Tech Mahindra :Now “Comviva” in the bag! : ICICI Securities

Now “Comviva” in the bag!
Yesterday, Tech Mahindra acquired a 51% stake on a fully diluted basis in
Comviva Technologies Ltd, a Bharti group company, and a global leader
in providing mobile valued added  services (VAS), mobile money and
mobile payment solutions. The deal consideration is | 260 crore (i.e.
EV/rev of 1.53x), in cash, with | 125 crore made upfront and the
remaining | 135 crore to be paid over five years, on Comviva achieving
mutually agreed performance targets. Other key highlights of the deal are:
Comviva had revenues of $70 million in FY12 (~| 334 crore at average |/$
47.8) while revenues grew at 15-18% CAGR during FY10-12. FY12
margins were mid teens with top 10 clients contributing 85% of revenues
and Airtel being the top client. As  of July 2012, the company has | 32
crore of cash and 1500 employees

Praj Industries :Stake increase in subsidiary… : ICICI Securities

Stake increase in subsidiary…
Praj Industries Ltd has increased its stake in its Mumbai based subsidiary
Neela Systems Ltd by 9.8% for | 12.5 crore. Praj had acquired a 50.2%
stake in Neela Systems at | 64 crore on January 6, 2012. This acquisition
would be funded by the internal accruals of the company. According to
the Praj management, it would increase its stake in Neela Systems further
within three years. We believe the acquisition is EPS accretive for Praj led
by the higher profit margins of Neela. We maintain our target price of | 58
and upgrade the stock from HOLD to BUY.

Shipping Monthly Report – September 2012 • :: ICICI Securities

Shipping Monthly Report – September 2012
• The Baltic Dry Index (BDI) contracted 22% in August 2012
hovering around a six-month low of 703. Concerns over the
Chinese economy slowing down and US drought continue to
plague the industry along with the burden of excess
additional tonnage. The Baltic Capesize and Panamax index
rates tapered off by 2% and 25%, respectively, on a MoM
basis. Baltic Supramax and Handymax index continued to
slump by 17% and 19%, respectively, MoM due to US
drought woes
• The Dirty Tanker Index (BDTI) was down marginally by 2%.
However, the Clean Tanker Index remained flattish posting
no gains on an MoM basis. VLCC time charter yields (TCY)
rates continued to face the brunt slumping below operating
level. Suezmax rate were down 67% on an MoM basis.
Aframax rates showed some signs of relief posting a modest
gain of 4% on an MoM basis.
• LPG freight rates remained flattish across all segments.
However, the medium carrier segment (MGC – up to 35000
cbm) was down nearly 1% MoM
• Utilisation levels for drill ships, semi-subs and jack-ups
continue to remain at elevated levels at 90%, 91% and 82%,
respectively, providing stability to rates in August 2012

PTC, FDI in power exchanges: Impact negligible... :: ICICI Securities

FDI in power exchanges: Impact negligible...
The Cabinet Committee on Economic Affairs (CCEA) has given approval
for FDI up to 49% in power exchanges. This move, though a step in the
right direction, would not have a material positive impact on PTC India.
The company, via its subsidiary PTC Financial Services (PFS), holds a 5%
stake in the India Energy Exchange as of Q1FY13. The absolute amount of
investment for a 5% stake amounts to | 1.5 crore on a historical cost
basis, which when calculated on hefty premium to past deals for equity
stake in IEX provides miniscule impact on overall valuation of PTC India.
PFS has sold 14% stake in IEX in FY12 and currently owns 5%
In FY12, PFS had sold its 14% stake in IEX at | 166/share thereby valuing
the exchange at ~| 500 crore. Currently, PFS owns a 5% stake in IEX,
which translates into an absolute holding of | 25 crore. The current stake
translates into | 0.5/share into PTC India (PTC holds a 60% stake in PFS,
which, in turn, holds 5% in IEX). Even under an imaginative Blue Sky
scenario, wherein a new foreign investor come in and values at 2x the last
equity deal (thereby valuing IEX at | 1000 crore) that would only result in
| 1/share accretion in PTC India’s share price. Hence, we believe that until
maturity and scalability of Indian  power exchanges is not attained, the
current FDI move will be sentiment positive in the near term.
Power sector reforms like fuel linkage and SEB to be key drivers
We believe timely receipt of dues from TNEB throughout FY13 and tariff
revisions by UP SEB will lead to cash flow improvement and,
subsequently, open doors for PTC to resume trading with these states,
which can meaningfully contribute to trading volumes and profitability.
We have valued PTC on an SOTP basis and assigned a target price of
| 65/share.

http://content.icicidirect.com/mailimages/ICICIDirect_PTCIndia_QuickComment.pdf

How zero-interest loans work :: President, Consumer Business, Bajaj Finserv Lending. in Business Line

Planning to buy a smart phone, LED television or air conditioner? When you visit the dealer, you are bound to come across zero-interest financing schemes for these goods which help you shell out the purchase price in easy instalments. But how does this work?

