INVESTORS PLEASE LISTEN !: May 2009

Saturday, May 30, 2009

The right time to invest in infrastructure in Now

From the No. 1 Mutual Fund Company of India –" Reliance Mutual Fund".

Immense growth prospects in Infrastructure Sector

Stable Government creates Stable platform for Infrastructure Sector.

"We want to have concentrated focus on Infrastructure"..says Mr. Manmohan- Prime Minister of India.

Big inline Projects indicate Boom in Infrastructure Sector.

60,000 Crs to upkeeep of Roads, 40,000 Kms of roads as a part of another economic stimulus package to be announced soon..

"Total expected Investment of Rs. 20,271 Billion in Infrastructure sector"- says Planning Commission

CALL OUR INVESTOR SERVICE CELL @ 0-9818269396

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Friday, May 29, 2009

[Investors Please Listen] Rishabhdev Technocable Ltd IPO to open on Jun 04

Incorporated in 1994, Rishabhdev Technocable Limited is in the business of cable manufacturing and trading. Company's product includes Industrial control cables, Hi- Tech- data cables, Process control instrument signal cables, Thermocouple extension and Compensating cables, Computer application, Hi- Bit rate networking cables, Digital data communication cables, Specialty cables and Customized cables.

Rishabhdev Technocable Limited is entering in the capital markets with an initial public offering, IPO of 90,00,000 Equity Shares for cash, at a premium to be decided through a 100% Book Built Issue.

The price band for the issue has been fixed at Rs 29/- at lower level and Rs 33/- at upper level for equity share of Rs 10/-. The issue opens on June 04, 2009, and closes for subscription on June 09, 2009. The equity shares of the company are proposed to be listed on the Bombay Stock Exchange (BSE). The existing equity shares of the company are listed for trading on the Pune Stock Exchange (PSE) and the Jaipur Stock Exchange (JSE).

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Stringent KYC norms PROPOSED for mutual fund investments

Mutual Fund investors must brace themselves for more stringent KYC (Know-Your-Client) norms going forward. The Government of India, based on the suggestions given by the finance ministry, is contemplating to impose stricter KYC norms on mutual fund investments. The step is directed towards curbing the flow of black money into the stock markets. At present, investments of Rs 50,000 and above are only subjected to KYC norms. However, if the proposed norms come into force, all mutual fund investments irrespective of the investment amount, will be subjected to the KYC norms. Under these norms, investors have to register details of their PAN, income, address and contact details.

The proposed KYC norms may face some resistance from investors who normally invest in smaller amounts. They might take this move as an extra burden on their shoulders. And to address this issue, the onus is on the Government to ensure that the process of KYC registration is simple and less cumbersome for investors. One way to make it easier for investors is by opening more centers, where they could get their registration done. Moreover, Government should ensure that the process is speedier and does not lag. Also, starting an online platform where investors can register their details will be helpful for them.

Credit cards may not be free anymore

Credit card customers could soon be feeling the pinch of an extra charge. If banks have their way, they will soon have to shell out annual charge on their credit cards. Banks are planning to take this step because of high issuance costs and rising defaults. Earlier at the height of consumerism and as credit card popularity gained momentum, banks started issuing credit cards indiscriminately. They even started offering free lifetime schemes to many customers without any annual charges. They also came up with many high-end credit cards for HNI and high-income group customers, where they levied some annual charges.

Look at your credit card bills and your spending habits carefully. Apart from interest costs for the credit used, you may have to shell out the annual charges. Indirectly this could be positive to individuals, as the tendency to apply for a card, because it is freely available is reduced. This in turn means that individuals may manage their expenses better and not fall into a debt trap.

Looking for health cover at old age?- Read this

Now here is something for the senior citizens to cheer about. In its latest directive to all insurance companies, IRDA (Insurance Regulatory and Development Authority) has asked them to extend the entry limit for health insurance policies till the age of 65 years. This will come into effect from July 1, 2009. The new directive will be applicable on new as well as existing policies, which are issued or renewed on or after July 1, 2009. Moreover, the health insurer will have to charge a fair and just premium to the senior citizens. In case the senior citizen is denied a policy for any reason, then the reasons have to be furnished in writing for such a denial.

This directive comes as a huge relief for senior citizens. Many insurance companies tend to deny entry for health policies after a particular age or used to charge exorbitant premiums with respect to age. Such a move would ensure transparency in the system and a fair and just treatment to all senior citizens. In our view, all individuals irrespective of their age should have a health cover. The earlier they take - the better it is, since the premium would be low.

Investing in New Pension Scheme - Don’t ignore the charges

On May 1, 2009, New Pension Scheme (NPS) was introduced in the markets with much fanfare. Portrayed as a scheme with the lowest fund management charges, they created quite an excitement among individuals. But the fund management cost is not the only charge attached to the scheme. In-fact, there are few other charges as well, which comes out once you start investing in the scheme. The table below shows some of those charges.

