The market's not cheap yet

Compass: The market's not cheap yet

Shobhana Subramanian / Mumbai June 4, 2008, 19:14 IST

At 15,515, the BSE Sensex may not have breached March 2008 lows but many large cap stocks have. What's significant about the fall today is that the market has crashed on volumes that are higher than average volumes seen over the last couple of weeks.

The breadth has been bad and important technical levels have been broken, especially the 4600 level for the Nifty which closed at 4586. Not surprisingly, mid-caps have taken it on the chin, falling by over 3 per cent.
The markets are only reflecting investors' concerns about the worsening macroeconomic situation — higher inflation and higher interest rates that could hurt growth and profits. The March 2008 quarter numbers from India Inc reveal that revenue growth is slowing down and that operating profit margins are clearly under pressure.

So given that there could be earnings downgrades, the market could remain expensive even as it falls. Even now, India is still expensive compared with other emerging markets: a Merrill Lynch report highlights that India is trading at over 17 times twelve-month forward earnings, way above Korea at 12 times or Taiwan at 13.4 times. Not surprisingly, both in May and between January-May, India was the second-worst performing emerging market with FIIs pulling out close to $4 billion.

While FIIs have been net sellers this year, mutual funds (MFs) and insurance firms, who were big buyers earlier in the year, aren't doing so now. MFs were net sellers in March and April and in May, they bought negligible amounts. That's probably because inflows into mutual funds are slowing down: they were down 91 per cent month-on-month in April 2008, to their lowest level in six months. Insurance firms too are seeing lower inflows of premiums. Retail investors are understandably jittery. It's not that the India story is over, it remains promising but things could get a little worse before they get better.

via:BS

Engineers India on good quarterly earnings

Engineers India rose 1.18% to Rs 607 at 10:12 IST on BSE after posting 33.3% surge in net profit to Rs 56.68 crore on 49.2% rise in net sales to Rs 242.82 crore in Q4 March 2008 over Q4 March 2007.

The stock hit a high of Rs 625 and a low of Rs 600 so far during the day. The stock had a 52-week high of Rs 1314.40 on 9 January 2008 and the stock hit a 52-week low of Rs 445.05 on 5 September 2007.

The company’s current equity is Rs 56.16 crore. Face value per share is Rs 10.

The current price of Rs 607 discounts its Q4 March 2008 annualised EPS of Rs 40.37, by a PE multiple of 15.04.

Engineers India’s net profit rose 36.1% to Rs 194.60 crore on 29.2% increase in net sales to Rs 737.75 crore in the year ended March 2008 over the year ended March 2007.

In February 2008, Engineers India received the central government's approval to form an equal joint venture with Tata Projects.

Engineers India provides engineering and related technical services for petroleum refineries and other industrial projects.

Meltdown sees 24 stocks make new lows

3 Jun, 2008, 1525 hrs IST, E.T

MUMBAI: If the Monday’s over 300 points fall wasn’t enough, the Bombay Stock Exchange’s Sensex sought new lows on Tuesday. As the 30-share index slumped another 353.67 points to the day’s low of 15,709.51, one saw 24 stocks record new lows.

Meltdown sees 24 stocks make new lows
Scrip	52-week low
Sundram Fasteners	Rs 29.50
Deccan Bearings	Rs 19.05
Himatsingka Seide	Rs 45.50
Deccan Chronicle	Rs 122.20
HT Media	Rs 122
Jagran Prakashan	Rs 73.25
Sobha Developers	Rs 455.20
Binani Cement	Rs 57.50
Central Bank	Rs 70
Parle Software	Rs 198.65
Allied Computers	Rs 17.65
Reliance Power	Rs 215.60 (ex-bonus)
Tulsi Extrusions	Rs 58.10
Nahar Capital	Rs 50.55
Solectron EMS	Rs 102.25
ETC Network	Rs 205.15
CHI Investments	Rs 50.55
Jaibalaji Industries	Rs 340.00
Easter Silk	Rs 104.00
Elgi Tread	Rs 13.70
Joonktollee Tea	Rs 244.85
Eastern Gas	Rs 45
Brahmanand Himghar	Rs 132.55
Lohia Securities	Rs 96.25

Kirloskar Brothers plans Business restructuring

Kirloskar Brothers declined 1.77% to Rs 222.50 at 15:07 IST on BSE even as the company said it is reorganising its business into nine divisions to achieve a revenue target of $1 billion by 2011.

The stock hit a high of Rs 225 and a low of Rs 215 so far during the day. The stock had a 52-week high of Rs 527 on 3 October 2007 and the stock hit a 52-week low of Rs 206.40 on 24 March 2008.

The company’s current equity is Rs 21.15 crore. Face value per share is Rs 2.

The current price of Rs 222.50 discounts its Q4 March 2008 annualised EPS of Rs 19.92, by a PE multiple of 11.17.

