Showing posts with label News. Show all posts
Showing posts with label News. Show all posts
Wednesday, 4 April 2012
FM may remove duty on unbranded jewellery
Finance Minister Pranab Mukherjee hinted at a roll back of the excise duty on unbranded jewellery but ruled out going back on the hike in import duty on gold and platinum.
He also promised to reconsider the proposal to make it mandatory the use of PAN card for purchase of jewellery of over Rs 2 lakh.
"I understand the plight of small jewellers ...I am considering it... the period that will be available from now and (passage of) Finance Bill, I will come out with an acceptable formulation", Mukherjee said in his reply to the general discussion on the Budget for 2012-13 in the Lok Sabha.
He was referring to the decision to include unbranded jewellery in the ambit of one per cent excise duty on branded jewellery that led to protest and strikes by bullion dealers all over the country.
He also promised to reconsider the proposal to make it mandatory the use of PAN card for purchase of jewellery of over Rs 2 lakh.
"I understand the plight of small jewellers ...I am considering it... the period that will be available from now and (passage of) Finance Bill, I will come out with an acceptable formulation", Mukherjee said in his reply to the general discussion on the Budget for 2012-13 in the Lok Sabha.
He was referring to the decision to include unbranded jewellery in the ambit of one per cent excise duty on branded jewellery that led to protest and strikes by bullion dealers all over the country.
Monday, 2 April 2012
Top executives at Indian Oil, Bharat Petroleum Corp and Hindustan Petroleum Corp Need To Raise Fuel Prices ImmediatelyELY
Top executives at Indian Oil, Bharat Petroleum Corp and Hindustan Petroleum Corp told ET that independent directors were regularly asking 'uncomfortable questions' about their decision to sell petrol below market price.Executives at oil companies said the pressure was mounting. Petrol prices need to be raised by about Rs 9 per litre to bring them on par with international rates.
But before raising prices, state companies always informally seek the oil ministry's permission, which has not been granted since December because of assembly elections and fear of objections from allies such as Mamata Banerjee.
Given the severe strain on their finances, oil companies need to raise petrol prices immediately, executives said. The three companies reported a combined net loss of about Rs 15,000 crore in the first three quarters of 2011-12. "We can't wait any longer. We have to take a decision in a day or two," the chairman of an oil firm said, requesting anonymity.
"We will find it very difficult to explain our pricing decision to independent directors. They have already raised many questions. They say that we should at least raise the price of petrol, which is a deregulated fuel," the chairman said.
The chairman of another state oil company said it was difficult for them to convince independent directors why petrol prices have been frozen since December. Oil companies were ready to raise petrol prices on March 31. "Essential personnel were called on Sunday expecting a hike, but it could not be done due to political reasons," said an oil company executive directly involved in fuel pricing.
But before raising prices, state companies always informally seek the oil ministry's permission, which has not been granted since December because of assembly elections and fear of objections from allies such as Mamata Banerjee.
Given the severe strain on their finances, oil companies need to raise petrol prices immediately, executives said. The three companies reported a combined net loss of about Rs 15,000 crore in the first three quarters of 2011-12. "We can't wait any longer. We have to take a decision in a day or two," the chairman of an oil firm said, requesting anonymity.
"We will find it very difficult to explain our pricing decision to independent directors. They have already raised many questions. They say that we should at least raise the price of petrol, which is a deregulated fuel," the chairman said.
The chairman of another state oil company said it was difficult for them to convince independent directors why petrol prices have been frozen since December. Oil companies were ready to raise petrol prices on March 31. "Essential personnel were called on Sunday expecting a hike, but it could not be done due to political reasons," said an oil company executive directly involved in fuel pricing.
Saturday, 3 March 2012
IRFC tax free bonds list on the stock exchanges
The tax-free bonds of the Indian Railway Finance Corporation (IRFC), the financing arm of Indian Railways, made their debut today on the National Stock Exchange and Bombay Stock Exchange at a premium.
RFC in January 2012 issued tax free, secured, redeemable, non-convertible bonds of face value of Rs 1,000 each in the nature of debentures, having benefits under Section 10(15)(iv)(h) of the Income Tax Act, 1961, as amended (bonds) aggregating to Rs 3,000 crore with an option to retain oversubscription of upto the shelf limit of Rs 6,300 crore.
These bonds carry a coupon rate of 8.00% p.a for 10 years (ISEC Comment: Series I) and 8.10% p.a for 15 years (ISEC Comment: Series II). An additional coupon rate of 0.15% p.a. and 0.20% p.a. on series 1 and series 2 respectively shall be available to Resident Indian Individuals, Hindu Undivided Families through the Karta and Non Resident Indians on repatriation as well as non-repatriation basis, applying for an amount aggregating upto and including Rs 5 lakh across all series in the tranche (available only to the original allottees).
The bonds have been rated 'CRISIL AAA/Stable' by CRISIL, '[ICRA] AAA' by ICRA and 'CARE AAA' by CARE, indicating highest degree of safety for timely servicing of financial obligations.
SBI Capital Markets Limited, A K Capital Services Limited and ICICI Securities Limited are the Lead Managers to the issue. Indian Bank shall be the Trustee to the issue.
The company intends to utilize the Issue proceeds for financing the acquisition of rolling stock and financing the capacity enhancement works in the Indian Railways.
RFC in January 2012 issued tax free, secured, redeemable, non-convertible bonds of face value of Rs 1,000 each in the nature of debentures, having benefits under Section 10(15)(iv)(h) of the Income Tax Act, 1961, as amended (bonds) aggregating to Rs 3,000 crore with an option to retain oversubscription of upto the shelf limit of Rs 6,300 crore.
These bonds carry a coupon rate of 8.00% p.a for 10 years (ISEC Comment: Series I) and 8.10% p.a for 15 years (ISEC Comment: Series II). An additional coupon rate of 0.15% p.a. and 0.20% p.a. on series 1 and series 2 respectively shall be available to Resident Indian Individuals, Hindu Undivided Families through the Karta and Non Resident Indians on repatriation as well as non-repatriation basis, applying for an amount aggregating upto and including Rs 5 lakh across all series in the tranche (available only to the original allottees).
