Monday, January 31, 2011

BASIS OF ALLOTMENT FOR Tata Steel Limited FPO



The issue price of Tata Steel Limited FPO is Rs 610/- per equity share.



Download BASIS OF ALLOTMENT FOR Tata Steel Limited FPO

NTPC Company Update; Results hinting at change in grossing up again; Hold; Target: Rs 190

NTPC

Reco: HOLD

CMP: Rs188

Target Price: Rs190

Results hinting at change in grossing up again

·      APAT of Rs23.2bn (prior year sales not adj.) is higher than est. of Rs20.6bn - we see change in grossing up again to full tax rate led by 25.6% tax rate in the qtr (project delays)

·      Detailed analysis of Q310 & Q311 numbers indicate that Q311 APAT should have been lower byRs5.7bn, had NTPC followed MAT rate grossing up but actually its lower by only Rs450mn  

·      Though this might increase our FY11E earnings by ~10% but we believe that NTPC in all probabilities is likely to fall under MAT rate in FY12E - thus no change in FY12E earnings

·      Valuations at 2.2xFY12E Book value, reasonable on core ROE of 25%; to review earnings post the concall tomorrow; Maintain Hold

Thursday, January 20, 2011

LIC Housing Finance Company Update; Valuations comfortable; upgrade to BUY; Target: Rs 210

LIC Housing Finance

Reco: BUY

CMP: Rs174

Target Price: Rs210

Valuations comfortable; upgrade to BUY

·      Recent increases in the lending rates to take care of NIMs atleast for next two quarters. We are already building in 20bps pressure in spreads/NIMs next year

·      Developers' loan portfolio only on pause now, to start disbursing fresh loans from Q4FY11 onwards. The proportion of developers' loan to remain steady at 11% of total

·      Developers' loans portfolio NPAs are minimal. The loans under investigation at Rs3.9bn which are all performing assets

·      Valuations at 1.7x/1.4x FY11E/FY12E ABV – valuations attractive looking at 22% avg RoEs despite higher provisions and building lower NIMs. Upgrade to BUY with TP of Rs210

Wednesday, January 19, 2011

Most Bought & Most Sold stocks by MF in December

Most Bought & Most Sold stocks

Mutual Funds in December picked stocks ranging from Agriculture, Electric Utilities as well as the IT sector. Coal India and Manganese Ore India Ltd saw entry into the maximum number of portfolios in December 2010. In all, 15 AMCs added Coal India to their portfolios and seven added MOIL Ltd.

Top 10 most bought stocks by MF in December

S No

Company

Sector

No of Shares Added

1

Coal India Ltd

Coal

16,464,171

2

MOIL Ltd Mining 2,494,310

3

Usher Agro Agricultural products 1,705,268

4

Suzlon Energy Ltd Heavy Electrical Equipment 1,586,991

5

NTPC Limited Electric Utilities 1,027,002

6

Industrial Development Bank of India Financials 919,842

7

Wipro Ltd Information & Technology 904,355

8

APL Apollo Tubes Ltd Iron & Steel Products 900,000

9

NVC Lighting Holdings Ltd Lighting 857,000

10

Dena Bank Ltd Financials 841,711

Source: Product Research & Information Desk

Mutual Funds in December sold stocks in the financial companies including banks signaling concerns over the macro environment. Hindustan Construction was pared by fund houses for the second consecutive time and was the seventh most sold stock on the list

Top 10 most sold stocks by MF in December

S No

Company

Sector

No of Shares Sold

1

GVK Power & Infrastructure Ltd Electric Utilities 7,454,251

2

South Indian Bank Ltd Financials 4,963,511

3

Welspun Corp Ltd Construction & Engineering 2,804,973

4

K S Oils Ltd Edible Oils 2,581,328

5

Development Credit Bank Financials 2,385,000

6

Standard Chartered PLC Financials 2,100,000

7

Hindustan Construction Co. Ltd Construction & Engineering 2,004,631

8

Camlin Ltd Non-Durable Household Prod 1,322,138

9

Escorts Ltd Commercial Vehicles 1,168,026

10

Rashtriya Chemicals & Fertilizers Ltd Fertilizers 1,156,424
Source: Product Research & Information Desk