The business units will deal in products, services and systems and will include irrigation and rural electrification, water resource management and oil and gas divisions. The reorganisation is effective from the first week of June 2008, the company said.

In May 2008, Kirloskar Brother received an order worth Rs 933.76 crore from the Andhra Pradesh state government's Irrigation & CAD Department for building a pump house.

On 15 April 2008, the company received a letter of intent for an order worth Rs 166.77 crore from Damodar Valley Corporation - Kolkata in respect of Koderma thermal power project.

On 1 April 2008, the company received a letter of intent for an order worth Rs 338.92 crore from the Government of Andhra Pradesh, Irrigation & CAD Department in respect of Rajiv Sagar Lift Irrigation project.

Kirloskar Brothers’ net profit rose 43.4% to Rs 52.66 crore on 26.9% increase in net sales to Rs 569.01 crore in Q4 March 2008 over Q4 March 2007.

The company is engaged in manufacturing and selling pumps and compressors. Products of the group include power driven pumps, valves, anti corrosion products, electric motors, spares and others. The group operates in three segments, namely, pump, compressors and others.

ACC on acquisition plans

ACC gained 2.39% to Rs 641.05 at 12:14 IST on BSE on reports the company has short-listed some companies for acquisition.

The stock hit a high of Rs 646.20 and a low of Rs 615.55 so far during the day. The stock had a 52-week high of Rs 1314.85 on 16 October 2007 and the stock hit a 52-week low of Rs 615 on 22 January 2008.

The company’s current equity is Rs 187.64 crore. Face value per share is Rs 10.

The current price of Rs 641.05 discounts its Q1 March 2008 annualised EPS of Rs 76.14, by a

PE multiple of 8.42.

As per recent reports, ACC has cash reserves of Rs 1000 crore which it would use for expansion and acquisition.

ACC’s net profit rose 0.5% to Rs 357.54 crore on 8% increase in net sales to Rs 1766.34 crore in Q1 March 2008 over Q1 March 2007.

ACC manufactures ordinary portland cement, fly ash and slag-based cement.

Adhunik Metaliks proposal for IPO of it's subsidiary

Adhunik Metaliks rose 2.55% to Rs 179 at 12:11 IST on BSE after its board approved initial public offer of the company's 100% subsidiary viz. Orissa Manganese & Minerals.

The stock hit a high of Rs 183 and a low of Rs 167.50 so far during the day. The stock had a 52-week high of Rs 253 on 2 January 2008 and the stock hit a 52-week low of Rs 46.05 on 12 June 2007.

The company’s current equity is Rs 91.23 crore. Face value per share is Rs 10.

The current price of Rs 179 discounts its Q4 March 2008 annualised EPS of Rs 9.6, by a PE multiple of 18.64.

Adhunik Metaliks' net profit rose 1.5% to Rs 21.9 crore on 65.9% rise in sales to Rs 311.92 crore in Q4 March 2008 over Q4 March 2007.

Adhunik Metaliks is part of the Adhunik group, promoted by the Kolkata-based Agarwal family. Its product portfolio includes sponge iron, pig iron and alloy billets.

Mudra Lifestyle planning new project

Mudra Lifestyle declined 2.84% to Rs 41 at 11:29 IST on BSE on reports the company is planning to set up a greenfield Spandex yarn project at Silvassa at an estimated investment of Rs 300 crore.

The stock hit a high of Rs 41.95 and a low of Rs 40.25 so far during the day. The stock had a 52-week high of Rs 114.90 on 2 January 2008 and the stock hit a 52-week low of Rs 33 on 19 March 2008.

The company’s current equity is Rs 35.99 crore. Face value per share is Rs 10.

The current price of Rs 41 discounts its Q3 December 2007 annualised EPS of Rs 9.29, by a

PE multiple of 4.41.

As per recent reports, the company is scouting for a finance partner to part fund this project. Earlier, the company was planning to rise about Rs 200 crore through foreign currency convertible bond (FCCB). But, looking at the recent slump in the stock market, it is now looking for a partner to invest Rs 200 crore.

Mudra Lifestyle’s net profit rose 77.5% to Rs 8.36 crore on 57.6% increase in net sales to Rs 68.85 crore in Q3 December 2007 over Q3 December 2006.

The company has engaged in fabric weaving, processing and making garments.

L&T to transfer its medical equipment business

Larsen & Toubro declined 3.17% to Rs 2,823.29 at 10:51 IST on BSE after company said it is seeking shareholders' approval to transfer its medical equipment and systems business to a subsidiary or to sell it.

The company did not give further details in a statement issued late on Monday, 2 June 2008.

The stock hit a high of Rs 2890 and a low of Rs 2802 so far during the day. The stock had a 52-week high of Rs 4670 on 1 November 2007 and the stock hit a 52-week low of Rs 1863.35 on 13 June 2007.

