Edelweiss, REAL ESTATE- Event: As per media articles, the Brihanmumbai Municipal Corporation (BMC) is drafting a policy that would make at least 50 additional components a part of the chargeable floor space in new buildings. Currently, the developer gets to construct these areas for free. Under Section 35 (2) of the Development Control Regulations, the developer is not charged for constructing areas like passages, lofts, balconies, society offices and meter rooms. However, BMC is now proposing that these areas should be included in FSI calculations. Impact: Although the policy is still in a draft stage, if the proposed change in FSI policy comes through, it implies that the difference between carpet area and saleable area will reduce significantly (currently, this difference is between 50% and 100% in terms of excess area over the carpet area). However, we believe that this may bring about greater transparency in property transactions. Land prices may correct; property prices unlikely to see downside risk: With the carpet/saleable area differential reducing, saleable area would be limited to existing FSI, leading to overall saleable area reducing by 15-30%. As a result, lower supply of saleable area will reduce downward pressure on property prices. Land prices may, however, reduce as the saleable/carpet area differential will be lower. We do not expect projects that have already received FSI sanctions to be impacted, but projects yet to receive approvals (where land has been already purchased) could be hit if the policy changes come through. As different projects may be at different stages of approval, this regulation will negatively impact each developer differently. Some large developers like DB Realty (Not Rated), HDIL (Not Rated), Sunteck Realty (Not Rated), Ackruti City (Not Rated), Orbit Corporation (Buy) and Oberoi Realty (Not Rated) are likely to be impacted due to this change. BMC’s draft proposal of revising FSI policy in Mumbai may hit developers

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��



Event: As per media articles, the Brihanmumbai Municipal Corporation (BMC) is
drafting a policy that would make at least 50 additional components a part of the
chargeable floor space in new buildings. Currently, the developer gets to construct
these areas for free.
Under Section 35 (2) of the Development Control Regulations, the developer is not
charged for constructing areas like passages, lofts, balconies, society offices and
meter rooms. However, BMC is now proposing that these areas should be included in
FSI calculations.
Impact: Although the policy is still in a draft stage, if the proposed change in FSI
policy comes through, it implies that the difference between carpet area and saleable
area will reduce significantly (currently, this difference is between 50% and 100% in
terms of excess area over the carpet area). However, we believe that this may bring
about greater transparency in property transactions.
Land prices may correct; property prices unlikely to see downside risk: With
the carpet/saleable area differential reducing, saleable area would be limited to
existing FSI, leading to overall saleable area reducing by 15-30%. As a result, lower
supply of saleable area will reduce downward pressure on property prices. Land
prices may, however, reduce as the saleable/carpet area differential will be lower. We
do not expect projects that have already received FSI sanctions to be impacted, but
projects yet to receive approvals (where land has been already purchased) could be
hit if the policy changes come through.
As different projects may be at different stages of approval, this regulation will
negatively impact each developer differently. Some large developers like DB Realty
(Not Rated), HDIL (Not Rated), Sunteck Realty (Not Rated), Ackruti City (Not Rated),
Orbit Corporation (Buy) and Oberoi Realty (Not Rated) are likely to be impacted due
to this change.

ABB – 4QCY2010 Result Update Angel Broking

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

ABB – 4QCY2010 Result Update

Angel Broking recommends a Reduce on ABB with a Target Price of Rs. 595.

ABB India (ABB) ended CY2010 on a disappointing note with losses in its rural

electrification (RE) projects and de-growth in order inflow. For the quarter ending

December 2010, revenues posted muted growth of 9% yoy to `2,072cr, while PAT

dipped by a substantial 94% yoy to `6.8cr largely owing to the exit from RE

projects and forex losses. We recommend a Reduce on the stock.

