RESEARCH REPORTS
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HYDERABAD INDUSTRIES LIMITED
Hyderabad Industries Ltd. (HIL) is one of the leading manufacturers of Fibre Cement Sheets in India with a market share of about 20.5%. Its key product range include Fibre Cement Roofing Sheets sold under the brand name CHARMINAR, AAC Blocks and Panels called AEROCON, and Calcium Silicate Insulation Product (thermal insulation) called HYSIL…
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RANBAXY LABORATORIES: Multiple triggers ahead; Upgrade to Hold
■ Worst is behind; Multiple triggers ahead
■ These triggers present potential upsides of Rs120
■ Factored in only triggers like – hive-off of NCE R&D and monetization of Aricept FTF- which have already kicked in
■ Upgrade to ‘Hold’ and raise target price to Rs520. Have a positive bias on the stock but will factor in upsides only on occurrence of triggers -
CRISIL: Putting cash to good use – acquires Pipal Research
■ CRISIL to by Pipal Research, for a sum of USD12.75mn. The acquisition is at 1.6-3.2x EV/ Sales (assuming 50-100% stake), which is lower than 2.2x it gave for Irevna in 2005
■ Looking at CRISIL’s history of acquiring smaller companies and then quick scale up it will be able to scale up Pipal’s business significantly leveraging their existing capabilities…
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INDIA: Financial Services
Insurance industry interactions were more tepid in tone with the jury still likely to be out for some time on how recent regulations would impact growth and margins. Companies are currently in the process of calibrating strategies – product mix, and focus on cost, productivity and persistency to minimize impact. From our interactions it emerged that insurance companies expect volume growth to be lower in 2H given a higher base, lower commissions and retraining of agency force to sell new products. Most companies we interacted with indicated a potential shift in product focus to traditional products from ULIP, though these traditional products along with distributors may potentially be the next target area for the regulator…
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STRATEGY: DECALOGUE: KIE’S TOP TEN RECOMMENDATIONS
■ Dearth of absolute low valuation ideas
■ Infrastructure and domestic consumption dominate the list
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SATYAM (CLSA)
Satyam – FAQs and what to expect on 29th Sep?
Satyam will report its financials on 29th September, 21 months after the fraud was discovered. The impending result report and the 27% stock move in the last 1 month have generated considerable investor interest. This note attempts to answer a few key investor queries.
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STRATEGY: Which stocks to buy now?
Given the pace of the rally, we believe the market is vulnerable to a correction. We believe even if the market uptrend continues, the outperformers may see some rotation. We, therefore, screen for stocks that have under-performed the current rally and are cheap relative to their history as a means of identifying ideas for investors. Some of the large cap stocks that look attractive on this screen are Reliance, Zee, BHEL, Sterlite, Wipro and Maruti. These are not necessarily stocks on which our fundamental analysts have a Buy rating currently…
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ORIENT GREEN POWER: IPO NOTE; Unexciting ‘Orient’ation
Orient Green Power (OGPL) is India’s leading renewable energy-based power generation company focused on developing, owning and operating a diversified portfolio of renewable energy power plants. OGPL, which currently has an installed capacity of 213.0MW, has another 836.5MW of prospective capacity expected to get operational by FY2013. Huge potential for the development of renewable power: India’s renewable energy-based power capacities have increased their share of total power capacity from 2.0% in FY2003 to around 10.0% in 2010. Despite this, the renewable power sector still has huge potential, which remains untapped…
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CANTABIL RETAIL:IPO NOTE; Expansion led growth
About Cantabil Retail (CRIL): CRIL, an integrated discount apparel retailer, is in the business of designing, manufacturing, branding and retailing of apparels under the brands ‘Cantabil’ and ‘La Fanso’. The ‘Cantabil’ brand offers a complete range of formal wear, party wear, casuals & ultra casual clothing for men, women and kids in the middle-to-high income group. The ‘La Fanso’ brand caters to men’s segment in the lower-to-middle income group. Apparel range catering to a wide customer base, strong in-house design & research team and inhouse integrated capacity, are some of the strengths of CRIL…
