14 April 2011

Economy / Political News :: BofA Merrill Lynch

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Economy / Political News
Food inflation fell to a 4-month low of 9.18% for the week ended March 26,
compared to 10.2% the previous week.
The country's foodgrain output is set to touch an all-time record of 235.88 million
tonnes (mt) in 2010-11.
State assembly elections including the crucial states of West Bengal and
Tamilnadu are being held in April & May. Assam, Kerela and Pondicherry are also
holding the assembly elections.
Corporate Highlights
BHEL- 4Q results surprise: BHEL pleasantly surprised street with Rec. PAT
Rs57bn +37%YoY (+3% consensus) on 20%YoY growth in sales (target 11-16%)
and 170bps fall in labour costs. Reported PAT was +40%YoY on Rs2.8bn of profit
on change in a/c policy for warranty provision.
Stock market overview
Performance: The BSE Sensex was up by 0.2% last week. Trading volumes
were up by 18% and the Advance/Decline ratio was 1.87 at BSE.
Flows: FII bought USD 1515mn during the week ended 8th Apr’11. YTD they have
bought USD 1bn. Domestic MFs on the other hand sold USD 150mn during the
week ended 7th Apr’11.
Top performers of the week: Mah Satyam, Suzlon, Unitech, Aditya Birla and
IndiaBull Realestate
Worst performers: DLF, Idea Cellular, Bajaj Auto, NTPC and Hindalco.
Economic Data Watch
Forex reserves rose by USD 2bn to US$305bn for the week ended 1st Apr’11.


News This Week
Economics
􀂄 Food inflation fell to a 4-month low of 9.18% for the week ended March 26,
compared to 10.2% the previous week. – Media
􀂄 The country's foodgrain output is set to touch an all-time record of 235.88
million tonnes (mt) in 2010-11. - Media
Politics
􀂄 State assembly elections including the crucial states of West Bengal and
Tamilnadu are going to be held in April & May. Assam, Kerela and
Pondicherry are also holding the assembly elections. - Media
Corporate
􀂄 Domestic Car sales rose by 24.4% to 194,199 units in Mar’11. On other hand
2W sales in March increased by 19.14% to 1,096,233 units. –Media
􀂄 M & M for the 2nd time in the year has raised prices of its entire range of
vehicles by up to Rs15,000 from last week.-Media
􀂄 Cairn Energy and Vedanta Resources extended the deadline for a $9.6
billion deal for Cairn's India assets. -Media
􀂄 Cadila Healthcare has received USFDA approval to conduct trials for its new
molecule entity (NME) ZYGK1 to be used for treating diabetes. -Media
􀂄 GVK Power and Infrastructure is in exclusive talks to buy two Australian coal
mines owned by Hancock Prospecting in a deal worth A$8 billion. -Media
􀂄 Genpact has signed a definitive agreement to acquire Headstrong
Corporation for $550 million. – Media
􀂄 Maruti Suzuki will recall 13,157 units of its three diesel driven models of
Dzire, Swift and Ritz due to a possible faulty engine part. -Media
􀂄 L&T Metro Rail Ltd has achieved financial closure for the Rs121bn
Hyderabad metro rail project. - Media
􀂄 REpower, a 95% subsidiary of Suzlon, entered its largest onshore framework
agreement for the supply of 240 wind turbines with total capacity of 720MW
with Juwi Group. - Media
􀂄 BHEL pleasantly surprised street with Rec. PAT Rs57bn +37%YoY (+3%
consensus) on 20%YoY growth in sales (target 11-16%) and 170bps fall in
labour costs. Reported PAT was +40%YoY on Rs2.8bn of profit on change in
a/c policy for warranty provision.- Media
􀂄 ARSS Infra won a work order from MP Road Development Corporation Ltd
for construction of a 70km road on a build-operate-transfer basis.- Media
􀂄 Wipro to do an all-cash acquisition of the Global Oil and Gas IT Services unit
of SAIC. – Media
􀂄 Much-awaited Rs80bn follow-on public offer of Steel Authority of India (SAIL)
is set to hit the capital market by the end of May. - Media
Source: Collated from Bloomberg and following news papers - Economic Times, Live Mint,
Business Standard & Financial Express dated Apr 2 – Apr 08, 2011.


Cement: Cement prices - cartel or can't tell::Kotak Sec,

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Cement
India
Cement prices—cartel or can’t tell. We are perplexed by the Rs40-50/bag increase
over the past few months in cement prices, despite sluggish demand (4.6% YTD) and
low utilization rates (77% YTD). The trend affirms the strength of the ‘industry
discipline’ against all odds. Accordingly we review our stance (and earnings)—as such a
sharp price increase, although difficult to explain, could help overcome several obstacles
including rising cost of production and moderate volume growth.

Buy ICICI BANK :Management to focus on stable albeit profitable growth:: Kotak Sec

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ICICI BANK
 RECOMMENDATION: BUY
TARGET PRICE: RS.1364
FY12E P/E: 19.5X,
P/ABV: 2.2X
We recently met with the management of ICICI bank which reinforces
our existing positive outlook on the stock; management to
focus on stable growth with improving structural profitability.
We reiterate BUY on the stock.
q Post the consolidation phase, management is likely to focus on stable
growth. They have guided us that loan book is likely to grow at 18-20%
during FY11 (15-17% standalone growth and another 3% due to BoR
merger). During FY12, they are likely to witness ~20% loan growth
mainly driven by corporate and Infrastructure segments.
q The bank has been focusing on improving its funding mix by increasing
the share of CASA mix (low cost deposits). Its CASA deposits as a percentage
of total deposits increased from 28.7% at the end of FY09 to
41.7% at the end of FY10 and further to 44.2% at the end of Q3FY11.
q NIM of ICICI bank has been historically lower vis-à-vis its peers due to imbalances
in its asset & liability profiles. Although liability franchise has
improved very sharply in last 2 years, its margin has continued to drag.
However, we believe these overhangs are likely to wane over next 12-18
months.