Edelweiss, SCBs dig into excess SLR investments & short term market instruments to manage the robust credit demand

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


SCBs dig into excess SLR investments & short term market instruments to manage the
robust credit demand


Our observations: Tracking Investment and Credit
 Cash and lending by the banking system, as observed in the Weekly Statistical
Supplement (WSS) for the fortnight-ended February 11, can be stated as below:
1. Deposit growth soars to 17.40% as banks perk up their deposit rates to
keep pace with the robust credit demand. Households kept away from
investing into bank deposits due to the negative returns taking into account
the high inflationary environment. However in H2FY11 banks were compelled
to increase deposit rates in order to mobilize deposits. The overall deposits for
SCBs stood at INR 50.4trn, 17.26% higher than the outstanding deposit of
INR 43trn outstanding a year ago. The incremental deposit for the fortnight
stood at INR 588bn.
2. Bank credit continued to sustain strong growth above the central bank’s
target due to the overall buoyancy in the economy and increasing
infrastructure funding. The overall credit disbursed by SCBs so far in FY11
stood at INR 37.84trn, 24% higher than the outstanding credit of INR
30.51trn outstanding a year ago. Credit to deposit ratio for the SCBs have
inched up to 75.05 compared to 74.95 a fortnight ago, indicative of the faster
growth of bank credit compared to its deposits. At the pace credit is growing,
banks will have to garner additional deposits of at least another INR 3.50trn
so as to maintain its CD ratio at 75. Given that SCBs have managed to
achieve an average growth of 12% per annum in the incremental deposits for
the last four years, this will put upward pressure on the interest rates.
3. SLR investment declined by INR 102bn over the fortnight. Investment
to Deposit ratio has declined continuously from 32.11 in Mar-10 to 29.16 in
the fortnight ending 11th Feb-11, reflective of SCBs funding the robust credit
growth out of its excess SLR investments. However expected borrowing of INR
3.80trn from GoI in FY12, limits the scope of using the excess SLR as a
funding source.
4. M3 growth inches to 16.90% during the fortnight. During the fortnight
the multiplier declined by 6bps to 4.94x mainly on account of an increase in
the reserve money base to INR 12.77trn from INR 12.47trn a fortnight ago.
Broad money growth has been below the target for 9MFY11 on account of
sluggish deposit growth as well as some moderation in money multiplier
resulting from higher growth in currency.
 CD issuance remained robust as banks scout for funds in the short term market to
meet up with the pace of the credit growth. During the fortnight outstanding CDs
increased by INR 104bn to INR 3.71trn, despite the high rate of borrowing. With
~INR1trn of CD to be rolled over in Mar-Apr, CD rates are expected to edge even
higher.
 Foreign exchange reserves rose modestly by $1.96bn to $300bn during the week
ending Feb-4 on account of the increase in the foreign currency assets

Tata Steel signs definitive agreement to sell TCP facility for USD 469 mn ::Edelweiss,

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

􀂄 Tata Steel signs definitive agreement to sell TCP facility for USD 469

mn

Today, Tata Steel announced the signing of definitive agreement for the sale of
Teesside Cast Products (TCP) plant for a value of USD 469 mn to Sahaviriya
Steel Industries (SSI). The MOU for the deal was signed in August 2010,
targeting a consideration of USD 500 mn, and the sale is expected to complete
by March 2011. The TCP plant has a capacity of 3.9 mt with FY10 production at
2.3 mt. The plant was mothballed in February 2010 after offtake agreement for
~80% of its slab output was purportedly terminated in April 2009. As proposed
in the initial MOU, the deal includes sale of assets such as coke ovens, power
plants, sinter plants, blast furnaces and steel making facilities. As part of the
deal, Tata Steel Europe will continue to operate the Redcar wharf (bulk terminal)
in JV with SSI, thereby providing itself the flexibility to use it for its own
purposes. Tata Steel Europe will also continue to operate two large diameter
tube mills, a special section mill, a beam mill and the technology centre.
􀂄 Sale value of USD 469 mn lower than targeted, marginal impact on
valuation
The definitive agreement sale value is ~USD 31 mn (earlier USD 500 mn) lower
than the value proposed in the initial MOU. We had considered USD 500 mn in
our fair valuation for Tata Steel, contributing ~INR 23/share to our target price
of INR 778/share. Considering the definitive agreement at USD 469 mn, the
contribution will get reduced to INR 22/share, a marginal impact.
􀂄 Remain positive; maintain ‘BUY/ Sector Outperformer’
Sale of TCP plant post the mothballing of the facilities in February 2010 is
incrementally positive for the company. We maintain our positive view on Tata
Steel in light of the expected volume growth from the 2.9 mtpa expansion in
India, expected to be completed by Q4FY12, increasing visibility from the
international raw material projects in Canada and Mozambique and better than
expected performance at Tata Steel Europe. We maintain our ‘BUY/Sector
performer’ recommendation/rating on the stock with a fair value of INR
778/share.

