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Budget 2010-2011, Income Tax

2010-02-26T05:46:00.000-08:00

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BIG CHALLENGES: Pranab Mukherjee is facing the

challenge of controlling price rise and stimulate economic

growth.

Thanks FM! tax burden down up to Rs 50,000

Agencies

New Delhi: Finance Minister Pranab Mukherjee on Friday brought

cheers to lakhs of tax income payers by increasing the tax limits which he

claimed will help nearly 60 per cent of the tax payers while presenting the

Budget for 2010-11.

Making the announcement about increasing the tax limits Mukherjee said

that those earning up to Rs 1.60 lakh per annum will now have to pay no

tax while those earning between Rs 1.60 lakh to Rs 5 lakh per annum will

from now on pay tax at the rate of 10 per cent.

Tax on income between Rs 5 lakh per annum to Rs 8 lakh per annum will

be 20 per cent while those earning more than Rs 8 lakh per annum will

pay tax at the rate of be 30 per cent.

New income tax rates

No income tax for those earning upto Rs 1.60 lakh per annum

For people earning between Rs 1.60 lakh per annum to Rs 5 lakh per annum the tax rate will be 10 per cent

Tax on income between Rs 5 lakh per annum to Rs 8 lakh per annum will be 20 per cent

Income tax on income of Rs 8 lakh and above will be 30 per cent

New tax rates would offer relief to 60 per cent of tax-payers

Additional deduction of Rs 20,000 allowed on long term infrastructure bonds for income tax payers; this is above Rs

one lakh on saving instruments allowed already

Income Tax department ready with two-page Saral-2 return forms for individual salaried assesses.

Investment linked tax deductions to be allowed to two-star hotels anywhere in the country.

Mukherjee began his budget speech by recalling the hard days of past two years, but with an assurance that

the worst was over for the economy and the days ahead were promising though not without challenges.

"Today, as I stand before you, I can say with some confidence that we have weathered this crisis well,"

Mukherjee told the Lok Sabha.

"That is not to say that the challenges today are any less than they were nine months ago, when the UPA was

voted back to power under the leadership of Sonia Gandhi and Prime Minister Manmohan Singh," he added.

He said three challenges he had listed last year remained relevant today -- those of quickly reverting to a high

growth path of 9 percent and cross over to double-digit expansion; making growth more inclusive and

developing infrastructure in rural areas; and strengthening food security.

He said in 2009, when he presented the interim budget in February and the full budget in July, the Indian

economy was facing grave uncertainty, the economy slowed down and business sentiment was low.

But this year, the budget has came against the backdrop of the Economic Survey for 2009-10, saying India's

growth can go up to double digit levels in four years, with the country emerging as the fastest growing economy

in the world.

The initial market reaction, as the finance minister began his budget speech was guarded, with the sensitive

index (Sensex) of the Bombay Stock Exchange (BSE) ruling at 16,347.72 points, against the previous day's

close at 16,254.2 points, with a gain of 93.52 points, or 0.58 percent.

Those in the packed house presided over by Speaker Meira Kumar, included Prime Minister Manmohan Singh,

United Progressive Alliance (UPA) chairperson Sonia Gandhi and Leader of Opposition Sushma Swaraj.

Although the Budget speech also contained some policy pronouncements and other steps directed at reforms,

it is basically an annual statement of accounts for the upcoming fiscal in terms of receipts and expenditure,

along with direct and indirect tax proposals.

The Budget was presented after a quick meeting of the Union Cabinet inside Parliament presided over by the

Prime Minister for a customary approval for the proposals.

Budget highlights:

India has weathered global economic crisis well; Indian economy in far better position than it was a year ago.

In 2009 Indian economy faced grave uncertainty; delay in southwest monsoon had undermined agricultural

IBNLive : Thanks FM! tax burden down up to Rs 50,000 : Print Page http://ibnlive.in.com/printpage.php?id=110729&section_id=7

1 of 3 2/26/2010 1:26 PM

production.

First challenge now is to quickly revert to 9 percent growth and then aim for double digit growth; need to

make recovery more broadbased.

Second challenge is to make growth more inclusive; have to strengthen food security.

Third challenge is to overcome weakness in government's public delivery mechanism; a long way to go in

this.

Impressive recovery in the past few months. Can witness faster recovery in the coming months, says

Mukherjee.

Focus shifted to non-governmental actors and an enabling government. Government will concentrate on

supporting and delivering services to the economically backward sections.

Fiscal year 2009-10 was challenging for Indian economy

Economy stablished in Q1 of 2009 itself

Manufacturing growth at 18.5 per cent in December was highest in two decade

Export in January encouraging

Figures for merchandise exports for January encouraging after turnaround in November and December last.

Double digit food inflation last year due to bad monsoon and drought-like conditions

Erratic monsoon and drought-like conditions forced supply side bottleneck that fuelled inflation

Government conscious of the situation of price rise and taking steps to tackle it

Need to review stimulus imparted to econony

Need to ensure that the demand-supply imbalance is managed

Stress on the need to make growth more broad-based

Need to review the public spending and mobilise resources

Status paper on public debt within six months

Finance Minister says Government hopes to implement direct tax code from April 2011.

Earnest endeavour to implement General Sales Tax in April 2011.

Government will raise Rs 25,000 crore from disinvestment of its stake in state-owned firms

Kirit Parekh report on fuel price deregulation will be taken up by Oil Minister Murli Deora in due course

Nutrient based fertiliser subsidy scheme to come into force from April 1, 2010

Market capitalisation of five PSUs listed since October increased by 3.5 times

FDI inflows steady during the year. Government has taken series of steps to simplify FDI regime

Government has decided to set up apex-level Financial Stability and Development Council

RBI considering some additional banking licenses to private companies, NBFC will also be considered if

they meet criteria

Government intends to make FDI policy user friendly by compling all guidelines into one document

Government to continue interest subvention of 2 per cent for one more year for exports covering handicrafts,

carpets, handlooms and small and medium enterprises

Government to provide Rs 300 crore to organise 60,000 pulse and oilseed villages and provide integrated

intervention of watershed and related programme

Government to provide Rs 16,500 crore to public sector banks to maintain tier-I capital

Rs 200 crore provided for climate resilient agriculture initiative

Government committed to ensure continued growth of Special Economic Zones.

Need to take firm view on opening up of the retail sector

Repayment of loan by farmers extended by six months to June 30, 2010 in view of drought and floods in

some part of the country

Interest subvention for timely repayment of crop loans raised from one per cent to two per cent, bringing the

effective rate of interest to five per cent.

Propose to maintain thrust of upgrading infrastructure in rural and urban areas. IIFCL authorised to refinance

infrastructure projects.

