Posts in category All News
Amid FII selloff, India shows resilience (27-08-2015)
23 dead as Madagascar troops battle cattle rustlers (27-08-2015)
AKZO Nobel – A sleeping giant – preparing for next wave of Growth (27-08-2015)
Let me tell you a true story.
I wanted to get my house painted. Big house. 4500 sq feet. 250000 worth of paint.
I called Dulux first. no response.
I called their call center. They said someone will contact me. No one did.
I left an email. no revert.
I called Asian Paints once, and they did everything from that point on.
I was holding Akzo...sold all my holdings.
If you think this team will make you money, forget it.
Control Print – Deservers attention? (27-08-2015)
Dear Niku
Sorry for missing your post earlier.
Any luck with meeting the Management?When is the AGM as it seems management will open their mouth in AGM only.
You can ask on why are receivables and inventory on the higher side?Why is cash flow negative?What has been the impact of recent strictness n banning of Maggi noodles by FSSAI?How are they faring against competition? Why was CFO sacked recently?Any more chances of warrant allotments to promoters or is the chapter finally over?How big is the opp size n whats the moat of the co?Any plans of expansion? was the Nalagarh plant taken on lease n will it be closed down n production shifted to the new Assam plant as the tax benefits are over?
In the recent carnage it was heartening to see that CP stood firm ...any instl entry here?can this Maruti turn into Mercedez ?we need to find out.Thanks
Buy Ashoka Buildcon, target Rs 210 (27-08-2015)
Initiate ‘buy’ on Ashoka Buildcon with a target price of Rs 210 per share.
Our March-2017 based SoTP values the core construction business at 6.5x EV/Ebitda, given its strong execution track record but weak starting backlog.
We estimate the recent build-operate-transfer additions (part of Ashoka Concessions) to yield returns below the 12% IRR committed on investments made by SBI Macquarie, leading to a shortfall of ~R12 per share.
This levers the SoTP to recovery in traffic (lifting of mining ban, economic recovery). Investible funds form 20% share of our SoTP, which once invested could yield higher value.
The stock may be volatile in near term, but will eventually reflect strong sectoral growth prospects. We build in 14% revenue CAGR and flat Ebitda margin over FY2015-18e for the construction business.
For the BOT business, we estimate 1) a steady-state traffic growth of 5.5%, 2) WPI inflation of 4.5% and (3) ebitda margin gradually improving to average ~80% over the period of concession. We build in extension of concession period for Sambalpur (six years), PNG (four years), Dhankuni (three years) and Belgaum projects (three years).
Ashoka Buildcon is an integrated roads BOT player with a strong EPC business (nil debt, material third-party exposure). On the strength of its EPC cash flows, the company has been able to fund most of its R800 crore of BOT investments over FY11-15.
While these recent BOT additions have not lived up to their potential, contribution of mature BOT projects has made the overall portfolio well-funded. Its BOT portfolio has limited downside risks as 1) all toll projects have been commissioned and 2) exposure to long distance, south-north traffic (DFC) is limited.
The company can be the biggest beneficiary of an uptick in ordering in roads, given its dual business exposure and access to ~R1,400 crore of cash inflows over FY2016-18e. This can help multiply its ordering and order backlog over this period.
Double delight for primary markets (27-08-2015)
The three-day initial public offering (IPO) of Pennar Engineered Building Systems (PEBS) closed successfully on Thursday with the issue getting subscribed 1.78 times at 5 pm IST, assuring PEBS of at least R152 crore through the issue.
Qualified institutional buyers bid for more than 60.56 lakh shares against 18.32 lakh reserved for the category. The non-institutional category comprising high net-worth individuals (HNIs) was subscribed 1.08 times. HNIs bid about 14.42 lakh shares against 13.39 lakh shares reserved.
On Monday, PEBS had raised R46.85 crore through a pre-IPO placement made to 15 anchor investors, including Religare Invesco Mutual Fund, Birla Sunlife Trustee Company, Nomura Singapore and DSP Blackrock.
Motilal Oswal and Axis Capital were the lead book running managers for the issue.
The Hyderabad-based company had fixed a price band of R170-178 a share and intends to use about R34 crore from the proceeds for working capital requirements, about R8 crore for procurement of infrastructure, including software and hardware for expansion of design and engineering services for the prefabrication business, and the rest for other general corporate purposes.
Shree Pushkar IPO subscribed 1.29 times
The IPO of Shree Puskar Chemicals managed to rope in enough subscribers to raise R70 crore. As per stock exchange data, the issue was subscribed 1.29 times on the final day of the offering.
The non-institutional category bid for 35.99 lakh shares against 17.21 lakh reserved. The book was subscribed 2.09 times. The retail book was subscribed 1.41 times. Retail investors bid for 56.48 lakh shares against 40.16 lakh on offer. Shree Pushkar Chemicals & Fertilisers had fixed the price band of R61-65 per equity share for the issue.