Services	Charges (Rs)	Example (On Investment of Rs 500 pm)
Annual maintenance charges	350	350
Each Deposit / Switches / Statements	30	360
Central Record- Keeping	50	50
Point of Presence	40	40
Total	470	800

In addition to above, there will be a charge for Demat account, asset servicing and investment management fee. As can be seen above, even if an investor invests Rs 500 per month, then for the whole year, his expenses will be a minimum of Rs 800 for an investment of Rs 6,000. The expense ratio turns out to be around 13%, which is way too high when compared to investments in avenues like mutual funds (expense ratio on equity-oriented mutual funds is capped at 2.50% per annum).

Hence, investors would do well to take into account the charges levied on NPS, before making investments in the scheme.

Indian mid cap funds goes up 1.5x large cap funds - Now what?

The biggest beneficiaries of the recent stock market rally are the mid cap and small cap segments. Over the last two months (since March 27, 2009 to May 27, 2009), BSE Sensex is up 40.4%. On the other hand its contemporaries, BSE Midcap and BSE Smallcap indices, has risen by 67.0% and 79.0% respectively.

Similar performance is replicated by the mutual funds in the large cap and mid cap categories as well. Graph below depicts the performance of both these categories over the last two months. While the returns generated by the mid cap funds in the recent times are great, investors should not get blindly carried away with their performance.

It should be well understood that investments in mid caps are a typical high risk-high return investment proposition. Investors must acknowledge the above-average risk associated with these investments before making the final investment decision. However, for investors who have the requisite risk appetite, it’s the right time to invest in well-managed mid cap funds.

At PersonalFN, we regularly update our clients through our INVESTMENT IDEAS NOTE - about what is happening in the markets and what should be their future course of action. In our latest issue we have analysed the factors that could take the index to 21,000 by mid 2010.

India third most promising country to overcome recession

The impact of the global economic downturn has begun to thrive and India's chances to successfully glide over the tide remain positive. The country has been ranked third by a study, among the most promising country to survive the economic crisis.

The rankings are based on the Servcorp International Business Confidence Survey, which was conducted to understand the business morale and impact of the economic downturn. Australia has been voted as the best place to be during these recessionary times by international business people, followed by China. The third position is held jointly by India and Singapore while Hong Kong and Canada are in the fifth and sixth place respectively. As per international businessmen the other most promising countries include Japan, Qatar, New Zealand, Malaysia, Sweden, Vietnam, Netherlands, U.S., Indonesia, South America, France, Belgium, England, Korea, South Africa, Austria, Taiwan, Czech Republic, Germany, Ireland, Lebanon, Russia, UAE, Brazil, Morocco, Philippines, Scotland, Sri Lanka, Syria and Thailand.

The survey pinpointed that developing nations have emerged favorites among international businessmen as places which are best placed to tide over the recession. The rankings enlisted 36 countries and 21 countries among the 36 are emerging economies.

[Investors Please Listen] Research Views

Tata Motors Limited – Q4FY09 Result expectation

We expect subdued performance from Tata Motors in Q4FY09. We expect 25.7% YoY decline in net sales to Rs 65.8 bn, led by 23.3% YoY decline in volumes. On account of inventory reduction exercise, foreigh exchange rate fluctuation and cost pressure at all front, we expect EBITDA to decline by 65.4% YoY to Rs 3.9 bn. We expect APAT to decline by 80.0%% YoY to Rs 1.6 bn. We would attach more importance on the following rather than 4QFY09 results. The financial detail of Jaguar and Land Rover (JLR). Also, the nature of backing expected for JLR from Brtish Government. The status of outstanding debt and details abou the end use of the same.

Tata Chemicals Q4FY09 / FY09 results below estimates

Consolidated net revenues of Rs 19 bn, +30%YoY were driven by 30% growth in each fertiliser and chemical. However EBITDA increased by 60% to Rs 3.4 bn (implying EBITDA margins of 17.9%). On segmental for Q4FY09 fertiliser contributed loss (adjusted) of Rs 1.3 bn while chemicals contributed EBIT (adjusted) of Rs 2.9 bn. However there may some adjusted items since proper break up and stand alone segmental results are not available.

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Safe Harbor:
The information contained and provided on this Website provides Investment advice for the education of investors. The posts are an information service only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. We do not assume any responsibility or liability resulting from the use of such information, judgment and opinions for Trading or Investment purposes.

[Investors Please Listen] Auction cut-offs and devolvement sustain investor pessimism; 10-yr up 11bps