Rs 1,73,552 crore provided for infrastructure development

Allocation for Railways fixed at Rs 16,752 crore, an increase of Rs 950 crore over last financial year

Government proposes to set Coal Development Regulatory Authority

Mega power plant policy modified to lower cost of generation; allocation to power sector more than doubled

to Rs 5,130 crore in 2010-11

Government for competitive bidding for coal blocks for captive power plants

Rs 500 crore allocated for solar and hydro projects for Ladakh region

Clean Energy Fund to be created for research in new energy sources

Allocation for new and renewable energy ministry increased by 61 per cent to Rs 1,000 crore

One-time grant of Rs 200 crore provided to Tirupur textile cluster in Tamil Nadu

Allocation for National Ganga River Basin Authority doubled to Rs 500 crore

Alternative port to be developed at Sagar Island in West Bengal

Draft of Food Security Bill ready, to be placed in public domain soon

Deficit in foodgrains storage capacity to be met by private sector participation

Outlay for social sectors pegged at Rs 1,37,674 crore, accounting for 37 per cent of the total plan allocation

Plan allocation for school education raised from Rs 26,800 crore to Rs 31,036 crore in 2010-11

Plan allocation for health and family welfare increased to Rs 22,300 crore from Rs 19,534 crore

For rural development, Rs 66,100 crore have been allocated

Allocation for NREGA stepped up to Rs 40,100 crore in 2010-11

Indira Awas Yojana scheme's unit cost raised to Rs 45,000 in plain area and Rs 48,500 in hilly areas

Allocation for urban development increased by 75 per cent to Rs 5,400 crore in 2010-11

Road transport allocation raised by 13 per cent to Rs 19,894 crore

25 per cent of plan outlay earmarked for rural infrastructure development

One per cent interest subvention loan for houses costing up to Rs 20 lakh extended to March 31, 2011; Rs

700 crore provided

Allocation for development of micro and small scale sector raised from Rs 1,794 crore to Rs 2,400 crore

Rs 1,270 crore provided for slum development programme, marking an increase of 700 per cent

Government decides to set up National Social Security Fund with initial allocation of Rs 1000 crore to

provide social security to workers in unorganised sector.

Road transport allocation raised by 13 per cent to Rs 19,894 crore

Exclusive skill development programme to be launched for textile and garment sector employees.

Allocation for women and child development hiked by 80 per cent.

Rs 1,900 crore allocated for Unique Identification Authority of India.

Government to contribute Rs 1,000 per year to each account holder under the new pension scheme.

Plan outlay for Ministry of Social Justice raised by 80 per cent to Rs 4,500 crore.

Plan allocation for Ministry of Minority Affairs raised from Rs 1,740 crore to Rs 2,600 crore.

Financial Sector Legislative Reforms Committee to be set up.

Unique identity symbol to be provided to the Indian Rupee in line with US Dollar, British Pound Sterling,

Euro and Japanese Yen.

Defence allocation pegged at Rs 1,47,344 crore in 2010-11 against Rs 1,41,703 crore in the previous year.

Of this, capital expenditure would account for Rs 60,000 crore.

Planning Commission to prepare integrated action plan for Naxal-affected areas.

FM appeals to "misguided elements" (left wing extremists) to eschew violence and join the mainstream.

Gross tax receipts pegged at Rs 7,46,656 crore for 2010-11, non-tax revenues at Rs 1,48,118 crore.

Total expenditure pegged at Rs 11.8 lakh crore, an increase of 8.6 per cent.

Fiscal deficit at 5.5 per cent, says FM

Fiscal deficit seen at 4.8 per cent and 4.1 per cent in 2011-12 and 2012-13 respectively

Non-plan expenditure pegged at Rs 37,392 crore and Plan expenditure at Rs 7,35,657 crore in budget

estimates. 15 per cent increase in plan expenditure and six per cent in non-plan expenditure.

The 74-year-old Lok Sabha MP is presenting his fifth Budget while grappling with the problems of rising prices

and an economy that is still feeling the effect of the global slowdown of the last two years.

The Economic Survey 2009-10 presented on Thursday favoured the gradual rollback of stimulus measures that

were introduced following the global economic meltdown in late 2008.

Income Tax Rates for Financial Year 2010 - 2011, Income Tax Rates

2010-02-26T03:48:00.000-08:00

Income Tax Rates, Income Tax Rates In India, Personal Income Tax

Income Tax Slab for Financial Year 2010 - 2011

Tax Slabs	Tax rate
00000 - 160000		0%
160001 - 500000		10%
500001 - 800000		20%
> 800000		30%

Tax saving limit raised from Rs. 1,00,000 to Rs. 1,20,000

Income Tax calculator, Income tax rates 2010, income tax brackets 2010 - 2011

Income Tax Slab for Financial Year 2009 - 2010

Tax Slabs	Tax rate
00000 - 160000		0%
160001 - 300000		10%
300001 - 500000		20%
> 500000		30%
» Income Tax Introduction » Income Tax Department » Introduction To Department » CBDT » Income Tax Offices » Heads of Income » Heads of Income: Salary » Heads of Income: House Property » Heads of Income: Profit in Business/ Profession » Heads of Income: Capital Gains » Heads of Income: Other Sources » Income Tax Return » What is Income Tax Return » Income Tax Return Form » Authorized Signatory » Income Tax Return Filing » Income Tax Rates » Income Tax Dates » Income Tax Deductions » Income Tax Exemptions » Income Tax Saving Schemes » Permanent Account Number » PAN Application Form » Income Tax Calculator » Income Tax Complaint

Live Silver price charts 10 years

2008-07-29T03:05:00.000-07:00

Live Silver prices charts

Live Silver prices....30 day price charts

One year price charts

How to know / predict a Bull and a Bear Markets

2008-06-10T19:02:00.000-07:00

How to know / predict a Bull and a Bear Markets

To predict a Bull and a Bear Markets, Check for…

Weekly New lows.
12 month moving average of top 500 companies.
If the stocks are loosing or gaining 7-10% with in week or so.

What you need to do Buy/Sell during these Bull and a Bear Markets?

First look at the market and then look at the company.

A bull market is one in which prices of a certain group of securities are rising or are expected to rise. A bear market is an opposite of bull market

A bullish market is often accompanied by a sudden increase in demand for securities and smaller supplies of the same securities. This is because more and more investors are willing to buy securities while fewer wish to sell. This will generally push the prices higher. The very opposite is true in a bearish market.

Stock symbol and Trading Strategies

2008-06-10T18:56:00.000-07:00

Stock symbol and Trading Strategies

All you have to think

How would I deal in baring losses.
Try to see whether it is a Bull market or a Bear Market.
Do Technical Analysis, such as

Price Action
Bar Chats
Daily closing, weekly closing, Monthly closing
Moving Averages, Gap Analysis

4. Timings and Technical analysis

Trading holidays for NSE, BSE in 2008 (sessions off)

2008-06-10T04:50:00.000-07:00

List of holidays / trading sessions off in BSE/NSE in 2008

The following are the list of holidays of stock exchanges NSE and BSE (India) to be observed in 2008.

Mahashivratri --> 06-Mar-08
Id-E-Milad --> 20-Mar-08
Good Friday, Holi --> 21-Mar-08
Ambedkar Jayanti --> 14-Apr-08
Mahavir Jayanti --> 18-Apr-08
Maharashtra Day --> 01-May-08
Buddha Purnima --> 19-May-08
Independence Day --> 15-Aug-08
Ganesh Chathurthi --> 03-Sep-08
Ramzan Id, Gandhi Jayanti --> 02-Oct-08
Dasera --> 09-Oct-08
Diwali (Laxmi Pujan) --> 28-Oct-08
Diwali ( Bhaubeez) --> 30-Oct-08
Gurunanak Jayanti --> 13-Nov-08
Bakri-Id --> 09-Dec-08
Christmas --> 25-Dec-08

In total there are 16 holidays for NSE, BSE in 2008. Trading suspended during these days in NSE and BSE.

Best time to buy Mutual Funds and Shares

2008-06-10T03:29:00.000-07:00

NSE, BSE and world stock markets are down for the last 4-5 days and I think it best time to Buy Mutual Funds and Shares.