The company’s current equity is Rs 58.48 crore. Face value per share is Re 2.

The current price of Rs 2823.29 discounts its Q4 March 2008 annualised EPS of Rs 132.27, by a PE multiple of 21.34.

On 15 May 2008, Larsen & Toubro (L&T) entered into an agreement with Lafarge India for sale of its ready mix concrete business for an enterprise value of Rs 1480 crore.

L&T's net profit rose 38% to Rs 966.76 crore on 35.6% rise in sales to Rs 8,466.87 crore in Q4 March 2008 over Q4 March 2007. At the time of announcement of the Q4 result on 29 May 2008 company announced 1:1 bonus issue.

Larsen & Toubro manufactures a wide range of engineering products like earthmoving, industrial and chemical machinery, switchgears, valves and welding alloys.

PSL gets Large US order

PSL slipped 0.42% to Rs 355 at 10:37 IST on BSE despite bagging an order worth $418 million from Florida Gas Transmission Company for laying 543 miles of pipes and associated coating.

The company made this announcement during trading hours on Monday, 2 June 2008, when the stock declined 4.45% to Rs 356.50.

The stock hit a high of Rs 362 and a low of Rs 350.05 so far during the day. The stock had a 52-week high of Rs 588 on 31 December 2007 and the stock hit a 52-week low of Rs 233.05 on 4 June 2007.

The company’s current equity is Rs 42.71 crore. Face value per share is Rs 10.

The current price of Rs 355 discounts its Q3 December 2007 annualised EPS of Rs 28.37, by a PE multiple of 12.51.

In May 2008, PSL’s subsidiary PSL FZE, Sharjah, UAE secured an order worth $45 million for supply of steel pipes.

PSL’s net profit rose 45.1% to Rs 30.19 crore on 32.1% growth in net sales to Rs 659.05 in Q3 December 2007 over Q3 December 2006.

PSL manufactures pipes to meet requirements from all sectors, including oil and gas. Its mills are equipped with internal and external pipe-coating facilities to meet technical requirement of the oil, gas and water sectors in conformity with international specification. It has facilities at Kandla and Ahmedabad in Gujarat, Chennai in Tamil Nadu, and Visakhapatanam in Andhra Pradesh.

Punj Lloyd, BUY -CITI GROUP

CITI, 30 May 2008

Punj Lloyd, BUY

Auditor Qualification Mars Robust Headline Numbers

Buy/Low Risk 1L

Price (30 May 08) Rs320.85

Target price Rs493.00

Expected share price return 53.7%

Robust headline numbers — Recurring FY08 PAT at Rs3.21bn, up 63% YoY,

was 2% ahead of CIR estimates of Rs3.16bn. Reported PAT at Rs3.5bn was higher on account of sale of investments to the tune of Rs371mn in 3QFY08. Consolidated FY08 EBITDA margins at 8.3% were ahead of estimates at 7.6%. The company ended the year with an order backlog of Rs196bn, up 23% YoY.

Forex derivates MTM — The company reversed Rs218mn of forex derivative

gains recognized in the previous quarters in 4QFY08. At the end of FY08, the

company had forex derivative contracts with gains of Rs357mn on an MTM basis which has not been recognized, in line with ICAI standards.

Auditor qualification in FY08 accounts — Auditors have qualified the FY08 results, mentioning that the accounts do not provide for Rs3.0bn of losses on a long-term contract currently in progress (Simon Carves, UK). Management believes that the cost increase is because of growth in design/scope. Further, management expects that on settlement of claims and variation orders the project will break even. If these losses were provided for the reported FY08,PBT would have been Rs1.8bn and not Rs4.8bn.

Legacy losses in 3QFY08 — In 3QFY08, Semb E&C booked losses of Rs680mn. Management had mentioned that they had been conservative and provided for the entire amount of losses on these orders even though some recoveries are possible. Punj had Rs10.3bn of legacy orders at the end of 3QFY08.

Valuation

Our target price of Rs493 is based on a target P/E multiple of 23x Dec09 for Semb + Punj, which is well supported by earnings CAGR of 45% over FY07- 10E and RoEs expanding from 17% in FY08E to 21% in FY10E. Our target multiple is at a 23% discount to that of L&T. Despite Punj Lloyd’s superior earnings CAGR of 45% over FY07-10E vis-à-vis that of 42% for L&T, we believe Punj Lloyd should trade at a discount to L&T given L&T’s superior order backlog, RoEs and execution capabilities. Further, we also value Punj Lloyd investments in a shipyard and a real estate JV at a P/BV of 2.3x

Punj Lloyd – Buoyed by oil spending-Auditors comment on potential losses not provided for

Punj Lloyd – Buoyed by oil spending

Auditors comment on potential losses not provided for (BL Research Bureau)

Increased spending in the oil and gas sector on the back of soaring oil prices appeared to be the catalyst for the strong numbers announced by Punj Lloyd for the year-ended March 2008. The company, on a consolidated basis, announced a 51 per cent growth in revenues and 82 per cent growth in net profits for financial year 2008.