April 14, 2011: News Round-up 􀁠 Kotak Securities

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Economy News
4 India’s index for industrial production (IIP) grew 3.6 % in February, yearon-
year due to the high base effect and continued weakness in capital
goods dragged the index further down (BS)
4 IMF has scaled down India’s economic growth to 8.2 % for 2011. The
Indian economy grew 10.4 % in 2010 and is expected to grow by 7.8 % in
2012 (BS).
4 The finance ministry is likely to review the loan portfolio of public sector
banks to ensure they are lending directly to the priority sector and not
buying loans from regional rural banks (RRBs) or microfinance institutions
(MFIs) to meet their mandatory lending requirements (ET).
4 Urban households expect inflationary pressure to sustain through 2011
and feel there may not be any softening of food prices, an RBI survey
shows. While year end 2011 household inflation is expected to be 13.1
per cent, up from the perceived 11.8 per cent in December 2010, dailywage
workers and housewives expected higher inflation rates to
continue. As per the ‘Inflation Expectations Survey of Households:
December 2010 (Round 22)’ conducted by the apex bank, the rise will be
mainly on account of movement in food prices. (BL)
4 The finance ministry has asked the telecom department (DoT) to
investigate the role of mobile phone service providers in leaking Niira
Radia tapes as it looks to identify individuals involved in making the
telephonic intercepts public. (ET)
4 Prime Minister Manmohan Singh has pitched for greater Indian exports
to China to reduce the trade deficit between the two countries and
expressed confidence that the bilateral trade would surpass $100 billion
by 2015. "I am confident that we will surpass our bilateral trade target of
$100 billion dollars by 2015, but we have to make more efforts to
promote greater Indian exports to China to reduce the trade deficit,"
Singh said in an interview to China's state-run Xinhua news agency. (ET)

Company Fixed Deposit Schemes with High Interest Rates

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1.    Mahindra Finance Samruddhi Fixed Deposit:

·         Rated FAAA by CRISIL indicating highest safety
·         10.00% p.a interest for 3 years (Cumulative Option)
·         0.25% p.a additional interest for Senior Citizens
·         One of India’s leading NBFCs with a vast network of over 450 branches
·         Assets Under Management in excess of Rs. 10,000 Cr
·         Profit Before Tax (PBT) crossed Rs. 500 Cr for 2009-10

2.    Dewan Housing Aashray Deposit Plus:

·         10.25% p.a interest (Yearly) for 12-84 months tenure
·         Rated AA+ by CARE and FAAA by BWR
·         Third largest housing finance company with an extensive network of 101 branches
·         Net Profit of over Rs.150 Cr for the year ended 31/03/2010
·         Listed on BSE & NSE

3.    J.P. Associates Fixed Deposit:

·         High attractive interest rates ranging between 10.50-11.50% p.a.
·         Minimum investment amount of just Rs. 20,000
·         A listed company engaged in the business of Construction, Cements, Engineering, Power and Hospitality
·         Profit After Tax (PAT) of over Rs. 1,700 Cr for 2009-10

4.     HDFC Platinum Fixed Deposit:

·         Rated FAAA and MAAA by CRISIL and ICRA respectively indicating highest safety
·         Offers attractive rates of 9.50% p.a for 15 & 33 Months tenure
·         0.25% p.a. additional interest for Senior Citizens
·         Loan against deposit available after 3 months from the date of deposit
·         One of India’s premier housing finance companies with loan disbursements in excess of Rs. 50,000 Cr (2009-10)
·         Profit After Tax (PAT) of over Rs. 2,800 Cr for 2009-10

5.    Shriram Unnati Fixed Deposit:

·         Rated FAA+ by CRISIL and MAA+ by ICRA indicating high safety
·         Attractive interest rate of 10.75% p.a for 3 years
·         Minimum investment amount of just Rs. 25,000
·         Largest asset financing NBFC in India
·         Profit After Tax (PAT) of over Rs. 870 Cr (2009-10)
·         Consistently making profits and paying dividends

6.    LIC Housing Finance Limited

·         One of India’s largest housing finance companies having nation wide network
·         The Company is recognized by National Housing Bank and listed on NSE & BSE
·         Net Profit  for 2009-10 at Rs.662 Cr and Reserves of Rs.3293 Cr (as of 31/03/2010)
·         FD scheme rated "FAAA/Stable" by CRISIL
·         Attractive rate of 9.50% p.a for 3 years deposit

Power 􀂃 : Q4FY11 Result Preview: ICICI Securities

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Power
􀂃 Capacity addition of coverage universe picks up pace
During the quarter, NTPC added ~1000 MW (standalone) of capacity
while NHPC and Neyveli Lignite reported no capacity addition and
Lanco Infratech added 1200 MW of capacity. For our coverage
universe, we expect capacity addition of ~ 9000 MW in FY12.
The government has revised the Eleventh Five Year target of
capacity addition from 62,000 MW to 58,000 MW. We believe, with
the best efforts, ~48,000 MW is expected to be achieved till the end
of the Eleventh Plan. For FY11, capacity addition was 12,060 MW
against the target of 16,790 MW (achievement of 70%). During
Q4FY11, there was capacity addition of ~ 2800 MW.
􀂃 Merchant power rates increase sequentially but decline YoY
Merchant power rates have firmed up QoQ. We expect companies
with merchant power exposure (Lanco Infratech, Tata Power), to
report a realisation in the range of ~| 4.2-4.60/kwhr. On IEX,
merchant power rates in the southern region were as high as |
8/kwhr due to grid congestion. We expect merchant power rates to
stabilise at ~| 4.5 -5/kwhr in Q1FY12 on account of state elections.