The bonds have been rated 'CRISIL AAA/Stable' by CRISIL, '[ICRA] AAA' by ICRA and 'CARE AAA' by CARE, indicating highest degree of safety for timely servicing of financial obligations.
SBI Capital Markets Limited, A K Capital Services Limited and ICICI Securities Limited are the Lead Managers to the issue. Indian Bank shall be the Trustee to the issue.
The company intends to utilize the Issue proceeds for financing the acquisition of rolling stock and financing the capacity enhancement works in the Indian Railways.
Thursday, 1 March 2012
New Accounting Rules for Real Estate
Real estate companies and companies involved in carbon trading will have to change the way they recognize revenues and it's all thanks to a new guidance note issued by the Institute Of Chartered Accountants In India. Payaswini Upadhyay reports
In a move to reduce the disparate practices of revenue recognition by real estate companies, ICAI has issued a guidance note identifying threshold limits when revenues from projects can be recognized.
These thresholds are:
1. when all critical regulatory approvals are secured
2. when 25% of the project is completed
3. when 25% of the project's inventory is sold and
4. when at least 10% of the expected revenue is received.
This is in sharp contrast to the current practice, where revenue recognition differs from company to company and experts say this will mean a change in valuations and quarterly profit statements.
In a move to reduce the disparate practices of revenue recognition by real estate companies, ICAI has issued a guidance note identifying threshold limits when revenues from projects can be recognized.
These thresholds are:
1. when all critical regulatory approvals are secured
2. when 25% of the project is completed
3. when 25% of the project's inventory is sold and
4. when at least 10% of the expected revenue is received.
This is in sharp contrast to the current practice, where revenue recognition differs from company to company and experts say this will mean a change in valuations and quarterly profit statements.
Wednesday, 22 February 2012
SBI shares plunge 8% on Kingfisher exposure concerns
Shares of State Bank of India plunged sharply by over 8 per cent on Wednesday, on concerns about its exposure to Kingfisher Airlines and reports about public sector lender giving fresh loans to the debt-ridden carrier.
Shares of Kingfisher also plunged by over six per cent on continuing financial and operational troubles at the company.
Shares of Kingfisher also plunged by over six per cent on continuing financial and operational troubles at the company.
Tuesday, 31 January 2012
RIL's $2 bn share buyback opening on 01 Feb 2012
Reliance Industries climbed more than two percent on Tuesday ahead of the opening of its $2 billion share buyback -- the largest ever in the country's capital market history.
The company, whose shares are held by one out of every four Indian investors, plans to spend up to 104 billion rupees ($2 billion) to buy back its shares in a bid to bolster its sagging performance.
Reliance's 2012 buyback will begin on Wednesday and close January 19 next year, the company said in a statement Monday. This is Reliance's second buyback since December 2004.
The company, whose shares are held by one out of every four Indian investors, plans to spend up to 104 billion rupees ($2 billion) to buy back its shares in a bid to bolster its sagging performance.
Reliance's 2012 buyback will begin on Wednesday and close January 19 next year, the company said in a statement Monday. This is Reliance's second buyback since December 2004.
India is hopeful $100 bn foreign investment in nuclear power sector
India is hopeful of getting more than $100 billion worth of foreign investment in the nuclear power sector in the next two decades and a quarter of it would come from France, Commerce and Industry Minister Anand Sharma has said.
"In the coming two decades, India will see investments in excess of $100 billion in the nuclear power sector alone and I am sure that at least a quarter of these will come from France," Sharma said, addressing the fourth India-France CEOs Forum here Monday.
"In the coming two decades, India will see investments in excess of $100 billion in the nuclear power sector alone and I am sure that at least a quarter of these will come from France," Sharma said, addressing the fourth India-France CEOs Forum here Monday.
ICICI Bank Q3 at Rs 1728 crore
ICICI Bank Net profit rose to Rs 1728 crore ($347.4 million) from Rs 1437 crore a year earlier, while net interest income increased 17 per cent to Rs 2710 crore.
During the reporting period, the bank's total income climbed to Rs 10,483.73 crore from Rs 8,444.75 crore, it said in a filing to the BSE. Operating profit stood at Rs 2,687.10 crore as against Rs 2,342.61 crore, it said.Its total provisions declined to Rs 341.10 crore from Rs 464.27 crore, the bank said.
The net non-performing asset ratio decreased to 0.70 percent from 1.16 per cent 12 months back, it said.Total capital adequacy stood at 18.88 per cent of which the core tier-I constituted 13.13 per cent.
During the reporting period, the bank's total income climbed to Rs 10,483.73 crore from Rs 8,444.75 crore, it said in a filing to the BSE. Operating profit stood at Rs 2,687.10 crore as against Rs 2,342.61 crore, it said.Its total provisions declined to Rs 341.10 crore from Rs 464.27 crore, the bank said.
The net non-performing asset ratio decreased to 0.70 percent from 1.16 per cent 12 months back, it said.Total capital adequacy stood at 18.88 per cent of which the core tier-I constituted 13.13 per cent.
Monday, 30 January 2012
CBI arrests Andhra Pradesh senior IAS officer & home secretary
The CBI on Monday arrested senior IAS officer and Andhra Pradesh principal home secretary B P Acharya in a case relating to alleged irregularities in land transfer and sale of villas and apartments in a township in the state.
The township has been jointly developed by state-run Andhra Pradesh Industrial Infrastructure Corporation (APIIC) and Dubai-based infrastructure firm Emaar.
The township has been jointly developed by state-run Andhra Pradesh Industrial Infrastructure Corporation (APIIC) and Dubai-based infrastructure firm Emaar.
India is considering settling payment for oil imports from Iran in rupees
India is considering settling payment for oil imports from Iran in rupees, the Reserve Bank of India deputy governor H.R. Khan said on Monday.
Khan said New Delhi was evaluating different options to settle payment for oil imports from Iran, India's second biggest oil supplier.
"There are different options which are being evaluated. It is a bilateral issue. It cannot be discussed openly," Khan said.Earlier this month Reuters reported that India and Iran have agreed to settle some of their $12 billion annual oil trade in rupees, citing a government source, resorting to the restricted currency after more than a year of payment problems in the face of fresh, tougher U.S. sanctions.
Khan said New Delhi was evaluating different options to settle payment for oil imports from Iran, India's second biggest oil supplier.
