Update on Grasim Inds:
Our sources suggest that VSF realization prices for Grasim have increased substantially to Rs 98-99 per kg as against our estimates of Rs 91 per kg. This implies that maximum earnings upgrade may happen in Grasim. We believe there is a possibility of 14-15% earnings upgrade for the company with 8% possible upgrade coming from cement, 3% from increased volumes & 5% from increased realization on VSF.
Sintex Inds
We attended concall organized by the company post Q1FY10 numbers. The key takeaway is that there is no change in guidance from the company inspite of reported numbers being lower than target. The reason for slippage in performance was on performance from Monolithic & Prefab divisions. Both these are order flows driven businesses & are dependant on govt expenditure. The company maintains that it has enough orders & this distortion may be made up in next quarters. Due to nature of business spill over to next quarters is possible. Hence mgmt as well as we do not see this as major concern. We continue with our previous estimates & no change in our view on the stock.
Sterlite Inds coming out with follow up offer of US $ 1.5 bn ADS. Impact: Positive for the stock
Sterlite has announced that today it will come out with a follow up offer of $ 1.5bn worth of ADS out of which $500m will be subscribed by the Vedanta grp. The floor price has been fixed at rs591. The company intends to use the entire money from this issuance to repay some amount of debt that it took for its energy venture (financial closure already done). Though this ADS issue will lead to equity dilution but the savings on interest costs will more than offset the impact of dilution. While more details are awaited on the issue but prima facie the news is positive for the stock.
Global Cues: The US mkts rebounded very sharply on Wednesday with DOW ending the day with substantial gains of 3%. Even better is that this is accompanied with broader mkts also performing in the similar manner. The better than expected numbers from Intel results coupled with better economic data on consumer prices, industrial production etc all cheered up the mkts. Following the positive cues from their western counterparts Asian mkts are also trading with good gains. Hang Sang & Nikkei are both trading in green with gains of around 2%. SGX is trading with major gains crossing above 4300 mark (gain of 60 points).
Our Markets: Our markets started yesterday on a positive note but suddenly flared up around the last hours of trade whereby both the indices scaled up substantially. Today again global cues are positive. On the domestic front positive talk by power minister on ambitious targets on adding capacity will provide trigger for the stocks related to this sector. However for the overall mkt we are again witnessing coincidental positive cues all across the globe, everywhere all the central bankers have again started speaking in one language that economy is improving. We have doubts on these claims & would remain cautious of such statements. Our strategy would continue to stick to stock specific ideas.
Team Emtrade
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