Pipes 􀂃 : Q4FY11 Result Preview: ICICI Securities

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Pipes
􀂃 Healthy topline growth but higher costs impact EBITDA margins
We expect the topline for the I-direct coverage universe to increase
15.7% YoY to | 5042.2 crore, primarily on the back of higher
volumes and improved realisations. However, the EBITDA margins
are expected to decrease 190 bps YoY to 17% on the back of higher
raw material costs. As a result, the EBITDA for the I-direct coverage
universe is expected to increase 4.3% YoY to | 864.5 crore.
􀂃 Order book – rising sequentially
Rising crude oil prices and an increase seen in rig counts augurs
well for pipes companies. After remaining muted for the last couple
of quarters, there has been a sequential improvement in the order
book position of pipes companies in the current quarter. Welspun
Gujarat’s order book has increased from | 5000 crore during the end
of Q3FY11 to | 6153 crore during the end of Q4FY11. Due to a pickup
in the North American pipeline projects and renewed activity in
the Middle East region, the export market is likely to remain strong
in terms of demand. Even on the domestic front, demand from
major oil & gas majors is expected to stay.

Muthoot Finance IPO Grey Market Premium: : April 14th 2011


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Company Name
Offer Price
Premium

(Rs.)
(Rs.)
Muthoot Finance
160-175
34 to 36

Muthoot Kostak Rs 3,000- Rs3,200

Oil and Gas 􀂃 : Q4FY11 Result Preview: ICICI Securities

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Oil and Gas
􀂃 Oil prices increase 21.3% QoQ due to unrest in MENA region
The geo-political tensions in the Middle East and North Africa
(MENA) region led to 38.3% YoY and 21.3% QoQ increase in
average Brent crude oil prices to US$105.4 per bbl in Q4FY11
(historically third highest quarterly average). Continued tensions in
Libya, Yemen and Syria kept crude oil prices at higher levels. This
would increase the realisations and profitability of the exploration
and production (E&P) companies. Cairn India, ONGC, OIL India and
RIL would be the key beneficiaries.
􀂃 Gross under-recoveries for FY11 at ~| 77,800 crore
Higher crude oil prices would increase gross crude oil underrecoveries
from | 46,100 crore in FY10 to |77,800 crore in FY11E.
The gross under-recoveries are estimated at | 30,800 crore in
Q4FY11 against | 15,600 crore in Q4FY10. We have modelled
government’s share at 50% in FY11E against 56.5% in FY10. This
would bring down the profitability of oil marketing companies
(HPCL, BPCL and IOC) YoY.

Hospitals 􀂃 : Q4FY11 Result Preview: ICICI Securities

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Hospitals
􀂃 Hospital revenues to grow 24.4% YoY
We expect revenues of our I-direct hospital universe to increase by
24.4% YoY on the back of robust revenue growth by Apollo
Hospitals. Overall, we expect in-patient volumes and average
revenue per bed (ARPOB) to grow 13% and 8% YoY, respectively,
for the quarter.
􀂃 Operating margins to remain stable
Operating margins of the I-direct hospital universe are likely to
improve by 150 bps to 15.1%. Operating margins of Apollo Hospital
are likely to improve by 230 bps to 15.3% YoY due to an
improvement in the pharmacy segment. However, QoQ it is
expected to remain flat. The operating margin of Fortis Healthcare is
likely to see a marginal improvement of 60 bps YoY to 14.8% for
Q4FY11E.
􀂃 PAT to grow ~53% YoY with Apollo Hospitals leading the pack
The profitability of the I-direct hospital universe will grow 53.3% on
stable operating margins and better revenue growth. Among the
peer set, we expect Apollo Hospitals to report higher growth in
bottomline compared to last year as its business got impacted by
the Telangana crisis. Fortis is expected to report net profit growth of
38% YoY on healthy revenue growth and stable margins.

Media 􀂃 : Q4FY11 Result Preview: ICICI Securities

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Media
􀂃 Sequentially lower ad revenue growth after a festive backed quarter
Media companies would witness a relatively weak quarter as
sequential advertisement revenue growth takes a dip after a festive
backed robust quarter while input cost continue to be on the rise.
Our media universe would grow 19.4% YoY while it would report
de-growth of 10.6% QoQ. The quarter is expected to be muted
sequentially due to festive led high ad revenue growth and booking
of revenue from the movie Enthiran in the last quarter. Also,
multiplexes would post a QoQ decline since the box office releases
were overshadowed by the ICC World Cup tournament.

Capital Goods 􀂃 : Q4FY11 Result Preview: ICICI Securities

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Capital Goods
􀂃 Order inflows a mixed bag for coverage universe in Q4FY11
The key highlight for capital goods companies was muted order
inflows on the back of reasons like deferment in capex decisions by
corporates (mainly on the industrial side), regulatory hurdles being
faced by various projects and rise in borrowing costs (impacts
incremental IRR for fresh capex). Companies under our coverage
had a mixed quarter in terms of order flows. Companies like Bhel
saw 2% YoY growth on a high base. Among T&D EPC companies,
KEC and Kalpataru Power won orders from PGCIL while IPPs and
international markets witnessed good flows. On the negative side,
mid-sized companies focusing on power generation equipment, BoP
and industrial witnessed disappointing order flows (BGR Energy and
Thermax) as they either lost out to competition and in many cases
regulatory issues resulted in a delay in awarding of orders
(deferment of NTPC bulk tender in FY12 and delay in award of
Rajasthan SEB order where BGR is a key contender).

Buy Dai-ichi Karkaria Ltd :: Money Times

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Dai-ichi Karkaria Ltd
BSE Code: 526821
Last Close: Rs.44.70
Dai-ichi Karkaria Ltd (DKL) commenced commercial production in 1963 in technical collaboration with the world renowned Dai-Ichi Kogyo Seiyaku Co. Ltd. of Japan. The company has access to relevant and innovative technologies with 42 years of experience in the development and manufacture of high performance speciality chemicals for different applications. The company has built a reputation on innovation & quality and consistent quality standards are maintained and upgraded continuously in line with customer expectations.

