31 December 2012

SpiceJet: Hold ::Business Line


Indian Hotels: Hold ::Business Line


India NBFCs CV Lending- A word of caution ::JPMorgan


Commercial Vehicle lending has become a key growth driver for the
business of most Auto NBFCs. However much of this growth seems to be
driven by Small (or Light) CV’s. As per a pool analysis of such loans
(source: India Ratings) LCV loans have potential for higher
delinquencies given weaker credit profile of borrowers who seek low
ticket size loans. A further increase in input costs has not been matched by
a corresponding increase in freight rates thus putting pressure on business
economics.

DLF - Asset sales coupled with new launches have the potential to turn around operating cash flow ::JPMorgan


DLF has entered into a binding agreement to sell Aman resorts for
US$300MM (source: BSE). Proceeds of the divestment are expected to be
used largely for debt reduction. This comes on the back of big-ticket
Mumbai asset sale in October. The company, in our view, is now closer to
achieving its net debt target of Rs185B by Mar-13 (JPME Rs200B). This
debt reduction, coupled with high-value NCR launches, has the
potential to significantly turn around cash flow for the company.
However, given past misses we expect the market to remain skeptical until
the company’s core operating cash flows turn decisively positive.

Coming year, ask for meaningful products from service providers ::Business Line


Since the 2008 sub-prime crisis, there has been a collective surge across the world to reduce unfair practices, be it in politics or in business. You can also gather such collective energy to encourage mutual fund companies and insurance firms in India to offer more meaningful products.
Whether it is the anti-corruption protests in India or the insider-trading cases in the US, one factor seems clear as 2012 draws to a close — all of us want fairness.
And that means improving the credibility of the institutions that offer goods and services we consume. In this article, we discuss how you can demand such credibility from the asset management industry and the insurance companies in India in 2013.

Kansai Nerolac (Neutral)  Dominant player :: HSBC


Kansai Nerolac (Neutral)
 Dominant player (42% market share) in industrial paint segment; leader in automotive paints (60% market share)
 Focus on decorative paints segment (14% market share; characterized by higher margins) through greenfield capacity in Tamil Nadu expansion which would come on stream by Q4FY13
 Kansai is valued at 20x Sept-14 earnings with a revised target price of Rs 1,125; Since stock has run up 21% since Aug-12, we rate the stock as ‘Neutral’

Prestige Estates -BUY Target: `205 (Dec’13) JM Financial


Balanced portfolio with comfort of South
Prestige Estate is one of the largest developers in Bangalore real estate
market with strong cashflow profile (from completed and existing ongoing
projects), healthy fresh sales momentum (average `7bn/qtr of fresh sales in
last 5 quarters), large outstanding order book pending revenue recognition
(`48bn) and growing rental income. We like Bangalore real estate market
from the volume offtake and pricing perspective. The southern market
presence and a balanced portfolio of investment and development
properties are the key reasons for us to like Prestige Estates. Initiate with
BUY and NAV based target price of `205 (Dec’13).

SGX Nifty 5,945.00 -12.00; markets to open DOWN

SGX Nifty 5,945.00 -12.00; markets to open DOWN
8:15 AM India time
Dec 31, 2012