Most common stocks::
Abb, Bharti, Bhel, Cairn, Cipla, Dlf, Gmr, Hdfc, Hfcl, Hindalco, Icici, Icici Bank, Idbi, Idea, Idfc, Ifci, Indiabulls, Infosys, Ispat, Itc, Ivrcl, Lanco, Larsen, Mindtree, Nagarjuna, Niit, Ntpc, Omaxe, Ongc, Petronet, Praj, Rel, Reliance, Reliance Natural, reliance petro

Best Mutual Funds As on : June 2008

DSP-ML India T.I.G.E.R -RP (G)

DSP-ML Top 100 Equity - RP (G)

DWS Alpha Equity (G)

DWS Inv Opp. Fund (G)

HSBC Equity Fund (G)

ICICI Pru Infrastructure (G)

IDFC Premier Equity (G)

Kotak Opportunities Fund (G)

Principal Global Oppor (G)

Reliance RSF - Equity

Sundaram Select Focus - RP (G)

Tata Infrastructure Fund (G)

Templeton (I) Equity Income(G)

Templeton (I) Growth Fund (G)

DWS Tax Saving Fund (G)

Principal Personal Tax Saver

Tata Tax Advantage Fund-1(G)

DSP-ML Balanced Fund (G)

FT India Balanced Fund (G)

Kotak Dynamic Asset Allocation

Birla MIP II - Savings 5 (G)

Principal MIP (G)

Principal MIP - MIP Plus (G)

Birla Dynamic Bond - RP (G)

Birla Income Plus - Retail (G)

Birla Income Fund (G)

IDFC SSIF (G)

Templeton (I) ST Income (G)

ABN Amro Flexi Debt - RP (G)

HDFC High Interest - STP (G)

ING Short Term Income (G)

UTI Liquid Plus Fund - RP (G)

Kotak Floater LTP (G)

LIC MF Floating Rate Fund (G)

UTI Floating Rate - STP (G)

HDFC Cash Mgmt. Fund - SP (G)

JM Money Manager Fund -SPP (G)

LIC MF Liquid Fund (G)

LIC MF Liquid Plus Fund (G)

Stock Recommendations:: Ranbaxy

2008-06-10T03:02:00.000-07:00

Ranbaxy has entered a strong earnings trajectory with high visibility on FTF upsides till CY14 and improving outlook for base business. Ranbaxy’s focus on settling Para IV cases and more effective operational execution supported by business development moves has started to deliver. Steady growth in emerging markets (2/3rd of sales) and recovery in US generics will drive 18% CAGR in USD revenues and 320bp expansion in EBITDA margin over CY07-09 in base business. Ranbaxy is expected to generate ~USD2.5bn gross profit from the confirmed FTF opportunities over CY08-14. Given the strong earnings outlook and significant incremental positive news flow potential, we expect Ranbaxy to get rerated. Reiterate Outperformer with SOTP-based price target of Rs610 excluding NCE R&D business value. Ranbaxy is one of our top picks in the pharma space.

FTF value unlocking begins: Ranbaxy has among the best Para IV pipelines in the business with 18 potential FTF Para IVs. Based on visibility on eight of these FTFs, Ranbaxy will have 6-month exclusivity on at least one >$1bn sales molecule each year (barring 2013) from CY08-14 along with Nexium settlement revenues that will accrue over CY09-14. Ranbaxy is expected to generate ~$2.5bn of gross profit from this opportunity which, in turn, can create multiple new growth engines for the company.

Base business; gradual but steady progress: Driven by recovery in US generics market (20% growth in CY07, 17% CAGR over CY07-10E) and strong growth momentum in non-US/ EU markets (21% CAGR in CY07-10E). Ranbaxy’s early entry in newer markets of Canada, Japan, Nigeria, Mexico, etc is beginning to pay off. Multiple sales growth initiatives undertaken recently will accelerate the momentum.

Golden phase; stock to get rerated: We believe the market will begin to view FTF upsides as an integral component of Ranbaxy’s business model and reward the strong multi-year earnings growth visibility. Exclusivity earnings flow will also enable Ranbaxy to further strengthen its base business. Demerger of the NCE R&D business will also trigger value unlocking. Ranbaxy is one of our top picks in the space.

Stock Recommendations:: Larsen & Toubro, Mahindra & Mahindra (L&T, M&M)

2008-06-10T02:58:00.000-07:00

Larsen & Toubro
Recommendation: Buy
Price target: Rs4,044
Current market price: Rs2,882

Performance beats expectations

Result highlights

The Q4FY2008 results of Larsen and Toubro (L&T) are ahead of our expectations on both top line and profitability fronts.
The stand-alone top line saw a strong growth of 35.5% to Rs8,466.9 crore, ahead of our expectations. The growth was primarily driven by the stellar performance of the engineering and construction (E&C) division, which grew by 38.2%.
The operating profit margin (OPM) improved by 20 basis points year on year (yoy) and by 250 basis points sequentially to 13.2%. Looking at the segmentals, the E&C division reported an excellent margin growth as the earnings before interest and tax (EBIT) margin improved by 130 basis points yoy to 15%. Consequently, the overall operating profit grew by 38.1% to Rs1,118.1 crore.
A higher other income and a stable depreciation charge led to a 25.5% growth in the adjusted profit. The reported profit rose by 38% to Rs966.8 crore after taking into account an exceptional item of Rs87.23 crore relating to the gain on the sale of a stake in a group company.
L&T has also decided to issue bonus shares in the ratio of 1:1 subject to the approval of the shareholders.
The management maintains its bullish outlook and stands by its earlier guidance of maintaining a 30-35% top line growth in the next couple of years. The demand scenario remains bullish and the company is hopeful of maintaining its margins going forward as well.
We have realigned our consolidated earnings per share (EPS) for FY2009 and FY2010 to factor in the performance of the key subsidiaries and the company's (L&T) stake sale in the RMC business and in HPL Cogen. Our revised EPS for FY2009E and FY2010E stands at Rs110.5 and Rs150.1 per share respectively.
L&T's sound execution track record and strong order book position as well as the excellent performance of its subsidiaries enforce our faith in the company. We value the core business of L&T at 25x FY2010E earnings, or Rs3,038 per share. We value the subsidiaries at Rs1,006 per share of L&T. At the current market price of Rs2,882, the stock is trading at 19.2x its FY2010E consolidated earnings. We recommend a Buy on the stock with our sum-of-the-parts based price target of Rs4,044.

Mahindra & Mahindra
Recommendation: Buy
Price target: Rs800
Current market price: Rs606

Price target revised to Rs800

Result highlights

The Q4FY2008 results of Mahindra and Mahindra (M&M) are slightly below our expectations due to higher tax expenses incurred during the quarter.
The stand-alone net sales grew by 14.6% year on year (yoy) to Rs3,148 crore in Q4FY2008. The operating profit margin (OPM) for the quarter declined by 50 basis points to 10.9% yoy. A lower other income, and higher interest cost and income tax resulted in a 16% decline in the pre-exceptional profit after tax (PAT) to Rs207 crore. The company realised a net extraordinary income of Rs14 crore on account of the profit arising from the merger of certain subsidiaries with it and the expenses on a voluntary retirement scheme. Thanks to this, the reported PAT declined by only 13.4% to Rs221 crore from Rs255 crore in Q4FY2007.
On a stand-alone basis, the net sales for FY2008 grew by 14.7% to Rs11,503 crore. The operating profit rose by 8.3% to Rs1,336 crore. The adjusted PAT grew by 10.4% to Rs 938.2 crore whereas the reported PAT grew by 14.9% to Rs1,103.4 crore.
On a consolidated basis, the net sales for FY2008 grew by 35.2% to Rs23,775 crore. The OPM declined from 15.5% in FY2007 to 13.9% in FY2008. Consequently, the operating profit grew by only 21.6% to Rs3,308 crore. The PAT after minority interest grew by 6% to Rs1,573 crore.
The company has increased its capital expenditure (capex) outlay and plans to spend approximately Rs2,000 crore per year for the next three years. The funds would be utilised for setting up the new plant at Chakan, carrying out capacity expansions at the other plants, launching new products and carrying out research and development (R&D) activities.
We expect FY2009 to be a year of challenges for the company as during this period its sales are likely to be affected by the caution being exercised by financiers in extending credit on account of the rising delinquencies in the automotive and tractor businesses. In addition, the margins are expected to be under pressure on account of the rising commodity prices. The management hopes to cope with these challenges with its continued focus on cost control, process efficiencies and product innovations that exceed customer expectations.
We continue to value M&M on the sum-of-the-parts (SOTP) method and at the current market price of Rs606, the stock discounts its standalone FY2010 earnings by 15.8x. We maintain our Buy recommendation on the stock with a revised price target of Rs800.

