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India Equity Research Reports, IPO and Stock News
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Indian IT Services: Slowdown to propel market-share gains for offshore firms [Aniruddha Bhosale]
We recently spoke to the CIOs/IT service vendor relationship managers of four of the top ten banks in Europe. The key message was that (a) a current macroeconomic slowdown could boost offshoring and benefit large Indian vendors that are strategic partners and (b) banks are inclined to do 'more with less' rather than pursue sharp price discounts. In our view, this means that the macroeconomic environment would likely have to get a lot worse for absolute price declines to hurt growth and margins significantly. Our top pick is TCS. In our view, the biggest positive for the Indian IT services industry since the last downturn has been its acceptance as a ‘viable low-cost high-quality IT services delivery model’ across service functions. Most banks have embarked on long-term plans to increase delivery from offshore locations.
Essar Oil Ltd: New projects to drive earnings growth; initiating with Buy [Harshad Katkar]
We initiate coverage on Essar Oil (ESOIL) with a Buy rating and a target price of INR130, implying upside potential of 33%. Our positive investment case is premised on: 1) refinery capacity expansion by 29% to 18mmtpa in 3QFY12E, and almost a doubling of complexity to 11.8 leading to higher refining margins; 2) commercial production start-up from Raniganj CBM by 3QFY12E; and 3) a current valuation of 4.6x FY13E EV/EBITDA, which is a 20% discount to regional peers.
Adani Power: No surprises from Appellate Tribunal [Abhishek Puri]
According to media reports, the apex regulatory authority in India (Appellate Tribunal - similar to High court) has again upheld that the contractual terms of PPA are not negotiable in the recently announced judgment on Adani Power’s Mundra phase-III project. Adani contested on lack of fuel support from state run GMDC. To recall, the PPA was signed in 2007 for supplying 1,000MW at a fixed rate from 1,320 capacity at Mundra-III to Gujarat SEB (GUVNL). While it remains to be seen whether Adani Power would now seek to go to Supreme Court or not, on the face of it this seems to be similar to other recent judgments where in the Tribunal in India has upheld the contractual terms of the PPA.
FITT: Indian Industrials: Darkest before the dawn... but we can't time the sunrise [Manish Saxena]
We now expect a pick-up in the capex cycle. But unlike the last cycle, which was driven by power and metals, this cycle should be spurred by rising industry utilisation, a higher share of road/rail capex and fertiliser spending. Following the global correction, valuations are below levels seen during the Lehman crisis, even though our estimates are below consensus. We upgrade companies with robust balance sheets to Buy. Our top picks are L&T, BHEL, Thermax, and IRB.
US Daily Economic Notes : Modified yield curve/claims do not portend recession [Joseph LaVorgna]
Over the past few weeks, we have been discussing various economic series that have been useful in the past for determining whether we are in or about to enter a recession. Jobless claims are one of the most important high frequency indicators, and the data released yesterday showed a 2k increase to 414k for the week of September 3. Historically, claims have foreshadowed a downturn when they have jumped 50k to 75k on a sustained basis, meaning a month or two.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Indian IT Services: Slowdown to propel market-share gains for offshore firms [Aniruddha Bhosale]
We recently spoke to the CIOs/IT service vendor relationship managers of four of the top ten banks in Europe. The key message was that (a) a current macroeconomic slowdown could boost offshoring and benefit large Indian vendors that are strategic partners and (b) banks are inclined to do 'more with less' rather than pursue sharp price discounts. In our view, this means that the macroeconomic environment would likely have to get a lot worse for absolute price declines to hurt growth and margins significantly. Our top pick is TCS. In our view, the biggest positive for the Indian IT services industry since the last downturn has been its acceptance as a ‘viable low-cost high-quality IT services delivery model’ across service functions. Most banks have embarked on long-term plans to increase delivery from offshore locations.
Essar Oil Ltd: New projects to drive earnings growth; initiating with Buy [Harshad Katkar]
We initiate coverage on Essar Oil (ESOIL) with a Buy rating and a target price of INR130, implying upside potential of 33%. Our positive investment case is premised on: 1) refinery capacity expansion by 29% to 18mmtpa in 3QFY12E, and almost a doubling of complexity to 11.8 leading to higher refining margins; 2) commercial production start-up from Raniganj CBM by 3QFY12E; and 3) a current valuation of 4.6x FY13E EV/EBITDA, which is a 20% discount to regional peers.
Adani Power: No surprises from Appellate Tribunal [Abhishek Puri]
According to media reports, the apex regulatory authority in India (Appellate Tribunal - similar to High court) has again upheld that the contractual terms of PPA are not negotiable in the recently announced judgment on Adani Power’s Mundra phase-III project. Adani contested on lack of fuel support from state run GMDC. To recall, the PPA was signed in 2007 for supplying 1,000MW at a fixed rate from 1,320 capacity at Mundra-III to Gujarat SEB (GUVNL). While it remains to be seen whether Adani Power would now seek to go to Supreme Court or not, on the face of it this seems to be similar to other recent judgments where in the Tribunal in India has upheld the contractual terms of the PPA.
FITT: Indian Industrials: Darkest before the dawn... but we can't time the sunrise [Manish Saxena]
We now expect a pick-up in the capex cycle. But unlike the last cycle, which was driven by power and metals, this cycle should be spurred by rising industry utilisation, a higher share of road/rail capex and fertiliser spending. Following the global correction, valuations are below levels seen during the Lehman crisis, even though our estimates are below consensus. We upgrade companies with robust balance sheets to Buy. Our top picks are L&T, BHEL, Thermax, and IRB.
US Daily Economic Notes : Modified yield curve/claims do not portend recession [Joseph LaVorgna]
Over the past few weeks, we have been discussing various economic series that have been useful in the past for determining whether we are in or about to enter a recession. Jobless claims are one of the most important high frequency indicators, and the data released yesterday showed a 2k increase to 414k for the week of September 3. Historically, claims have foreshadowed a downturn when they have jumped 50k to 75k on a sustained basis, meaning a month or two.
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