DKL has Partnerships & Alliances with Dai-Ichi Kogyo Seiyaku Co. Ltd. and Matsumoto Yushi Seiyaku Co. Ltd. of Japan and Inogent Laboratories Pvt. Ltd., India (The GVK Group).


It has an equity base of Rs.7.61 cr. that is supported by huge reserves of around Rs.53.89 cr. (which is more than 7.08% of its equity). The book value of the share is around Rs.75.70. The promoters hold 60.57%, non-promoter corporate bodies hold 3.34% while the investing public holds 34.87% stake in the company.
For Q3FY11, it recorded net sales of Rs.15.30 cr. with net profit of Rs.0.75 cr. against net sales of Rs.12.70 cr. with net profit of Rs.0.72 cr. in Q3FY10. For the first nine months of FY11, it recorded net sales of Rs.40.57 cr. with net profit of Rs.3.75 cr. against net sales of Rs.37.76 cr. with net profit of Rs.2.86 cr. in the previous corresponding period (Net sales zoomed 7.44% while net profit zoomed 31.11% on a nine monthly basis). The Q3FY11 EPS was Rs.1 while the nine monthly EPS is Rs.5.03.
This company is a regular dividend paying company. It paid 20% for FY06, 11% for FY07, 12% for FY08, 19% for FY09 and 20% for FY10. This shows that it is an investor friendly company. At the current level, the stock is available at a forward P/E multiple of just 7.4.
Investors can buy this stock with a stop loss of Rs.40. On the upper side, the stock will zoom to Rs.60-65 levels in coming days.

Aviation 􀂃: Q4FY11 Result Preview: ICICI Securities

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Aviation
􀂃 Growth in passenger traffic to moderate in Q4FY11
Domestic air carriers have witnessed a sequential decline of 4.6%
QoQ in passenger traffic during January-March 2011 on account of
the seasonality impact. Average yield per pax also declined
marginally by 3% in the first two months of Q4FY11. However, it
started inching up from March onwards to offset soaring fuel prices.
Overall, we expect yields to remain flat for the quarter. However, on
a YoY basis, the I-direct aviation universe is going to report healthy
revenue growth of 23% on strong pax traffic trend.
􀂃 Higher fuel cost to take a toll on margins
Average jet fuel costs have inched up by over 18% QoQ to | 55,300
per kilolitre and players have been unable to pass on this burden
fully onto passengers due to a sequential decline in the passenger
traffic. As a result, we expect the operating margin of the overall Idirect
aviation universe to decline by 160 bps YoY and 1100 bps
QoQ to 2.3%.
􀂃 Jet Airways to report better operating result among peer group
With nearly 55% of revenues coming from international operations,
we expect Jet Airways to report positive EBITDA on account of its
presence in the high margin international segment.
Exhibit 6: Company specific view
Company Remarks
Jet Airways Revenues will decline sequentially due to seasonality and marginal decline in pax
yields. Domestic business (~45% share) will continue to outperform vs.
international business in terms of revenue growth. EBITDA is expected to remain
positive due to healthy margin in the international segment
SpiceJet Pax traffic and yields are expected to decline 0.4% and 6.0% QoQ. Also, with an 18%
QoQ rise in average fuel price, it is expected to report negative EBITDA margins of -
0.3% vs.13.7% reported in the last quarter
KFA KFA will report a minimal drop in its topline sequentially vs. other airlines on account
of the recovery of seven aircraft. Margins will get impacted sharply by soaring fuel
prices. However, interest cost saving of ~| 39 crore on conversion of loans into
preferential shares would help it in reducing its losses
Source: Company, ICICIdirect.com Research

Tea 􀂃 : Q4FY11 Result Preview: ICICI Securities

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Tea
􀂃 Lower production, higher realisation to augur well for industry
Tea production in India has remained stagnant in the range of ~960-
980 million kg (2006-10) and is likely to remain at ~980-1000 million
kg in 2011 (mere increase of 2-3%). In Q4FY11, tea companies are
likely to post better results compare to Q4FY10 with the losses
contained due to higher realizations for the low quality or dust tea,
which is being traded between Jan-Mar. We believe tea prices will
remain buoyant in 2011 on the back of high export demand for
Indian tea. This has been reflected by the first trades (starts with the
5th April, 2011) as quality tea fetched 29% higher prices while the
average quality rose by 15%. Average crush, tear and curl (CTC) tea
garnered | 150-160 per kg against | 130-140 per kg in Q4FY10.

Muthoot Finance IPO- All details, Grading, Prospectus, ABSA/ application form, reports

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MUTHOOT FINANCE LIMITED
Symbol - SeriesMUTHOOT EQ
Issue PeriodApr 18, 2011 to Apr 21, 2011[* For QIB bidders Issue closes on Apr 20, 2011]
Post issue Modification PeriodApr 23,2011
Issue SizePublic Issue Of 51,500,000 Equity Shares of Rs. 10/- each.
Issue Type100% Book Building
Price RangeRs.160 to Rs.175
Face ValueRs.10/-
Tick SizeRe. 1/-
Market Lot40 Equity Shares
Minimum Order Quantity40 Equity Shares
IPO GradingIPO GRADE 4
Rating AgencyCRISIL and ICRA
Maximum Subscription Amount for Retail InvestorRs.200000
IPO Market Timings10.00 a.m. to 5.00 p.m.
Book Running Lead ManagerICICI Securities Limited, Kotak Mahindra Capital Company Limited
Co Book Running Lead ManagerHDFC Bank Limited
Syndicate MemberHDFC Securities Limited, Kotak Securities Limited and Geojit BNP Paribas Financial Services Limited
CategoriesFI,IC,MF,FII,OTH,CO,IND,and NOH
No. of Cities with Bidding Centers69
Name of the registrarLink Intime India Private Limited
Address of the registrarC- 13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (West), Mumbai - 400 078
Contact person name number and Email idMr. Sachin Achar, Tel: +91 22 2596 0320 Fax: +91 22 25960329,mfl.ipo@linkintime.co.in
ProspectusClick Here
Trading Member ListClick Here
Application FormsClick Here
ASBA e-form linke-Forms
Grading ReportClick Here

