REC OFS Clearing Price (Rs.) 333.30

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Invest in REC OFS at a 5% discount

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REC OFS floor price is Rs 315/-

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REC TAX FREE ISSUE : 100% Allotment on All Valid Applications

Please note that all Valid Applications in REC-Tax Free Issue have received 100% Allotment.

To check allotment status : http://associates.indiainfoline.com/AllotmentStatus.aspx

or  http://mis.karvycomputershare.com/ipo/

Investment Focus: REC bonds offer good yields - INVEST :: Business Line

REC Tax Free Bonds Issue '2013 Issue Opens : 30th August'2013

REC Tax Free Bonds Issue '2013

Issue Opens : 30th August'2013

Issue Closes : 23rd September'2013

 

Series of Bonds*
Options For Category I, II & III*
	Tranche I Series 1 A	Tranche I Series 2 A	Tranche I Series 3A
Coupon rate (%) p.a.	8.01	8.46	8.37
Annualised yield (%) p.a.	8.01	8.46	8.37
Options For Category IV only#
	Tranche I Series 1 B	Tranche I Series 2 B	Tranche I Series 3 B
Coupon rate (%) p.a.	8.26	8.71	8.62
Annualised yield (%) p.a.	8.26	8.71	8.62
For Category I, II, III and IV#
Frequency of interest payment	Annual	Annual	Annual
Minimum Application size		5 bonds (Rs. 5000), across all Series of Bonds
In multiples of		1 bond (Rs. 1000) , across all Series of Bonds
Face value	Rs. 1,000 per Bond.	Rs. 1,000 per Bond.	Rs. 1,000 per Bond.
Issue price	Rs. 1,000 per Bond.	Rs. 1,000 per Bond.	Rs. 1,000 per Bond.
Tenor	10 years.	15 years.	20 years.
Coupon Type	Fixed coupon rate	Fixed coupon rate	Fixed coupon rate
Redemption Date	10 years from the Deemed Date of Allotment.	15 years from the Deemed Date of Allotment.	20 years from the Deemed Date of Allotment.
Redemption Amount (Rs./Bond)	Repayment of the face value along with any interest that may have accrued at the Redemption Date.	Repayment of the face value along with any interest that may have accrued at the Redemption Date.	Repayment of the face value along with any interest that may have accrued at the Redemption Date.

Rural Electrification :: Religare Research

Strong business growth; valuations attractive – BUY
REC’s Q4FY13 PAT at Rs 9.6bn (up 26% YoY) came in lower than our/ consensus estimates, but largely on account of standard asset provisions of Rs 1.06bn. NII was marginally lower despite strong disbursement and loan book growth. Asset quality was stable and business growth strong with loan book/disbursements/sanctions up 26%/ 56%/ 41% YoY in FY14. Valuations at 1.1x FY14 BV are cheap given ROEs of 24% and receding concerns on SEB exposure. Maintain BUY with a TP of Rs 300.
 Business growth strong: REC sanctioned/disbursed loans of Rs 183bn/Rs 144bn in Q4FY13, taking its total sanctions/disbursements in FY14 to Rs 795bn/Rs 393bn (up 56%/41% YoY). Loans grew 26% YoY, SEB exposure 23% YoY and exposure to private developers 55% YoY (now 13% of total advances). We expect REC’s loan book to grow by 19% CAGR over FY13-FY15.
 NIMs contract 29bps QoQ to 4.7%: The yield on advances declined by 60bps QoQ to 11.55% which, in our view, could be on account of disbursements made towards the end of the quarter. Cost of funds declined by 34bps QoQ as the incremental cost of borrowings stood at just 5.7% in Q4FY13 (due to access to tax-free bonds). We expect calc. NIMs to remain in the 4.5-4.7% range (as against 4.6% in FY13).
 Asset quality stable: GNPLs/NNPLs remained stable QoQ at Rs 4.9bn/Rs 4bn (0.4%/0.3% of book). While the asset quality was stable, REC made provisions of Rs 1.1bn in Q4FY13 (which translates into provisions of ~8bps). We note that PFC also has already started making standard asset provisions and expect REC to continue with standard asset provisions of 8bps in FY14/FY15.
 Risk-reward favourable: Valuations (5x FY14 EPS/1.1x FY14 BV) are attractive given strong ROEs (~24%) and likely earnings growth of ~20% over FY13-FY15. We restate our BUY rating and remain positive on the stock. SEB restructuring and steps taken by the government to improve fuel availability would be the key stock catalysts.