"There are different options which are being evaluated. It is a bilateral issue. It cannot be discussed openly," Khan said.Earlier this month Reuters reported that India and Iran have agreed to settle some of their $12 billion annual oil trade in rupees, citing a government source, resorting to the restricted currency after more than a year of payment problems in the face of fresh, tougher U.S. sanctions.
Wednesday, 25 January 2012
The government is looking to garner an additional Rs 7,000 crore by PSU companies
Hard-pressed for funds, the government is looking to garner an additional Rs 7,000 crore by persuading state-owned companies to increase their dividend payout for FY12, taking the total collection in the current fiscal to over Rs 30,000 crore.
In addition, the government expects to rake in Rs 1,500 crore through Dividend Distribution Tax (DDT) in the current financial year."(We are) looking at garnering Rs 7,000 crore higher dividend payment by PSU companies and Rs 1,500 crore as dividend tax distribution tax (DDT)", a senior Finance Ministry official said here.
Senior officials of the Finance Ministry led by Secretary of Economic Affairs (DEA) R Gopalan have held a series of consultations with the heads of state-owned enterprises, including PSU banks, to persuade them to raise the dividend payout to the government.
During 2010-11, the government collected Rs 25,978 crore as dividend from public sector enterprises. The target for the current financial year was pegged at Rs 23,495 crore.
The government has been facing financial problems on account of its rising subsidy bill and poor receipt from disinvestment and the fiscal deficit for 2011-12 is expected to exceed the budget target of 4.6 per cent of the Gross Domestic Product (GDP).
Disinvestment in PSUs has yielded only about Rs 1,145 crore this year through the sale of equity in Power Finance Corporation (PFC), against the target of Rs 40,000 crore for 2011-12.
Finance Minister Pranab Mukherjee has informed Parliament that the subsidy bill for FY12 is likely to exceed the Budget estimate by Rs 1 lakh crore.
In addition, the government expects to rake in Rs 1,500 crore through Dividend Distribution Tax (DDT) in the current financial year."(We are) looking at garnering Rs 7,000 crore higher dividend payment by PSU companies and Rs 1,500 crore as dividend tax distribution tax (DDT)", a senior Finance Ministry official said here.
Senior officials of the Finance Ministry led by Secretary of Economic Affairs (DEA) R Gopalan have held a series of consultations with the heads of state-owned enterprises, including PSU banks, to persuade them to raise the dividend payout to the government.
During 2010-11, the government collected Rs 25,978 crore as dividend from public sector enterprises. The target for the current financial year was pegged at Rs 23,495 crore.
The government has been facing financial problems on account of its rising subsidy bill and poor receipt from disinvestment and the fiscal deficit for 2011-12 is expected to exceed the budget target of 4.6 per cent of the Gross Domestic Product (GDP).
Disinvestment in PSUs has yielded only about Rs 1,145 crore this year through the sale of equity in Power Finance Corporation (PFC), against the target of Rs 40,000 crore for 2011-12.
Finance Minister Pranab Mukherjee has informed Parliament that the subsidy bill for FY12 is likely to exceed the Budget estimate by Rs 1 lakh crore.
Tuesday, 24 January 2012
RBI cuts Cash Reserve Ratio (CRR) by 50 bps
The Reserve Bank of India (RBI) has slashed the cash reserve ratio (CRR) by 50 basis points (bps) to 5.5% effective from January 28, 2012. The cut is expected to infuse Rs 32,000 crore into the system easing the tight liquidity situation. However, it has left its key policy rates unchanged in its third quarter monetary policy (October-December).
CRR is the fixed portion of the total deposits or the net demand and time liabilities (NDTL) that banks mandatorily have to keep with the Reserve Bank of India. Currently, it is at 6%. This means, for every Rs 100 deposits with the RBI, banks will have to set aside Rs 5.50 as CRR instead of Rs 6.
RBI has hiked the policy rates 13 times since March 2010. However, the reverse repo and repo rates were left unchanaged at 7.50% and 8.50% respectively in the last two credit policies in accordance with the market expectation. However, a section of market participants were indeed anticipating a small cut in the CRR. Since 2009, this is the first time the RBI went for reducing the ratio.
"In reducing the CRR, the Reserve Bank has attempted to address the structural pressures on liquidity in a way that is not inconsistent with the prevailing monetary stance," D Subbarao, the governor of RBI said in a statement.
"Based on the current inflation trajectory, including consideration of suppressed inflation, it is premature to begin reducing the policy rate. However, the persistence of tight liquidity conditions could disrupt credit flow and further exacerbate growth risks. In this context, the CRR is the most effective instrument for permanent liquidity injections over a sustained period of time."
Banks are seen borrowing around 1.30-1.40 lakh crore on an average on daily basis from the RBI's repo window at 8.50%. According to analysts, the borrowing level is significantly higher than the average level of around Rs 70,000-80,000 crore. Through repo counter, the RBI lends to banks meeting their liquidity requirment.
Meanwhile, RBI has cut FY12 gross domestic product forecast to 7% from 7.6%. It has kept inflation forecast unchanged at 7%.
CRR is the fixed portion of the total deposits or the net demand and time liabilities (NDTL) that banks mandatorily have to keep with the Reserve Bank of India. Currently, it is at 6%. This means, for every Rs 100 deposits with the RBI, banks will have to set aside Rs 5.50 as CRR instead of Rs 6.
RBI has hiked the policy rates 13 times since March 2010. However, the reverse repo and repo rates were left unchanaged at 7.50% and 8.50% respectively in the last two credit policies in accordance with the market expectation. However, a section of market participants were indeed anticipating a small cut in the CRR. Since 2009, this is the first time the RBI went for reducing the ratio.
"In reducing the CRR, the Reserve Bank has attempted to address the structural pressures on liquidity in a way that is not inconsistent with the prevailing monetary stance," D Subbarao, the governor of RBI said in a statement.
"Based on the current inflation trajectory, including consideration of suppressed inflation, it is premature to begin reducing the policy rate. However, the persistence of tight liquidity conditions could disrupt credit flow and further exacerbate growth risks. In this context, the CRR is the most effective instrument for permanent liquidity injections over a sustained period of time."