Talwalkars launches its ‘Hi-Fi’ gyms Money Times

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Talwalkars launches its ‘Hi-Fi’ gyms
MARKET FOLIO
Talwalkars Better Value Fitness Ltd. (TBVFL), the largest health club chain present in over 50 cities, has announced the launch of its 100th health club in Kolkata and the launch of its ‘Healthy India, Fit India’ movement with its ‘Hi Fi’ gyms in Tier II & Tier III towns.
TBVFL has been in an aggressive expansion mode since its IPO in May 2010 and set up 36 new health clubs spread across Bareilly, Belgaum, Bhubhaneshwar, Bilaspur, Ghaziabad, Kota, Madurai, Rajkot, Rajahmundry, Trichy, Trivanduram.
The company has capex plans of Rs.100 crore to be met through internal accruals to meet its expansion plans in FY12 and targets to set up 250 health clubs by the end of 2015, company officials revealed at a press conference.

Logistics 􀂃: Q4FY11 Result Preview: ICICI Securities

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Logistics
􀂃 Container volumes outperform overall port volumes
Overall volumes at major ports during FY11 have registered a
marginal 1.6% YoY increase at 569.9 million tonnes (MT) while
container volumes have increased by 9.4% YoY to 7.5 million TEUs.
In Q4FY11, container volumes increased 7.0% YoY to ~1.94 million
TEUs. Going forward, we expect the trend of outperformance of
container volumes vis-à-vis overall port volumes to continue.
􀂃 EBITDA margins to decline YoY and remain flat QoQ
We expect the EBITDA for the ICICIdirect.com coverage universe to
increase 17.4% YoY to | 483.2 crore mainly on account of higher
volumes and improved realisations. EBITDA margins are expected
to increase 130 bps YoY to 20.4%. We expect the PAT for the
ICICIdirect.com coverage universe to increase 16.9% YoY to | 315.0
crore.

Beware of credit card EMI schemes:: Business Line,

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So, finally, you bought yourself that chic smartphone which costs a good Rs 30,000 with one swipe of your credit card. Talk about being able to resist anything but temptation. Now, what would you prefer? Paying the full 30k next month when the credit card bill arrives, or spreading the payment over the next 6 months, settling in easy instalments of Rs 5,000. Prima facie, the latter seems to win hands down, right?
After all, you get the benefit of settling your dues over an extended period, that too at no extra cost. Welcome to the enticing world of credit card equated monthly instalment (EMI). But before you get seduced, take a look at the fine print. Maybe, the deal really is too good to be true.
Genuine zero-interest EMI credit card schemes (the ones without any extra charges attached) may truly be great deals. Such schemes do exist, but by far, these remain rare sightings. If you come across these, it may make sense to avail of the benefit, provided you are disciplined in your monthly payments.
However, a good EMI scheme, by itself, does not translate into a licence for credit card users to speed-drive on splurge-highway. Users would do well to distinguish between needs and wants, and spend within their means. After all, you do need to pay for what you purchase, even under the best EMI scheme.

THE FINE PRINT

Generally, credit card EMI schemes are available only on purchases exceeding a minimum threshold, say Rs 3,000 or Rs 4,000. And often, the devil is in the detail, as many such schemes have extra costs attached. The most obvious among these is interest. For instance, if in the example above, the EMI was Rs 5,500 (instead of Rs 5,000), you would end up paying a total of Rs 33,000 by the end of the 6th month – 10 per cent more than what you would have paid upfront.
This translates into 20 per cent on an annualised basis. So, before you go in for the EMI scheme, check if the total of the EMIs exceeds the original cost of your purchase. If yes, there is an interest cost attached. Check whether the cost is reasonable before you sign in. Generally, interest charged on credit card EMI schemes is lower than the regular rates (between 30-36 per cent) charged on the outstanding balance on such cards.
Yet, that does not mean that EMI schemes should be a natural choice for credit card users, especially if they can afford to settle dues within the normal credit period available. A rupee saved is a rupee earned, and the same applies to interest cost, no matter if it comes a tad cheap.
Also, look out for processing charges. Many credit card EMI schemes, even if they carry zero-interest, charge one-time processing fees. This could translate into a tidy sum, when annualised. Say, in the example above, processing fee of Rs 2,400 is levied on the 6-month EMI. While the charge works out to 8 per cent (2,400/30,000), you actually pay 16 per cent on annualised basis (2,400/30,000*12/6). Now, is this really a dream offer?
Users should also take note of pre-closure charges on EMI schemes. Such charges add to cost and reduce flexibility of users in closing the loan. These charges could range between 2-5 per cent of the outstanding principal amount.
Also check whether you are losing out on any discount offers by going in for the EMI scheme. Such cannot-be-clubbed-with-other-offers EMI schemes may not really be beneficial to credit card users.
The discount lost on the purchase is effectively a cost.
In addition, the balance EMI amount is reduced from the overall credit card limit of the user, and only released as and when the EMI gets paid each month.
Also, if there is a default on the EMI, penalty charges may be levied and the outstanding amount may be converted into normal credit card dues, which are subject to very high interest rates.
In a nutshell, do take a closer look at what's on offer before saying yes to the sweet voice on the other end of the phone, or signing on the dotted line at the store

Future Capital launches first Financial Superstore : Money Times

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Future Capital launches first Financial Superstore
Future Capital has launched India’s first Financial Superstores within a retail format to offer multi-range financial products.
Similar to the ‘Big Bazaar’, ‘Central’ or ‘Pantaloon’, ‘E-Zone’, ‘Hometown’ of Future Group retail stores, Future Capital aims at providing holistic financial solutions by being a one stop shop for all retail financial products ranging from loans, payment solutions, wealth management and equity and equity broking solutions, insurance offerings, real estate broking and money changing. These superstores would range from 150-350 sq. ft. The company hopes to launch 100 such Financial Superstores with a turnover of Rs.100 crore in 2011-12.