Go for short straddle in REC :: Business Line

Rural Electrification Corporation (Rs 242): The long-term outlook will turn positive only if REC closes above Rs 305. In the short-term, it is likely to move in a narrow range between Rs 266 and Rs 214 with a downward bias. The stock finds immediate resistance at Rs 266 and support at Rs 233.

F&O pointers: The REC February futures shed open positions along with fall in share price. This indicates profit taking. Similarly, option trading also indicates a negative bias due to the strong emergence of call writers. A couple of put options witnessed unwinding of open interests too.

Strategy: Traders can consider short-straddle on REC. This can be initiated by selling both call and put of 240 strike price. They closed at Rs 9.7 and Rs 5.8 respectively. Short straddle strategy is best suited when the underlying equity is likely to move in a narrow range. While the maximum profit is limited to the premium collected, (here about Rs 16,500 (excluding margin and brokerages), loss could be unlimited if REC swings wildly in any one of the directions i.e. either up or down. Maximum profit occurs if the underlying REC settles around Rs 250. Loss will start mounting for traders, if REC moves below Rs 224 or closes above Rs 256. In other words, only a fall of 6.6 per cent or a gain of 7.5 per cent will hurt position. Writing option involves margin commitments, so this strategy is for traders who can afford to take this risk. Hold the position for at least two weeks.

Follow-up: Last week, we advised traders to consider a short strangle strategy on HDIL, by selling 90 call and 65 put. The position is in the positive considering the opening and closing prices of HDIL option, As advised, traders can consider holding it for at least another week.

FINAL Subscription figures for Rural Electrification Corporation Limited Tax Free Bonds 2012 -13 Tranche 1

Below is the Subscription figures for Rural Electrification Corporation Limited Tax Free Bonds 2012 -13 Tranche 1. Issue closed.

Issue Period : Dec 3^rd 2012 TO Dec 10^th 2012.

REC Tax free	Issue Size (in Rs.)	as on 10th Dec 2012 @ 6.00 pm Bid received (in Rs.)	No of Times #	No of Times ##
CAT I *	3000000000	605675000	0.20	0.04
CAT II **	1500000000	7124022000	4.75	1.06
CAT III***	1500000000	3016017000	2.01	0.45
CAT IV****	4000000000	9630859000	2.41	0.54
TOTAL	10000000000	20376573000	2.04	0.45

No of Appl:               23,539 approx

*         QIB.

**       Non Institutional Portion.

***     HNI Individual Category Potion. (> Rs.10 lac)

****    RETAIL Individual Category Potion. (<= Rs.10 lac)

#          Considering Rs.1000 cr. size

##        Considering the overall Rs.4500 cr. size

-- 

REC Tax Free Bonds

Rural Electrification Corporation Limited (REC) has got the ROC approval for its Debt IPO Yesterday  on (27/11/2012). The  final details of the forthcoming Debt Public Issue are as follows:

Issue Size:

1.        Rs. 1000 crores with right to retain oversubscription upto the Shelf Limit (i.e. upto Rs 4,500 crores)

2.        Face value of each Bond shall be Rs. 1,000/- and the minimum application size shall be for 5 bonds and in multiples of 1 Bond thereafter

Yield Offered:

Options	Series of Bonds*
	Tranche 1 Series 1	Tranche 1 Series 2
Tenor	10 Years	15 Years
Frequency of interest payment	Annual                                                                                                      Annual
Mode of payment	Through various modes available**	Through various modes available**
Coupon rate (% p.a.) for Category I,II,III	7.22	7.38
Additional Coupon Rate*** (% p.a.) Category IV***	0.50	0.50
Aggregate Coupon Rate (% p.a.) for Category IV***	7.72	7.88
Effective yield(% p.a.) for Category I, II and III applicants	7.22	7.38
Effective yield (% p.a.) for Category IV applicants***	7.72	7.88
Coupon Type	Fixed coupon rate	Fixed coupon rate

Note:

*** In case the Bonds held by the original allottees under Category IV Portion are sold / transferred (except in case of transfer of Bonds to legal heir in the     event of death of the original allottee), the coupon rate shall stand revised to the coupon rate applicable for allottees falling under Category I, Category II and Category III Portion. 

Categories of Reservation:

1.         Category I – QIB’s                                                      :   30%

2.         Category II - Non Institutional Investors          :   15%

3.         Category III – HNI’s                                                   :  15%

4.         Category IV – Retail Individual Investors          :   40%

Issue Timing:

1.    Issue Opening Date:        December 3, 2012

2.    Issue Closing Date   :        December 10, 2012

Interest on Application Money:

1.    On application money allotted    :    @ the rate of 7.22% p.a. and 7.38% p.a. on 10 Year option and 15 Years Option respectively for allottees

    under Category I, Category II and Category III Portion, and at the rate of 7.72% p.a and 7.88% p.a. on

    10 Year option and 15 Years Option respectively for allottees under Category IV Portion

2.    On application money refunded:     @ 5% p.a.

Rural Electrification Corporation -Increasing TP on FY13F PAT increase of 17% FRP improves the outlook for the biggest Discom lender:: Nomura Research

Action: Reiterate Buy; TP increased to INR255
We believe that the recent financial restructuring plan (FRP) and the spate
of tariff hikes over the past few months have strongly reduced the
overhang on REC's SEB exposure (82% of its Q1FY13F loan book). We
had earlier factored in a restructuring of 10% of REC's loans to stressed
Discoms, which we don’t see necessary any longer, although we have
factored in a marginal NIM impact from extending shorter-term transition
loans to some of these Discoms over the next few years. Our earnings
estimates for FY13F and FY14F rise by 17% and 7%, respectively. We
expect a loan book growth of 18.4% and 18.1% for FY13F and FY14F,
respectively.

Power Finance Corporation / REC ::Prabhudas Lilladher, Banks/Financials conference

􀂄 Upbeat on state reform action; UP to move on tariffs by Sep‐12: The PFC/REC
management was very upbeat on tariff hikes taken by the states (17 of 27
states) in FY13 including large ones like TN. PFC expects tariff hike to be taken
by UP by mid Sep-12 which will be a big relief. These hikes surely bring some
states close to break even but hikes not being implemented in Agri continue to
increase hike requirements for commercial/personal segments. Of all states,
PFC was extremely positive on prospects of a turnaround of SEBs in MP and
believes MP SEBs could turn profitable in due course.
􀂄 No clarity on FRP; Don't see PFC/REC taking haircut/NPV hits: The restructuring
package (FRP) is still in works and PFC management said there is limited clarity
still on the terms of restructuring (Media sources: 50% debt to be shifted to
state govt. and other 50% to be offered a 3 yr moratorium). PFC/REC have
categorially denied taking any haircut on these loans but transfer of debt to
state governments and getting state government bonds could entail some NPV
loss due to lower yields on state govt. debt in our view.
􀂄 Fresh sanctions to SEBs ‐ Part of restructuring: Both PFC/REC as part of the
ongoing restructuring will provide Rs170bn each to the SEBs for working capital
requirements. PFC/REC who have largely refrained from funding losses of SEBs
will now do so as some burden gets shifted from banks to PFC/REC but
management believes that these loans remain contingent on going reform
performance and guarantees by each state.
􀂄 Regulatory provisioning: (1) Usha Thorat committee had recommened
applicability of standard asset provisioning (0.25%) for PFC/REC and according to
the mgt, they intend to provide this over next 4 yrs (0.05% annually) (2) Also, on
providing for risk weight on undisbursed sanction, PFC/REC have asked RBI for
an exemption upto FY17 and is currently under consideration