Auction cut-offs and devolvement sustain investor pessimism; 10-yr up 11bps

The 10-year benchmark paper soared 11bps today to close at 6.73% (highest since April 13). Investor pessimism seemed well ingrained in the government bond market as yields trailed consistently higher for most of the day; the curve drifted up by 5-10bps. Total volumes on the NDS-OM platform stood at INR 63.95 bn.
The INR 150 bn auction turned a catalyst for the ongoing bearishness, reporting cut-offs worse than expectations along with the devolvement in the longer dated securities. The 7.59% GoI 2016 bond was the most liquid counter, auctioned today at a cut-off yield 10bps below (at 6.94%) market expectations.
Liquidity in the system remained plush with excess cash under the RBI's reverse repo holding at INR 1.33 tn. Total volumes in the overnight money market were marginally held back from the INR 1 tn mark (at INR 969 bn) at a weighted average return of 2.84%.
The INR 150 bn auction concluded with this financial year's maiden devolvement – INR 3.71 bn of the 26-year bond (7.40% GoI 2035) bought by primary dealers. Cut-off yields for all securities, barring the 7-year paper, were issued at much higher (4-5bps) yields than market expectations.
Annual Wholesale Price Index (WPI) for the week-ended May 16 rose 0.1%, reporting a Y-o-Y inflation of 0.61%. Prices of tea (up 10%), select pulses (up 1% each), aviation turbine fuel and furnace oil (up 2% each) held an upside on wholesale prices; the annual inflation unchanged from the previous week.
Yields on the PSU 5 and 10-year corporate papers rose 10bps each, while select participants were also seen selling 2-year papers. RPL continued to take recourse to CPs, raising another INR 3.50 bn at 4.25% (up 15bps) in the 3-month segment.

Revision in the rate of interest of JINDAL STEEL & POWER. w.e.f. 05.06.2009.

Revision in the rate of interest of JINDAL STEEL & POWER. w.e.f. 05.06.2009.

Period (Months)	Rate of Interest (%)
12	8.00
24	8.25
36	8.50

Thursday, May 28, 2009

IPO Season Expected to Kickoff Soon in India Stock Market

IPO Season Expected to Kickoff Soon in India Stock Market

With growing market stability and improved market sentiment in last few months, corporate India once again is gearing up for IPO's to raise capital. Chemcel Bio was the last IPO raised capital from primary market in early September 2008.

Multiple business houses are lined up for IPO's and waiting for the right time. More then Rs 10,000 Cr are expected to raise through IPO's in recent future. The current market situation looks positive for companies to kickoff the IPO season and go ahead with there ambitious projects.

18 companies planning for IPO's, already got approvals from SEBI while few others are still waiting for clearance.

NHPC Limited IPO

Incorporate in 1975, National Hydroelectric Power Corporation (NHPC) is a Government of India enterprise. NHPC is in the business of building and maintaining hydro-electric power stations across India and its neighboring countries. The company is expected to raise around Rs 2,000 Cr though the IPO. More detail of the IPO can be found in the draft prospectus [ http://chittorgarh.net/click.html?x=a62a&lc=oJIU&mc=3&s=ZxWfe&y=N& ] document company filed with SEBI on Aug 07, 2008.

Oil India Limited IPO

Incorporate in 1959, Oil India Ltd is also a Government of India enterprise. Oil India is in the business of crude oil exploration around India and overseas. Company is the second largest explorer of crude oil in India after ONGC. Government is planning to offload its 10% ownership in the company to issue 26.4 million shares (around Rs 1,400 Cr) though Initial Public Offer which is expected in next few of months.

Future Ventures India Limited, Pipavav Shipyard Limited, Rishabhdev Technocable Limited and Astec lifesciences Limited are among few IPO's cleared by SEBI and all set to tap India stock market.

22 IPO's are still waiting for approval from SEBI, including Adani Power Limited IPO, Godrej Properties Limited IPO and Jindal Cotex Limited IPO.

Bring your gang together. Do your thing. Find your favourite Yahoo! Group.

[Investors Please Listen] 9AM with Emkay - 28 May 09

Mahindra & Mahindra Limited – Q4FY09 Result expectation

We expect 13.1% YoY growth in net sales , led by 4.9% YoY increase in volumes. On account of inventory reduction exercise and cost pressure at all front, we expect EBITDA to decline by 6.8% YoY to Rs 3,175 mn. We expect APAT to increase by 4.1% YoY to Rs 2,052 mn.However Q4FY09 numbers are not comparable with Q4FY08 due to merger of Punjab Tractors.

Larsen & Toubro Q4FY09E Result Estimates (Standalone)

Results expected on May 28, 2009

We expect L&T to report muted performance in Q4FY09E following strong performance in 9MFY09. We expect revenues to increase marginally by 1.7% yoy to Rs86,235 mn. We expect L&T to maintain its operating margins at 15.2% with no benefits from falling input costs. Consecutively we expect operating profits to also increase marginally by 1.6% yoy to Rs13,150 mn. We expect adjusted net profits to decrease by 3.4% yoy to Rs8,495 mn owing to higher interest and depreciation costs. Management commentary on guidance on revenues / order booking and order inflows will be reviewed closely.

Tata Chemicals Q4FY09 results expectations

On consolidated basis, we expect net sales to increase by 25% to Rs 18.3 bn. EBITDA margins are expected to expand by 568 bps to 20.2%. As a result, EBITDA is expected to increase by 74% to Rs 3.7 bn. We expect PAT before minority (not adjusting for M-T-M forex loss) to increase by 87% to Rs 1.4 bn. APAT after minority interest is expected to increase by 47% YoY to Rs 1.1 bn.