FPO: Tata Steel, Following on the restructuring path; Subscribe; Price Band: Rs 594- 610

Tata Steel

Reco: SUBSCRIBE

Price Band: Rs 594- 610

Following on the restructuring path; Subscribe

·      Tata Steel announced to issue 57 million shares as follow on public offering including 1.5 million shares for the employees

·      At the higher and lower ends of the price band, the company would mop up Rs 34.8 billion and Rs 33.9 billion respectively

·      On fully subscription, there would be an equity dilution of 6.3% and at the extended equity base the promoters' stake would come down to 30.5% from 32.5%

·      At our target price of Rs 712, on the upper end of the offer price band the stock has a potential upside of 17%. Recommend SUBSCRIBE

Monday, January 17, 2011

CAPITAL GAINS ON SALE OF PROPERTY

CAPITAL GAINS ON PROPERTY
Capital Gains arise when a residential property is sold for a value higher than the cost of purchase or construction. There are two categories of capital gains. Short-term capital gains arise if a house is sold within 36 months from date of purchase. If a house is sold after 36 months from date of purchase or construction, the surplus will be taxed as long-term capital gains.
The distinction between short-term and long-term capital gains is important, as the rates of tax are different. Short-term capital gains is added to other heads of income like salary, income for business or profession, and other incomes like interest etc. and taxed at the relevant slab rate. In the case of long-term capital gains, the tax is a flat rate of 20 percent on the capital gains amount, plus applicable surcharge.
Capital losses can be set off against other heads of income, except long-term capital losses that can be set off only against long-term capital gains.
COMPUTING CAPITAL GAINS
Capital gains is computed by deducting from the amount of sale consideration the following:
  • Cost of acquisition of the property, including cost of any improvements made or any capital expenditure for modifications and/or renovation that is permanent in nature.
  • Adjustment factor for indexation, and
  • Costs or expenses relating to the sale of the property e.g. brokerage, commission etc.
INDEXATION Indexation is a deduction allowed to adjust for inflation during the period of property ownership. Indexation helps to tax real profits and not inflationary profits. The government publishes the annual cost inflation index every year for the current year 2004-05 the index is 480 (base year 1981-82 – 100)
The indexed cost if calculated by multiplying the asset cost with the index of the year of sale and dividing the result with the index of the year of purchase or construction
The Income Tax Act has two situations where capital gains tax on sale of residential property need not be paid
Situation 1: Investment in another residential property (Section 54)
If the full amount of capital gain is spent on purchasing or constructing a new property, there will be no tax liability. If the amount spent on the new property is less than the capital gains amount, then the difference between the cost of new property and the capital gains amount will be taxed. There are time limits for purchase and sale prescribed in the section which should be compiled with. If the new property is not acquired immediately in the same financial year or within the date for filing the return of income, then the capital gains amount should be deposited in a Capital Gains Deposit Account Scheme with a nationalized bank.
Situation 2: Investment in financial assets (Section 54 EC)
If the full amount of capital gain is invested in specific bonds there will be no tax liability. Presently, bonds issued by NABARD, Rural Electrification Corporation, National Highways Authority of India, National Housing Bank, and Small Industries Bank of India is notified for this purpose. The investment should be made within six months from date of sale and there is a lock-in period of three years.
 