BHEL, Power Finance Corp, Rural Electrification, Container Corporation, reports by Kotak Sec PDF links

Rural Electrification Corporation ADD Vision clouded, mission clear : ICICI Securities

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We initiate coverage on Rural Electrification Corporation (REC) with a ADD rating
and a target price of Rs217/share (1.3x FY13E ABV). We believe valuations at 1.2x
FY13E adjusted book value and 5.7x FY13E EPS leave little upside, even as
concerns about the utilities space are being addressed through coordinated
efforts by the power ministry, CERC, state regulators and the RBI. However, we
build in slightly higher loan loss provisions for FY12-FY14E, and remain watchful
of its exposure to private sector. Despite this, 18% CAGR in loan growth and
stable spreads will ensure RoEs at 21% over FY12-14E. Prolonged delay in the
SEB reform process and private power projects turning unviable remain the key
risks to our call.
􀁦 Reforms to ensure revival in disbursements. While lending to SEBs has slowed
down over past six months, sanction pipeline remains strong at ~Rs1300bn as of
Dec 2011 and will translate to strong disbursement growth once the reform process
accelerates. Further, REC has been diversifying its loan book with higher
disbursements to gencos which will aid future growth. We estimate a pick-up in
disbursements to drive an overall loan book growth of 18% CAGR over FY12-14E.
􀁦 Cost advantage to ensure healthy spreads. A well diversified liability profile has
helped REC control its borrowing costs and maintain its spread at +3% over FY09-
9MFY12. Capital gains exempt bonds and ECBs, the major sources of low cost
borrowings, constitute 16% and 12% of total borrowings as of Q3FY12. Going
ahead, their proportion is likely to remain stable while declining interest rate
environment will lower borrowing costs. Spreads would remain stable at 3.3% over
FY12-14E.
􀁦 Partial restructuring of SEBs possible; pressures likely from private sector.
REC has higher exposure to the distribution arms of SEBs and stressed SEBs
could very well see some restructuring. As such, we build in yield compression of
55bps over FY12-14E to account for possible interest rate hair-cut. However, larger
risk stems from its exposure to private sector.


Valuation methodology and key risks
We initiate coverage on REC with an ADD rating and a target multiple of 1.3x FY13E
ABV, which translates into a target price of Rs217/share. Slowdown in the SEB reform
process and inability on the part of private players to complete their on-going power
plants remain the key risks of our call.