Information Technology 􀂃 : Q4FY11 Result Preview: ICICI Securities

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Information Technology
􀂃 FY12 guidance “whisper” not loud enough relative to consensus
We expect Infosys to guide US$ revenue growth of 16.5-18.5% YoY
for FY12E and EPS of |135-137 (13.4%-15.1% assuming |119 EPS
for FY11E), conservative relative to consensus expectation of 23%
revenue growth and ~|150 in EPS. Recall, in April 2010, Infosys
guided for 16-18% US$ revenue and 2-2.1% rupee EPS growth and
is likely to finish FY11E with ~26% revenue and 9% rupee EPS
growth. Though Infosys could likely outperform its FY12 guidance
by 8-10 percentage points (p.p), elevated expectations could leave
limited earnings upgrades. Sequentially, we expect a soft quarter
with Tier 1 vendors reporting an average 3-4.5% US$ revenue
growth helped in part volume growth & 0.9%, 1.5% & 1.7%
depreciation of the US$ vs. the Euro, pound and Australian dollar.

Auto and auto ancillary: Q4FY11 Result Preview: ICICI Securities

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Auto and auto ancillary
􀂃 Demand growth tempers due to base effect, OEM growth positive
This quarter completed a robust year of volume growth (~27%
YTD) with ~21% YoY and ~4.4% QoQ. The PV and two-wheeler
segment has grown ~24.1%, 27.7% YTD, respectively, in FY11.
With increasing pricing power, OEMs have undertaken pricing
actions in Q4 ranging from 0.5-2.0% to offset costs pressures. This
has not dampened demand. There have also been initial indications
of increasing dealer inventory with interest rates and costs.
However, we will wait for Q1FY12 volumes to take a call on demand
sustenance. The CV segment has continued to see healthy growth
of ~17% YoY supported ably by year-end purchase. Though input
side pressures remain high, we remain positive on volume outlook
led by expected pick-up in infra-related activities in FY12. Tata
Motors would remain our top pick among OEMs. We expect our
OEM universe to have a topline growth of 23.3% YoY for Q4FY11E.

Mid Cap Buzzers: Money Times

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* Ganesh Housing (Rs.155.60) has successfully launched 4 residential projects one in every quarter. Seeing to the very good response, it is likely to launch two more projects in the current quarter. The company has booked an area of two lakh sq. ft. during the last quarter. Majority of the booking has come for its residential project Maple County II project. It currently has 662 acres or 24.4 million sq. ft. of land under development, which is likely to provide immense growth to the company.
The stock has come down from a high of Rs.279 to the current level while its book value is around Rs.155. The stock looks attractive for investment. There is promoter buying in the stock over the last few weeks and speaks of the confidence of the promoters in the future outlook of the company. A firm closing above Rs.165 is likely to give a decent upmove in this stock.
* Elecon Engineering Company (Rs.75.55) has been awarded a prestigious order of Rs.176.49 crore by NMDC Ltd. for the Downhill Conveyor System for the Kumaraswamy Iron Ore Project Package - II for design, engineering, manufacturing, supplying, erection, testing, commissioning as per the Technical Specifications associated with Civil and structural works, electrical instrumentation, Material Handling Equipments and other.
Investors can continue to hold this stock for good long-term growth. A sustained and firm closing above Rs.78 is likely to give an upmove.
* Western India Shipyard (Rs.12.19) results for the December 2010 quarter are encouraging. We had recommended profit booking at RS.17 level in this stock. Those having booked profit at higher levels can keep a watch to accumulate this stock on dips. It is a good turnaround story and the outlook is encouraging.
* BGR Energy (Rs.530.80) has posted a net profit of Rs.875.547 million for Q3FY11 as compared to Rs.419.095 million in Q3FY10. Total Income has risen from Rs.6388.773 million in Q3FY10 to Rs.12585.605 million in Q3FY11. Company has orders in hand worth Rs.93000 million and there are indications that it is likely to receive some good orders in the near future. We had advised profit booking at higher levels above Rs.750. Those having booked profit at higher levels can keep a watch to accumulate this stock on dips.
* Plastiblends India (Rs.198) is the largest domestic manufacturer of masterbatches. With an installed capacity of 50,000 TPA, it commands 60% share of the organised segment. Masterbatches are used as colouring agents mainly in the plastic industry. Higher consumption of packaged goods have led manufacturers to pack products at a higher speed. New and modified packaging machines and the aesthetic appeal of packages has created the need for speciality products, which the company is developing in its R&D laboratory. It has introduced some high volume and speciality products such as Masterbatches for BOPP films, PET filaments and yarns, PP filaments and fibres, conductive compounds and biodegradable additives and compounds.
On account of increasing awareness and concern for the environment, the government has taken various steps to formulate and enact new norms & laws to encourage the use of degradable plastics. This is going to increase its use significantly and such awareness towards the environment will benefit the company to strengthen its position in this segment.


The company has been able to penetrate into the global markets by maintaining the global standards of cost and quality thereby enabling it to grow its exports manifold.
The company has bright future ahead. The book value of its share is Rs.126, expected EPS for FY11 likely to be around Rs.23/24. Past performance is very consistent. Investors can continue to hold or accumulate this stock on dips.
* Zee News (Rs.12.07) has shown an encouraging trend in Q3 results. Investors can continue to hold this stock or accumulate on dips.
* Garware Wall Ropes (Rs.60.95), There is promoter buying in the stock to the extent of around 4.2% of capital last week. It Fundamentals are strong. The stock had touched a high of Rs.260 in 2007 bull run. At the current level, the downside is limited. Investors can accumulate this stock.
* First Leasing (Rs.91.60) has moved up well over the last two weeks with good volumes. Investors are advised to stay invested. Fresh buying should be avoided.
* Kennametal India (Rs.594) is a delisting candidate with an expected EPS of Rs.30 for the current full year investors can keep watch on this stock for buying on sharp reactions.
* As per marketmen, some favourable developments are expected in Camlin Ltd (Rs.67) in the near future. Investors can continue to hold the stock.
* Note: Market has moved up sharply over the last two weeks. Many mid caps too have moved up fast. Investors need to be cautious in buying at higher levels.

