Infrastructure: Government eases norms for land use by SEZs :: Kotak Securities

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Government eases norms for land use by SEZs. A government notification allowing
the dual use of social and commercial infrastructure in non-processing areas of SEZs will
offer a fillip to land monetization plans of SEZ developers. The area will however, get no
tax concessions. Adani Ports & SEZ will be a natural beneficiary given its operational SEZ
at Mundra has large area that is yet to be leased. A potential bigger boost to SEZs may
come from lowering of tax rates in the upcoming budget.

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ƒConstruction & Infrastructure ƒ Reforms spree to boost tormented sector… :Q3FY15 Result Preview : ICICI Securities, report

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Infrastructure: Private-corporate capex to gain ground :: report for Sep 12 :: Kotak Sec, PDF link

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Infrastructure: Private-corporate capex to gain ground
` Decline in projects seeking funds in FY2014 led by pre-election standstill in
4QFY14
` Capex spends expected to improve
` Contribution of large projects has corrected meaningfully
` No dramatic shift in industry mix away from power/metals
` Data qualification: some gaps exist, but metric still captures capex intentions
on a consistent basis

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Infrastructure funds: On shaky ground :: Business Line

India Infrastructure, Power and Industrials-- Floating Gems: :: JPMorgan

In this report, we analyze four aspects of stock ownership: free float,
institutional holding, insider transactions and promoter share pledges.
Together, these are good indicators of share performance, in
conjunction with fundamentals, of course.

Investor feedback on Indian Infrastructure sector:: Deutsche bank,

A lot of investors in the first two days of our marketing trip in Asia were bit
taken aback by the extent of slowdown suggested by the micro data points,
with impact now being seen in power, coal demand (after a prolonged slow
down in industrial products such as cement). While a few investors felt that
India has probably achieved the inflation target, the key related question was –
at what cost? The next worry for most seems to be, what would happen if
foreign investors were to start selling from hereon?
Other stock specific questions were
• Why is L&T not at INR 1200/ sh (vs INR 1428/sh)
• Do we think that utilities like Coal India / NTPC can even correct 5-
10% from here, given the demand slowdown? What are must buy
levels? and
• For investors with a longer horizon, the key debate was which
companies can weather the downturn?
What do Investors own in the Infrastructure sector?
Surprisingly very few hold Larsen & Toubro (Buy, INR 1428) our top infra pick
and are underweight the large caps in the sector, with ownership being either
in cement names or mid-caps such as Cummins India (Hold, INR 456) and for
some even the likes of Crompton (unrated) and Voltas (unrated). Amongst
Utilities it is either PowerGrid (Hold, INR 109) or NTPC (Buy, INR 142) with no
large holders in Coal India (Buy, INR 291) or BHEL (Buy, INR 187). For few
BHEL is still a short - but we find the tradeoff on cost of the position vs fair
value estimate is not that attractive. Despite L&T being low in ownership, the
stock remains on the radar for everyone with buying levels around INR 1200-
1250/sh as they feel a large company like L&T has a lot of levers to reduce
earnings cyclicality and the near term earnings weakness is well known.
What's our message?
At our end, we are cautious in our approach given the macro headwinds and
recommend investors buying into companies that (a) can weather downturn
through entry into new businesses/markets (b) have a strong balance sheet,
(c) can show an earnings CAGR above 12-15% under the scenario of GDP
growth continuing at low levels, (d) are trading at valuations cheaper to market
on a relative basis and/or offering a dividend yield of over 5%.
Our preferred picks are L&T, UltraTech, Coal India, NTPC, Shree Cement and
Thermax.

DB - Indian Infrastructure - Needing much more than help from the weather gods

We are encouraged by the monsoon, which is above normal, widespread and
could help arrest the dip in India's water tables. This is good news for the
economy as a whole, as power deficits decline, both from lower demand from
the subsidized agri sector and higher supply from low-cost hydro. However, for
the majority of infrastructure projects, built on structural shortages, this would
mean a push-back in earnings. Notwithstanding strong 2H demand, we cut
Coal India estimates by 4% to factor in the likely H1 miss, similar to cuts we
made for the cement companies. Even for DG sets, sales may be pushed back,
not good news for CUMM (Hold) and merchant power player IPPs.