AN EXAMPLE OF CALCULATION OF CAPITAL GAINS ON SALE OF RESIDENTIAL PROPERTY
Case:
Purchase of house in July 1998   Rs. 7,50,000
Sale of house in May 2004   Rs. 11,20,000
Brokerage paid for arranging Sale   Rs. 10,000
     
Calculation of capital gains:    
Cost inflation index for 1998-99   351
Cost inflation index for 2004-05   480
     
Indexed cost of acquisition   7,50,000 X 480/351 = Rs. 10,25,641
     
Add:    
Brokerage   Rs. 10,000
Total Cost   Rs. 10,35,641
Sale Value   Rs. 11,20,000
Long-term capital gains   Rs. 84,359
Tax payable at 20 percent   Rs. 16,871
If a new property is acquired or constructed for a value greater than the Capital gains amount of Rs. 84,359.00 the tax of Rs. 16871.00 need not be paid. Similarly, if an amount of Rs. 84,359 or more is invested in specified bonds there will be no tax liability. 


IDFC Infra bonds - Tranche 2 - January 2011

 IDFC - INFRA BONDS - Extra TAX SAVINGS for EMPLOYEES

Under Section 80 CCF of the I.T. Act, an investor in such infrastructure bonds will be entitled to tax deduction of investments of up to Rs 20,000. The deduction is over and above the Rs 1,00,000 deduction available under section 80C, 80CCC & 80CCD read with section 80CCE.


Options
Series I
Series II
Interest Payment

Annual
Cumulative
Minimum Application
2 bonds and in multiples of one bond thereafter
Face Value (Rs. / Bond)

Rs.5,000/-
Rs.5,000/-
Coupon (%) p.a.
8%
N/A
Yield on Maturity (%) p.a.
8.0%

8.0% compounded annually
Maturity

10 years
10 years
Redemption Amount per bond
Rs 5,000
Rs 10,800
Buy back Facility
YES
YES
Buyback Date (from allotment)
5 years
5 years
Buyback Intimation Period
The period beginning not
before 9 months prior to the Buyback Date and
ending not later than 6 months prior to the Buyback Date
The period beginning not
before 9 months prior
to the Buyback Date and
ending not later than 6 months
prior to the Buyback Date
Buy back Amount (Rs)
Rs 5,000 per bond
Rs 7,350 per bond
Buy back Yield (%)
8.0%
8.0% compounded annually

For Corporate Bookings of Infra Bonds in Delhi - NCR Region Call @ 0-9910009312
For more information write to us at info@safeinvestindia.com


Sunday, January 16, 2011

Upcoming FPO - Tata Steel Ltd

Upcoming FPO - Tata Steel Ltd

Tata Steel Ltd is entering in the capital markets with an follow-on public offer, FPO of 57,000,000 Equity Shares of Rs. 10 each. The price band for the issue has not been fixed yet.

Tata Steel Ltd is India's largest steel companies with a steel production capacity of approximately 27.2 mtpa. The Company has a presence across the entire value chain of steel manufacturing, including producing and distributing finished products as well as mining and processing iron ore and coal for its steel production.

The issue opens on Jan 19, 2011 and closes for subscription on Jan 21, 2011. The equity shares of the issue are proposed to be listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

Friday, January 14, 2011

REC Long Term Infrastructure Bonds Issue - Januray 2011

The REC Long Term Infrastructure Bonds Issue is  opening today i.e., 12th January 2011 and will be closing on 31st March 2011. 