Banks are seen borrowing around 1.30-1.40 lakh crore on an average on daily basis from the RBI's repo window at 8.50%. According to analysts, the borrowing level is significantly higher than the average level of around Rs 70,000-80,000 crore. Through repo counter, the RBI lends to banks meeting their liquidity requirment.
Meanwhile, RBI has cut FY12 gross domestic product forecast to 7% from 7.6%. It has kept inflation forecast unchanged at 7%.
Thursday, 19 January 2012
Q3 results on 20 Jan 2012 Analysts` estimates for RIL, Axis Bank, ITC, Wipro, JSW Steel
Reliance Industries (RIL), Axis Bank, ITC, Wipro and JSW Steel will be announcing its third quarter financial results on Friday, January 20. We have collated views of analysts on how they see earnings for these companies. The same is as follows:
Reliance Industries (RIL)
Prabhudas Lilladher
On the back of declining GRMS during the quarter, RIL is likely to report weak set of numbers. Benchmark Singapore GRMs have averaged at USD 7.9/bbl. We expect GRMS of USD 7.0/bbl for RIL during the quarter. Weakness in the Dubai-AH spreads is likely to adversely impact the spreads over benchmark GRMs. Rupee depreciation and higher other income are likely to help matters during the quarter.
Motilal Oswal
We expect RIL to report 3QFY12 GRM of USD7.7/bbl v/s USD10.1/bbl in 2QFY12. Petchem EBIT is expected to be lower QoQ despite decent margin performance due to subdued volumes (2QFY12 volumes were up 21% QoQ). We expect 3QFY12 KG-D6 gas volume of 41mmscmd v/s 45.3mmscmd in 2QFY12. We expect RIL to report PAT of Rs 49.5 billion (down 13.1% QoQ and 3.6% YoY). The muted performance for the quarter is largely on account of lower GRM, lower petchem volumes and decline in KG-D6 production, partially compensated by 10% rupee depreciation. Also, in E&P segment, RIL`s lower share of 60% for full 3 months in 3QFY12 v/s only for one month (September) in 2QFY12. Key things to watch out for: (a) GRM, (b) Petchem margin, (c) KG-D6 production. RIL trades at 10x FY13E adjusted EPS of Rs 75.4. We maintain Neutral due to concerns on cash utilization, RoE reaching sub-15%, and increased share (80%) of cyclical refining and petchem businesses to the earnings.
Axis Bank
Prabhudas Lilladher
We expect loan growth of 6% QoQ in Q3FY12 and with 2% contraction in H1FY12. We see risks to our 21% loan growth assumption for FY12, though seasonality in loan growth is stronger for Axis in H2. We expect margins to moderate by 15bps in Q3FY12. Slippages have inched up in Q2FY12 and given the high share of SME credit, we expect moderate inch up in slippages from Q2FY12. However, due to lower investment depreciation, we expect provisions to trend down. Overall, we expect 13% PAT growth in Q3FY12.
Motilal Oswal
We expect AXSB to post higher-than-industry growth, with loan growth of 22% YoY and 8% QoQ. Sequentially, we expect deposit growth to be in line with loan growth. However, on a YoY basis, deposit growth is likely to be strong at 34%+. In 2QFY12, the bank had reported a sharp increase of 50bp QoQ in NIM, led by increase in loan yields and cooling bulk deposit rates. We expect margins to moderate by 10-15bp QoQ on a higher base and bunching up of PSL in the quarter, as lag impact of deposit re-pricing catches up. Non-interest income is likely to be strong, led by continous momentum in fee income and treasury gains. We expect reported fee income to grow 23% YoY. Asset quality has held up fairly well. However, elevated interest rates could lead to increase in slippages in mid corporate segment. In 2QFY12, slippage ratio had increased to 1.8% as against 1.1% in 1QFY12. The stock trades at 1.6x FY12E and 1.4x FY13E BV, and 8.9x FY12E and 7.5x FY13E EPS. Maintain Buy. Key things to watch for: (1) Performance on margins, (2) Sustained traction in fee income growth, (3) Trend in slippages, and (4) Restructured portfolio.
ITC
Prabhudas Lilladher
We expect Cig volumes to grow 6% for the quarter. Continued revenue momentum (expect 20% plus revenue growth) in Non-Cig FMCG business, with sustained higher profitability in Paper and Agri division, will mark Q3. We expect stock performance to remain range-bound as one approaches the budget. Cig did not see any excise increase in the previous budget. We are building in 15% excise increase in Cig for FY13e.
Motilal Oswal
We expect ITC to post 17.4% YoY revenue growth to Rs 64.7 billion. Margin expansion of 60bp will drive 19% growth in EBITDA to Rs 24.2 billion and net profit to Rs 16.4 billion. Led by continued strength in consumer demand, we expect cigarette volumes to grow 6.5%. Price increases in premium brands like Classic and Navy Cut in 2Q, coupled with no increase in excise duty will result in 100bp EBIT margin expansion to 56.3%. We expect 20% increase in FMCG sales and 16% decline in EBIT losses. Improving profitability in food, education and lifestyle retail businesses should lower EBIT losses. Paper margins are likely to expand by 120bp to 23% due to improved realizations and a favorable mix; revenue growth will be moderate at 12% owing to lack of capacity. We expect the agri business to record 15% revenue growth, with margins expanding by 180bp, benefitting from rupee depreciation. Though revenue growth in hotels will be subdued, margins are likely to improve by 50bp to 32%, in line with earlier quarters. The stock trades at 26.4x FY12E EPS of INR7.8 and 7.1x FY13E EPS of INR9.2. ITC is our top pick in the FMCG space. Buy.
Wipro
Prabhudas Lilladher
We expect Wipro to report IT Services revenue growth of 2.5% in USD terms to USD 1,510 million, in line with their guidance of 1.8-3.8% QoQ growth. We expect volumes to grow by 4.5% sequentially, with no pricing improvement. EBITDA margin is expected to expand by 221bps due to currency depreciation. We are expecting management commentary on change in strategy to perform in line with its Tier-1 competitors. We expect positive commentary with guidance of investment in Sales and Marketing effort by the company.