Emco LTD - Q4FY09 Result – Above estimates (First cut analysis)

Revenue grew by 9% yoy to Rs3.7bn in Q4FY09 - above estimates. Operating profit grew 16% yoy and the operating profit stands at Rs561mn. Operating Profit Margins stood at 15.0% (higher than estimated 12.3% margins) against 14.1% in Q4FY08 and 13.3% in Q3FY09. Net Profit declined by 18% yoy to Rs235mn - above estimates. Earnings for the quarter stood at Rs4.0/Share. For Full Year, EPS stood at Rs8.9/Share.

TNPL Q4FY09 results below expectations

TNPL Q4FY09 results were below our expectations mainly on account of lower than expected EBITDA margins. Net sales increased by 19% YoY to Rs 3 bn. EBITDA margins improved by 310bps to 24.5% as a result EBITDA increased by 36.6% to Rs 732 mn. Interest and and depreciation increased increased significantly by 20% and 238%, respectively due to commissioning of pulp unit. As a result APAT declined by 27% YoY to Rs 202 mn. EPS for the quarter stood at Rs 2.9. Company has also declared dividend of Rs 4.5 per share. We will be shortly coming with update on valuations.

[Investors Please Listen] LIC Housing Finance Stock Update ; QIP plans; valuations not cheap - downgrade to HOLD ; HOLD ; Target : Rs450

LIC Housing Finance

QIP plans; valuations not cheap – downgrade to HOLD

HOLD

CMP: Rs478 Target Price: Rs450

LIC Housing Finance (LICHF) is likely to discuss QIP plans in its forthcoming board meeting on June 1, 2009. If the board approves the QIP plans then the agenda will be put across in the annual general meeting of the company which may be held in July 2009.

We believe that with a robust tier I capital adequacy ratio of 10% and robust RoE of 25%+, LICHF does not need fresh equity infusion at least for next 18-24 months. We see any equity dilution as marginally negative for the stock.

At the current market price, the stock is trading at 1.5x FY10E ABV and 1.2x FY11E ABV with an average RoE of 25%+. We believe that the valuations are not cheap looking at the historical 1-year forward valuations which have been at 1.2x ABV for last fourteen years and 1.5x over last five years. We downgrade the stock to HOLD keeping our price target same at Rs450.

Wednesday, May 27, 2009

[Investors Please Listen] Cummins Q4FY09 Result Update ; Numbers boosted by amalgamation ; SELL ; Target : Rs195

Cummins India Ltd.

Numbers boosted by amalgamation

SELL

CMP: Rs257 Target Price: Rs195

Cummins India reported its Q4FY09 results which included amalgamation of its two subsidiaries, Cummins Auto Services Limited and Cummins Sales and Services Limited. The results are therefore not comparable. Revenue for the quarter was at Rs.10.2bn an increase of 53.1%. Net profit increased by 56% to Rs.1.1bn. However, excluding the impact of the amalgamation, revenue for the quarter was at Rs.6.3bn, decline of 8.3% and net profit declined by 10.6% to Rs.657mn. Decline in the engine segment clearly demonstrates that the worst may not be over for the company. During the quarter, exports reported decline of 10% to Rs.3.2bn. Going forward export segment will remain as a pressure point for Cummins, which was a growth driver in the past six quarters.

We expect Cummins to be severally impacted due to slowdown in the capex in general and demand for power gensets in particular. Demand is expected to slowdown significantly from manufacturing, IT/ITES and automotive segment. We are revising our EPS estimate, primarily due to better than expected performance of the subsidiary companies (now amalgamated with the parent company). We expect the company to report net profit of Rs.3.2bn in FY10 and Rs.3.8bn in FY11. We expect the company to report consolidated EPS of Rs.16.2 in FY10 and Rs.19.4 in FY11. We maintain our SELL rating on the stock with revised target price of Rs.195, based on 10x FY11 earnings.

Tuesday, May 26, 2009

Research View

Dishman Q4FY09 Result Update ; Strong Operating Performance ; BUY ; Target : Rs213

Amidst weak global outlook and inventory rationalization, Dishman's FY09 numbers are ahead of our expectations. Revenue grew by 32% to Rs10.6bn (est. of Rs10.4bn) on the back of a) 29% growth in CRAMS business and d) full year impact of Vitamin-D business. Despite lower off-take of Eposartan by Solvay and drop in revenues from smaller biotech companies, 24% organic growth in sales demonstrate the underlying strength in Dishman's business model. EBIDTA for FY09 was up by 71% to Rs2615mn driven by a) 610 bps reduction in raw material cost (change in product mix), and b) 110 bps reduction in employee cost. Recurring PAT was up by 75% to Rs1462mn (est. of Rs1331mn). Despite strong performance in FY09, management has given 15-20% revenues and earnings growth for FY10E, which is line with our estimates. We maintain our FY10E revenue and earning estimates and introduced FY11E numbers. We reiterate our Buy rating with a target price of Rs213.

Deepak Fertiliser Company Update ; Change in Reco from BUY to HOLD ; HOLD ; Target : Rs 103

We recently organized conference call with the management of Deepak Fertilizers and Petrochemicals (DFPCL) to discuss their Q4FY09 / FY09 results and their outlook on the industry. Company's Q4FY09 results were better than our estimates. For FY09, company reaped the benefit of strong commodity cycle in H1FY09 and posted PAT growth of 37%. In FY10, we expect volume growth from capacity expansion in nitric acid, increased production of complex fertiliser on account of improved gas availability and higher fertiliser trading. We have factored in these scenarios and have increased our FY10 revenue estimates by 20% to Rs 13.8 bn and PAT by 20% to Rs 1.2 bn from previous Rs 11.5bn and Rs 1 bn, respectively.