Infrastructure Finance Companies In fear lies opportunity : ICICI Securities

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Power Finance Corporation (PFC) and Rural Electrification Corporation (REC)
have underperformed the NIFTY by 22% and 12% YoY respectively. However,
fears that had sent valuations crashing to 0.8x (for PFC) and 0.9x (for REC) 12-
month forward ABV still persist. Tariff hikes precipitated by financiers’
aggression and positive steps taken inter alia by APTEL and the PMO signify
remedial processes are underway to resolve the crisis. In our view, given that the
various stakeholders (government, CIL, APTEL, lenders, etc.) have much to lose
by allowing PFC and REC to fail, it is unlikely that their exposure to SEBs will
deteriorate into NPAs. Note that in case of a net worth impairment in either PFC
or REC: i) the government will anyhow have to recapitalise them because they are
state-owned lenders, and ii) failing to recapitalise will undermine the
government’s creditworthiness. Exposure to private sector projects may not
receive the same favours though. However, both PFC and REC have low private
sector exposure, which restricts asset risks. We therefore expect both PFC and
REC to trade at ~1.3x FY13E ABV (a discount to its 5-year average ABV multiple
of ~1.6x) with RoAs of 2.7 / 3.1% and RoEs of 18 / 21% respectively. We initiate
coverage on PFC (BUY) and REC (ADD) and prefer PFC for its lower risk profile.
􀁦 Asset risks only in pockets, not across exposures. We believe PFC and REC’s
asset risks lie predominantly in their IPP exposures, concentrated in the underconstruction
generation projects. Most of these IPP projects are currently facing
delays due to lack of environmental clearance, FSAs and PPAs. One could foresee
restructuring/slippage in these projects. While risk of SEB default is quite low, the
possibility of restructuring loans to them exists; hence we also differentiate between
PFC and REC based on their SEB exposures. Of the exposure to SEBs, PFC has
~85% of it to states with unbundled SEBs and 49% to states with the top-9 lossmaking
SEBs. Its asset book is relatively less risky than that of REC where the
corresponding numbers are 71% and 60%.
􀁦 Outstanding sanctions will help sustain business/earnings momentum.
Outstanding sanctions will lead to a healthy disbursement momentum of 18-20%
YoY, leading to a loan CAGR of 19% over FY12-FY14E for PFC and 18% for REC.
This coupled with average spreads of 2.4% and 3.3% for PFC and REC
respectively, is likely to result in healthy RoAs of 2.7% / 3.1% and an earnings
CAGR of 20% / 18% for PFC / REC respectively over FY12-14E.
􀁦 As reforms take shape, multiples will approach ~1.3x FY13E ABV. PFC and
REC stock prices have corrected from peak valuations of 2.6x and 2.8x 1-year
forward P/ABV on persistent negative newsflow from the power sector. Current
valuations of 1.0x / 1.2x respectively seem to have factored-in the recurring bad
news. Incrementally, an overhang of tardy reform will keep trading multiples below
long-term averages. However, given their profitability profiles, we estimate 12-
month fair value multiples of ~1.3x FY13E ABV (a discount to 5-year average
P/ABV of ~1.6x) for both. Initiate coverage on PFC (BUY) and REC (ADD).

Sizzling Stock - Nalco, REC ::Business Line

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Sizzling Stock - Nalco (Rs 61)

After finding ground at around Rs 53, National Aluminium Company Ltd (Nalco) jumped more than 11 per cent with good volumes in the previous week. This rally has breached the stock's immediate resistance at Rs 59 as well as its 21 and 50-day moving averages. However, the stock is currently testing its 200-day moving average at Rs 63.

The daily relative strength index is on the brink of entering the bullish zone from the neutral region and the weekly RSI is inching higher in the neutral region.

Both daily and weekly price rate of change indicators are featuring in the positive terrain implying buying interest. Strong up move above Rs 63 will push the stock higher to Rs 67 and then to Rs 71 in the short-term.

Only an emphatic rally above Rs 71 will reinforce the stock's medium-term uptrend which started from December 2011 trough of Rs 48.5. Subsequent medium-term targets will be Rs 77 and Rs 81.

Nevertheless, inability to surpass Rs 67 can pull the counter down to Rs 57 and to Rs 54 in the short-term. Significant long-term support is pegged between Rs 48 and Rs 50.

Buy Hathway Cable; Target : Rs 200 : ICICI Securities, PDF link

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


G e t !   S e t !   D i g i t i s e ! !  !
Hathway Cable & Datacom, one of the largest MSOs in India with a well
spread distribution network and adequate infrastructure, is perfectly
placed to be a major beneficiary of mandatory digitisation. About 85% of
its 8.9 million cable subscribers would be covered in the first two phases
of digitisation. Assuming 15% churn  to DTH, we expect Hathway to
witness 1.9x growth in revenues, 2.0x growth in EBITDA and become PAT
positive by FY14E, led by the mandatory digitisation drive resulting in
revenue paying subscribers increasing ~4x in the next two years. Key risk
would involve price war against DTH operators and delay in digitisation.
We believe the growth delta achieved by accounting for all subscribers
(currently ~85% under-declaration) far outweighs the concerns. We are
initiating coverage on the stock with a BUY rating.