Stock Recommendations:: Mold-Tek, Tata Motors

2008-06-10T02:54:00.000-07:00

Mold-Tek Technologies
Recommendation: Buy
Price target: Rs169
Current market price: Rs71

Price target revised to Rs169

Result highlights

Mold-Tek Technologies Ltd's (MTTL) Q4FY2008 results were in line with our expectations. The net sales increased by 15.3% year on year (yoy) to Rs26.0 crore. The KPO division contributed 15.5% to the overall revenue during the quarter. The gross revenue from the plastics division increased by 16.9% yoy to Rs23.2 crore, while the sales from the KPO division increased by 16.8% yoy to Rs4.3 crore.
The operating profit margin (OPM) rose to 14.2% in the quarter from 13.5% during the same quarter last year on account of improved profitability of the plastics division. Consequently, the operating profit grew by 21.6% to Rs3.7 crore. The segmental profit before interest and tax (PBIT) for the plastics division increased by 60.9% to Rs1.0 crore with the margin expanding by 120 basis points to 4.4%. The PBIT for the KPO division increased by 15.1% to Rs1.9 crore.
The interest costs increased by 37% to Rs63 lakh, while the depreciation increased by 55.8% to Rs81 lakh. Higher other income resulted in a 22.9% increase in the profit before tax (PBT) to Rs2.6 crore. There was no provision for tax during the quarter.
During the quarter, the company suffered notional loss of Rs5.3 crore as on March 31, 2008 from the forex derivatives positions. Though the losses are measured on a marked-to-market basis, these losses overhung on the stock resulting in the steep correction.
Major rework of earlier assignments during the quarter would shift the company's focus more on improving the quality of work resulting into lower growth than our earlier estimates. We are downgrading our earnings estimates from Rs18.7 to Rs14.7 for FY2009 and from Rs25.4 to Rs19.2 for FY2010. Currently the stock is trading at 4.8x FY2009E earnings. We maintain our Buy recommendation with revised price target of Rs169.

Tata Motors
Recommendation: Hold
Price target: Rs680
Current market price: Rs532

Price target revised to Rs680

Result highlights

Tata Motors' sales for Q4FY2008 were in line with our expectations at Rs8,750 crore, which represents a 5.8% growth. The increase in costs adversely affected the margins on a year-on-year (y-o-y) basis, which are down by 300 basis points to 8.7%. The operating profit declined by 21% to Rs763 crore.
A higher other income led to a 3% drop in the adjusted net profits to Rs560.3 crore.
For FY2008, the net revenues grew by 4.6% to Rs28,730 crore led by a 3.6% realisation growth, while the reported profit after tax (PAT) grew by 6% to Rs2,028.9 crore. On a consolidated basis, the net sales grew by 10.2% to Rs35,651.5 crore and the adjusted net profit declined by 2% to Rs2,097.1 crore.
In order to fund its Jaguar Land Rover (JLR) acquisition, the company is looking to raise Rs7,200 crore through three simultaneous but unlinked rights issues. In addition, it proposes to raise about $500/$600 million through an appropriate issue of securities in the foreign markets on terms to be decided at the time of issuance.
The outlook for the commercial vehicle (CV) industry appears to be weak for FY2009 onwards in view of the tight financing situation and higher fuel prices. In the passenger vehicle (PV) segment, quite a few launches are slated, but most of them with be in the second half of FY2009, the full impact of which would get reflected in FY2010 only.
We downgrade our PAT estimates for FY2009 by 2% and introduce estimates for FY2010. We have not factored in the equity dilution as well as the revenue impact of JLR acquisition in view of the incomplete details of JLR. At the current levels, the stock trades at 7.8x its FY2010E consolidated earnings and is available at an enterprise value (EV)/earnings before interest, depreciation, tax, and amortisation (EBIDTA) of 3.8x. In view of the much higher than expected equity dilution to fund the JLR acquisition, muted business outlook, we maintain Hold on the stock with a revised price target of Rs680.

Stock Recommendations:: Opto Circuits India, Deepak Fertilisers & Petrochemicals Corporation

2008-06-10T02:50:00.000-07:00

Opto Circuits India
Recommendation: Buy
Price target: Rs460
Current market price: Rs316

Results in line with estimates

Result highlights

Opto Circuits (Opto) has reported a top line growth of 43.1% to Rs120.5 crore for Q4FY2008 and of 86.1% to Rs468.1 crore for FY2008. The revenues are ahead of our estimates and were driven by a doubling of the invasive business and an increasing demand for the non-invasive products (sensors and patient monitors) from the regulated markets.
Opto's operating profit margin (OPM) shrank by 670 basis points to 29.2% in Q4FY2008 and by 350 basis points to 29.3% in FY2008, largely due to an increase in the promotional spend on the distribution of free samples. Consequently, the operating profit grew by 16.2% to Rs35.1 crore in Q4FY2008 and by 66.2% to Rs137.2 crore in FY2008.
Buoyed by a significant jump in the other income (on account of higher foreign exchange [forex] gains), Opto's net profit jumped by 43.5% to Rs34.8 crore in Q4FY2008 and by 80.7% to Rs132.4 crore in FY2008. The net profit reported by the company was in line with our estimate.
Opto has successfully closed the acquisition of US-based Criticare Systems (Criticare) for $70 million. We estimate the Criticare acquisition would generate incremental earnings of Rs1.0 per share in FY2009 and of Rs2.7 per share in FY2010.
In keeping with its trend of rewarding its shareholders, Opto's management has announced a 50% dividend and also decided to award seven bonus shares for every ten shares held by the existing shareholders.
In order to incorporate the acquisition of Criticare, we are revising our revenue estimate upwards by 30.7% for FY2009 and by 19.7% for FY2010. Our profit estimate has also been upgraded by 5.3% for FY2009 and by 1.8% for FY2010. We believe Opto's revenues will grow at a compounded annual growth rate (CAGR) of 57% to Rs1,158.9 crore in FY2010 on the back of a 30% compounded annual growth in the non-invasive business and a 67% compounded annual growth in the base invasive business of stents. We expect Criticare to grow at a 20% CAGR to $62 million in FY2010. The net profit will grow at a CAGR of 48% to Rs290.6 crore in FY2010.
At the current market price of Rs316, Opto is trading at attractive valuations of 15.0x FY2009E fully diluted earnings and 10.4x FY2010E fully diluted earnings. We maintain our Buy recommendation on the stock with a price target of Rs460.