In FY10, we expect company to witness the impact of strong results in FY09 and expect drop in revenues, margins and PAT led by softening chemical prices. We expect CAGR (FY09-11E) in revenues and PAT of 3.4%. Next upside trigger can be increase in chemicals prices and possible JV with Yara international to manufacture specialty fertiliser. We value the stock at Rs 103 based on 1xFY10E book value and change our recommendation from BUY to HOLD on the stock.

Revision of Interest rate on Shriram Transport Finance Co. Ltd.

Final Interest rate, with yield are as under-

Period          Interest Rate          Cumulative Yield     Rs. 25000/- becomes
                         ( Qutrly)
1 Year              9.00                              9.30                         Rs. 27,325

2 Year              9.50                              10.33                       Rs. 30,165

3 Year             10.00                             11.49                       Rs. 33,618

4 Year             10.00                             12.12                       Rs. 37,120

5 Year             10.00                             12.77                       Rs. 40,963

Please note that minimum investment is Rs. 25,000
Rest of the terms remain the same.
All deposits where banking is made on or before 31st May will earn existing rates.

[Investors Please Listen] MNC Pharma Sector

Global Local

The renewed focus of MNC pharma companies on India promises to provide strong upside potential with low downside risks. MNC pharma companies, hitherto considered as safe bets rather than as strong contenders to domestic pharma players, are likely to see a total change in strategy. Saddled by stagnant growth in developed markets, lower returns on investments and higher R&D costs, MNC pharma companies are aggressively scouting for strong growth options. In their search for high growth-high potential markets, India, with its numerous growth triggers emerges as a strong destination. MNCs, after identifying India as their growth prescription, have embarked on a multi pronged strategy to establish their dominance in the Indian pharmaceutical market. Introduction of patented products, divesting non-core businesses, acquisitions, strengthening their sales & distribution network, developing India-centric strategies are a few of the steps taken by the MNCs to establish their stronghold in the Indian pharma market. Strong cash flows and healthy balance sheets, high dividend pay-outs, outperformance of the domestic market and strong patent product pipeline makes the Indian MNC pharma companies an attractive investment proposition.

Reco	Company	CMP (Rs)	TP (Rs)
BUY	GlaxoSmithKline Pharma	1103	1350
BUY	Pfizer Ltd.	730	867

[Investors Please Listen] IRB Infrastructure Developers Ltd

Q4FY09 results – below expectations

ACCUMULATE

CMP: Rs142 Target Price: Rs145

IRB Q4FY09 results were below our estimates primarily on account of higher operating costs. Revenues for the quarter increased by 34.3% qoq to Rs3.21bn (our estimate Rs3.15bn) driven by 41.3%qoq increase in construction revenues while BOT revenues were up 19.8% sequentially. Operational costs during the quarter jumped up by 45.8% qoq to Rs2.0bn as the company incurred higher periodic maintenance costs during the quarter which were schedule to be incurred over FY10. Resultant, EBIDTA for the quarter grew at a lower pace of 18.7% sequentially to Rs1.20bn while EBITDA margin declined by 577 bps. EBITDA margins for the construction business were up 422bps to 18.2% while BOT EBITDA margins were down 1412bps. We expect construction EBITDA to improve with addition of high margin Surat Dahisar construction project and falling commodity prices. Net profit for the quarter was at Rs422.4mn which was below our estimated Rs483mn. We are downgrading our FY10E earnings by 5.7% to Rs11.6 mainly on account of lower than estimated contribution from the Surat Dahisar project and higher costs in the construction business. We believe IRB is an ideal play on India's continued focus on developing road infrastructure through PPP model. We also take comfort from the fact that post financial closure of Surat Dahisar project, the company does not require significant funds for executing its projects. The lower interest rate scenario shall add further fuel to stock outperformance. At CMP of Rs142, the stock is trading at 11.6x FY10E earnings. We are revising our rating on the stock from BUY to ACCUMULATE with a revised price target of Rs145.

Monday, May 25, 2009

[Investors Please Listen] Research Views

Emco Transformers Q4FY09E Result Estimates (Result on 27th May)

We expect net sales to grow 2.7% yoy to Rs3.5bn. Expect Volume growth of 6% yoy to 4027 MVA. Expect realizations per MVA to drop by 10% yoy to Rs0.47mn. Expect 10% yoy decline in meter revenues and 16% yoy growth in project revenues. We expect operating margins to be at 12.3% (drop of 180 bps yoy) and operating profits to decline 10.6% yoy to Rs432mn. We expect net profits to decline by 36.5% YoY to Rs183mn. The key things to watch out - (1) order inflows from industrial segment as well as SEBs, (2) guidance on realizations/margins going forward, (3) Delay in dispatches / payment and 4) update on power generation business especially funding.