Today, zero-interest schemes fund 11 per cent of total consumer durables purchases. Out of the total consumer durable purchases of over Rs 36,850 crore annually, products worth over Rs 4,053 crore are bought on zero per cent interest financing.

A consumer durable loan with zero per cent interest will usually carry a processing fee. One can avail loans ranging from Rs 7,500 to Rs 5,00,000 on various categories from durables stores in the country. All the customer needs to do is choose his desired product and approach the in-store representative for loan approval. The partnership between the manufacturer of the appliance, the retailer and the financing company, aided by technology, enables the financing companies to approve loans through a simple, hassle-free and quick process.

Aviation Sector: Allowing FDI: Sentimental booster… :: ICICI Securities

Allowing FDI: Sentimental booster…
By allowing FDI from foreign carriers, the government has opened up
new avenues for fund raising by domestic carriers who are currently
finding it tough to raise money from Indian banks.
As per the rules of this new policy, 1) There will be no automatic
clearance for such FDI proposals and it has to be vetted by FIB and
security agencies. 2) The JV airline will have to be registered in India and
also have its principal place of business in India. 3) The JV must be Indian
owned and lastly 4) The chairman and two-third of directors will have to
be Indian citizens.
In our view, this bold step by the government, though it would help the
Indian carrier over the longer term in a strategic manner, would do little to
attract foreign investments over the short to medium term, unless the
sector fundamentals are set right first through further policy changes with
respect to taxes on ATF, free pricing, etc.
Looking at the fundamentals and balance sheet positions, SpiceJet and
Jet Airways are both placed better to attract investments via the FDI route
over the longer term. Hence, we continue to remain positive on both
these stocks and maintain our BUY rating.
http://content.icicidirect.com/mailimages/ICICIdirect_AviationSector_QuickComment.pdf

MotoGaze-September, 2012 :: ICICI Securities

Tough times continue…festivities to spur growth?
High inventory levels…few takers
Overall auto sales for August have de-grown 5.1% YoY at 1.58 million units.
Passenger vehicles’ decline of 8.4% was more than expected owing to
loss of production at Maruti Suzuki’s Manesar plant and sluggishness of
demand. Even for diesel vehicles, which witnessed high waiting periods
and premium pricing, the slowdown has caused carmakers to offer
discounts to ride out the demand slump. The UV segment continued to
grow at a healthy rate of ~70% (~57% growth YTD). Demand in the
M&HCV segment has been sluggish for a long time now and the excess
inventory in the system has now begun to ease out. The LCV segment has
continued to perform better in the CV space. However, for this segment
hit hard by low industrial output, a return to growth seems daunting. The
two-wheeler segment has seen a decline for the first time in three years
and declined by ~5% YoY for August. The decline for motorcycles was
more severe at ~8% YoY while the  scooter segment has continued to
grow; albeit at a slower rate of ~10% YoY growth. Given the slowdown,
OEMs are in the inventory correction phase with emphasis on ramping up
newer models as the festive season arrives.


Increase in fuel prices to further curb growth....
Increase in international crude prices and a continued weakness in the
domestic currency has led to an increase in the fuel subsidy burden. With
a view to contain the bloating fiscal deficit, an increase in fuel prices looks
imminent. This may lead to a further deferral of demand as consumers
wait for a favourable interest rate regime and higher incentives on vehicle
purchases.
Will festive season bring back demand for OEMs?
OEMs have always relied on the festive season to drive demand. This time
around, with the gloom surrounding the demand scenario and high
interest rates, the festive season is more important than ever. The festive
season that is slightly late this year could lead to higher demand for
October as inventory ramp-up at the dealers end would start about three
to four weeks in advance. Improved monsoon in the latter half of the
season may lead to better sowing in the Rabi season and, thereby,
revitalise discretionary spending. Reversal of the interest rate cycle is also
expected in the second half of the year. This would have a positive impact
on the demand situation in both  the commercial vehicles as well as
passenger vehicle segments.
Industry outlook
The volume growth outlook for the industry is mildly positive with growth
ranging between 8% and 10% in FY13E. Volumes are likely to increase in
the scooter segment in the two-wheeler space and UV segment in the
passenger vehicle space. However, the rapid growth is unlikely to be
sustained. In the three-wheeler space, goods carriers are likely to remain
under pressure as the onslaught from LCVs continues, which will continue
to drive growth in the CV segment.
On the basis of index performance, the BSE Auto index (one-month return
3.2%) has outperformed the BSE Sensex (one-month return 2.2%).
Among our I-direct auto-coverage, we remain bullish on frontline OEM
stocks like Maruti Suzuki, M&M and Tata Motors. In the ancillary coverage,
we find favourable valuation and business growth perspective in Bharat
Forge and Balkrishna Industries.