Motilal Oswal
We expect Wipro`s IT Services 3QFY12 revenues at USD 1.5 billion, up 2.1% QoQ. This is at lower end of company`s guided band of 1.9-3.9%, with 3% QoQ volume growth partly offset by 170bp hit from cross currencies (depreciation of GBP, EUR and INR v/s USD). We expect overall rupee revenue at Rs 99.2 billion, up 9.1% QoQ. We expect overall EBIT margin at 18.5%, up 300bp QoQ; but, adjusting for estimated Rs 2.8 billion hedge losses in the topline (which we take below the operating line), EBIT margin declines 30bp QoQ (from 16.4% to 16.1%). We expect IT Services` EBIT margin at 22.5%, up 250bp QoQ, but down 140bp QoQ to 19.6% when topline hedges are adjusted. We expect Wipro`s PAT to grow 4.3% QoQ to Rs 13.6 billion, lower than peers due to hedge losses (estimated at Rs 2.8 billion). The stock trades at 18.3x FY12E and 16x FY13E earnings. Maintain Neutral, with a target price of Rs 407, based on 16x FY13E earnings.
JSW Steel
Prabhudas Lilladher
Led by 3.7% growth in steel volumes QoQ and flat realisations, revenue is expected to grow by 3.7% QoQ to Rs 79 billion. We expect increase in cost of steel production by Rs800 per tonne QoQ due to higher weighted cost of iron ore. Hence, EBITDA per tonne would decline by 12% QoQ or Rs 833 to Rs 6,020. Accordingly, EBITDA would decline by 9% QoQ to Rs 11.7 billion. Adjusted PAT would fall by 32% QoQ to Rs 3.3 billion due to higher depreciation and interest cost associated with commissioning of 3.2mtp crude steel facility. We expect loss of Rs 1.9 billion for its 49% share in Ispat.
Motilal Oswal
Revenue to remain flat QoQ with flat volumes and realization: We expect 3QFY12 standalone net sales to remain flat QoQ (+32% YoY) at Rs 76.6 billion on the back of flattish steel volumes and realizations. We expect JSTL`s saleable steel volume to be up 19% YoY (flat QoQ) to 1.9m tons, despite Karnataka mining ban, due to more availability of e-auction ore. Average steel realization should be up 11% YoY (flat QoQ) at Rs 40,557/ton. Domestic steel prices are flattish due to lackluster demand despite sharp rupee depreciation. Prices of flat steel remain flat while long product prices are up 2-3%. EBITDA to be up 21% QoQ: JSTL`s saleable steel production is up MoM as more iron ore is available due to eauction ore. We expect JSTL`s EBITDA to be up 21% QoQ at Rs 9.5 billion due to higher capacity utilization of Vijaynagar plant. We expect EBITDA/ton to be USD 99, up from USD 92 in 2QFY12. Production improves with ore availability; but margins remain under pressure: We expect Adj PAT to improve 73% QoQ to Rs 2 billion on lower base of 2QFY12 when steel production had been impacted due to non-availability of iron ore, and costs had increased due to imports of ore from neighboring states. With more iron ore available from eauction, we expect JSTL to ramp up production gradually in next few months although margins will be under pressure in near term. The stock trades at 8.4x FY13E EPS and EV of 5.3x FY13E EBITDA. Maintain Sell.
Reliance Industries (RIL)
Prabhudas Lilladher
On the back of declining GRMS during the quarter, RIL is likely to report weak set of numbers. Benchmark Singapore GRMs have averaged at USD 7.9/bbl. We expect GRMS of USD 7.0/bbl for RIL during the quarter. Weakness in the Dubai-AH spreads is likely to adversely impact the spreads over benchmark GRMs. Rupee depreciation and higher other income are likely to help matters during the quarter.
Motilal Oswal
We expect RIL to report 3QFY12 GRM of USD7.7/bbl v/s USD10.1/bbl in 2QFY12. Petchem EBIT is expected to be lower QoQ despite decent margin performance due to subdued volumes (2QFY12 volumes were up 21% QoQ). We expect 3QFY12 KG-D6 gas volume of 41mmscmd v/s 45.3mmscmd in 2QFY12. We expect RIL to report PAT of Rs 49.5 billion (down 13.1% QoQ and 3.6% YoY). The muted performance for the quarter is largely on account of lower GRM, lower petchem volumes and decline in KG-D6 production, partially compensated by 10% rupee depreciation. Also, in E&P segment, RIL`s lower share of 60% for full 3 months in 3QFY12 v/s only for one month (September) in 2QFY12. Key things to watch out for: (a) GRM, (b) Petchem margin, (c) KG-D6 production. RIL trades at 10x FY13E adjusted EPS of Rs 75.4. We maintain Neutral due to concerns on cash utilization, RoE reaching sub-15%, and increased share (80%) of cyclical refining and petchem businesses to the earnings.
Axis Bank
Prabhudas Lilladher
We expect loan growth of 6% QoQ in Q3FY12 and with 2% contraction in H1FY12. We see risks to our 21% loan growth assumption for FY12, though seasonality in loan growth is stronger for Axis in H2. We expect margins to moderate by 15bps in Q3FY12. Slippages have inched up in Q2FY12 and given the high share of SME credit, we expect moderate inch up in slippages from Q2FY12. However, due to lower investment depreciation, we expect provisions to trend down. Overall, we expect 13% PAT growth in Q3FY12.
Motilal Oswal
We expect AXSB to post higher-than-industry growth, with loan growth of 22% YoY and 8% QoQ. Sequentially, we expect deposit growth to be in line with loan growth. However, on a YoY basis, deposit growth is likely to be strong at 34%+. In 2QFY12, the bank had reported a sharp increase of 50bp QoQ in NIM, led by increase in loan yields and cooling bulk deposit rates. We expect margins to moderate by 10-15bp QoQ on a higher base and bunching up of PSL in the quarter, as lag impact of deposit re-pricing catches up. Non-interest income is likely to be strong, led by continous momentum in fee income and treasury gains. We expect reported fee income to grow 23% YoY. Asset quality has held up fairly well. However, elevated interest rates could lead to increase in slippages in mid corporate segment. In 2QFY12, slippage ratio had increased to 1.8% as against 1.1% in 1QFY12. The stock trades at 1.6x FY12E and 1.4x FY13E BV, and 8.9x FY12E and 7.5x FY13E EPS. Maintain Buy. Key things to watch for: (1) Performance on margins, (2) Sustained traction in fee income growth, (3) Trend in slippages, and (4) Restructured portfolio.
