Sterlite makes a fresh bid for Assarco for $1.7bn with cash payment of $1.1 bn upfront & remaining over the next 9 years: Positive for the stock
Sterlite has been in talks with Assarco for quite some time & in fact earlier it was buying the same company at much higher prices. However due to changed macro economic conditions & global demand contraction the company went in for renegotiation. We believe this deal will be EPS accretive for Sterlite. (Detailed note will follow later)
Visit to Sesa Goa, Vedanta Aluminum & Hindustan Zinc
We visited these companies’ sites to assess the expansion plans announced by these companies. We come out convinced that all expansion is going on schedule & companies are likely to meet there respective guidance’s.
Banking Sector
In the past few trading sessions most of the banks stocks have come off significantly are trading almost near their mean valuations reached in past 8 year period. Even if we were to assume NPAs to double this year most of the stocks in the sector will still be trading near their lowest valuations. A few examples would be Allahabad Bank, Andhra Bank & Corporation Bank. Thus we may see short term positive move in these stocks.
However there are some banks which are still trading at premium or near their mean valuation. For example SBI is trading at 1.2x FY10 book. If we were to assume more slippage on asset quality than this valuation may go up to 1.6x. Thus we expect this stock to remain under pressure for some more time.
For long term our top picks remain BOB & PNB.
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