Deepak Fertilisers & Petrochemicals Corporation
Recommendation: Buy
Price target: Rs169
Current market price: Rs100

Benefits delayed

Result highlights

The net sales of Deepak Fertilisers & Petrochemicals Corporation (DFPCL) increased by 56.8% year on year (yoy) to Rs330 crore. The chemical division and the fertiliser division contributed 72% and 27% respectively to the net sales. The revenues from the chemical division increased by 48.2% yoy to Rs241.5 crore on the back of a strong contribution from isopropyl alcohol (IPA), while the sales from the fertiliser division increased by 72.3% yoy to Rs90.6 crore due to an increase in the trading volume.
The operating profit during the quarter grew by 38.7% yoy to Rs56.8 crore with the operating profit margin (OPM) declining by 230 basis points to 17.2%. The segmental profit before interest and tax (PBIT) for the chemical division increased by 41.8% to Rs62.4 crore with the margin declining from 27% to 25.8%. The loss in the fertiliser division reduced to Rs0.3 crore from Rs1.4 crore.
The interest expenses were higher by 11.6% yoy on account of the increased outstanding debt issued for new projects and capacity expansions. The depreciation charge also increased by 5.7% yoy during the quarter.
The adjusted profit after tax (PAT) increased by 13.1% yoy to Rs31.3 crore with the margin reducing by 370 basis points to 9.5%. The effective tax rate increased during the quarter as the company had carry forward losses last year.
Commencement of additional ammonia storage tank (15,000MT) at Jawaharlal Nehru Port Trust and new nitric acid capacity (45,000TPA) at Taloja has got delayed by over nine months till March 2009.
The company is still in the process of negotiating long-term gas supply contract. An improved supply of natural gas to Taloja plant would help in replacing naphtha by natural gas for steam generation. Spot liquid natural gas at around $12-14 per million British thermal units (MMBTU) would cost almost half the price of naphtha ($22 per MMBTU).
Setting up of the ammonium nitrate plant at Paradeep (Orissa) has got delayed due to impending approvals. Civil and construction work is complete and the orders for various equipment have been placed.
The company's JV with the global major Yara International is still under due diligence and is expected to get over in the next two months.
The company's specialty mall Ishanya, for interiors and exteriors, commenced operations during the quarter, ahead of the festive season. The company has already leased out nearly 80% of the 550,000 square feet leasable area at an average rental price of Rs46 per square foot.
At the current market price of Rs100, the stock is trading at 7.6x its FY2009E earnings and 5.7x its FY2010E earnings. We maintain our Buy recommendation on the stock with a price target of Rs169.

Reliance Power (Rpower) Bonus Shares Announced June 02, 2008

2008-06-05T07:57:00.000-07:00

Reliance Power (Rpower) Bonus Shares Announced

Reliance Power limited (REPL) has announced bonus shares on, June 02, 2008. Reliance power will issue 3 bonus shares for every 5 shares hold by investors at the end of day June 02, 2008.

Reliance Power to give 3 bonus shares for every 5 held
Bonus Shares Record date: June 02, 2008

Day Trading Strategies, Intraday Trading Strategies Rules

2008-05-13T01:59:00.000-07:00

Day Trading / Intraday Trading, Rules Strategies

1. Don't Fight The Trend
Go long a stock only when it is strong (up) on the day. Same for shorts (only short down stocks).

2. Don't Overtrade
Enter a maximum of three trades on any given day. Be selective.

3. Consistent Trade Sizes
Each trade should only consist of buying between 100 to 300 shares. Never more.

4. Buy Near Support Levels
Never chase a stock way above its support levels. Wait for a pullback.

5. Manage Losses
Never take a loss of over 10% on any trade. Enter only trades where the stop, if triggered, will result in a loss of less than $10%

6. The 30 Minute Rule
Never enter a trade in the first 30 minutes of trading.

7. Overnight Rule
Any overnight holding can only consist of 100 shares. Only one holding. Again, be selective.

Trading is all about profits and losses.... But, successful trading is about making your losses small and profits big.....

Gold:: Akshaya tritiya Gold Festival:: biggest gold buying festival

2008-05-05T14:22:00.000-07:00

Akshaya Tritiya, is also spelt as Akshya Thiritiya, Akshaya Trutheeya, Akshaya Tritiiya and also called Akshaya Trithi.

Akshaya Tritiya is an Auspicious Day to make major purchases or to begin new ventures. Akshaya Tritiya, the third day of the bright half of Vaishakh, is considered one of the four most sacred days of the vear.

The word Akshaya means that which never diminishes. Akshava Tritiva is reserved for buying gold, silver and other assets.

Akshaya Tritiya is India's biggest gold buying festival

Gold sales seen up 10-15 pct year/year.

An estimated 45-55 tonnes gold sold on 'Akshaya Tritiya' day.

Click here to View Gold::

Live gold prices per Gram

10 Years Gold Price Chart

RPOWER Bonus Issue

2008-05-05T14:13:00.000-07:00

Reliance Power Ltd. Issues Bonus Shares (RPOWER)

THREE Bonus

equity shares of Rs.10/- each for

every FIVE existing

equity shares of Rs.10/- each held.

share holders are requested to take note of it.

SBI eZ-Trade Screens

2008-04-25T06:30:00.000-07:00

SBI eZ-Trade Log In Screen::

eZ-Trading Live Trading Screen::

eZ-Trade Book :: Live Screen

eZ-Net Position :: Live Screen

eZ-Cash Margin :: Live Screen

SBI eZ-Trade Total Turnover :: Live Screen

SBI eZ-Trade Research Reports :: Live Screen

The above are the screen shots of SBI eZ-trade's Live Trading Screens

Trade to Trade Scrips:: BSE

2008-04-22T03:45:00.000-07:00

BSE NOTICE :

The under mentioned scrips will be included in "T" Group and they would be traded and settled on Trade to Trade basis effective from April 22, 2008 .