ITC
Prabhudas Lilladher
We expect Cig volumes to grow 6% for the quarter. Continued revenue momentum (expect 20% plus revenue growth) in Non-Cig FMCG business, with sustained higher profitability in Paper and Agri division, will mark Q3. We expect stock performance to remain range-bound as one approaches the budget. Cig did not see any excise increase in the previous budget. We are building in 15% excise increase in Cig for FY13e.
Motilal Oswal
We expect ITC to post 17.4% YoY revenue growth to Rs 64.7 billion. Margin expansion of 60bp will drive 19% growth in EBITDA to Rs 24.2 billion and net profit to Rs 16.4 billion. Led by continued strength in consumer demand, we expect cigarette volumes to grow 6.5%. Price increases in premium brands like Classic and Navy Cut in 2Q, coupled with no increase in excise duty will result in 100bp EBIT margin expansion to 56.3%. We expect 20% increase in FMCG sales and 16% decline in EBIT losses. Improving profitability in food, education and lifestyle retail businesses should lower EBIT losses. Paper margins are likely to expand by 120bp to 23% due to improved realizations and a favorable mix; revenue growth will be moderate at 12% owing to lack of capacity. We expect the agri business to record 15% revenue growth, with margins expanding by 180bp, benefitting from rupee depreciation. Though revenue growth in hotels will be subdued, margins are likely to improve by 50bp to 32%, in line with earlier quarters. The stock trades at 26.4x FY12E EPS of INR7.8 and 7.1x FY13E EPS of INR9.2. ITC is our top pick in the FMCG space. Buy.
Wipro
Prabhudas Lilladher
We expect Wipro to report IT Services revenue growth of 2.5% in USD terms to USD 1,510 million, in line with their guidance of 1.8-3.8% QoQ growth. We expect volumes to grow by 4.5% sequentially, with no pricing improvement. EBITDA margin is expected to expand by 221bps due to currency depreciation. We are expecting management commentary on change in strategy to perform in line with its Tier-1 competitors. We expect positive commentary with guidance of investment in Sales and Marketing effort by the company.
Motilal Oswal
We expect Wipro`s IT Services 3QFY12 revenues at USD 1.5 billion, up 2.1% QoQ. This is at lower end of company`s guided band of 1.9-3.9%, with 3% QoQ volume growth partly offset by 170bp hit from cross currencies (depreciation of GBP, EUR and INR v/s USD). We expect overall rupee revenue at Rs 99.2 billion, up 9.1% QoQ. We expect overall EBIT margin at 18.5%, up 300bp QoQ; but, adjusting for estimated Rs 2.8 billion hedge losses in the topline (which we take below the operating line), EBIT margin declines 30bp QoQ (from 16.4% to 16.1%). We expect IT Services` EBIT margin at 22.5%, up 250bp QoQ, but down 140bp QoQ to 19.6% when topline hedges are adjusted. We expect Wipro`s PAT to grow 4.3% QoQ to Rs 13.6 billion, lower than peers due to hedge losses (estimated at Rs 2.8 billion). The stock trades at 18.3x FY12E and 16x FY13E earnings. Maintain Neutral, with a target price of Rs 407, based on 16x FY13E earnings.
JSW Steel
Prabhudas Lilladher
Led by 3.7% growth in steel volumes QoQ and flat realisations, revenue is expected to grow by 3.7% QoQ to Rs 79 billion. We expect increase in cost of steel production by Rs800 per tonne QoQ due to higher weighted cost of iron ore. Hence, EBITDA per tonne would decline by 12% QoQ or Rs 833 to Rs 6,020. Accordingly, EBITDA would decline by 9% QoQ to Rs 11.7 billion. Adjusted PAT would fall by 32% QoQ to Rs 3.3 billion due to higher depreciation and interest cost associated with commissioning of 3.2mtp crude steel facility. We expect loss of Rs 1.9 billion for its 49% share in Ispat.
Motilal Oswal
Revenue to remain flat QoQ with flat volumes and realization: We expect 3QFY12 standalone net sales to remain flat QoQ (+32% YoY) at Rs 76.6 billion on the back of flattish steel volumes and realizations. We expect JSTL`s saleable steel volume to be up 19% YoY (flat QoQ) to 1.9m tons, despite Karnataka mining ban, due to more availability of e-auction ore. Average steel realization should be up 11% YoY (flat QoQ) at Rs 40,557/ton. Domestic steel prices are flattish due to lackluster demand despite sharp rupee depreciation. Prices of flat steel remain flat while long product prices are up 2-3%. EBITDA to be up 21% QoQ: JSTL`s saleable steel production is up MoM as more iron ore is available due to eauction ore. We expect JSTL`s EBITDA to be up 21% QoQ at Rs 9.5 billion due to higher capacity utilization of Vijaynagar plant. We expect EBITDA/ton to be USD 99, up from USD 92 in 2QFY12. Production improves with ore availability; but margins remain under pressure: We expect Adj PAT to improve 73% QoQ to Rs 2 billion on lower base of 2QFY12 when steel production had been impacted due to non-availability of iron ore, and costs had increased due to imports of ore from neighboring states. With more iron ore available from eauction, we expect JSTL to ramp up production gradually in next few months although margins will be under pressure in near term. The stock trades at 8.4x FY13E EPS and EV of 5.3x FY13E EBITDA. Maintain Sell.
Tuesday, 17 January 2012
Reliance Loans from Chinese banks to refinance Rs 6,125 crore worth of outstanding foreign currency bonds
Reliance Communications said on Tuesday it has secured loans from a host of Chinese banks to refinance $1.18 billion worth of outstanding foreign currency bonds due for redemption on March 1.
The deal will provide respite to the No. 2 Indian mobile operator by subscribers, controlled by billionaire Anil Ambani, that has been trying for more than a year to sell its telecoms tower unit to cut the company's about $6.5 billion debt.
The deal will provide respite to the No. 2 Indian mobile operator by subscribers, controlled by billionaire Anil Ambani, that has been trying for more than a year to sell its telecoms tower unit to cut the company's about $6.5 billion debt.
