Buy INFOTECH ENTERPRISES:: TARGET PRICE: RS.163:: Kotak Sec

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INFOTECH ENTERPRISES LTD (IEL)
PRICE: RS.125 RECOMMENDATION: BUY
TARGET PRICE: RS.163 FY13E P/E: 7.1X
Infotech's results were better than expected, on the operational front,
largely on the back of higher margins. While volumes grew by 2.3% (4.1%
in 2Q), margins improved by an above-expected 485bps. Apart from
currency, better scale and cost control initiatives helped improve the
margins. The average realisations were almost flat, according to the
management. The company has finalised billing rate increases for a major
part of the business from the largest client (WEF January 2011). However,
we believe that, the overall uncertainties in the macro environment may
restrict significant improvement in billing rates. We tweak our earnings
estimates for FY12 and FY13. FY12E earnings now stand at Rs.13.4 per share
(Rs.13.1) and FY13E earnings at Rs.17.6 per share (Rs.16 earlier). The
improvement is largely on the back of changes in currency assumptions. We
tweak our PT to Rs.163 (v/s Rs.155), based on FY13 estimates. At our target
price FY13 estimates will be discounted by about 7.3x. We believe this
discount to larger peers is justified due to the lower margins. We are also
concerned about relatively high proportion of project-based revenues (in
N&CE). We maintain BUY, purely based on valuations and continue to prefer
the larger peers. Expected cash of Rs.43 per share by FY13 end, may provide
cushion to the stock.

RBI Policy Preview - CRR cut: improbable, not impossible: Edelweiss

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In the forthcoming quarterly monetary policy review, we expect a status quo on repo rate and assign low probability to a CRR cut. Further, we expect the central bank to lower its growth projection for FY12 towards 7% while maintaining a dovish tone overall. This expectation is based on the rationale that core inflation still remains elevated and a CRR cut cannot be undertaken exclusively to provide liquidity to the system as unlike OMOs, CRR is essentially a monetary tool (as RBI has stated on a number of occasions). Therefore the RBI may be more comfortable to continue injecting liquidity through OMOs and repos at LAF.

Nevertheless, the possibility of a CRR cut cannot be completely ruled out as growth has faltered more than expected and the impact of past rate actions is yet to be fully felt.  Indeed monetary conditions have tightened further amidst call money rates prevailing above repo rate in recent weeks.   

FII DERIVATIVES STATISTICS FOR 23-Jan-2012

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FII DERIVATIVES STATISTICS FOR 23-Jan-2012
	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	129465	3253.51	116848	2930.06	704300	17745.43	323.46
INDEX OPTIONS	470681	11688.74	496307	12381.04	1620487	40861.34	-692.31
STOCK FUTURES	248269	6515.85	243778	6439.44	1148319	30345.67	76.41
STOCK OPTIONS	31539	834.98	32278	841.97	64658	1722.22	-6.99
						Total	-299.44

-- 

Buy NIIT TECHNOLOGIES LTD (NIIT) :: TARGET PRICE: RS.300:: Kotak Sec

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NIIT TECHNOLOGIES LTD (NIITT)
PRICE: RS.211 RECOMMENDATION: BUY
TARGET PRICE: RS.300 FY13E P/E: 5.4X
NIITT's operating results for 3QFY12 were broadly in line with our
estimates. Organic volumes (excluding Proyecta and hardware revenues)
grew by about 3% QoQ (8% in 2Q), we believe. The lower growth was
likely due to the seasonality impact. While the volume growth was broadly
in-line, margins rose more than anticipated. Revenues from USA and EMEA
grew by 17% and 20%, respectively, we opine. This growth follows eight
successive quarters of high volume growth for the company. Average
realizations remained stable. EBIDTA margins were almost flat excluding the
impact of one-time integration costs in 2Q. The gains from currency were
set off by the relatively lower margins on revenues from Morris and
Proyecta, apart from lower utilization rates. The company had a translation
gain of about Rs.164mn during the quarter. Non-linear revenues (including
Morris) grew faster than company average and formed about 30% (27% in
2Q) of revenues. The order bookings were at $75mn, including a large deal
extension. On the macro front, the management has indicated challenges,
but expects the order book to help sustain decent revenue growth. The
company is bidding for a few larger orders in the $10mn - $50mn range. We
have tweaked our FY12E and FY13E estimates. Our FY12E EPS stands at
Rs.34.6 and FY13E EPS at Rs.39.1 (Rs.37 earlier), largely due to changes in
currency assumptions. Our DCF - based price target stands unchanged at
Rs.300, based on FY13 earnings. At our TP, our FY13 earnings will be
discounted by about 7.6x which, we believe, is undemanding. We maintain
BUY. NIITT has been achieving consisting revenue growth and margins over
the past few quarters.