Sr. No.	Scrip Code	Scrip Name
1	520155	ABG Heavy Industries Ltd.
2	513513	Aditya Ispat Ltd.
3	532351	Aksh Optifibre Ltd.
4	532919	Allied Computers International (Asi
5	500009	Ambalal Sarabhai Enterprise Ltd.,
6	521076	Amit Spinning Industries Ltd.
7	526241	Amrapali Industries Ltd
8	531878	Anjani Finance Ltd
9	500014	Apple Finance Ltd
10	522134	Artson Engineering Ltd
11	530619	Asian CERC InformationTechnology Lt
12	532047	Asian Films Production & Distributi
13	532668	Aurionpro Solutions Ltd.
14	500030	Autoriders Finance Ltd.,
15	532161	Baffin Engineering Projects Ltd.
16	517246	BCC Fuba India Ltd.,
17	500046	Best & Crompton Engineering Ltd.,
18	531530	Betala Global Securities Ltd.
19	512332	Birla Capital & Financial Services
20	526709	BITS Ltd
21	531921	Bombay Baroda Roadways (India) Ltd.
22	501425	Bombay Burmah Trading Corpn. Ltd.,
23	532695	Celebrity Fashions Ltd.
24	522292	Chandni Textiles Limited
25	512624	Chandrika Traders Ltd.
26	530713	Choksh Infotech Ltd.
27	526987	Commitment Capital Services Ltd.
28	500226	Consolidated Finvest & Holdings Lim
29	523415	Coventry Coil-O-Matic (Haryana) Ltd
30	526785	Crest Animation Studios Ltd.
31	512068	Deccan Gold Mines Ltd.
32	531923	Dhampure Speciality Sugars Ltd.
33	521099	Emtex Industries (I) Ltd.
34	512369	Ennore Coke Limited
35	526614	Expo Gas Containers Ltd.
36	513579	Foundry Fuel Products Ltd.
37	532521	Four Soft Limited
38	509563	Garware Marine Industries Ltd.,
39	530389	Geefcee Finance Ltd.
40	531939	Genus Commu-Trade Ltd.
41	531613	GIVO Limited,
42	526717	Gopala Polyplast Ltd.
43	506879	Gujarat Themis Biosyn Ltd.
44	526779	Hinafil India Ltd.
45	509635	Hindustan Composites Ltd
46	531155	Hulta Pharmaceutical Export Ltd.
47	522219	Hyderabad Flextech Ltd.
48	523465	Ind Bank Housing Ltd
49	509684	India Foils Ltd
50	506131	Indiaco Ventures Limited
51	531084	Indo-Castle Multimedia Ltd.
52	504092	Indokem Ltd
53	532894	Indowind Energy Ltd.
54	526859	Inter State Finance Ltd.
55	531398	Inwinex Pharmaceuticals Ltd
56	532379	IQMS Software Ltd.
57	508807	IST Limited
58	514312	Jaihind Synthetics Ltd.
59	526865	Jainco Projects (India) Ltd.
60	500222	JCT Electronics Ltd.,
61	523592	Jenson & Nicholson (India) Ltd.,
62	531960	Jindal Online.com Ltd.
63	530027	JRC Industries Ltd.
64	504084	Kaycee Industries Ltd.,
65	531413	Kiran Print-Pack Ltd.
66	531602	Koffee Break Pictures Limited
67	531366	Kohinoor Broadcasting Corporation L
68	531261	Kushagra Software Ltd
69	517415	Lee & Nee Softwares (Exports) Ltd.
70	590004	Lotte India Corporation Ltd
71	500259	Lyka Labs Ltd.,
72	514450	Mahalaxmi Rubtech Ltd.
73	511768	Master Trust Ltd.
74	532470	Mather & Platt Fire Systems Ltd.
75	511688	Mathew Easow Research Securities Lt
76	523371	Mawana Sugars Ltd
77	532127	Mobile Telecommunications Ltd
78	532078	Monnet Industries Ltd.
79	532407	Moschip Semiconductor Technology Lt
80	590011	Moving Picture Company (India) Ltd.
81	526616	National Plastic Industries Ltd.
82	531452	NCC Finance Ltd.
83	502893	Neemtek Organic Products Ltd.
84	530811	Netvista Information Tech. Ltd
85	523558	Network Ltd.
86	523209	Nicco-Uco Alliance Credit Ltd.
87	511523	Niyati Industries Ltd.
88	531791	Novagold Petro-Resources Ltd
89	532350	Padmalaya Telefilms Ltd.
90	511306	Pal Credit & Capital Ltd.
91	511525	Pan India Corporation Ltd
92	526562	Pearl Engineering Polymers Ltd.
93	521123	Pearl Global Ltd.
94	513405	Pennar Aluminium Co. Ltd
95	524572	Pharmaids Pharmaceuticals Ltd.
96	532679	Piramyd Retail Ltd.
97	526773	Pressure Sensitive Systems (India)
98	521149	Prime Textiles Ltd.
99	500361	Ras Propack Lamipack Ltd
100	500365	Remi Metals Gujarat Ltd.
101	531646	RFL International Ltd.
102	523658	Rishiroop Rubber (International) Lt
103	524194	Rock Hard Petrochemical Ind. Ltd.,
104	503169	Ruby Mills Ltd.,
105	532316	S Kumars.com Ltd.
106	522042	S.M. Energy Teknik & Electronics Lt
107	590051	Saksoft Limited
108	512409	Sanket International Ltd.,
109	532031	Sarang Chemicals Ltd.
110	532404	Saven Technologies Ltd.
111	532455	Shalimar Wires Industries Ltd.
112	512289	Shirpur Gold Refinery Ltd.
113	503205	Shree Ram Mills Ltd.,
114	531715	Shukun Construction Ltd.
115	531598	Shyam Software Industries Ltd
116	531738	Silicon Valley Infotech Ltd.
117	503229	Simplex Realty Limited
118	512589	Sita Enterprises LTD.
119	532332	Softpro Systems Ltd
120	521034	Soma Textile & Industries Ltd
121	523826	Sovereign Diamonds Ltd
122	530845	Sunshield Chemicals Ltd.
123	503297	Super Syncotex (India) Ltd.,
124	532262	TCI Industries Ltd.,
125	524156	TCM Ltd.
126	532355	Telephoto Entertainments Ltd.
127	511730	TRC Financial Services Ltd.
128	531703	Tribhuvan Housing Ltd.
129	531774	Tripex Overseas Ltd.
130	532131	Triumph International Finance India
131	530321	Unimin India Ltd.
132	531762	Unjha Formulations Ltd.
133	524310	VBC Industries Ltd
134	530769	Venus Universal Ltd
135	517015	Vindhya Telelinks Ltd.,
136	517393	Vintron Informatics Ltd.
137	531668	Vision Corporation Ltd.
138	522080	Vulcan Engineers Ltd.,
139	511246	White Lion Asia Ltd.
140	532116	XO Infotech Ltd.
141	522209	Yogi Sung-won (India) Ltd.

Further, the under-mentioned scrips which are presently traded under “S” group (i.e. Indonext Segment) are transferred to trading and settlement on a trade-to-trade in “TS” group (i.e. Trade-to-trade segment of Indonext) from April 22, 2008 .

Sr. No.	Scrip Code	Scrip Name
1	506230	Albright & Wilson Chemicals India L
2	531541	Avon Organics Ltd.
3	532113	Brijlaxmi Leasing & Finance ltd.
4	500078	Camphor & Allied Products Ltd.,
5	524818	Dynamic Industries Ltd.
6	531750	Encore Software Ltd.
7	530407	EPIC Energy Ltd.
8	524374	EPIC Enzymes Pharmac. & Industrial
9	505711	Gajra Bevel Gears Ltd.,
10	509567	Goa Carbon Ltd.,
11	531777	Intellvisions Software Ltd
12	532326	Intense Technologies
13	507180	Kesar Enterprises Ltd.,
14	524518	Krebs Biochemicals & Industries Ltd
15	530059	Maharaja Shree Umaid Mills Ltd.
16	500267	Majestic Auto Ltd.,
17	523832	Mukat Pipes Limited
18	530175	Odyssey Technologies Ltd.
19	523333	Polar Pharma India Ltd.
20	511076	Sat Industries Ltd
21	504908	Schrader Duncan Limited,
22	530989	Shantivijay Jewels Ltd.
23	532311	Tutis Technologies Limited

Stock Recommendations:: Satyam Computer

2008-04-22T03:43:00.001-07:00

Satyam beat the high expectation of the street by reporting Indian GAAP consolidated revenues of Rs24.2bn (10% qoq and 33% yoy) against consensus Rs23.58bn but net profit of Rs4.67bn was lower than consensus (Rs4.84bn) due to forex losses of Rs461m. Overall, volume growth of 8.8 qoq was lead by 10.7% qoq growth in offshore and 3% qoq growth in onsite. Satyam has reported double digit volume growth qoq in offshore volumes in 6 out of the last 7 quarters. In comparison, both TCS and Infosys have had double digit qoq offshore volume growth only once in the last 7 quarters. EBITDA margins in Q4FY08 expanded by 130bp lower than street expectation of about 150-200bp due to higher marketing expenses. In FY08, Satyam’s revenues grew by 46% and earnings by 40% in US$ terms, which is higher than peers’. While it’s EBITDA margins declined by 200bp (Infosys – 20bp and TCS – 120bp) despite 590bp improvement in utilization and more than 5% increase in pricing due to 16% salary hike (average about 13% for peers) for offshore employees. Satyam’s guidance for FY09 of 24-26% revenue growth (compared to Infosys’ 19-21%) and EPS of Rs29.54-30.04 was in line with expectation Satyam has guided for a margin decline of about 50bp for FY09 and intends to hike offshore salaries by 12-14% (11-13% by Infosys), higher than market expectation. Overall, we believe, Satyam has ample scope to increase wallet share within its existing clients and hence would deliver superior growth. At 14.8x FY09 earnings, which is set to grow by 25%, we maintain Outperformer with a target price of Rs560 and retain it as our top pick in the sector along with Infosys.