Increasing order size

Operating profit margins for the consolidated entity improved to 8.2 per cent from 7.3 per cent. This nevertheless pales against the double-digit margins enjoyed by the company before its acquisitions.

The company has been taking initiatives to improve profitability of its subsidiaries, where though they held prequalification in high end areas, could not convert the same into commercial opportunities. The company has effectively tapped the qualification of the acquired companies to sharply ramp up its order book. Punj Lloyd’s current order backlog of Rs 19,600 crore is over five times its order book when it came out with its IPO in December 2005.

The average increase in the order size can also be expected to improve profitability through economies of scale. While the company recent Rs 2,015-crore order win in Malaysia is a case in point, the company has stated that it is working at bagging orders of $1billion in size.

While the above order backlog is tilted in favour of oil and gas segment, infrastructure projects (civil, power) account for a significant 35 per cent.

Although the management has stated that 90 per cent of its total orders have passed through clauses for input hikes, the infrastructure segment may nevertheless be vulnerable to commodity increase as the escalation clauses seldom cover the complete hike in inputs.

Loss on contract : The company’s auditors have commented that no provision has been made for expected losses of Rs 305 crore arising out of one of the contracts. The company has clarified that it hopes to recover the same and at least break even on the project.

The project, for a UK-based company, was a legacy order (of Simon-Carve before it was acquired by Punj Lloyd) and involved changes in design and scope of projects. While the company has already reversed some profits booked in the third quarter, it stated that a settlement has been reached for part of the revised order size. Given that this project accounts for less than 1 per cent of the present order backlog, the outcome of this issue is unlikely to have any significant impact on future profitability.

Emami comes out with open offer for Zandu

Kolkata, June 2 Emami and a string of entities acting in concert purchased 23.6 per cent stake from one of the promoter groups of Zandu Pharmaceutical Works at Rs 6,900 per share at a total cost of around Rs 130 crore.

The purchase price included Rs 100 each for non-compete fees.

Emami has also announced an open offer for 20 per cent stake in Zandu.

The open offer price has been fixed at Rs 7,315 per share, higher than the purchase price of the majority stake in Zandu.

Strong brand equity and business prospect for Zandu was behind the arrived valuation, Mr Harsha V. Agarwal, Executive Director of Emami said. He said neither the Parekh family, which hold around 18 per cent stake in Zandu, has been approached as of now for Emami’s entry into the management of Zandu, nor it has moved the company for berth on the board. “We would take up such matters after the open offer is complete,” he added.

Anand Rathi Financial Services is the manager to the open offer, which opens on July 24.

The specified date for the offer is June 13 and the last date for revising the offer price is August 1.

The offer closes on August 12. The average price of the Rs 100-face valued Zandu on the bourses in last 26 weeks was Rs 6,807.07 and the past fortnight’s average was at Rs 7,136.91 per share.

Zandu stock on Monday shot up by 19.47 per cent to Rs 9,716.15, but the Rs 2 Emami stock declined by 6.28 per cent to Rs 300.

Slowdown, falling market demolish real estate stocks

3 Jun, 2008, 0402 hrs IST,Sanjeev Choudhary, TNN

With increasing evidence of a slowdown in the realty sector, rising input costs and little chances of interest rate softening, realty may see further dip.

The uncertainty in the capital market has hit realty stocks the hardest.

The BSE realty index is the worst performer this year, having shed 51% of its 52-week peak reached in January.

With increasing evidence of a slowdown in the realty sector, rising input costs and little chances of interest rate softening, experts feel realty stocks may see further dip in valuations.

The BSE benchmark index Sensex has shed 24% since January while power stocks, which had a fantastic rally before the January crash, have lost 42% of their 52-week peak. Other major losers include bank (41%), consumer durables (41%), capital goods (39%), PSU (39%) and oil and gas index (28%).

"Realty and power stocks had run quite high in 2007, and that’s why when they started coming down, the fall was more pronounced," says Centrum Capital research head Harendra Kumar.

Investors were factoring in higher profits, but now with the sector in the throes of a slowdown, they are scaling down their expectations leading to fall in prices, he added.

The country’s largest property firm DLF’s scrip lost 54% while Unitech shed 64% from its peak. The scrips of Delhi-based Parsvnath and Omaxe have lost 68% each since January.

Real estate sector is seeing a major slowdown in the sales volume in most markets of the country. The speculators have exited the market and Mumbai and NCR, the biggest real estate markets in the country, are seeing subdued sales.

In Gurgaon and Noida, which had seen prices almost treble in four years, sales are down 70%, leading to a price correction of 10-20%. Centrum’s Harendra Kumar says if the negative newsflow continues for the realty sector, the scrips may see a further dip.