MPHASIS- Plumbing new low; our concerns vindicated:: Edelweiss

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

 MPHASIS Plumbing new low; our concerns vindicated


􀂃 Results disappoint on multiple fronts
Mphasis results came in with a lot of negative surprises validating our long
drawn concerns. In a strong demand environment, quarterly revenue decline of
8% in USD terms and 3% decline in operating margins summarizes the
performance. Further, we see changes in the disclosure policy, non-disclosure of
provision reversals and one-off revenues in previous quarter impacting the
company reputation. Revenues were reported at INR 12.3 bn, down 8.3% Q-o-Q
and net profits at INR 2.3 bn, down 20.2% Q-o-Q. Decrease in operating profits
and higher effective tax led to this profit decline.

views of Mr. Dinesh Thakkar(Chairman & Managing Director, Angel Broking) on Union Budget 2011-12.

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

views of Mr. Dinesh Thakkar(Chairman & Managing Director, Angel Broking) on Union Budget 2011-12.

“In the Union Budget 2011-12, constraint is what was required on the expenditure side and by not having any major populist measures, the FM has managed to bring down the targeted Fiscal Deficit to 4.6%, which should be achievable provided fuel prices are hiked. Rightly focusing on pressing matters, measures to tackle high food inflation include viability gap funding will be provided for cold storage chains and increase in priority sector lending targets from Rs3.8 to 4.8lakh cr. Also, given the shortage of funds in the domestic banking sector, several measures are included to increase fund availability from other sources, pertinently FII investments in corporate bonds being increased to US$40bn, withholding tax reduced, Tax-free bond limits increased, etc. Together with new bank licenses and increased foreign bank participation over the course of next year, the gap between savings and investments should get narrowed, keeping interest rates also in check – a positive for banks, infrastructure and the overall economy. On governance, there seems to be a firm commitment to plug leakages (direct transfer of cash subsidy), reduce black money, tackle corruption, monitor performance of ministries as well as continue fiscal consolidation. Without over-stretching itself, this Budget includes a decent set of measures without compromising on its fiscal deficit position and considering this, I would assign the Budget a rating of 7 out of 10.”

Edelweiss: Reduce Sesa Goa - hit by increased export duty

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Sesa Goa (SESA IN, INR 261, Reduce)

n  Hike in export duty to hurt profitability significantly

The government has raised export duty on iron lumps and fines to 20% of selling price (FOB) as part of the Union Budget proposals today; it was at 5% for fines and 15% for lumps earlier. Iron ore exporters will be adversely impacted by this proposal, particularly Sesa Goa as it exports ~90% of total volume, of which ~85% is fines. We incorporate the same in our earnings model.

n  Revising FY12E and FY13E earnings down over 20%

In light of the hike in export duty, we are revising down our FY12E EBITDA and net profit estimates ~24.6% and 22.3%, respectively. For FY13, the same duty structure will result in 21.2% and 20.1% decline in EBITDA and net profit, respectively.

n  High iron ore prices likely to keep export duty and freight cost high

Export duty on iron ore has undergone numerous changes in the past two years ranging from 0% to 20% currently. We believe as long as iron ore prices remain high, potentially above USD 100 FOB (63 Fe), export duty is unlikely to dip meaningfully. In addition, Indian Railways is also known to hike freights in such situations.

n  Outlook and valuations: Issues continue; maintain ‘REDUCE’

Sesa Goa has been constantly facing challenges on the volume front with the Orissa mine now out of operations, the effective export ban in Karnataka till date, and lack of approvals for additional volumes in Goa. However, our FY12 volume estimate of 21 mt assumes revoking of the ban in Karnataka, which is likely considering the latest Supreme Court directive to the government to frame guidelines for export. In addition, we expect issues of high export duty and railway freight to add to the cost pressure. With iron prices determined by Chinese steel demand-supply, we do not see possibility of pass through of the same. We maintain our ‘REDUCE/ Sector Underperformer’ recommendation/ rating on the stock with a revised fair value of INR 275/share (earlier INR 308/share). Over the long term, we expect domestic sales proportion of Sesa Goa and other exporters to increase as they look to diversify their business mix.