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Ashoka Buildcon Limited: IPO NOTE
Ashoka Buildcon Ltd (ABL) is a Nashik based EPC contractor having pan India presence. Company owns 23 projects on BOT (Built Operate Transfer) basis covering 1100 kms and 6 foot over bridges which are operational. Other business vertical of ABL would include sale of ready mix concrete for road construction and civil works. ABL can also provide toll collection services to third party BOT projects. ABL is also capable of providing EPC solutions for power sub stations…
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ZF STEERING GEARS (VENTURA)
ZF Steering Gears (India) Limited, a pioneer in manufacturing and supply of Steering Gears for commercial vehicle (CV) space in India, is expected to gain from the rising demand for the steering gears. Apart from the positive business outlook, ZF also has significant liquid investments in its balance sheet which at the current prices is valued of Rs 115 per share. This provides much needed cushion to the stock. Over the next two years ZF is expected to exhibit a CAGR of 29% & 40% in its revenues & profitability respectively. At CMP of Rs 450, the stock is available at 9.1x & 7.3x its estimated earnings of Rs 49.4 & Rs 61.3 respectively…
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PRAKASH INDUSTRIES: Story remains unhampered
We hosted a conference call with Vipul Agarwal, Director of Finance, Prakash Industries (PKI). The management of PKI has categorically denied any indulgence in illegal activities as mentioned in the Times of India (9th September 2010 issue) with regard to selling coal in the open market from the Chotia mines. The management ascertained that the whole news article was published with malafide intent and entire allegations are baseless. The management also clarified that the Chotia mine does not fall in the Hasdeo Arand “No Go” region hence, the company can continue mining coal from it as per the approved mining plan…
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CAREER POINT INFOSYSTEMS: IPO NOTE, Company Background, Business Model & Key Strengths (ADITYA BIRLA MONEY LIMITED)
Career Point Infosystems Ltd was incorporated as a public company on March 2000 by Pramod Maheswari, who has been in tutoring for competitive entrance exams since 1993 along with other promoters Mr. Om Prakash Maheswari and Mr. Nawal Kishore Maheswari. In FY02, the company started its operations via franchisee centres and from April 2006 onwards, it started to provide tutoring via company operated training centres as well. CPIL is one of the leading tutorial service providers to high school and post high school students for various competitive entrance exams including All India Engineering Entrance Examination…
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MOTOGAZE: What seasonality? Demand grows unabated…
The Indian automotive industry is witnessing a trend of volume growth, which has been defying all seasonality trends of the past. This is reflecting the structural change in consumer patterns driven by the strong economic performance adding strength to the income levels of the urban as well as rural customers. The volume growth of the industry till date has been around 26% with the passenger car segment growing ~34% and commercial vehicle (CV) segment growing at ~45% leading the way. The robust growth across the segment has led to demand surpassing supply in all major segments with suppliers facing acute capacity shortages…
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TELECOM SECTOR: Revival in GSM subscriber addition…
Subscriber growth continued unabated in the telecom industry. The industry added 13.5 million GSM subscribers in August 2010 –highest since April 2010. Though net adds declined in metros, it was more than compensated in all other circles. Highest traction was seen in C Circles, which added 2.0 million subscribers against just 0.9 million in July 2010. Metros recorded MoM growth of 2.3% while A and B circles grew by 3.1% each and C circles by 3.2%. BSNL and Uninor put up an impressive show. Uninor had highest ever net adds at 2.2 million subscribers while BSNL added 2.3 million subscribers. Subscriber addition for Bharti Airtel was down at 2.0 million subscribers – lowest in several quarters…
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BANKING SECTOR: Basel III – been there; done that
■ Basel Committee on Banking Supervision (BCBS) announces Basel III capital requirements.
■ The new framework requires 50-200% higher tier I capital than that required under basel II
■ Indian banks would not require much capital for transition to Basel III norms as they comply with most of the norms even as of now…