"The scenario has changed since end-2007 when the consumers expected interest rates to soften. We are faced with such a high inflation rate that interest rates are unlikely to come down for 6-9 months," says Angel Broking research head Hitesh Agrawal, adding the demand for real estate will remain subdued at such a high interest rate.

"Rising steel and cement prices have increased the input cost for developers while credit has been tightening with banks becoming selective in lending," says Mr Agrawal.

VIA:E.T

Blue Dart jumps 10 pc on BSE

2 Jun, 2008, 1854 hrs IST, PTI

MUMBAI: Shares of courier major Blue Dart Express on Monday surged over 10 per cent on the BSE, amid reports that global express and logistics company DHL would make an open offer to the firm.

The scrip soared over 10 per cent to an intra-day high of Rs 684, as against Friday's close of Rs 618.05. The shares finally settled up 5.84 per cent to Rs 655, while 7,727 shares of the company changed hands at the Bombay Stock Exchange.

On the National Stock Exchange, the scrip closed at 655, up 5.52 per cent after touching an intra-day high of Rs 683.9.

The NSE had written to the officials of the company to verify the information reported in the media for safeguarding investors interest. In response, Blue Dart said in a filing today that, "With reference to the news item appearing in a financial newspaper ... the company is unaware of any such move."

The report stated that DHL is planning to make an open offer to shares of Blue Dart, a move aimed at delisting the courier firm from the domestic bourses, making it a fully owned subsidiary of the International logistics firm.

As on December 2007, DHL Express Singapore Pte, a subsidiary of DHL, held 81.03 per cent stake in Blue Dart.

Blue Dart has the extensive domestic network covering over 17,500 locations, and service more than 220 countries and territories worldwide through its sales alliance with DHL.

Tata Tea on strong Q4 outcome

Tata Tea gained 1.25% to Rs 874.30 at 11:59 IST on BSE after reporting 4497.9% spurt in net profit to Rs 178.86 crore on 71.9% jump in total income to Rs 455.54 crore in Q4 March 2008 over Q4 March 2007.

s The stock hit a high of Rs 893 and a low of Rs 860 so far during the day. The stock had a 52-week high of Rs 1014 on 3 January 2008 and the stock hit a 52-week low of Rs 586.10 on 22 January 2008.

The company’s current equity is Rs 61.84 crore. Face value per share is Rs 10.

The current price of Rs 874.30 discounts its Q4 March 2008 annualised EPS of Rs 115.69, by a PE multiple of 7.56.

However, Tata Tea’s net profit rose a mere 2.1% to Rs 312.86 crore on 7.8% increase in net sales to Rs 1153.43 crore in the year ended March 2008 over the year ended March 2007.

Tata Tea owns brands like Tetley and Glaceau among others. The company carries major plantation activity in India and Sri Lanka.

Sesa Goa set back on Steep export duty hike

Sesa Goa slumped 3.30% to Rs 4,144.30 at 10:24 IST on BSE after reports that the government has imposed 15% export duty on iron ore.

The stock saw volatile swings between day's high and low of Rs 4,310 and Rs 4,120 respectively, so far during the day. The stock had a 52-week high of Rs 4,390 on 5 May 2008 and a 52-week low of Rs 1,630 on 7 June 2007.

The mid-cap iron ore exporter has an equity capital of Rs 39.36 crore. Face value per share is Rs 10.

The current price of Rs 4144.30 discounts its Q4 March 2008 annualised EPS of Rs 811.28, by a PE multiple of 5.10.

According to reports, the decision was taken at the meeting of the Committee of Secretaries (CoS) on 30 May 2008.

At present, an export duty at a specific rate of Rs 300 per tonne is imposed on iron ore with 62% of higher iron content and Rs 50 per tonne on lower grade ore. Under the new dispensation, the export duty would be based on the value of the product shipped abroad.

Decisions on both roll back of export duty on steel and imposition of the same on its raw material are expected to announced in the next few days, the reports added.

Sesa Goa is India's largest private sector iron ore exporter and this move is likely to impact its profitability.

Sesa Goa reported 216.4% surge in net profit to Rs 798.30 crore on 112.1% increase in sales to Rs 1644.48 crore in Q4 March 2008 over Q4 March 2007.

Sesa Goa, an iron ore mining company of the Vedanta group, has been involved in iron ore mining, beneficiation and exports besides. It is also into the manufacture of pig iron and metallurgical coke.

Monsanto India tumbles on turning ex-dividend

Monsanto India plunged 12.39% to Rs 1686.50 at 10:15 IST on BSE after the company’s shares started trading at Rs 180 per share ex-dividend from today, 2 June 2008.

Shares of India's third largest multinational agrochemicals producer by sales had hit a high of Rs 1845 and a low of Rs 1670 so far during the day. The stock had touched a 52-week high of Rs 2500 on 4 January 2008 and a 52-week low of Rs 1300 on 17 October 2007.