The company plans to utilise the proceeds for acquisition of an existing factory at Lote Parshuram in Maharashtra and financing the setting up of new manufacturing facilities for reactive dyes with a capacity of 3,000 tonne per annum, H-Acid with a capacity of 750 TPA and Vinyl Sulphone (VS) Ester with a capacity of 1,000 TPA.
Keynote Corporate Services is the book running lead manager to the issue.
Expect more earning downgrades in near term: Saumil Shah, Bank of America Merrill Lynch (27-08-2015)
A sustained yuan devaluation could be a positive for India from inflation point of view, building a stronger case for interest rate cuts, says Saumil Shah, MD & Head (Equity Sales Trading), Bank of America Merrill Lynch, in an interview with Devangi Gandhi. Excerpts:
Market volatility has gone up in the last two months. How do you see the Indian market in terms of attractiveness?
Foreigners have purchased shares worth $7 billion year-to-day versus $15 billion last year. If one were to analyse the inflows, a substantial part is made up of block deals, rebalance flow and public offerings. The huge overweight of 500-bps-plus that India enjoyed in global emerging markets (GEM) funds has come down to 350 bps approximately as GEM funds have lightened their overweight on India. Since July, net inflows have been close to $740 million. As investors start looking at India from a macro perspective, the Iran deal has been welcomed and we expect crude prices to go down by $5-10 a barrel in the next 6-8 months as that supply starts coming in.
Commodity prices are under pressure on the back of China slowdown, which is very positive for India from the inflation point of view. According to me, a big positive for Indian market is the way gold is beaten down.
Of course, monsoon is a concern with the cumulative rainfall so far lagging 9% from the average. However, sowing has been encouraging and government has kept the prices under check by managing supply. The main concern at this point for the market is the pick-up in the economy and growth in earnings. Earnings growth in the recently concluded earnings season was disappointing with marginally negative earnings growth.
We expect the earnings to remain weak in the near term. This is likely to result in more earnings downgrades. Thus, the current valuation of 16.5 times is actually closer to 18-times forward. After this quarter, there will be adjustments for the fact that the economy hasn’t really picked up. The good thing is, with oil prices coming down, consumption is likely to pick up and government could likely meet the allocation towards infra spending — especially in roads and railways. So, one is very hopeful, towards beginning of the next year, we will start to see a pick-up.
The conclusion of the monsoon session where the government could not push through key Bills is seen as a concern by many…
It is definitely a major concern as it stalls the reform process. It is now very clear that it will take some more time for the government to get these Bills passed. So, if you ask me, currently markets are definitely are a bit on the higher side of the band. The positives are there in terms of a better macro picture, but what’s negative is earnings and growth have not picked up. The critical factor which the market and investors are looking for is when they start to see a pick-up in infra spending and key reform Bills, such as the GST and land Bill, get passed.
If you look at India against other countries, India stands out — in terms of external debt to GDP ratio, current account deficit. Fiscal deficit is under control and the rupee has managed to stand ground and outperform versus other EM currencies. Of course, what might change is emerging markets like Korea and Taiwan improve and their fundamentals start to improve and you may see a reverse flow of funds.
The other factor that is supporting the market is the interest of the domestic investor. Since last April, more than $10 billion has made its way into domestic mutual funds — this is a very big positive for the markets. At a time when gold prices are crashing, real estate as an investment is losing its popularity, fixed-income funds are facing lower rates going ahead, equities as an asset class definitely looks attractive. You can’t ignore domestic inflows anymore and it is a space that we need to watch more closely.
The momentum in foreign inflows has surely slowed down…
The net incremental flow has been quite low because GEM funds are already quite overweight on Indian market. Even as the overweight may have come down from over 500 bps to 350 bps, it still persists. The money which really hasn’t come is from the global funds. Emerging market fund that is well overweight on India and the impact of oil and commodity prices coming down is already factored in.
So, there’s no new catalyst for an EM fund in absence of earnings momentum to invest more in India. But it would still stay invested in India due to its relative attractiveness. The case is not there for global funds to come in as against an India or EM dedicated fund as they await triggers like growth and earnings recovery. Ultimately, this will happen as reforms take shape and infra spending picks up.
What impact could a sustained yuan devaluation can have on Indian markets and foreign flows?
Theoretically, yuan devaluation can have a negative impact on Indian exports. However, it also signals that all is not well in China and could lead to further softness in commodity prices which is beneficial for India. A sustained yuan devaluation thus could be positive for India from a Inflation point of view, building a stronger case for interest rate cuts. Also, typically if investors form a view that China will further devalue its currency then it might scare away the foreign flows from China into India. Although one will have to be careful and have a bottoms up approach. For example, textiles is a sector that competes with China and could be impacted negatively.