Stock Recommendations:: Reliance Industries

2008-04-22T03:39:00.000-07:00

Q4FY08 EBITDA (standalone) at Rs60.19b was up 16.4% yoy, while net profit at Rs39.12b was up 24% yoy. Operating profits were ahead of our expectation of Rs 58.3bn because of high PP spread over propylene that more than compensated for lower than expected GRM’s, net profits were in line with our expectation of Rs 38.99 bn. Key contributors to yoy growth were higher refining margins, lower tax rate and realization as well as volume growth at PMT. Extension of RIL’s existing tax benefits to IPCL production has led to accelerated booking of the benefits leading to lower rates. With atleast 6 discoveries under appraisal (two more discoveries over the last three weeks) out of 17 discoveries pending appraisal, a portfolio of highly prospective exploration blocks, superior petrochem and refining margins and a highly competitive off-gas based petrochem complex on the anvil, we believe, risk-reward has turned favourable and presents a well diversified growth opportunity. We maintain outperform, with a base case target price of Rs3025/share. RIL is now our top pick in the oil and gas / Petrochem space.

SECTOR UPDATE:: Banking

2008-04-22T03:29:00.000-07:00

Banking

CRR hike to hurt sentiments
The Reserve Bank of India (RBI) has raised the cash reserve ratio (CRR) by 50 basis points to 8% to check inflationary expectations by sucking out excess liquidity from the system. The hike would be implemented in two stages: a 25-basis point hike on April 26, 2008 followed by a 25-basis point rise on May 10, 2008. The fact that the RBI has not waited for the policy review (due on April 29, 2008) for announcing the CRR hike is likely to weigh down heavily on sentiments towards the banking stocks.

Stock Recommendations: Wipro, TCS, Satyam, Axis Bank

2008-04-22T03:23:00.000-07:00

Trade Recommendation:: Wipro
Price target: Rs525
Current market trading price: Rs453

Price target revised to Rs525

Result highlights

Wipro’s global information technology (IT) service business grew by 5.4% quarter on quarter (qoq) and by 24.8% year on year (yoy) to Rs3,789.9 crore (under US GAAP) for Q4FY2008. In dollar terms, the revenues grew by 5.4 % qoq to US$959.4 million during the quarter (ahead of the company’s guidance of US$955 million). The revenue growth was driven by a 5.5% sequential growth in the volume. The volume growth was marginally mitigated by a ten-basis-point decline in the blended realisation during the quarter. Revenues from the Infocrossing acquisition also grew by 2.8% qoq to US$61.7 million during the quarter.
The global IT service division’s operating profit margin (OPM) declined by 20 basis points to 20.5% in Q4FY2008. This was despite the fact that the company had hiked the onsite wages during the quarter (by 3-4% with effect from January 2008), which had an adverse impact of 100 basis points. However, the impact was mitigated by the improvement in the utilisation rate (up 67.2% from 66.7% in Q4FY2007), improved profitability in the business process outsourcing (BPO) service division (driven by higher realisations) and a significant improvement in the margin of the recently acquired Infocrossing (up 450 basis points qoq to 9.0%).
Wipro’s consolidated revenues grew by 6.9% qoq to Rs5,595.4 crore and net income grew by 6% qoq to Rs875.4 crore during the quarter. The growth rate in the net income was lower than the operating profit growth rate primarily due to other expenses of Rs2.2 crore in Q4FY2008 due to foreign exchange (forex) losses of Rs35 crore. The company’s other income had stood at Rs45.5 crore in Q3FY2008.
For Q1FY2009, the company has guided revenues of US$988 million for the global IT service division and of US$1060 million for the combined IT service business (global plus India and Asia-Pacific). This implies a sequential growth of 2.9% for the global IT service business and of 2.8% for the consolidated IT service business. The management expects to maintain the margin of the global IT service business in FY2009. It is also positive on the continued uptick in the pricing during the year.
We have revised our FY2009 earnings estimate upward by 2.7% and also introduced the FY2010 estimate in this note. At the current market price, the stock is trading at 16.6x FY2009 earnings estimate and 15.1x FY2010 earnings estimate. We maintain our Buy recommendation on Wipro with a revised price target of Rs525.

Trade Recommendation:: Axis Bank
Price target: Rs1,150
Current market price: Rs881

Results above expectations

Result highlights

Axis Bank reported a blockbuster set of numbers for Q4FY2008, beating our and consensus estimates by a significant margin. The PAT (profit after tax) for the quarter came in at Rs361.4 crore indicating a growth of 70.6% yoy (year on year) and 17.8% qoq (quarter on quarter).
Reported NII (net interest income) was up 88.7% yoy to Rs828.4 crore on the back of a 50.2% y-o-y (year-on-year) increase in the interest earned, while the growth in the interest expense was contained at 31.5% yoy.
Non-interest income continued to be a major contributor to the bottom line with a 84.8% growth at Rs556.5 crore. The robust growth was supported by a jump in treasury gains and continued strong traction in fee income growth.
Operating expenses were up 93% yoy to Rs662.1 crore, primarily driven by higher staff expenses (up 107% yoy), while other operating expenses were up 88% yoy.
Reported provisions registered a 102% y-o-y (year-on-year) increase at Rs164.2 crore, driven by prudent provisions related to potential losses from forex (foreign exchange) derivative transactions.
PAT was up 70.6% yoy and 17.8% qoq to Rs 361.4 crore, beating our expectation of a Rs304 crore PAT and a consensus estimate of a Rs307.2 crore PAT.
Asset quality improved further as %GNPA (gross non-performing assets as % of advances) and %NNPA (net non-performing assets as % of advances) improved during the quarter. Capital adequacy remained healthy at 13.73% compared to 11.57% a year ago.
Axis Bank clarified on the forex derivative issue stating that except for the two customers that have filed lawsuit, the bank is not experiencing troubles in recovering the dues. The bank has provided Rs72 crore for potential default losses from the two aggrieved customers.
At the current market price of Rs881, Axis Bank trades at 22.2x 2009E EPS (earnings per share), 10.5x 2009E PPP (pre-provisioning profit) and 3.1x 2009E price-adjusted book value. We maintain our Buy recommendation with price target of Rs1,150.

Trade Recommendation:: Satyam Computer Services
Trade Recommendation: Price target: Rs505
Current market trading price: Rs459

Healthy guidance for FY2009

Result highlights

The consolidate revenues of Satyam Computer Services (Satyam) grew by 10.0% quarter on quarter (qoq) and by 35.8% year on year (yoy) to Rs2,416 crore in Q4FY2008. In dollar terms, the revenues grew by 9.0% qoq to US$613.3 million during the quarter driven by an impressive volume growth of 8.8% sequentially.
The operating profit margin (OPM) improved by 133 basis points qoq to 22.8% during the quarter primarily due to a better utilisation rate (an improvement of 189 basis points in the offshore utilisation rate to 85.6% and that of 53 basis points in the onshore utilisation rate to 97.3%) and an increase in the billing rates (a 0.63% sequential growth in the onsite billing rate and a 0.51% sequential growth in the offshore billing rate). Consequently, Satyam's operating profit grew by 16.8% qoq to Rs550.6 crore.
The net income grew by 7.6% qoq to Rs466.8 crore, below our expectation of Rs485.9 crore. The net income was lower primarily due to a lower than expected other income of Rs23 crore following foreign exchange (forex) losses of Rs46 crore in Q4FY2008. For the same quarter the company has reported earnings per share (EPS) of Rs7, which is below its guidance of Rs7.23 announced in the previous quarter.
For FY2009 the company has guided to a revenue growth of 23.9% to 25.9% in rupee terms; the same is on the higher end of the street expectation. The earnings are expected to grow at 17-19% during the same period, in line with the market expectation. The earnings are expected to grow at a lower rate compared with the top line primarily due to a 50-basis-point decline in the OPM and a 2% equity dilution.
In Q1FY2009, the revenues and EPS are guided to grow to Rs2,500-2,512.5 crore and Rs7.64-7.68 respectively, implying a sequential growth of 3.5-4.0% in the top line and of 9.7-10.2% in the EPS. The Q1FY2009 guidance given by Satyam is better than that provided by its peers in the last week.
To fine-tune our earnings estimates and to factor in the revised exchange rate assumption of Rs39.5 for FY2009, we have revised downward our earnings estimate for FY2009 by 0.2%. We have also introduced our earnings estimate for FY2010 in this note and expect the earnings to grow by 7.7% in the next fiscal. At the current market price, the stock is trading at 15.3x FY2009 earnings estimate and 13.8x FY2010 earnings estimate. We maintain our Buy recommendation on the stock with a price target of Rs505.