TCS Q3 net Profit up 18.26% at Rs 2,802.77 cr
The country's largest software services exporter Tata Consultancy Services on Wednesday reported an 18.26 per cent jump in consolidated net profit to Rs 2,802.77 crore for the quarter ended December 31, 2011.
The company's total income stood at Rs 13,203.99 crore in the reporting quarter, as against Rs 9,663.35 crore in the corresponding year-ago period, translating into a growth of 36.63 per cent.
The company's total income stood at Rs 13,203.99 crore in the reporting quarter, as against Rs 9,663.35 crore in the corresponding year-ago period, translating into a growth of 36.63 per cent.
Trai Realse:entry fee of Rs 20 cr for a pan-India mobile permit
Telecoms regulator Trai has proposed that entry fee for a pan-India mobile permit be fixed at Rs 20 crore from Rs 1658 crore at present.
But these permits will not be bundled with spectrum or airwaves, and companies that obtain them must buy radio frequencies by participating in auctions.
Currently, a pan-India permit comes bundled with 4.4 MHz of start-up GSM spectrum or 2.5 MHz of CDMA airwaves in all the 22 regions. The regulator has also proposed that companies be allowed to apply for these permits at a state or district levels.
The entry fee for state-level permit ranges from Rs 50 lakh to Rs 2 crore, while for a district licence, it is will be Rs 15 lakh, Trai said in its consultation paper released today.
It has also sought the industry's comments on the new unified licensing regime.
"Unified licence will be given without any spectrum. Licensee has to separately apply/bid for obtaining spectrum as per the prevailing policy," Trai said, while adding that the new licence will be technology neutral and companies can provide any form of communication service - mobile, landline, long-distance services, internet, satellite amongst others.
Currently, telecom companies need separate licences for each type of service such as GSM, CDMA, 3G, broadband wireless (4G), internet, Direct-to-Home and radio amongst others.
All existing rules under the current regime, including a foreign holding cap of 74%, resident Indians holding top positions and other security guidelines will apply to the new permits, Trai said.
But these permits will not be bundled with spectrum or airwaves, and companies that obtain them must buy radio frequencies by participating in auctions.
Currently, a pan-India permit comes bundled with 4.4 MHz of start-up GSM spectrum or 2.5 MHz of CDMA airwaves in all the 22 regions. The regulator has also proposed that companies be allowed to apply for these permits at a state or district levels.
The entry fee for state-level permit ranges from Rs 50 lakh to Rs 2 crore, while for a district licence, it is will be Rs 15 lakh, Trai said in its consultation paper released today.
It has also sought the industry's comments on the new unified licensing regime.
"Unified licence will be given without any spectrum. Licensee has to separately apply/bid for obtaining spectrum as per the prevailing policy," Trai said, while adding that the new licence will be technology neutral and companies can provide any form of communication service - mobile, landline, long-distance services, internet, satellite amongst others.
Currently, telecom companies need separate licences for each type of service such as GSM, CDMA, 3G, broadband wireless (4G), internet, Direct-to-Home and radio amongst others.
All existing rules under the current regime, including a foreign holding cap of 74%, resident Indians holding top positions and other security guidelines will apply to the new permits, Trai said.
Wednesday, 11 January 2012
Supreme Court orders unsealing of T.Nagar shops for six weeks
Special leave petitions
A Bench of Justice Dalveer Bhandari and Justice Dipak Misra passed the order on special leave petitions from the Ranganathan Street Merchants Association and others against the Madras High Court order of December 21, 2011 asking them to approach the monitoring committee for relief.
The Bench passed the order after hearing senior counsel Ravi Shankar Prasad, Altaf Ahmed, Aryama Sundaram, P. Wilson and Counsel V. Balaji for the association and other merchants and Additional Advocate General Guru Krishna Kumar for the State, senior counsel Rajeev Dhavan and counsel T. Mohan for the Consumer Action Group, the petitioner before the High Court.
The Bench in its brief order said, “By our order dated November 11, 2011 this court asked the High Court to hear the association and other applications and pass appropriate orders in accordance with law.”
Instead of dealing with the applications of unsealing, the High Court had directed the monitoring committee to dispose of the applications.
“In the peculiar facts and circumstances of the case, we direct the High Court to dispose of all the unsealing applications filed by the association and others when the matter is taken up for hearing in the fourth week of January. In the peculiar facts and circumstances we deem it appropriate to direct unsealing of the shops for six weeks”, the Bench said and disposed of the matter.
Association's grievance
The association and other shop keepers were aggrieved that the buildings were sealed by declaring them as unauthorised and illegal, when their applications for regularisation were still pending before the authorities concerned for which huge amounts had been collected.
When senior counsel faulted the High Court for asking the petitioners to approach the monitoring committee, Justice Bhandari observed, “When we had asked the High Court to consider the applications, it ought to have decided them on merits.”
“No authority”
When Mr. Guru Krishna Kumar submitted that all the applicants were issued notice about the violations and only the monitoring committee was competent to decide individual matters, Justice Bhandari said: “If they [applicants] or the State are aggrieved over the decision of the monitoring committee what is the remedy? The High Court should have decided the matter and not delegated the matter to an authority which itself has no authority to decide the issue.”
Mr. Aryama Sundaram intervened and brought to the notice of the court a petition filed by the State seeking review of an order passed by the High Court appointing the monitoring committee, saying the committee had no jurisdiction to decide the matter.
When the review petition was still pending how could the applicants approach the committee and seek relief before the same, he asked.
Plea for interim direction
Mr. Prasad pleaded for an interim direction for opening of the shops in view of the Pongal festival and a direction to the High Court to dispose of the pending applications.
A Bench of Justice Dalveer Bhandari and Justice Dipak Misra passed the order on special leave petitions from the Ranganathan Street Merchants Association and others against the Madras High Court order of December 21, 2011 asking them to approach the monitoring committee for relief.
The Bench passed the order after hearing senior counsel Ravi Shankar Prasad, Altaf Ahmed, Aryama Sundaram, P. Wilson and Counsel V. Balaji for the association and other merchants and Additional Advocate General Guru Krishna Kumar for the State, senior counsel Rajeev Dhavan and counsel T. Mohan for the Consumer Action Group, the petitioner before the High Court.