Automobiles - Budget : neutral to marginally positive; Edelweiss

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

n  No news is good news

·         We believe impact of Budget 2011-12 on the auto sector is neutral to marginally positive with no major announcements.

·         Excise duty was left untouched, contrary to consensus expectation of a hike in excise duty on diesel vehicles. In our view, the status quo was maintained to: (1) avoid the reduction in duty again once GST is rolled out; and (2) maintain demand momentum.  

·         Government’s rural thrust continued with wages under National Rural Employment Guarantee Act (NREGA) now linked to CPI (consumer price index) and credit flow to farmers has also been increased.

·         With a view to promote hybrid and electric vehicles (EV), budget proposes to set up a National Mission to set the road map for green vehicles. It has as well lowered excise duty to 5% from 10%. Earlier, the government had announced subsidies worth INR 4,000-100,000 for e-vehicles in Nov 2010.

·         a) Scope of taxi has been widened to include up to 13 seater (from 7 seater) vehicle. Currently taxi attracts lower tax rate of 10%. b) Also, the excise refund to manufacturer has been increased to 20% on such taxi from 10% earlier.

·         To conclude, we expect Mahindra & Mahindra’s underperformance versus the BSE Auto index to end as the big overhang of hike in excise duty on diesel vehicles no longer exists. We have ‘BUY’ recommendation on the stock with a target price of INR 820.

Budget 2011-12 Highlights: Sprism

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

The Finance Minister, Mr. Pranab Mukherjee unveiled and presented the Union Budget for 2011-12 to the Parliament today. The following are the key highlights of the same:  

* GDP estimated to have grown at 8.6% in 2010-11
* Indian economy expected to grow at 9% in 2011-12
* Critical institutional reforms set pace for double-digit growth
* Five-fold strategy to deal with black money. Group of Ministers (GoM) to suggest ways for tackling corruption
* Public Debt Management Agency of India Bill to come up next financial year
* Direct Tax Code (DTC) to be effective from April 01, 2012
* Phased move towards direct transfer cash subsidy to BPL people for better delivery of kerosene, LPG and fertilizer mooted
* Rs 40,000 crore to be raised through disinvestment in 2011-12
* FDI policy to be liberalized further
* SEBI registered mutual funds permitted to accept subscription from foreign investors who meet KYC requirement
* FII limit raised for investment in corporate bonds in infrastructure sector
* Additional banking license to private sector players proposed
* Micro Small and Medium Enterprises MSME gets boost as Rs. 5000 crore provided to SIDBI and Rs.3,000 crore to NABARD
* Credit flow to farmers raised from Rs.3,75,000 crore to Rs.4,75,000 crore
* Rs.10,000 crore for NABARD Short Term Rural Credit Fund for 2011-12
* 15 more mega food parks during 2011-12
* National food security bill to be introduced this year
* 23.3% increase in allocation for infrastructure
* Tax-free bonds of Rs.30,000 crore proposed by government undertakings
* Environmental concerns relating to infrastructure projects to be considered by Group of Ministers
* Allocation for social sector increased by 17% amounting to 36.4% of total plan allocation
* Bharat Nirman allocation increased by Rs.10,000 crore
* Allocation for education increased by 24%. Rs.21,000 crore allocated for Sarv Shikshya Abhiyan registering an increase of 40%
* 1500 institutes of higher learning to be connected by March 2012 with Knowledge Network
* Fiscal deficit kept at 4.6% of GDP for 2011-12
* Income Tax exemption limit for general category in individual tax payers enhanced from Rs.1,60,000 to Rs.1,80,000
* Qualifying age for senior citizens lowered to 60; senior citizen above 80 year to get Rs.5,00,000 IT exemption
* Surcharge on corporates lowered to 5%

Fertilisers - Budget extends investment-linked deduction to sector; Edelweiss

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

n  Benefits of investment-linked deduction extended to fertiliser sector

·         In Budget 2011, the fertiliser sector has been included in specified business entitled for investment allowance under section 35 AD. Incremental capex (excluding land, goodwill, and financial instruments) will be eligible for 100% deduction against taxable profits, subject to commencement of production out of a new unit on or after April 1, 2011.