The company’s current equity is Rs 8.63 crore. Face value per share is Rs 10.

The current price of Rs 1400 discounts Q1 June 2007 annualised EPS of Rs 267.86 by a PE multiple of 5.22.

Monsanto provides agricultural solutions. High-yield crop varieties and hybrid crops such as corn, sunflower and cotton are important crops that the company is committed to developing.

Monsanto India reported net profit of Rs 12.55 crore in Q4 March 2008 as compared to net loss of Rs 1.72 crore in Q4 March 2007. Net sales jumped 132.20% to Rs 50.13 crore in Q4 March 2008 over Q4 March 2007. The company’s net profit was boosted by 629.20% surge in other income to Rs 37.41 crore in Q4 March 2008 over Q4 March 2007.

Post Market Commentary -2nd June-08

Fears of early election rattles bourses

Mounting political concern was the key culprit that haunted bourses since second half of day's trading session, wiping-off steady early gains. A late sell-off resulted in the benchmark index BSE Sensex cracking below the physcological 16,000 mark, only to close slightly above that level. However the S&P CNX Nifty shut shop below 4,750 level. The market breadth was weak. Asian markets, which opened before Indian markets were firm.

The market which was firm till early afternoon trade, witnessed a sharp sell-off thereafter triggered by reports that the Revolutionary Socialist Party (RSP), a member of the Left Front led by the Communist Party of India-Marxist (CPM) was pulling out of the United Progressive Alliance (UPA)-Left coordination committee. Wary investors pressed sales over uncertainty that Left parties may withdraw support to the government.

Prime Minister Manmohan Singh reportedly said that the government is left with no option but to hike the fuel prices in the wake of soaring global crude oil prices. However government's move to hike fuel price will face challenge from Left, and may propel inflation above 10%.

On the other hand, if government does not hike prices, oil marketing companies will go bankrupt, spoiling its report card.

As per petroleum minister's proposal, a hike of Rs 10 a litre in petrol prices, Rs 5 per litre in diesel and Rs 50 per cylinder in cooking fuel is to be considered to cut losses being incurred by the state-run firms. But the Left parties had said they would oppose any move to hike prices of transport and cooking fuels since the average citizen was already burdened by high inflation.

Mercedes-Benz drives new CNG sedans into India

2 Jun, 2008, 0205 hrs IST,Chanchal Pal Chauhan, TNN

NEW DELHI: You needn’t loosen your purse strings on this one as it runs on compressed natural gas (CNG), the cheapest auto fuel in the world. The three-star iconic luxury brand, Mercedes-Benz, just drove in with a CNG-complaint engine, making it more fuel efficient than the India’s cheapest car Maruti 800, which runs only on petrol.

New CNG variant of Mercedes-Benz runs over 20 km on a kg of CNG against its petrol sibling which guzzles a litre for every 12 km. Moreover, CNG comes at less than half the price — Rs 19 — against Rs 45.52 for petrol in Delhi. And it’s much more cleaner than petrol.

As energy crisis grips the world and speculations mount about a hefty fuel price hike, CNG has taken centre stage in Mercedes India plans. The German company has already imported a couple of CNG-compatible cars in Delhi and Mumbai, allowing even the monied to have cheaper fuel options. According automobile industry sources, Mercedes-Benz plans to bring its globally-successful CNG sedans to India.

“We have some cars running on CNG in India. It’s a successful technology and has been developed over the years. We are also trying the bio-diesel option on the E Class saloon here. If these extensive trials are successful, we shall introduce these cars in India too,” said a Daimler India senior executive.

Mercedes-Benz, India’s largest luxury carmaker, had sold 2,491 cars in 2007. Buoyed by 50% increase in sales to 1,330 cars — both locally made and imported — in the first four months of 2008, it is looking at its worldwide successful new CNG models to garner higher sales.

It had already launched its B class B170 NGT and the E 200 CNG sedans in the US and Europe and plans to extend them to India. For its new CNG range in India, Mercedes is banking on institutional sales where vehicles ply largely on CNG technology.

Other luxury car makers are also not lagging behind on green plans. BMW is looking at bringing its clean hydrogen technology, which runs on water and emits only steam. The technology has not yet been commercialised.

“The high-tech BMW Hydrogen 7 is our answer to green fuels. It is an expensive technology but with rapid expansion of the luxury car market in India, there is a potential for alternative fuels in future,” said BMW India spokesperson.

CNG and other green fuels are likely to change the image of luxury cars known for guzzling fuel. With crude oil touching $135 a barrel, alternative fuel options are becoming basic characteristic of luxury cars too. With over 7,000 luxury cars sold in India in FY08, some exciting fuel options are likely to hit the segment soon.