The Bench in its brief order said, “By our order dated November 11, 2011 this court asked the High Court to hear the association and other applications and pass appropriate orders in accordance with law.”
Instead of dealing with the applications of unsealing, the High Court had directed the monitoring committee to dispose of the applications.
“In the peculiar facts and circumstances of the case, we direct the High Court to dispose of all the unsealing applications filed by the association and others when the matter is taken up for hearing in the fourth week of January. In the peculiar facts and circumstances we deem it appropriate to direct unsealing of the shops for six weeks”, the Bench said and disposed of the matter.
Association's grievance
The association and other shop keepers were aggrieved that the buildings were sealed by declaring them as unauthorised and illegal, when their applications for regularisation were still pending before the authorities concerned for which huge amounts had been collected.
When senior counsel faulted the High Court for asking the petitioners to approach the monitoring committee, Justice Bhandari observed, “When we had asked the High Court to consider the applications, it ought to have decided them on merits.”
“No authority”
When Mr. Guru Krishna Kumar submitted that all the applicants were issued notice about the violations and only the monitoring committee was competent to decide individual matters, Justice Bhandari said: “If they [applicants] or the State are aggrieved over the decision of the monitoring committee what is the remedy? The High Court should have decided the matter and not delegated the matter to an authority which itself has no authority to decide the issue.”
Mr. Aryama Sundaram intervened and brought to the notice of the court a petition filed by the State seeking review of an order passed by the High Court appointing the monitoring committee, saying the committee had no jurisdiction to decide the matter.
When the review petition was still pending how could the applicants approach the committee and seek relief before the same, he asked.
Plea for interim direction
Mr. Prasad pleaded for an interim direction for opening of the shops in view of the Pongal festival and a direction to the High Court to dispose of the pending applications.
Chief Minister J Jayalalithaa Comprehensive Health Insurance Scheme from Tomorrow
The Govt. of Tamil Nadu has formulated the Chief Minister’s Comprehensive Health Insurance Scheme to provide free medical and surgical treatment in Government and Private Hospitals through insurance coverage to eligible families in Tamil Nadu and issued Guidelines for implementation of the Scheme.
Inaugurated by Chief Minister J Jayalalithaa at the Secretariat here tomorrow, which will cover 1.34 crore families in the State against various ailments.
`Chief Minister`s Comprehensive Medical Insurance Scheme`, the plan will provide a cover of Rs one lakh per family annually, amounting to Rs four lakh for four years. For some specific treatments, a sum of up to Rs 1.50 lakh will be provided.
The consolidated insurance scheme will cover 1016 treatment procedures including treatments for infants. It will also cover 113 continuous treatment procedures and 23 diagnostic methods.
Inaugurated by Chief Minister J Jayalalithaa at the Secretariat here tomorrow, which will cover 1.34 crore families in the State against various ailments.
`Chief Minister`s Comprehensive Medical Insurance Scheme`, the plan will provide a cover of Rs one lakh per family annually, amounting to Rs four lakh for four years. For some specific treatments, a sum of up to Rs 1.50 lakh will be provided.
The consolidated insurance scheme will cover 1016 treatment procedures including treatments for infants. It will also cover 113 continuous treatment procedures and 23 diagnostic methods.
Tuesday, 10 January 2012
FDI in retail - Govt clears 100 per cent FDI in single-brand retail
The government on Tuesday cleared 100 per cent FDI in single-brand retail, paving way for global chains like Adidas, Nike, Louis Vuitton and Gucci among others to have full ownership of their India operations.
At present, 51 per cent FDI is permitted for single-brand retailers.
The decision to increase foreign direct investment (FDI) in single-brand retail was taken by the Cabinet on November 24 along with opening the gates for overseas investment in multi-brand retail.
However, the government was forced to put on hold its decision on the latter amid protests by several political parties, including one of the UPA allies - Trinamool Congress.
Department of Industrial Policy and Promotion (DIPP) Secretary PK Chaudhery had on January 6 assured reporters that a notification from the government 100 per cent FDI in single-brand retail would come soon.
Removal of investment cap will help global fashion brands, especially from Italy and France, to strengthen their interest in the growing Indian market - giving them the option of buying out their domestic joint venture partners.
At present, 51 per cent FDI is permitted for single-brand retailers.
The decision to increase foreign direct investment (FDI) in single-brand retail was taken by the Cabinet on November 24 along with opening the gates for overseas investment in multi-brand retail.
However, the government was forced to put on hold its decision on the latter amid protests by several political parties, including one of the UPA allies - Trinamool Congress.
Department of Industrial Policy and Promotion (DIPP) Secretary PK Chaudhery had on January 6 assured reporters that a notification from the government 100 per cent FDI in single-brand retail would come soon.
Removal of investment cap will help global fashion brands, especially from Italy and France, to strengthen their interest in the growing Indian market - giving them the option of buying out their domestic joint venture partners.
Thursday, 5 January 2012
JSW Energy promoter pledges 6.78% stake in company
JSW Energy today said one of its promoter entities, Sun Investments, has pledged 6.78 per cent stake of the company.
However, the financial details were not disclosed. Sun Investments pledged 5,40,000 shares of JSW Energy on December 28, according to a regulatory filing.
These 5,40,000 shares have been pledged in favour of L&T Finance, the filing said.
Sun Investments Private Ltd's shareholding in the company stood at 16.52 per cent as on December 28, 2011. At the end of September quarter, Sun Investments Private Ltd held 9.73 per cent stake in the company, out of which 3.50 per cent shareholding was pledged.
An energy company, JSW Energy is part of diversified JSW Group. The firm expects to have a power generation capacity of over 12,000 MW by 2016.
However, the financial details were not disclosed. Sun Investments pledged 5,40,000 shares of JSW Energy on December 28, according to a regulatory filing.
These 5,40,000 shares have been pledged in favour of L&T Finance, the filing said.
Sun Investments Private Ltd's shareholding in the company stood at 16.52 per cent as on December 28, 2011. At the end of September quarter, Sun Investments Private Ltd held 9.73 per cent stake in the company, out of which 3.50 per cent shareholding was pledged.
An energy company, JSW Energy is part of diversified JSW Group. The firm expects to have a power generation capacity of over 12,000 MW by 2016.
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