http://content.icicidirect.com/mailimages/ICICIdirect_Motogaze_September2012.pdf

ICICIdirect:: KPITCummins_Management Meet Update

http://content.icicidirect.com/mailimages/ICICIdirect_KPITCummins_ManagementMeetUpdate.pdf

‘Equity capital will elude power, infra sectors’ :: Business Line

The Planning Commission estimates $1 trillion investments in the infrastructure sector during the current Plan period ending March 2017. Given the challenges surrounding the sector, these targets may not be achievable, says Vikram Limaye, Deputy Managing Director, IDFC.

Business Line spoke to Limaye to get his views on the outlook and prospects of the infrastructure sector. He believes that availability of equity, and not debt capital, will be the biggest challenge for infrastructure companies in future.

Technicals-Castrol, ACC, V-Guard, Tata Teleservices, IRB :: Business Line

Sept 23: Pivotals: Reliance Industries,SBI, Infosys, Tata Steel :: Business Line

Investment Focus - Cairn India: Buy :: Business Line

Amara Raja Batteries: Buy :: Business Line

Lupin: Buy :: Business Line

With the recent gains, market attention has been shifting away from defensive stocks into out-of-favour cyclicals. But Lupin remains a good buy for investors with a two-three year perspective, given its sound fundamentals and high visibility on profit growth.

At the current market price of Rs 583, the stock trades 18.1 times its estimated FY14 earnings. Though stiff valuations may limit the upside potential in the near term, the stock is poised to deliver 15-17 per cent returns over a one-two year time-frame.

Sizzling Stocks: Canara Bank, HDIL :: Business Line

Sizzling Stocks: Canara Bank (Rs 430)

Canara Bank skyrocketed 26 per cent, accompanied by good volume last week. Most banking stocks witnessing buying interest after the Reserve Bank of India cut cash reserve ratio (CRR) by 0.25 per cent to 4.50 per cent on Monday. The stock jumped 9 per cent on September 18, breaking through its key resistance and intermediate-term down trend-line around Rs 365. The stock is currently testing key resistance at Rs 433.

Short-term trend has been up for the stock from its 52-week low registered at Rs 306 on August 30. Following a near-term corrective decline , the stock can breakthrough its key resistance at Rs 433 and climb to Rs 450 in the weeks ahead. Next important resistance is in the band between Rs 475 and Rs 480. Medium-term key resistances are pegged at Rs 510 and Rs 560. Short-term supports for the stock are positioned at Rs 400 and Rs 385. Only a strong fall below Rs 385 will pull the stock down to Rs 365 or Rs 350.

Consider short strangle on RCom :: Business Line

21st Sept week: Top Movers :: Business Line

  

Index Outlook: Poised at long-term hurdle :: Business Line

Reliance Capital :Talks about FDI in insurance spur stock… : ICICI Securities

Talks about FDI in insurance spur stock…
Reliance Capital remains one of the key beneficiaries of insurance and MF
sector reforms. The expectation of FDI in insurance being raised up to
49% from 26% has led to a sharp rally in the stock. The Cabinet meeting
on September 25 is likely to discuss the same and with the government’s
fast track reforms, there is a probability of the same getting approved in
principle. Recently, the Japanese giant, Nippon Life bought a 26% stake in
Reliance Life. With the FDI limit opening, we believe along with existing
partners, many foreign players will be interested to take smaller stakes.
Insurance IPOs may also be successful. Foreign funds can come to this
sector much faster than in other sectors where FDI proposals have been
approved in the recent past.
Even allowing the Rajiv Gandhi Equity scheme for MFs remains a positive
for RCap being one of the top 2 AMCs in the country.
Reliance Capital is gradually reducing the non core investment book
exposure and is expected to utilise capital gains to offset loss on exiting a
large portion of listed investments. RoA is strong at ~1.7%. However,
RoE is in high single digits mainly due to large net worth (| 3800 crore
added due to life revaluation). Its consolidated PBT is set to increase.
RCap has remained our conviction buy among NBFCs for long.
With our initial SOTP target price of | 381 based on FY13E being
achieved, as indicated earlier also, rolling all valuations to FY14 can offer
further upsides up to | 435. We recommend investors HOLD the stock.
http://content.icicidirect.com/mailimages/ICICIdirect_RelianceCapital_QuickComment.pdf