India Infrastructure, Power and Industrials Floating Gems:: JPMorgan

In this report, we analyze four aspects of stock ownership i.e., free float,
institutional holdings, insider transactions and promoter share pledge.
Together, these are good indicators of share performance, in
conjunction with fundamentals of course

Infrastructure, Auto, utilities sector reports ::Kotak Sec

Automobiles: Rough ride ahead
Energy: Domestic gas pricing: Striking the right balance
Infrastructure: NHAI: Getting back on track, but a different track this time

http://www.kotaksecurities.com/pdf/indiadaily/indiadaily03102012ll.pdf

Infrastructure - Back in favour; sector update:: Edelweiss

·       Government reforms to aid both execution and profitability of infra companies

§       Reforms like SEB restructuring etc., are likely to boost investment activity in the country

§       Investment growth, which had capitulated due to policy paralysis, likely to bounce back

·       Improvement in economic growth to act as a catalyst for volume surge

§       With GDP growth expected to improve, higher traffic and better volumes will boost asset valuations

·       Interest rate easing to result in multi-pronged benefits

§       With interest rates set to decline, infra companies with high leverage levels will see sharp jump in profitability; lower interest rates to boost capex cycle and improve working capital cycle

Keen on infra stocks? Buy the lenders first :: Business Line

Insatiable demand for funds and low non-performing assets make infra financing companies attractive.

With the markets becoming upbeat over beaten down sectors, infrastructure stocks are back in the limelight.

But we think that the best way to benefit from infrastructure growth is to bet on the financiers to the sector.

The stocks of IDFC, Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) have run up by more than 50 per cent from their December lows following reform announcements by the government.

However, the stocks of these companies are trading at a 25 to 30 per cent discount to their historical average price-to-book value.

Therefore, we suggest investing in these stocks in declines. Investors who already have exposure to these stocks can continue to hold on from a more than three-year horizon.

‘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.

Outlook for Indian infra sector remains negative: Fitch

Rating agency Fitch Ratings said there is more pain in store for India's infrastructure projects, which are already reeling under delays and regulatory hurdles, due to sector specific stresses and macroeconomic challenges.

It maintained negative outlook for Indian infrastructure projects.

The ratings of project companies will remain under pressure from aspects like equity capital constraints, high interest rates, currency depreciation and fuel shortages, Fitch said in a statement.

The slowing of economic growth and execution delays for power and prospects of slowing traffic growth for transportation would also put pressure.

Two mega projects ready for take-off :: Motilal Oswal

Two mega projects ready for take-off
JNPT CT-4 & DFCC Western Corridor: expect
project awards of USD5b-7b in FY13/14
 JNPT has selected the Port Authority of Singapore to
construct and operate its fourth container terminal (CT-
4), which will nearly double existing capacity.
 JNPT's CT-4 expansion is contingent on DFCC for evacuation
and the viability of DFCC's Western Corridor is contingent
on JNPT expansion, as containers will account for 75-80%
of traffic.
 We expect project awards of USD5b-7b in FY13/14 and
prefer L&T to play the theme.

Infrastructure special report: UR Associates

Manmohan Singh promises to speeden up infrastructure development
Prime Minister Manmohan Singh on Wednesday (June 06, 2012) sent a strong
signal by outlining an ambitious agenda to put infrastructure projects on the fast
track. He promised a big push to infrastructure development and pledged quick
action in awarding airports, highways and port projects in a meeting with
ministers and top officials from the power, coal, aviation, railways, highways and
shipping ministries. With Indian economy in doldrums and general elections
round the corner, this was anticipated. The Prime Minister said that
infrastructure development was a key part of the strategy to revive the India
growth story and has outlined an impressive target for the same.

Infrastructure Order Inflow Pulse ‐ May: Prabhudas Lilladher,

Engineering & Construction
Synopsis
Ordering activity was mainly seen in the Water and Building segments. The total
order inflow announced by various E&C players on BSE amounted to Rs53.1bn, down
by 26.8% on MoM basis. L&T announced the higher chunk of projects worth
Rs33.5bn followed by IVRCL at Rs6.5bn.

Infrastructure - a growth propeller; enabling thrust needed: Motilal OsSwal

Infrastructure - a growth propeller; enabling thrust needed

Opportunity canvas huge; LNT is the "Top Pick"
 The Prime Minister's Office (PMO) called for a review of the FY13 targets for key infrastructure segments - Roads, Power/
Coal, Railways, Aviation, and Ports.
 In the past, actual performance has fallen short of targets due to multiple hindrances, many of which are policy-related. In
this context, attention from the highest authority, the PMO, is positive.
 However, creation of an effective enabling framework, facilitating clearances and funding, is necessity.