Stocks in News :Jan 23: Edelweiss

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 Stocks in News

Tata Power in talks to acquire 15% stake in Dubai’s MEC coal (ET)

Move to regulate gas margins may hit valuation for sale of BG’s stake in Gujarat gas (ET)

Adanis agree to a lower stake in Mundra project (ET)

Essar group now hopeful of getting a tax refund (ET)

Cos may have to disclose source of funds coming via pref allotment (ET)

Coal India output target likely at 464 MT for FY13 (ET)

Welspun mulls port, power projects in AP (DNA)

JSW explores slurry pipeline ore supply for Bengal steel unit (BS)

RIL to develop 4 satellite fields in KG block (BS)

SAIL plans INR 14500 cr capex in FY13 (MINT)

Jan 23: Edelweiss Technical Reflection (ETR)

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Edelweiss Technical Reflection (ETR)

Indian equities registered yet another positive session with the Nifty surging in the final half hour to close with gains of 0.60% at 5048. The index traded in a narrow range of 28 points in the first half of the session, but started losing traction and dropped close to 5000 only to rally and recover 60 points off the day’s low. Nifty has close near the high of the day forming a ‘hanging man’ candle pattern. As per the candle pattern, if the index opens down sustains and lower in the next session, it confirms a temporary top. For the week though Nifty has managed yet another stellar performance; its third consecutive since the start of the New Year. The weekly setup has improved significantly with a buy crossover on the MACD along with positive divergence and the Nifty climbing above the crucial 200 week SMA. Coming back to the daily charts, the previous session witnessed high turnover and an adverse market breadth indicating profit taking by most traders before important events in the coming week. Short-term oscillators have reached an overbought state and the prices have reached a critical resistance cluster of 5070 / 5100, thus it is advisable to be cautions on long positions and is recommended to exit in case of break of intraday support of 5000.

Trend among the sectoral indices was mixed with the high beta space gaining bullish traction and the defensive stocks taking a back seat. The late rally was led by Banking (+3.51%), Power (+1.04%) and Oil & Gas (+1.04%) shares. FMCG (-2%) and Healthcare (-0.37%) saw some selling pressure. The outperformance of the broader markets appears to be fading down as the Mid-cap and Small-cap indices closed flat with 0.18% and 0.08% gains respectively.

Bullish Setups: RIL, HMCL, DRRD, HDFCB, JUBI

Bearish Setups: INFY, IGL, BJAUT

BUY Arshiya International, TARGET PRICE: RS.185:: Kotak Sec,

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ARSHIYA INTERNATIONAL (ARST)
PRICE: RS.122 RECOMMENDATION: BUY
TARGET PRICE: RS.185 FY13E: P/E: 5.0
We initiate coverage of Arshiya International (ARST) with a BUY rating and a
12- month PT of Rs.185 based on 7.5x FY13E P/E. ARST is in the midst of a
transformation from a 3PL player to becoming an integrated service
provider. Its Free Trade Warehousing Zone (FTWZ) foray, if successful, can
lead to a significant re-rating of the stock even above our target valutions.
We expect 24% sales CAGR over FY11-13E driven by ~Rs.5 bn cumulative
revenue from FTWZs and an increasing presence in container haulage and
3PL logistics. Adjusted PAT is expected to increase at a 34% CAGR driven by
a 750-bps expansion in EBITDA margin as high margin FTWZ business
expands and contributes about 25% to revenues in FY13E from 3% in FY11.
We expect sizeable value accretion from the FTWZ business from FY13E. We
believe a 25% discount to the one year forward multiple of peer group
companies adequately factors in concerns on account of high leverage.
Key investment argument
q FTWZ is a unique business model new in India and adopted by ARST.
FTWZ is a deemed foreign territory. The unit operating within the zone is given
special status with various fiscal and non-fiscal benefits. These benefits include
various tax exemptions and various value added services at relatively low cost
which leads to savings for the clients in the form of low working capital
requirement and reduced logistics cost. ARST is pioneering the FTWZ concept in
India and after successfully commissioning its Mumbai FTWZ in 3Q FY11, the
company is on track to start commercial operations at its Khurja FTWZ by
4QFY12. The company also has plans to add more FTWZs in future in central,
eastern and southern regions of the country.
q Ramping up of the rail business. ARST has a category 1 container rail licence
and a fleet of 15 rakes which primarily runs on domestic segment. Company
intends to buy another 5 rakes and lease 10 rakes over the next 24 months to
support its rail business and also to complement its FTWZ and Logistics business.
Company has already spent more than Rs 4 bn on rail license, rakes and Khurja
Distriparks and would be spending another Rs.1 bn in the next 24 months. We
estimate the rail business to effectively complement the FTWZ and logistics
business with revenues for the segment growing from ~Rs 1.7 bn in FY11 to
~Rs.2.3 bn in FY13E.
q ARST has an integrated business model which helps attract customers.
ARST, with its rail infrastructure network combined with the FTWZ has emerged
as a one-stop-shop to cater to the point-to-point logistics requirement of the
customers. The company has already started its first FTWZ in Panvel, near
Mumbai which would be followed by Khurja, near Delhi in Q4FY12. The
company intends to have FTWZ in every region of the country and all these
FTWZs would be well connected with the rail infrastructure of the company
providing customers with complete logistics solution. Such an arrangement is
very critical today to attract customers, retain them and command better rates.
q We expect 24% revenue CAGR to ~Rs 12.7 bn over FY11-13E led by FTWZ.
Strong initial performance at Mumbai FTWZs gives us visibility of about Rs.3.2 bn
revenue until FY13E as the company benefits from strong entry barriers in the
space. In addition, a differentiated strategy of entering long-term charters with
clients ensures a higher utilization rate in the container rail business, which is
expected to post a 15% CAGR while the third party logistics business is
estimated to grow at 7% CAGR over FY11-13E.

