daily Economic Notes: With retail sales, the trend is still our friend [Joseph LaVorgna]
Retail sales are the most important of this morning’s three economic releases because they provide us with key information on the state of the consumer, which accounts for approximately 70% of expenditures-based GDP. Specifically, retail sales cover about 30% of total consumption (or 21% of GDP ). Remember that it is the “retail control” subcomponent that is used in the GDP accounts—retail control excludes automobiles and building materials. The Bureau of Economic Analysis uses other source data to estimate these two series’ impact on consumption. Last quarter, total real consumer spending (goods and services) grew 2.2%, down from 4.0% in the previous quarter.
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