Below are the Issue Highlights:
Issuer Rural Electrification Corporation Limited (“the Issuer”)
Offering
100000 Unsecured, Redeemable, Non-Convertible, Taxable Bonds of Rs. 5,000/- each aggregating to Rs. 50 Crore with a green-shoe option to retain over-subscription for issuance of additional Infrastructure Bonds
Type Private Placement basis
Instrument Unsecured, Redeemable, Non-Convertible, Taxable Bonds having benefits under section 80CCF of the Income Tax, 1961 for long term Infrastructure Bonds
Rating ‘AAA /Stable’ by CRISIL, ‘CARE AAA’ by CARE ,’LAAA’ by ICRA, ‘AAA(IND) by Fitch
Eligible Investors Resident Indian Individual (Major) and HUF through Karta of the HUF
Security Unsecured
Face Value Rs. 5,000/- per bond
Issue Price At par (Rs. 5,000/- per bond)
Minimum Subscription 2 Bonds of Rs. 5,000/- each and in multiples of 1 Bond thereafter,
Tenure 10 years, with or without buyback option after five years
Options for Subscription The Bonds are proposed to provide the following options-
Option I - Annual Coupon and Buyback after 5 years
Option II - Annual Coupon and No Buyback Option
Redemption/Maturity At par at the end of 10th year from the deemed date of allotment.
Coupon rate Option I (Annual Coupon and Buyback after 5 years) – 8.00% p.a.
Option II (Annual Coupon and No Buyback) – 8.1 % p.a.
Listing Proposed to be listed on BSE/NSE or Both
Trustee IDBI Trusteeship Services Limited
Depository National Securities Depository Ltd. and Central Depository Services (India) Ltd.
Registrars Beetal Financial & Computer Services (P) Ltd.
Mode of Payment Interest payment will be made through ECS/At Par Cheques/Demand Drafts
Issuance Demat and Physical Form
Trading Demat mode only
Issue Open Date January 12 ,2011
Issue Close Date March 28, 2011 .
There is  an option to issuer would have pre-close the issue by giving 1 day notice to the Arrangers
Deemed Date of Allotment 31st March, 2011
Annual Interest Payment and interest on Application money The first annual interest shall be paid on 31 March 2012.Interest on application money at the prescribed rate from the date of credit in REC Bank Account to the date of allotment shall be paid with first annual interest payment

   
For Corporate Bookings of Infra Bonds in Delhi - NCR Region Call @ 0-9910009312
For more information write to us at info@safeinvestindia.com

REC LONG TERM INFRASTRUCTURE BONDS January 2011

The REC Long Term Infrastructure Bonds Issue is  opening today i.e., 12th January 2011 and will be closing on 31st March 2011. 

Below are the Issue Highlights:

Issuer

Rural Electrification Corporation Limited ("the Issuer")

Offering

100000 Unsecured, Redeemable, Non-Convertible, Taxable Bonds of Rs. 5,000/- each aggregating to Rs. 50 Crore with a green-shoe option to retain over-subscription for issuance of additional Infrastructure Bonds

Type

Private Placement basis

Instrument

Unsecured, Redeemable, Non-Convertible, Taxable Bonds having benefits under section 80CCF of the Income Tax, 1961 for long term Infrastructure Bonds

Rating

'AAA /Stable' by CRISIL, 'CARE AAA' by CARE ,'LAAA' by ICRA, 'AAA(IND) by Fitch

Eligible Investors

Resident Indian Individual (Major) and HUF through Karta of the HUF

Security

Unsecured

Face Value

Rs. 5,000/- per bond

Issue Price

At par (Rs. 5,000/- per bond)

Minimum Subscription

2 Bonds of Rs. 5,000/- each and in multiples of 1 Bond thereafter,

Tenure

10 years, with or without buyback option after five years

Options for Subscription

The Bonds are proposed to provide the following options-

Option I - Annual Coupon and Buyback after 5 years

Option II - Annual Coupon and No Buyback Option

Redemption/Maturity

At par at the end of 10th year from the deemed date of allotment.

Coupon rate

Option I (Annual Coupon and Buyback after 5 years) – 8.00% p.a.

Option II (Annual Coupon and No Buyback) – 8.1 % p.a.

Listing

Proposed to be listed on BSE/NSE or Both

Trustee

IDBI Trusteeship Services Limited

Depository

National Securities Depository Ltd. and Central Depository Services (India) Ltd.

Registrars

Beetal Financial & Computer Services (P) Ltd.

Mode of Payment

Interest payment will be made through ECS/At Par Cheques/Demand Drafts

Issuance

Demat and Physical Form

Trading

Demat mode only

Issue Open Date

January 12 ,2011

Issue Close Date

March 28, 2011 .