Management issue may upset IFCI sale again

2 Jun, 2008, 0254 hrs IST,Sangita Mehta, TNN

MUMBAI: Lack of clarity on management control may once again dampen interest among investors who are seeking to bid for the strategic stake in IFCI. On May 29, the board of IFCI announced that it would be making a second attempt to sell 26% in the term-lending institution. Market observers say this time IFCI will be able to pull through the stake sale only if it is willing to give management control to the investors.

Less than six months ago, IFCI was forced to call off its plans to sell stake after talks with Sterlite and Morgan Stanley — the consortium selected among bidders — failed. The bone of contention then was that of management control. Banking analysts say with the slump in the stock market and the perceived slowdown in the economy, few investors may show interest in bidding.

“This makes it even more essential for the institution to being in clarity on what is in it for investors,” said an analyst. Last time, IFCI had the advantage of calling for bids amid the boom in the stock market. While it had received ten bids, most bidders pulled out of race mid-way due to lack of clarity.

Market observers say IFCI will have to clearly spell out what they expect from the investors and what they have to offer to win suitable candidates as bidders. One development that irked investors was that after inviting bids but before shortlisting the final bidder, IFCI decided to allow PSU banks and insurance companies to convert IFCI bonds worth Rs 1,479 crore into shares. In effect, this would enhance the equity base and post-conversion, lower the stake of strategic investors below 26%.

Further, there was confusion on how much stake banks and insurance companies will hold post-conversion.
The last lap of bidding saw only three contenders in the fray — Sterlite Industries with Morgan Stanley, a consortium including Punjab National Bank, JC Flowers and Shinsei Bank and the third bidder were investors led by Cargill Financial Services.

Sources said investors were unhappy with the uncertainty over management control. After having acquired 26% stake, the successful buyer would have had to make an open offer for 20%, which would raise their stake to 46% — making them majority shareholder. But even at this position, they were not guaranteed full management control.

Yet another bone of contention was the bonds worth Rs 923 crore held by the government. There is uncertainty on whether or not they would be converted into shares. A conversion of government stake would widen the equity base and bring down the stake held by the strategic investor.

On June 12, the board of IFCI will meet to consider issues related to conversion of government’s Rs 923 crore debt into shares and induction of strategic partner. This time, IFCI’s CEO Atul Kumar Rai has been quoted by the media saying “IFCI will not repeat the mistakes of the past,” which is being interpreted to mean that the management skills of the new partner would be better leveraged or that they may be offered management control. Banking analyst say if IFCI fails to pull through this time, it faces the risk of losing some credibility.

via: E.T

Bonus no respite to RPower shareholders as stock trades well below adjusted cost of acquisition

Reliance Power was trading at Rs 237.25 at 15:04 IST on BSE, which is still below the adjusted cost of acquisition of Rs 269 for retail investors and Rs 281 for institutional investors.

The stock became ex-bonus today. The stock opened at Rs 308.95 on BSE. It hit a high of Rs 309.40 and a low of Rs 231.70 so far during the day. The stock had closed at cum bonus price of Rs 409.55 yesterday, 29 May 2008. The company has set 2 June 2008 as the record date for a 3:5 bonus issue.

The stock had a 52-week high of Rs 599.90 on 11 February 2008 and a 52-week low of Rs 303.45 on 24 March 2008 (cum-bonus prices).

The face value per share is Rs 10.

In a meeting held on 25 February 2008, Reliance Power's board of directors had approved 3:5 (3 bonus shares for every 5 shares held) bonus issue to all shareholders, excluding the promoter group comprising of Reliance Energy and the Anil Dhirubhai Ambani Group (ADAG). The promoter decided to waive their entitlement to bonus shares.

Meanwhile, Anil Ambani decided to transfer his 2.6% in Reliance Power to Reliance Energy so that Reliance Energy maintains its holding at 45% in Reliance Power after the bonus issue.

Following bonus issue and personal stake transfer by Anil Ambani, the cost of acquisition of Reliance Power stock will come down by 40% for retail shareholders to Rs 269 per share from issue price of Rs 430 per share, Reliance Power had said at the time of the bonus announcement. In the same way, for other investors the acquisition cost will be reduced by 37% to Rs 281, from issue price of Rs 450. The Rpower stock managed close barely above issue price of Rs 450 at Rs 450.40 only once on 25 February 2008. The bonus issue was declared to compensate shareholders following poor listing of the stock on bourses.

Following this bonus issue, Anil Ambani's stake will come down to 40% from the present 45% in Reliance Power. Reliance Energy's shareholding remains unchanged at 45% while public shareholding will increase by 5% to 15%.

Reliance Power is developing 13 power generation projects with a capacity of 28,200 megawatt (MW).

Reliance Power reported net profit of Rs 94.67 crore on total income of Rs 132.87 crore in the year ended March 2008.