BSE, Bulk deals, 23/1/2012

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Deal Date	Scrip Code	Company	Client Name	Deal Type *	Quantity	Price **
23/1/2012	511706	Action Fin	Kedia Consultants Pvt Ltd	B	99007	28.25
23/1/2012	531560	Aroma Enterprises	BIPIN HARILAL GANDHI	B	28900	17.00
23/1/2012	531448	ARROW SECURI	GAUTAM RESOURCES LTD	B	50000	17.31
23/1/2012	531448	ARROW SECURI	AANIR SHARES SERVICES	B	51500	17.35
23/1/2012	531448	ARROW SECURI	PREMALSINH PUNJAJI GOL	S	61500	17.35
23/1/2012	509053	Banas Finance	PONDURAI BALASELVI	S	516948	54.64
23/1/2012	511720	Capman Fin	SLOGAN INFOTECH PRIVATE LIMITED	B	29000	9.35
23/1/2012	511720	Capman Fin	GOLDEN MEDOWS EXPORT PRIVATE LIMITED	B	46500	9.35
23/1/2012	531695	Dhvanil Chem	GANESH BHAGOJI KHAIRE	B	34900	33.25

NSE, Bulk deals, 23-Jan-2012

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Date	Symbol	Security Name	Client Name	Buy / Sell	Quantity Traded	Trade Price / Wght. Avg. Price	Remarks
23-Jan-2012	ELFORGE	EL Forge Limited	CSA HOLDINGS PVT LTD	BUY	4,01,800	9.25	-
23-Jan-2012	ELFORGE	EL Forge Limited	TEAM INDIA MANAGERS LIMITED	SELL	4,00,000	9.25	-
23-Jan-2012	INDOWIND	Indowind Energy Limited	PASSAGE TO INDIA MASTER FUND LIMITED	SELL	4,50,000	5.27	-
23-Jan-2012	IVRCLINFRA	IVRCL Limited	ARCADIA SHARE & STOCK BROKERS PRIVATE LIMITED	BUY	15,87,736	45.06	-
23-Jan-2012	IVRCLINFRA	IVRCL Limited	ARCADIA SHARE & STOCK BROKERS PRIVATE LIMITED	SELL	15,87,569	45.07	-
23-Jan-2012	IVRCLINFRA	IVRCL Limited	INDUS PORTFOLIO (P) LTD	BUY	13,40,523	45.13	-
23-Jan-2012	IVRCLINFRA	IVRCL Limited	INDUS PORTFOLIO (P) LTD	SELL	10,44,559	45.30	-
23-Jan-2012	JISLDVREQS	Jain DVR Equity Shares	JANUS INVESTMENT FUND-JANUS ORIENT FUND	SELL	1,67,003	36.89	-
23-Jan-2012	JKPAPER	JK Paper Limited	KAHAN INVESTMENTS PRIVATE LIMITED	BUY	7,15,000	36.00	-
23-Jan-2012	KOUTONS	Koutons Retail India Limi	IFCI LTD.	SELL	4,60,621	16.15	-
23-Jan-2012	MINDTREE	MindTree Limited	ASHOK SOOTA	SELL	13,54,130	475.00	-
23-Jan-2012	MINDTREE	MindTree Limited	COFFEE DAY RESORTS PVT LTD	BUY	13,60,000	474.98	-
23-Jan-2012	RUCHISOYA	Ruchi Soya Inds Ltd.	MERRILL LYNCH CAPITAL MARKETS ESPANA S.A. SVB	SELL	24,38,000	89.46	-

23/1/12: Categories Turnover (BSE) (Rs. crore) Clients NRI Proprietary Trade Data

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Categories Turnover (BSE)