TRF Q4FY09 Result Update ; Maintain 'BUY' ; BUY ; Target: Rs692

TRF gave positive surprise in Q4FY09 with better-than expected operational performance – (1) revenues grew by 41% yoy to Rs2.4 bn led by sustained pick up in order booking in Project division (2) operating margins up 210 bps yoy to 15.5% (3) net profit growth at 55% yoy to Rs239 mn. However, York reported disappointing results due to adverse impact of forex movement and challenging business environment – its revenues down 61% yoy and net loss of Rs32 mn. Strong performance in H2FY09 following robust order booking allayed investor concerns. TRF has good quality order backlog of Rs13.6 bn, least likely to give negative surprise in FY10E. Benign commodity prices could yield savings in raw material expenses and trigger margin expansion. Amidst above, we revise our consolidated FY10E earnings upwards by 10.7% to Rs104.9/Share and introduce FY11E earnings of Rs125.9/Share. We maintain our 'BUY' rating with revised target price of Rs692, valuing at 6X 1-year forward PER.

US slowdown : A short-lived impact on Indian market

The US slowdown has started, affected by a series of events which have left the investors perplexed. In the first quarter of 2008 the investment bank The Bear Stearns filed for bankruptcy, which was later acquired by J P Morgan, a leading global financial services firm with assets of $1.6 trillion, having operations in more than 60 countries. Little did the investors realize that this was just the beginning of the industry convulsions but later on one after the other, major players in the financial industry went for a toss.

The cascading effect continues¦ and so does the protection plans

Another major event that shook the stock market was the news of US mortgage giants Fannie Mae and Freddie Mac filing for bankruptcy. The U.S. government seized control of these companies, placing the liabilities of more than $5 trillion of mortgages onto the backs of the U.S. taxpayer. Both companies have now been placed into a government conservatorship under the recently created Federal Housing Finance Agency, in a plan announced by Treasury Secretary Henry Paulson and FHFA Director Jim Lockhart.

If this was not enough, New York-based Lehman Brothers Holdings filed a petition under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court. The company is more than a century-and-a-half old and serves the financial needs of corporations, governments and municipalities, institutional clients, and high net worth individuals worldwide. The news set the US stock market on a downward move.

Another historic event was the sale of investment bank Merrill Lynch to Bank of America for $50 billion. Under terms of the transaction, Bank of America would exchange 8595 shares of Bank of America common stock for each Merrill Lynch common share. The price is 1.8 times stated tangible book value. The transaction is expected to close in the first quarter of 2009. It has been approved by directors of both companies and is subject to shareholder votes at both companies & standard regulatory approvals.

But, the respite came with the news of Barclays set to acquire Lehman Brothers' American businesses & assets. Barclays Capital, the investment banking division of Barclays Bank PLC, has signed a definitive agreement to acquire substantially all of the North American businesses & operating assets of Lehman Brothers Inc., a wholly-owned subsidiary of Lehman Brothers Holdings Inc., & certain related assets of Lehman Brothers Holdings Inc. & its affiliates for consideration consisting of assumed liabilities, $250 million in cash & certain contingent considerations. The businesses to be acquired will include Lehman Brothers' Investment Banking, & Fixed Income and Equities Sales, Trading & Research operations, as well as certain supporting functions. These operations will be acquired by Barclays Capital, accelerating the growth of a formidable player in the global marketplace. Approximately 10,000 employees of Lehman Brothers Inc. and Lehman Brothers Holdings Inc. in North America and certain of its subsidiaries will join Barclays upon the closing of the transactions.

As another strategic move, Nomura Holdings, the Japanese investment bank, has also agreed to buy Lehman Brothers' Asia-Pacific units. And the grapevine is that the bank was close to sealing a similar deal for Lehman's businesses in Europe as well.

World's largest insurer on sale¦

Another repercussion of the US real estate meltdown was on AIG, the world's largest insurer, which was hit hard by credit crunch because its derivatives unit sold guarantees on securities tied to the American mortgage market. As a result, the company decided a $20 billion (Â£11 billion) asset sell-off. The federal government has offered AIG a loan of up to $85 billion to prevent the company from falling into bankruptcy. But, the fate of the company has been kept on hold for sometime.

Struggle continues¦

Not only this, Washington Mutual, America's largest savings and loans company - the equivalent of a building society in the UK - is also struggling under a collapsing share price.

More recently, Morgan Stanley has entered into a letter of intent to pursue a strategic alliance with Mitsubishi UFJ Financial Group, Inc. ("MUFG"), Japan's largest banking group & the world's second largest bank holding company with $1.1 trillion in bank deposits. The letter of intent relates to an investment in Morgan Stanley that would eventually reach 20 percent of its equity on a fully diluted basis. Earlier, Morgan Stanley was granted approval by the U.S. Federal Reserve Board of Governors to become a Federal Bank Holding Company.

In view of the prevailing market conditions, The Goldman Sachs Group, Inc. has announced that it will become the fourth largest Bank Holding Company and will be regulated by the Federal Reserve.