IFCI

IFCI gained 2.17% to Rs 63.65 at 12:31 IST on BSE on reports Reliance Industries and Standard Chartered Bank have co-bid for a strategic stake in the state-run financial institution.

The stock hit a high of Rs 64.90 and a low of Rs 63 so far during the day. The stock had a 52-week high of Rs 121.20 on 17 December 2007 and a 52-week low of Rs 36.70 on 24 March 2008.

The company’s current equity is Rs 763.73 crore. Face value per share is Rs 10.

IFCI’s board of directors will now meet on 12 June 2008 to take a further view after yesterday’s 29 May 2008, meeting to consider induction of strategic investor and optionally convertible debentures held by Government of India. Ahead of the announcement, the IFCI stock jumped 6.50% to Rs 62.30 on Thursday, 29 May 2008.

This is the second time IFCI is making an effort to induct an investor. It may be recalled that in December 2007, IFCI's board decided to call-off the planned sale of a 26% equity stake as the Sterlite-Morgan Stanley consortium sought management control of the state-run firm.

The other issue for failure in strategic stake sale was the lack of clarity on the debentures issued to the government. The government owns convertible debentures of Rs 923 crore in IFCI that can be converted into equity shares at later date. Upon conversion, the government will hold around 15% stake in the Delhi-headquartered entity.

IFCI reported net loss of Rs 42.52 crore in Q4 March 2008 as compared to net profit of Rs 668.43 crore in Q4 March 2007. The company’s operating income declined 32.8% to Rs 830.10 crore in Q4 March 2008 over Q4 March 2007.

IFCI's principal activities are project financing, providing financial services and comprehensive corporate advisory services. The company also provides equipment finance, equipment credit, equipment leasing, corporate loans, short-term loans and working capital loans to meet the specific needs of corporate.

Sujana Metal shines on acquisition

Sujana Metal Products surged 5.05% to Rs 24.95 at 12:15 IST on BSE after the company announced the acquisition of three steel units with an investment of Rs 180 crore.

The stock hit a high of Rs 25.95 and a low of Rs 23.50 so far during the day. The stock had a 52-week high of Rs 66.05 on 12 July 2007 and the stock hit a 52-week low of Rs 16.35 on 24 March 2008.

The company’s current equity is Rs 27.59 crore. Face value per share is Rs 5.

The current price of Rs 24.95 discounts its Q3 march 2008 annualised EPS of Rs 8.33, by a PE multiple of 3.

With these latest acquisitions, Sujana Metal Products has made five acquisitions in less than 12 months. The units acquired earlier are Kamini Steels and Handum Industries.

Sujana Metal Products’ net profit fell 19.6% to Rs 13.17 crore on 69.1% increase in net sales to Rs 389.51 crore in Q3 March 2008 over Q3 March 2007.

The company is engaged in manufacturing and marketing of voltage towers, structural steels and TMT bars. The products of the company comprise of rounds reinforcement bars, angles, channels, flats, and I beams. The company markets its products in India, Germany, Japan, USA and Canada.

Aegis Logistics speeds up on strong Q4 show

Aegis Logistics advanced 2.86% to Rs 249.75 at 11:58 IST on BSE after the company reported 74.90% jump in net profit to Rs 12.03 crore on 75.80% surge in net sales to Rs 115.14 crore in the Q4 March 2008 over Q4 March 2007.

The stock hit a high of Rs 262 and a low of Rs 248.15 so far during the day. The stock had a 52-week high of Rs 404.40 on 31 December 2007 and 52-week low of Rs 126 on 20 November 2007.

The company’s current equity is Rs 19.94 crore. Face value per share is Rs 10.

The current price of Rs 249.75 discounts its Q4 March 2008 annualised EPS of Rs 24.17, by a PE multiple of 10.33.

Aegis Logistics is in the business of storing, handling and distributing oil products, chemicals and gas. It has a strong foothold in Mumbai, where it owns facilities for providing such services.

TNPL on good quarterly earnings

Tamil Nadu Newsprint & Papers surged 2.98% to Rs 101.55 at 10:25 IST on BSE after posting 26.1% rise in net profit to Rs 27.38 crore on 10.9% increase in net sales to Rs 250.22 crore in Q4 March 2008 over Q4 March 2007.

The stock hit a high of Rs 105.50 and a low of Rs 101.55 so far during the day. The stock had a 52-week high of Rs 147 on 8 January 2008 and the stock hit a 52-week low of Rs 83 on 24 March 2008.

The company’s current equity is Rs 69.21 crore. Face value per share is Rs 10.

The current price of Rs 101.55 discounts its Q4 March 2008 annualised EPS of Rs 15.82, by a PE multiple of 6.42.

Tamil Nadu Newsprint & Papers’ net profit rose 31.1% to Rs 112.82 crore on 9.8% rise in net sales to Rs 938.53 crore in the year ended March 2008 over the year ended March 2007.

The company's principal activity is to produce papers.