REC Bond Retail Limit Extended to Rs. 5 Lakh

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Public Issue by Rural Electrification Corporation Limited (REC) which initially had a Retail Limit of Rs. 1 Lakh for an Individual Investor has now been extended to Rs. 5 Lakh. Thus any Individual Investor investing upto Rs. 5 lakh shall be treated as a Retail investor and any individual investor investing more than Rs. 5 Lakh shall be treated as High Networth individual.

Below are the details of the Issue:

REC INFRASTRUCTURE BOND
ISSUE OPENS	06th March 2012
ISSUE CLOSES	12th March 2012
PRICE BAND	Rs. 1000/-
MINIMUM APPLICATION	5 Units [Rs. 5, 000] and in multiples of 1 Bond (Rs.1000) each thereafter.
MATURITY	10 & 15 years from the Deemed Date of Allotment.
INTEREST RATE	Series 1  (Category I & II  7.93 % p.a) (Category III  8.13 % p.a) Series 2  (Category I & II  8.12 % p.a] (Category III  8.32 % p.a)
RATING	CRISIL AAA/Stable by CRISIL, CARE AAA by CARE, Fitch AAA(ind) by FITCH and  AAA by ICRA
Tax Benefits	Interest on Bonds shall be exempt from income tax and The interest on these bonds shall not be included while computing the Total Income of an assessee as per provisions of section 10(15)(iv)(h) of the Income Tax Act, 1961. Since the interest income on these bonds is exempt, no Tax Deduction at Source (TDS) is required

REC Ltd - Tax Free Bonds - Allotment on First come First Serve Basis

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Rated “AAA” by CRISIL, CARE, ICRA & FITCH respectively Issue opens 6th March 2012

Highlights of the Issue Secured, redeemable bonds with tax benefits under  Section -10 of The Income Tax Act, 1961 Rated “AAA” by CRISIL, CARE, ICRA & FITCH respectively Interest Income on the bonds is tax-free in nature Who can Apply- Resident Individuals, HUFs, QIBs, Corporates To be listed on BSE Not available for NRIs   Company Profile : Registered as NBFC with RBI having a GOI stake of 66.8% as on December 31. 2011 Committed to financing & promotion of transmission, distribution & generation of energy projects throughout India One of the 16 public sector undertakings to be granted NAVRATNA status Consistent CAGR of 27.16% from 2007-2011 in the loans assets of the company Net Profit: Rs 2569.93 crores for the fiscal 2011  Net Worth: Rs 14074.86 crores as on September 30, 2011

Details of the Issue are as follows:

Particulars Series 1 Series 2 Tenure 10 years 15 years Issue Opens Tuesday, March 6, 2012 Issue Closes Monday, March 12, 2012 Issue Size  Rs 3000 crores Face Value Rs 1000/- Minimum subscription  Rs 5000/- & in multiple of 1 Bond thereafter Rating "AAA" from CRISIL, "AAA" from CARE ,"AAA" from ICRA & "FITCH AAA(Ind)" from FITCH Listing  BSE Interest Payments Annual Who can Apply?  Resident Individuals/HUF/QIBs/Corporates Coupon rate (%) Corporates/QIBs 7.93% 8.12% Individuals/HUF (Investments > 1 lac) 7.93% 8.12% Individua/HUF (Investments <= 1 lac) 8.13% 8.32% Redemption Date End of 10 yrs from the deemed date of allotment End of 15 yrs from the deemed date of allotment Redemption Amount Face Value plus the interest accrued if any Registrars          Karvy Computershare Private Ltd.

Basis of Allotment: Category Portion Allotment Basis Size (%) QIBs & Corporates (I) Institutional “First Come First Serve” basis 50% of the overall issue size Resident Individuals, HUFs -Investment> 5 Lacs (II) HNIs “First Come First Serve” basis 25% of the overall issue size Resident Individuals, HUFs -Investment<= 5 Lacs (III) Retail “First Come First Serve” basis 25% of the overall issue size Note : Please note that the interest rate of 8.13% & 8.32% as given are only applicable to the original allottees/investors under category III. These rates shall not apply further if the bonds are transferred or sold by the original allottees/investors. For details, please refer detailed prospectus.