Posts in category All News
Inflation seen easing, industrial output stable (10-09-2015)
Meat ban: Sena, MNS hit streets, HC sounds critical note (10-09-2015)
Retain add on Container Corp, target Rs 1,520: Kotak Institutional Equities (10-09-2015)
At our recent meeting, CMD of Concor explained how, post DFC, its network of terminals could aggregate volumes sufficient to run double-stacked long rakes, a significant competitive advantage. Warehousing is the other strong business enabler, where several deals are being negotiated at present (GST to aid growth).
The current business is a reflection of a shallow market, inefficient system and constrained rail capacities. These will gradually improve and cover up the potential hiccups on the costing front (uncertain pricing of DFC, expiry/renewal of land leases). We maintain add.
DFC is likely to change the face of logistics in India, as it makes rolling stock more productive and rail transportation superior. While these benefits should accrue to all rail operators, Concor has key ingredients to make the most of DFC: (1) ability to fill double-stacked long rakes; (2) making investments to capture incremental traffic; (3) favourably placed once ports grow in size and start preferring certain ICDs over others and (4) transparency and operational flexibility adding to its service offerings.
We revise our estimates to Rs 49.3 and Rs 60.8 from Rs 51 and Rs 64 for FY16E and FY17E, respectively led by (1) lower EXIM volumes (3% y-o-y increase in FY16E from 5% earlier), (2) higher tax rate (23% vs. 20% earlier), (3) other annual report led changes. We revise target price to R1,520 (R1,550 earlier).
No room yet for rating review for IHFL: Nomura (10-09-2015)
Reports indicate that India Bulls Housing Finance is looking to raise $500-600 million through a QIP, and that implies ~12% dilution. While higher capital levels could be a trigger for a positive credit rating review, we still do not see the need for dilution currently, with a Tier-1 of ~15% and high liquidity on its balance sheet (+15% of assets).
Since June 2015, valuations of IHFL have moved up from 2.0x to 2.7x FY17F book, just 10% lower than our target multiple (3x FY17F book of 237). While a successful QIP issue will likely make valuations look reasonable at 2.1x FY17F book, we would like to see steady state financial performance of the company over the next 12 months before expecting a further re-rating.
With most HFCs operating at 11-13% Tier-1 levels, and Indiabulls Finance already carrying +15% of its assets in the form of liquid investments, we do not see any reason for capital raising currently. We expected capital raising by end-FY17F.
Indiabulls is rated AA+ by Crisil and Icra, with a AAA rating by CARE. As it looks to move down the mortgage risk chain, we think AAA rating becomes almost necessary from a long-term perspective. Credit ratings depend upon the quantum of capital and liquidity on the balance sheet. While this can be one of the reasons to front-end the capital raising, its Tier-1 level of +15% and liquidity of 15% on its balance sheet is already one of the highest among HFCs and we don’t know whether this can trigger a ratings review.
ICRA downwards JMT Auto ratings (10-09-2015)
![ICRA has revised downwards JMT Auto's long term rating to the Rs 94 crore term loans and the Rs 102 crore fund-based facilities from [ICRA]BBB+(pronounced ICRA triple B plus) to [ICRA]BBB- (pronounced ICRA triple B minus).](http://images.financialexpress.com/2015/09/JMT-auto.jpg)
ICRA has revised downwards JMT Auto’s long term rating to the Rs 94 crore term loans and the Rs 102 crore fund-based facilities from [ICRA]BBB+(pronounced ICRA triple B plus) to [ICRA]BBB- (pronounced ICRA triple B minus).
ICRA has revised downwards JMT Auto’s long term rating to the Rs 94 crore term loans and the Rs 102 crore fund-based facilities from [ICRA]BBB+(pronounced ICRA triple B plus) to [ICRA]BBB- (pronounced ICRA triple B minus). It also has downgraded the short term rating to the Rs. 53 crore non-fund based facilities and to the Rs. 1.00 crore bill discounting facility of JMT from [ICRA]A2 (pronounced ICRA A two) to [ICRA]A3 (pronounced ICRA A three), it said.
“The revision in the ratings take into account the decline in JMT’s turnover and profits during the first quarter of FY16 which, along with the increase in working capital intensity, has led to a deterioration in debt coverage indicators of the company,” ICRA said in a note.
During the first quarter of the current fiscal that began in April, Amtek Auto slipped to a net loss of Rs 157.60 crore from a year earlier profit of Rs 86.08 crore. This has led to a stressed liquidity position in the group, ICRA says. JMT Auto reported a lower net profit of Rs 1.69 crore compared to Rs 3.59 crore a year earlier, while its sales also fell to Rs 84.25 crore compared to Rs 121.59 crore.
The ratings agency further adds that the ratings have been placed on watch with negative implications for lack of clairty on the company’s planned acquisiton of Germany-based REGE Holding GmbH, through its Singapore-based special purpose vehicle. “The total outflow for the acquisition and funding pattern thereof, at a time when JMT’s own performance and that of the parent have witnessed deteriorations, and success of integration of the acquired business with that of JMT, would be key rating sensitivities going forward. Apart from the said acquisition, JMT has sizeable capex plans in various other brownfield and greenfield expansion projects,” it said.
ICRA said it would “continue to monitor the developments and evaluate the impact of the same on the credit risk profile of JMT,” when it gets further details.
‘Exempt equity schemes from mandate of investing 25% in govt securities’ (10-09-2015)
The insurance industry has requested Irdai to limit the requirement of investing 25% of Ulip funds in Central government securities to debt-oriented schemes and exempt equity plans.
In the first week of July, Insurance Regulatory and Development Authority of India had sent an exposure draft mandating at least 25% of Ulip funds to be invested in Central government securities. However, industry players believe such a move would lower participation of retail investors. Life Insurance Council — the apex body of life insurers — and representatives from the sector met Irdai to share their concerns.
“Ulips invest in line with customer preferences for a certain risk-return profile. Customers make investments on the basis of certain asset allocations and risk-return expectations. Bringing in this limit for existing products would be negatively disruptive and mean a deviation from customer expectations,” said a industry member.
There are several types of Ulips and different funds have different risk profile. While some invest in equity, other go for balanced funds whereas still others invest only in debt products. Ulips are also eligible for tax benefits under Section 80C of I-T Act.
According to estimates, the total corpus of Ulips stands at Rs 3.6 lakh crore out of which around Rs 60,000 crore is invested in Central government securities.
“Even now, we invest around 15-18% in Central government securities, but to subject even equity funds to that requirement will be injustice to investors. When an investor enters Ulips, he knows what risks he is taking and that money should be invested only in equity markets,” said the CEO of a top insurance company.