There is  an option to issuer would have pre-close the issue by giving 1 day notice to the Arrangers

Deemed Date of Allotment

31st March, 2011

Annual Interest Payment and interest on Application money

The first annual interest shall be paid on 31 March 2012.Interest on application money at the prescribed rate from the date of credit in REC Bank Account to the date of allotment shall be paid with first annual interest payment

 
    To Apply write to us at info@safeinvestindia.com
     Please mention your complete address along with PIN number and phone numbers.

Tuesday, January 11, 2011

5 interesting IPOs to watch in 2011

Let's take a look at five of the most lucrative public offers in 2011.

Micromax IPO
India's biggest domestic mobile handset seller Micromax Informatics is expected to go public early in 2011. The company filed its prospectus late last month. The company is expecting to raise 426 crore through the offer. The company will use 50 percent of the IPO proceeds to set up a handset manufacturing plant in India while the rest would be spent in areas such as marketing and expansion. Micromax, according to IDC, has a 4.1 percent market share in India and is now valued at over $1 billion. M Financial, Citigroup, Edelweiss and Nomura are the book running lead managers to the issue. For the year ended March 2010, Micromax had sales of 1,600 crore on selling over 70 lakh handsets, with a net profit of 200 crore, as against revenue and profit of 350 crore and 35 crore respectively for the previous year.

Tata Autocomp Systems IPO
Auto parts maker Tata Autocomp Systems is to enter capital markets so as to raise 750 crore through an Initial IPO which include equity shares of 10 each. As per the prospectus, shareholders including Tata Motors, Tata Sons, Tata Capital and Tata Industries will together sell nearly 35.63 million shares in the company. The Book Running Lead Managers to the offer are JM Financial Consultants, Tata Capital Markets and JP Morgan India. The issue will dilute the company's post-issue equity capital by at least 25 percent. The company reported 41.77 crore net profit for the year ended March 31, 2010. For the half year ended September 30, 2010, profit stood at 35.62 crore.

IOT Infrastructure and Energy Services IPO
Indian Oil Corporation (IOC) co-promoted oil EPC firm, IOT Infrastructure and Energy Services is all set to hit the capital market with an IPO of 800 crore before March. The company had filed its Draft Red Herring Prospectus with SEBI for the IPO in September which entails marginal divestment by its existing owners and issue of fresh shares. Proceeds of the IPO are to be used for a capital expenditure of 1,920 crore for setting up a facility in Paradip and 350 crore outlay planned for a unit in Raipur. The public issue involves sale of 58.19 million fresh shares and offer for sale (divesment) of 14.59 million shares by the promoters. The company posted consolidated revenues of 15.2 billion with an EBITDA margin of 18.5 percent and net margin of 8.8 percent during FY10. The sole Book running lead manager to the issue is Enam Securities.

L&T Finance IPO
L&T Finance, the financial arm of Larsen and Toubro (L&T) has filed for an IPO to raise 1.500 crore, which is expected to hit the capital market in the fourth quarter of FY2011. The dilution for L&T Finance IPO will be around 10-12 percent. The company intends to utilize the proceeds from the issue to meet the capital adequacy requirements to support the future growth in their business. The book running lead managers to the issue are HSBC, Citigroup, JM Financial, Barclays Capital, and Credit Suisse. The company's market capitalization stands at 120,193.44 crore. L&T announced a 32 percent rise in net profit for the quarter ended September 2010 at 765 crore on an 18 percent revenue growth.

HPCL-Mittal Energy (HMEL) IPO
The joint venture between Hindustan Petroleum Corporation and Singapore-based Mittal Energy Investment, HPCL-Mittal Energy (HMEL) is going to sell 10 percent stake each in the Bathinda refinery in a public offering in Q4 of 2011. The IPO is expected to raise 1,000-1,500 crore. Both HPCL and Mittal Energy hold stake of 49 percent each in the company, while the financial institutions hold the rest 2 percent. HPCL reported a net profit of 2,089.61 crores for the second quarter ended September 30, 2010 compared with a loss of 136.68 crores in the same period last year.

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