Cost pressure to become imminent despite revenue growth 􀂃 ICICI Securities

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Cost pressure to become imminent despite revenue growth
􀂃 Q4FY11 already in price, all eyes on FY12E guidance
Expectation of 20% YoY revenue growth for the I-Direct coverage
universe (ex-financials) looks commendable prima facie, implying
the strong demand scenario on the ground and revenue growing on
a high base of Q4FY10. Unlike the revenue growth, we expect
EBIDTA to grow by 6% YoY and PAT to decline 7.7% YoY for the
coverage universe. This is mainly due to the rise in input prices and
increasing manpower costs, which will moderate EBITDA growth.
Similarly, rising borrowing costs, mainly for midcaps, will dent the
profitability of the companies under our coverage. We expect the
large cap stocks to perform relatively better than midcaps, as the
former commands pricing power, better operational efficiency and
better access to funds at relatively better rates. Going ahead, into
FY12E, we expect demand drivers to be strong. However, at the
same time, we are wary of high crude prices, input prices and high
borrowing costs, which will pose challenges for corporate
profitability especially for the medium and small enterprises.

Geodesic: For decent gains :: Money Times

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Geodesic: For decent gains
The share of Geodesic Ltd (Code: 503699) (Rs.89.75) is recommended for steady appreciation in the long-term based on its strong fundamentals and improving results.
Geodesic started on 8 July 1999 as Geodesic Information Systems Pvt. Ltd and is an innovator in software products focused on Information, Communication and Entertainment for mobile phones and desktop computers under the 'Mundu' brand name for the retail segment. Headquartered in Mumbai, Geodesic's ‘Mundu’ suite of award-winning products include solutions for Instant Messaging, Voice-over-IP (VOIP) and Internet Radio. The company has offices in Mumbai and Bangalore in India, USA (Silicon Valley), Sweden, Hong Kong and Singapore.
Geodesic continues its growth momentum for over a decade and along with its subsidiaries has been posting a good performance consistently. It claims to be a global corporation with 5 subsidiaries, 6 step down subsidiaries and 2 associate companies, both in India and abroad.
The company designs and markets mobile communication and Internet devices. These devices are pre-loaded with its communication and collaboration software to address last mile connectivity issues and remote data processing by Governments, Banking and Micro-finance companies.
Geodesic offers its unique enterprise solutions to and derives its revenues from Enterprise customers including Banking & Financial Services Institutions (BFSI), Portals and Publishers, State and Central Government, Telecom Network Operators, Handset Manufacturers, Educational Institutions, Small/Medium & Large Enterprises. Its strong Business Development team ensures that the company reach out to enterprises across the globe using a combination of a direct sales team and system integrators / partners/ value added resellers.
Its ‘Mundu’ range of products are retailed across www.mundu.com, multiple application stores including Nokia's Ovi Store, Apple's App Store, Palm Store, Blackberry Stores etc. Geodesic launched Spokn- its Internet telephony product across www.spokn.com and application stores. Its products command great editorial and user reviews besides winning GSM Asia, PC Magazine and C:net awards.
Geodesic's exhaustive list of products and services are mostly derived out of Continuum and address multiple market segments. The company acquired retail consumers through several channels including a network of Application Stores, Portals and Publishers, Mobile Device Manufacturers, Telecom Network Operators and its own websites. It licenses and white labels its products and services wherever necessary.
Geodesic and its subsidiaries launched IM and radio services across several telecom network operators, portals and handset vendors, providing itself an opportunity to address over 350 million potential subscribers for its range of products and services.
During FY10, it added several clients comprising Indian State and Central Governments, Telecom Network Providers, System Integrators, Handset Manufacturers, BFSI, Education Institutes, Portals & Publishers, Micro-Finance Companies among others. It incorporated Geodesic GridPoint Energy Pvt. Ltd. to address the growing concerns of energy losses in the transmission & distribution systems.
During FY10, it posted 15% lower consolidated net profit of Rs.223.7 crore on 2% lower sales of Rs.637 crore and the EPS stood at Rs.24.3. During Q3FY11, consolidated net profit shot up by 48% to Rs.87.5 crore on 48% higher sales of Rs.225 crore. For the first nine months of FY11, its net profit shot up by 41% to Rs.252 crore on 36% higher revenue of Rs.636 crore yielding a consolidated nine monthly EPS of Rs.28.
Geodesic’s equity capital as on 31 March 2010 was at Rs.18.5 crore and with reserves of Rs.900.7 crore, the book value of its share works out to Rs.99.4. The promoters hold 23.2% in the equity capital, foreign holding is 44.9%, Institutional holding is 1.2% and with PCB holding of 9.7% leaves 20% with the investing public.
The company’s business has grown rapidly over the past decade and its strategy of partnering with like minded companies, system integrators, popular web stores in distributing its products has resulted in consistent revenue and earnings growth. It plans to continue with this strategy of partnering with similar enterprises in FY11.
Geodesic plans to undertake 7 State E-governance projects independently. It has forged a major alliance with Zee Entertainment Enterprise to form a new company, ITM Digital Pvt. Ltd., to address the growing needs of consumers to converge entertainment and information on multiple digital devices and on three screens (TV/desktop/Mobile) that consumers are used to.
It will be investing heavily in building the necessary system and network infrastructure required to manage the growth. It will develop new products and services in the space of unified communications and collaboration on mobile phones and other digital devices. The company and its subsidiaries have added over 45 new customers in FY10 and hopes to continue the trend in future as well.
For FY11, Geodesic may post a consolidated EPS of Rs.35, which would further go up to Rs.37 in FY12. At the CMP of Rs.89.75, its share is traded at a P/E multiple of 2.5 on FY11 estimated earnings and 2.3 times FY12 earnings. A conservative P/E ratio of even 3.5 will take its share price to Rs.122 in the medium-term and will fetch a gain of over 45%. The 52-week high/low of the share has been Rs.143/67.