·         This deduction will be eligible for set off against profits of any other specified business; hence, capital expenditure of new fertiliser units can be set off against taxable profits of existing fertiliser units.

n  New provision will be cash flow positive, P&L neutral, encourage new investments

·         The above move will be cash flow positive to the extent of 33% of incremental capex for capacity expansion.    

·         However, it will be P&L neutral because of provision for deferred tax liability to the extent of incremental exemption. This is due to non-availability of depreciation allowance (in future) under the Income Tax Act to the extent of capital expenditure for which tax benefits are claimed.

n  Complex fertiliser companies to be immediate beneficiaries

·         Coromandel (BUY) and Zuari (BUY) are expected to benefit the earliest among fertiliser companies on account of their capex outlay for capacity expansion in the next 12-18 months.

·         Other companies like Chambal (HOLD), Tata Chemicals (Not rated), RCF (Not rated) etc., which have announced capex plans for new urea units will get the benefit post commissioning of new urea units, which may take 3-4 years post capex infusion (which is subject to conducive policies from government, which are awaited and also allocation of natural gas).

·         Coromandel and Zuari, with a capex outlay of INR 3,300 mn and INR 800 mn, respectively, until FY12 end for capacity expansion of their complex fertiliser manufacturing capacities, are set to benefit to the extent of
INR 1,000 mn and INR 240 mn, respectively, in the next two years.

·         We expect the above policy to encourage capacity expansion, especially by net cash positive companies like Coromondel and Zuari.

n  Additional capital investments in fertiliser sector will get infrastructure status

·         Capital investment in fertiliser production to be included under infrastructure sub-sector. This should facilitate low cost funds for incremental capex.

FII & DII trading activity on NSE and BSE as on 28-Feb-2011

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

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 28-Feb-2011.

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) Category Date Buy Value Sell Value Net Value FII 28-Feb-2011 3789.23 3829.09 -39.86

 

Domestic Institutional Investors trading activity on NSE and BSE on Capital Market Segment

The following is combined Domestic Institutional Investors trading data across NSE and BSE collated on the basis of trades executed by Banks, DFIs, Insurance, MFs and New Pension System on 28-Feb-2011.

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) Category Date Buy Value Sell Value Net Value DII 28-Feb-2011 1860.24 1542.86 317.38

 

 

 

FII DERIVATIVES STATISTICS FOR 28-Feb-2011

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

FII DERIVATIVES STATISTICS FOR 28-Feb-2011
	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
INDEX FUTURES	142170	3816.32	100713	2711.79	420639	11208.96	1104.53
INDEX OPTIONS	573330	15303.51	566401	15070.21	1661938	44317.10	233.30
STOCK FUTURES	108109	2800.38	89509	2328.34	1083046	25742.09	472.05
STOCK OPTIONS	20464	545.77	20146	539.23	22864	586.24	6.54
						Total	1816.42

 

NSE, Bulk deals, 28-Feb-2011

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Symbol	Security Name	Client Name	Buy / Sell	Quantity Traded	Wght. Avg.  Price
ARSSINFRA	ARSS Infra Proj. Ltd	GARNET INTERNATIONAL LTD	BUY	47,619	656.85
ARSSINFRA	ARSS Infra Proj. Ltd	GARNET INTERNATIONAL LTD	SELL	82,619	648.54
KALINDEE	Kalindee Rail Nirman (Eng	AJAY	BUY	1,85,061	110.26
KALINDEE	Kalindee Rail Nirman (Eng	AJAY	SELL	1,85,061	110.34