Engineering and Capital Goods - Q4FY12 Result Review - In search of growth DNA :: Edelweiss, PDF link

Q4FY12 Result Preview Road Infrastructure ::Centrum

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Q4FY12 Result Preview

Road Infrastructure

Competitive intensity likely to continue

FY12 ended with NHAI awarding 6,491Km (highest ever). We believe, the momentum will continue in FY13 & FY14 and hence the intense competition to persist. Issues faced by developers on financial closure, land acquisition, etc could dampen FY13 & FY14 execution. For Q4FY12, we expect the companies in our coverage to post revenue growth of 18.7% QoQ but a decline of 6.3% YoY and EBITDA growth of 6.7% QoQ, primarily driven by robust performance of Sadbhav Engineering. However, net profit is likely to increase 7.8% and 9.0% both YoY and QoQ respectively. We maintain our preference for diversified players like ITNL (IL&FS Transportation Network), and remain neutral on IRB (IRB Infrastructure) and Sadhabav Engineering. With this update we are transferring the coverage of road developers from Manish Kayal to Siddhartha Khemka.  

m  FY12 NHAI award at all time high of 6,491kms: NHAI closed FY12 registering a growth of 28.3% in road projects with awards totaling 6,491kms (vs. our expectation of 6,080kms) across 49 projects. Including project awards from State authorities and MoRTH, a total of 62 projects totaling to 7,957kms were awarded during FY12. For FY13, the target for new road projects has been set at 8,800kms (a 10.6% YoY growth). We expect the momentum to continue in FY13 with the award of 7,300kms by NHAI.
m  However, competitive intensity remains and continues to dent profitability: We maintain our stance held since sector initiation that the competitive intensity in the road development sector will remain going forward denting project level IRRs. We still observe 25-30 bidders at RFQ stage and 10-15 bidders at financial bidding level. Though, smaller players are facing difficulties (like financial closure issues, stretched balance sheet, CDR, etc), we believe the entrance of new players, especially large corporate groups like Welspun-Leighton, Ashok Piramal Group, Essel Infra will continue to maintain high competitive intensity.
m  Coverage companies Sadbhav Engg and ITNL bag projects in the quarter: Sadbhav Engg bagged 2 NHAI projects 1) Solapur – Bijapur (110Km, TPC Rs12.2bn) and 2) Gomati ka Chouraha to Udaipur (82Km, TPC Rs12.8bn). ITNL also bagged 2 projects namely 1) Kiritpur to Ner Chowk (113Km, TPC Rs18.1bn) and 2) Kharagpur to Baleshwar (119Km, TPC Rs4.7bn). We believe Gomati-Udaipur project bagged by Sadbhav is risky because there are parallel stretches owned by GMR on the right side (NH8) and L&T on the left side.

Thanks & Regards, 

-- 

Construction & Infrastructure ƒ : Q4FY12 Result Preview: ICICI Securities, PDF Link

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http://www.icicidirect.com/mailimages/ICICIdirect_ConsolidatedResultPreview_Q4FY12E.pdf

Construction & Infrastructure
ƒ Road segment contributes to bulk of order inflows
Highways awarding saw major movement in Q4FY12 with NHAI
achieving total awarding of ~7957 km (including  1466 km awarded
through state agencies) vs. its targeted ~7300 km. Additionally, bids for
~ 425 km have been received and are currently under evaluation.
The companies under our coverage that have bagged road orders in
Q4FY12 are IVRCL (L1 in two BOT projects – 166 km Patiala Sangrur
section worth | 1586 crore and 121 km Gundugulanu Rajahmundry
section worth | 1617 crore), Unity (two BOT project - 69 km Punjab
Haryana Border Jind section of NH-71 worth | 510 crore and Suratgarh-
Sriganganagar Section worth | 330 crore) and Sadbhav (L1 in two BOT
projects – 83 km Gomati ka Chauraha - Udaipur section worth | 1280
crore and 111 km Solapur-Bijapur section worth | 1220 crore).
In terms of order inflows from other segments, Simplex witnessed order
flows worth | 4000-4500 crore (including L1 of 1600 crore), followed by
IVRCL, which received orders worth | 878 crore and Supreme, which
reported order inflows of | 619 crore (including L1 of | 274 crore).