Sugar : Q4FY11 Result Preview: ICICI Securities

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Sugar
􀂃 Volumes to improve QoQ but remain stagnant YoY
Sugar millers with domestic operations would witness a QoQ
increase in sales volumes on the back of higher domestic
production. However, YoY it would remain stagnant. Sugar
realisation is likely to improve compared to Q1SY11 as domestic
sugar production will touch 24.5 million tonnes (MT) below the
earlier estimate of 25.5 MT. However, Shree Renuka Sugars would
witness a decline in sugar volumes due to very low inventories in
Brazil. We believe sugar prices will firm up after the crushing is over
in India and the new sugar season starts in Brazil.

April 14th is Dr. Babasaheb Ambedkar Jayanti: Indian Equity markets are CLOSED.

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April 14th is Dr. Babasaheb Ambedkar Jayanti:

Indian Equity markets are CLOSED. 

Eicher Motors -Trucks gaining acceptance; Raise estimates 􀂄 BofA Merrill Lynch

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Eicher Motors
Trucks gaining acceptance;
Raise estimates
􀂄 Preferred mid cap pick; Raise PO
Eicher Motors is our preferred pick in mid cap autos. We are positive on business
prospects of the company’s key operating segments i.e. Commercial vehicles and
premium bikes, and also excited about outsourcing of engines to meet Volvo’s
global requirements. Our revised PO of Rs 1,500 (up 6%) highlights increased
earnings visibility and attractive valuations.
Commercial vehicles set to outgrow industry
Eicher Motors’ strong franchise in light vehicles and growing acceptance of higher
tonnage trucks has prompted upward revision to our volume assumptions by 5%
in CY11. We also introduce CY13E. We expect the company to register 20%
sales CAGR over next 2 years, ahead of industry average.
Two wheelers a proven franchise
Eicher Motors’ competitive positioning in premium bikes reflects on YTD growth of
36%. With additional capacities in place, we expect this business to also register
20% CAGR over forecast period, similar to other popular models within this
space. We also see upside risk to profit margins through better efficiencies.
Cash and engine contract cushions volatility
Eicher Motors’ cash and equivalents at Rs 401/share (including proportionate
share in JV) is equivalent to 31% of market capitalization. Additionally, engine
supplies, which will likely commence in CY13E, contribute Rs 134/share (~9%).

TVS Motor-- Indonesia ops remain a drag; Downgrade to U/P from Buy 􀂄 BofA Merrill Lynch

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TVS Motor
Indonesia ops remain a drag;
Downgrade to U/P from Buy
􀂄 Widening valuation vs peers; Cutting PO by 13%
We downgrade our rating for TVS Motor to Underperform from Buy, and lower our
PO by 13% to Rs66, driven by: (1) our 8-11% EPS forecast cuts for the next two
years, to factor in delayed recovery in its Indonesian subsidiary, and (2) likely derating
due to widening valuation discount to peers.
Indonesia continues to disappoint
Despite several initiatives – expansion of product portfolio, enhancing distribution
network, and tying up with well-known financiers, Indonesian unit sales volumes
were similar to the previous year, i.e. well below profit break-even levels. Clearly,
we believe the business will take more than expected time to deliver. While
management remains optimistic on recovery, we cannot identify any tangible
drivers for a turnaround earlier than FY13E.
Domestic operations likely to revert to tardy growth
We expect TVS Motor’s domestic two-wheelers growth to lag the industry at 11%
in FY12E and 9% in FY13E, given (1) renewed competition from Honda’s scooter
business, which will benefit from commissioning of a new unit by Sept, and (2)
failure of commuter bike Jive – commuter bike is still the largest segment by
industry volume. However, its monopoly in mopeds and fast-growing three
wheelers business will ensure overall growth in double-digits, in our opinion.
Margins will likely be capped
Despite factoring in lower product amortization charges and shift to relatively
more profitable three wheelers, we expect stand-alone EBITDA margins to be
restricted at c.7.0% over the forecast period, albeit better than the FY11E’s 6.4%.
Overall swings will therefore depend on the less transparent Indonesian business.

Tata Motors Truly global; Raise target to Rs1,420 􀂄 BofA Merrill Lynch

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Tata Motors
Truly global; Raise PO
􀂄 Reasonable visibility for growth
Tweak EPS forecasts to factor increased volume forecasts for JLR, being partially
offset by cut in volume/margin assumptions of standalone operations. Postrevision,
we are 1%-4% above consensus over next 2 years. Our positive stance
continues to be due to solid demand in global luxury car market, negating
domestic headwinds.
JLR to sustain momentum
Raise profit forecasts by 1%-11% over FY12-13, driven by revised volume
estimates following strong inquiries for Land Rover Evoque. Our yearly
assumptions now stand at 270K and 299K units respectively. We moderate
margin assumptions by 10bps in FY12E, mainly factoring adverse currency
movements, being partially offset by operating leverage and improving sales mix.
Standalone growth will be restricted
We expect margins, and therefore profitability to be restricted due to (1) deceleration
in demand for commercial vehicles, and (2) cross subsidization to increase sale of
passenger vehicles. We still forecast 17% profit CAGR over next 2 years.
PO raised
PO been raised by 4% both for ordinary shares as well as Tata DVRs. While we
maintain rating on ordinary shares, we believe that Class A shares or DVRs is
relatively a better investment option as it trades at an unjustifiable 45% discount
for the same economic interest.