Impact on Indian stock market¦

It is often said that the stock market is ruled by sentiments and it has been proved as well. As soon as the US stock market tumbled, the Indian counterpart followed suit, leaving investors in a jittery. But, things in the US markets started improving and so did the sentiments of people back home. Even though global events are currently driving the Indian financial industry, and growing inflation rate, terrorists attacks and upcoming elections are making the matters worse; India still has a lot of potential to grow. It may be a bearish phase for the time being but Indian stock market will shine again. I feel after signing Indo-USA nuclear deal, sentiments in India will improve as investments around Rs. 2,50,000 Cr. is likely to make inroads in India for nuclear power generation. It will be a boom time for Indian engineering and electronic industries. Stocks picked at these levels would definitely grow. The success mantra is to invest wisely and carefully to reap the maximum benefits in the stock market. We conclude with a famous saying of John Templeton, "The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell." Happy investing!

Saturday, May 23, 2009

SBIMF Magnum Tax gains -D Plan

Announcing 28% Dividend, Record date 29th May’09

i.e. Rs 2.80 per Unit

Relative Performance (Fund Vs Category Average)

Fund Objective

The scheme seeks capital appreciation through investments in equities, cumulative convertible preference shares and fully convertible debentures and bonds. The scheme was converted into an open-ended plan in November 1999.

[Investors Please Listen] Key portfolios announced; Pranab Mukherjee is FM

Key portfolios announced; Pranab Mukherjee is FM

Today, it was announced that Pranab Mukherjee was elected as the Finance Minister, while P Chidambaram would retain his position as the Home Minister. AK Antony has been appointed as the Defence Minister and Mamata Banerjee will take over as the Railway Minister. Sharad Pawar has been given the position of the Agriculture Minister, Food and Civil Supplies. SM Krishna is the new External Affairs Minister. The much coveted Commerce Ministry has yet to be allocated. Congress heavyweights like Kapil Sibal and Kamal Nath are yet to be allocated portfolios.

Get all these reports and more on www.moneycontrol.com

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The information contained and provided on this Website provides Investment advice for the education of investors. The posts are an information service only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. We do not assume any responsibility or liability resulting from the use of such information, judgment and opinions for Trading or Investment purposes.

Reliance Infrastructure Fund : An Open Ended Equity Scheme

Investment Objective -

The primary investment objective of the scheme is to generate long term capital appreciation by investing predominantly in equity and equity related instruments of companies engaged in infrastructure and infrastructure related sectors and which are incorporated or have their area of primary activity, in India and the secondary objective is to generate consistent returns by investing in debt and money market securities.

Reliance Infrastructure Fund - Get more Business Documents

Call Our Investor Help Line @ 9818269396

Friday, May 22, 2009

[Investors Please Listen] Beware - Personal loan borrowers

Financial News. Simplified.

Weekly Facts
	Close	Change	%Change
BSE Sensex	13,736.5	1,863.6	15.7%
Re/US $	47.4	2.4	4.8%
Gold Rs/10g	14,435.0	455.0	3.1%
Crude ($/barrel)	58.6	2.3	4.1%

Weekly change as on May 21, 2009

Beware - Personal loan borrowers

PersonalFN Impact Indicator

CIBIL - Credit Information Bureau (I) Ltd. and TransUnion (a global leader in credit and information management) have launched the Personal Loan Score in India - a product that will keep a tab on personal loan defaults. This score will predict the likelihood of delinquencies by personal loan borrowers. The score will enable lenders to watch out for potential defaulters as they expand their retail lending operations and thus provide them with the tool to filter out these applicants. On the other hand, individuals with low "probability of default" scores, will actually be able to expect lower interest credit, as their lower risk profile, is attempted to be quantified.

A mortgage frauds list , which will have a database of all frauds committed on lenders will enable lenders to ensure they do not lend to such individuals, will be launched soon. Yet another product will list all mortgages created against loans taken, enabling lenders to confirm that the property they were lending against was free and available as security.

The rules and processes of consumer lending and specifically mortgage lending, in India, are about to change. The disciplined borrower will have life easier and defaulters will find that continuing to borrow will become increasingly impossible. Overall, the credit culture will improve and lenders risk will reduce. Credit flow can actually increase.

MIPs back in form - post attractive returns

PersonalFN Impact Indicator

Monthly Income Plans (MIPs), which were loathed by investors some time back for skipping dividend, are showing impressive returns at the moment. The graph below depicts the average returns of top 10 MIPs over 1-Yr period. Their average return over 6-Mth period have been around 17% pre-tax, which is much higher than what fixed deposits offer.

(Avg. returns of top 10 MIP's as on May 20, 2009)

MIPs generally invest 80% of the corpus into debt instruments and remaining in equities. The pick-up in their performance can be attributed to the recent rally in the equity markets and also improving debt market condition. Investors should consider adding MIPs to their portfolios if they wish to clock higher returns than those offered by fixed deposits or bonds; at the same time they should be willing to take on commensurately higher risk as MIPs are market-linked.

Fund houses push infrastructure funds again

PersonalFN Impact Indicator

With the optimism surrounding the stable government and anticipation of huge spending on the infrastructure sector, fund houses are now busy pushing infrastructure funds. Besides, few fund houses are also planning to launch infrastructure funds.