(Rs. crore)
	Clients			NRI			Proprietary
Trade Date	Buy	Sales	Net	Buy	Sales	Net	Buy	Sales	Net
23/1/12	1,435.21	1,361.95	73.26	0.58	1.11	-0.53	548.91	526.72	22.19
20/1/12	1,762.61	1,806.14	-43.53	1.69	1.30	0.39	675.03	656.54	18.49
19/1/12	1,622.51	1,677.05	-54.53	0.35	0.52	-0.18	575.78	540.33	35.45
Jan , 12	24,396.35	24,541.05	-144.70	12.84	9.83	3.01	8,666.95	8,421.92	245.03
Since 1/1/12	24,396.35	24,541.05	-144.70	12.84	9.83	3.01	8,666.95	8,421.92	245.03

FII & DII Turnover (BSE + NSE) (Rs. crore)

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FII & DII Turnover (BSE + NSE)

(Rs. crore)
	FII			DII
Trade Date	Buy	Sales	Net	Buy	Sales	Net
23/1/12	1,579.16	1,637.96	-58.80	873.05	1,311.53	-438.48

Allcargo: Buy :: Business Line

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Interest rates are not that simple :: Business Line

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“Since when have you bankers been paying higher interest than promised?” said Rohan to his neighbour, Narendra, a budding banking executive.

“Impossible!” said Narendra. “But tell me more.”

Rohan told him he had had invested his Diwali bonus of Rs 50,000 in a one-year fixed deposit with interest rate of 9.75 per cent and gone for the cumulative option, and he received Rs 55,056 now. At a simple interest of 9.75 per cent he should have received Rs 4,875. He got Rs 181 more.

POWER OF COMPOUNDING

Narendra smiled knowingly. “You have calculated the simple interest rate on your deposit, Rohan. Since you held the deposit under the cumulative option, your bank has paid you the interest rate on quarterly rests. That simply means that the interest in the first quarter will be added to the principal amount. For the next quarter, interest is worked out on this balance. For instance, the first quarter interest on your Rs 50,000 is Rs 1,219. Now for the next quarter interest will be considered on Rs 51,219. The power of compounding makes you feel you received more than you ought to. There could be monthly, half-yearly or annual compounding too. You should know these facts before you invest.”

“Hey, that's not bad,” said Rohan, a little disappointed that the bank only paid him his due. “But I have deposits with some finance companies where interest is paid out quarterly or half-yearly. How are those worked out?”

SIMPLE PAY OUTS

“Don't get too greedy Rohan,” quipped Narendra. “Only if you allow the money to grow, will you be given the compounding benefit. Not when your bank or finance company pays you interest periodically. So the monthly or half-yearly payout rates offered will be slightly lower than the cumulative rate. Payout options offer you simple interest rates, while cumulative options calculate interest on interest.”

“You're right, I noticed that,” said Rohan. “But even the cumulative option had only an annual compounding of interest, not quarterly. So now I know different institutions follow different practices.”

DON'T YIELD TO ‘YIELD CLAIMS'

He continued, “But tell me, I am reading about bonds that fetch me 16 or even 17 per cent yield. Is yield the same as interest?

Narendra settled in his chair and explained, “These bond issuers and even companies that issue deposits have started using the term ‘yield' liberally. Good that you have raised it.”

“While yield is used in different contexts, in your fixed investments like bonds and deposits, yield is the total benefit you derive from investing in that scheme at a certain cost. For example, a deposit rate of 10 per cent a year for three years is a simple interest rate. Yield will include the benefit of compounding as well as any tax benefit you derive from the investment but after deduction of any tax payments on the interest.

Take the current ‘flavour of the month' infrastructure bonds. They allow you a tax deduction of Rs 20,000 in the year of investment.

Let us suppose it carries an 8.5 per cent interest rate for five years and you decide to go for the cumulative option. That means, if you are, say, in the 30 per cent tax bracket, you will get a tax deduction of Rs 6, 180 (30 per cent plus surcharge on Rs 20,000).

By saving the above amount, your effective outflow will therefore be Rs 13,820 in the year of investment (20,000 less 6,180).

And the usual compounding of Rs 20,000 at 8.5 per cent a year gives you Rs 30,073 after five years.

In effect you get Rs 30,073 for an investment of Rs 13,820. A bond issuer may therefore claim a 16.8 per cent yield!

Now that's not true. In all this, the interest that you receive, which is Rs 10,073 (Rs 30,073-20,000) is taxable. While the initial tax deduction at 30 per cent was considered, this taxability on your interest income is not counted by many. Hence, after tax of 30 per cent on your interest, the yield actually goes down to 14 per cent.”

“Even then, remember Rohan, it is not entirely right to showcase this yield because it varies based on your tax slab. If you are in the 20 per cent tax slab, your yield is lower because you get less tax benefits (20 per cent on Rs 20,000) than somebody in the 30 per cent bracket.”

With an approving nod Rohan said, “Interest rates are not that simple, after all.”