Risk and return of infrastructure funds vis-à-vis diversified equity funds

Diversified Equity Funds	Std. Dev	Return in Yr 2008 (%)	Return in Yr 2007 (%)
DSP Equity	7.9%	-50.35	68.71
HDFC Growth	7.8%	-48.76	65.02
Birla Frontline	7.8%	-49.00	59.93
HSBC Equity	7.7%	-48.10	57.38
Fidelity Equity	7.6%	-50.45	53.64
HDFC Top 200	7..8%	-45.49	53.17
Reliance Equity	6.9%	-45.52	50.98
UTI Equity	7.1%	-45.81	45.68
ICICI Dynamic	7.6%	-45.33	39..46

Infrastructure Funds	Std. Dev	Return in Yr 2008 (%)	Return in Yr 2007 (%)
ICICI Pru. Infra.	9.5%	-51.71	91.57
Canara Infra.	10.1%	-59.34	88.26
Sundaram CAPEX	9.1%	-62.55	88.18
Tata Infra.	9.3%	-57.90	82.28
DSP T.I.G.E.R.	9.3%	-58.38	81.00
Sahara Infra.	8.6%	-55.00	78.62
Birla Infra.	9.1%	-60.64	72.41
UTI Infra.	8.6%	-56.64	70.52
JM HI FI	11.2%	-72.38	65.25

From above table it is apparent that the returns clocked by infrastructure funds were relatively higher as compared to diversified equity funds in year 2007. At the same time they posted higher losses in the year 2008 as compared to diversified equity funds. Hence, these funds do not really merit inclusion in your core portfolio. Second, even diversified equity funds have exposure to the infrastructure sector as a whole. Third, the infrastructure funds offer a high-risk proposition (compare their Standard Deviation with that of diversified equity funds in the tables above). In other words, the risk-return trade-off for investing in an infrastructure fund may not be in your favour.

In our view, investors would do well to understand that although infrastructure could be the buzzword for some time now, single-sector or thematic funds carry a huge risk especially when the particular sector or theme runs out of favour.

SIPs prove their worth

PersonalFN Impact Indicator

Investors who had discontinued Systematic Investment Plan (SIPs) last year have missed the recent rally. Consider two scenarios, one where the investors had started the SIPs in Jan 2007 and have continued till date. Second scenario where they had started the SIPs but discontinued them in June 2008.

The graph below highlights the return clocked by investors who had continued their SIPs were much higher than investors who had discontinued them.. The reason? The average purchase cost was lower by 8-13% for investors who had continued their SIPs as compared to investors who had discontinued them.

The other important point to note here is that some of these schemes have given positive returns to investors i.e. these investors will find their portfolio in positive territory.

Investors who had continued SIPs v/s investors who had discontinued SIPs.

Circuit filters trip the rally

PersonalFN Impact Indicator

With the UPA back in 'power', equity markets opened with a big bang ensuring that 'circuit filters' were activated. Trading on both the exchanges had to be halted for the entire day on Monday (May 18, 2009). Mutual funds, like other investors, could barely buy and sell on that day. Most fund houses declared the day as 'non-business day', which means that NAVs for equity funds were not declared for that historic day.

Although it was a great day for the equity markets, scores of investors felt left out yet again, as they could neither invest nor redeem their units.

By failing to prepare, you are preparing to fail.

- Benjamin Franklin

Please Note: Impact indicators indicate the news that will impact investors in the long-term or short- term

Thursday, May 21, 2009

ICICI Pru NFO Garners Rs 800 cr

ICICI Prudential Asset Management Company has notified in a press release today that its Target Returns Fund, that was launched on April 15, 2009, has collected more than Rs 800 crore from its new fund offer (NFO) which closed for initial subscription on May 14, 2009.
This is an open ended equity fund investing in companies constituting the BSE 100 index, which is also the benchmark for the fund. By itself, this fund is a normal large-cap fund that is likely to be run with the same competent conservatism that ICICI Pru’s equity funds generally are. However, it incorporates a useful innovation in the form of an automatic trigger option.
Last time the industry saw such a high figure-collection in this bear run, incidentally, also from the same fund house, was in May, 2008, when ICICI Pru Focused Equity Fund mopped up close to Rs 600 crore from its NFO. However, these figures are dwarfed by Reliance Natural Resources Fund which closed its offer in January 2008 after having mobilized Rs 5,660 crore. This was the highest NFO mobilization in the Indian mutual fund industry's history. HDFC Mutual Fund's Infrastructure Fund had mobilised Rs 1,720 crore in January 2008 when the markets were still ruling at their peak.
The mutual fund industry’s NFO activity had virtually slowed to a crawl over the last year and the case remained the same for much of the new year. Just eight new equity funds have been launched this year, as compared to 38 new launches in 2008. Since hitting its low, BSE's sensitive index, Sensex has gained 75 per cent. The reinstatement of the UPA government at the center has built up the confidence in business circles and money should start flowing into the equity funds in much greater quantities.
Source: Value Research

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