Trade Recommendation: Tata Consultancy Services
Price target: Under review
Current market price: Rs992

Q4FY2008 results: First-cut analysis

Result highlights

TCS (Tata Consultancy Services) has reported a growth of 2.9% qoq (quarter on quarter) and 18.4% yoy (year on year) in its consolidated revenues to Rs6,094.7 crore during Q4FY2008. The sequential revenue growth was contributed by volume growth of 4.8% and rupee depreciation of 1.1%. However the revenues during the quarter were adversely impacted by a 1.6% decline in blended realisation and a change in the revenue mix (1.4% due to higher offshore proportion).
The OPM (operating profit margin) declined by 118 basis points to 25.5% sequentially. The OPM was dented by lower blended realisation (1.6% q-o-q [quarter-on-quarter] decline) and increase in overhead cost as percentage of sales (up 70 basis points to 21.1% of the sales). On the other hand, the favourable offshore-onsite mix partially cushioned the pressure on OPM.
The other income declined sharply by 25.4% qoq to Rs78.1 crore. Consequently, the net income fell by 5.6% qoq to Rs1,255.9 crore, which was below our expectation of Rs1,377.7 crore. The performance was largely dented by a slowdown in the business from two of its top clients (from the banking and financial services domain).
The company closed six large deals during the quarter, with two of the deals amounting to over $250 million each. The deal pipeline is also healthy and the management expects the growth to improve in the coming quarter. TCS has set a target of 30,000-35,000 gross addition of employees in FY2009.
We would review FY2009 earnings and introduce FY2010 estimates in a detailed note. At the current market price, the stock trades at 14.8x FY2009 earnings and we maintain a Buy call on the stock.

Stock Recommendations:: Bharat Forge

2008-04-22T03:04:00.000-07:00

Mkt Cap: Rs65.2bn; US$1.63bn Bloomberg code (BHFC IN)

We recently met the management of Bharat Forge (BFL) to get an update on its existing businesses as well as on some new initiatives and expansion plans announced by the company. On the existing business front, BFL has gained market share with Tata Motors – a key customer due to favorable change in Tata Motors’ product mix. This, and a strong growth in the non-automotive components business have mitigated the impact of a slowdown in CV sales in FY08. Growth in exports too has been strong at 30%yoy (42%yoy adjusted for rupee appreciation) during 9mth FY08. Amongst BFL’s overseas subsidiaries, BFL America has seen a significant drop in business volumes in FY08 due to a slowdown in car and truck sales in North America.

On the new initiatives front, BFL’s upcoming non-automotive components facilities are likely to commence commercial operations in Q4FY09 and we expect material revenue contribution only from Q1FY10. These facilities are likely to operate at ~50% capacity utilization in FY10 and would have a revenue potential of Rs9-10bn at 100% utilization. BFL’s proposed JV with NTPC (51:49) would initially manufacture components for power equipment and would aim at manufacturing complete power plants by 2011-12 (initial capacity likely to 4500MW). Though BFL’s stake in the JV could be in for a significant dilution due to induction of a technology partner, it would remain a key component supplier to the JV with the obvious benefits of enhanced business opportunities. BFL’s proposed Rs7.0bn fund raising plans (Rs4.0bn in debt and Rs3.0bn in preferential warrant issue to promoters) would be utilized for funding the proposed venture into the Capital Goods sector (which includes the JV with NTPC). We believe BFL would also need to plan a further expansion in its automotive components business as we estimate ~100% capacity utilization in this segment by FY10.

In our view the company’s target of 12% EBIDTA margin for its subsidiaries by FY10 (7.9% in 9mth FY08) appears stretched due to delays in achieving benefits of product rationalization and other synergies. BFL has re-iterated that escalations in steel prices are a pass through with most customers and hence would not impact margins materially. Going forward, we expect higher proportion of non-automotive components to lead to higher margins and consequently expect ~300bps margin expansion over FY08-10. This would lead to a strong 40% PAT CAGR for BFL over FY08-10. The stock trades at PER of 13.3x and EV/EBIDTA of 6.2x FY10 based on fully diluted equity capital. Maintain Outperformer.

Stock Recommendation for April 21, 2008

2008-04-18T03:34:00.000-07:00

Stock Recommendation for April 21, 2008

Stock Recommendation: BASF India, Esab India

2008-04-18T03:08:00.000-07:00

Trade Recommendation:: BASF India
Trade Recommendation: Buy
Price target: Rs330
Current market trading price: Rs210

Agro products boost revenues

Result highlights

The stand-alone Q4FY2008 results of BASF India (BASF) are in line with our expectations. The net sales of the company grew by 20.3% year on year (yoy) to Rs193.4 crore, mainly driven by a strong 29.6% growth in the sales of agricultural products and a 20.2% growth in the sales of performance products. The plastic division’s sales also grew by a healthy 18.1%.
The operating profit margin (OPM) during the quarter remained flat at 5.1% yoy. The margin for the performance product and chemical divisions improved while the same for the agricultural product and nutrition division, and the plastic division declined during the quarter. Consequently, the operating profit grew by 18.5% to Rs9.8 crore in Q4FY2008.
Despite increased interest and depreciation charges, the company’s net profit increased by 20.2% to Rs4.4 crore during the quarter.
For FY2008, the consolidated net sales grew by 24.5% to Rs1,053.6 crore and the profit after tax (PAT) grew by 14.8% to Rs57.5 crore on the back of the solid performance by the agricultural product and nutrition division during the year.
We expect the consumption boom in the company’s user industries (white goods, home furnishings, paper, construction and automobiles) to continue and hence we remain optimistic about the company’s growth prospects.
We believe the stock is trading at attractive valuations of 6.9x FY2009E consolidated earnings and an enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA) of 3.9x. We maintain our Buy recommendation on the stock with a price target of Rs330.

Trade Recommendation:: Esab India
Trade Recommendation: Buy
Price target: Rs575
Current market trade price: Rs432

Annual report review

Key points

For CY2007 ESAB India has reported a healthy 19.4% growth in its sales and a 25.2% rise in its profits. The company continues to grow at a robust rate owing to the government’s thrust on infrastructure development. ESAB India remains a leader in the welding products industry.
The consumables business recorded a growth of 16.7% for the full year on account of a good volume growth with marginally better realisations except for the wire segment where price continues to be under pressure. The equipment business reported an increase of 26.8% in revenues while its earnings before interest and tax (EBIT) margin reported a healthy increase of 360 basis points on account of operating leverage. Overall, the company improved its operating profit margin (OPM) by 70 basis points to 23.3%.
During the year, Charter Plc, its parent company, increased its stake in ESAB India by acquiring shares from the open market at a price of Rs505 per share, taking the total holding to 55.56% from 37.31% earlier.
The outlook on ESAB India remains positive. The hectic activity in India's core infrastructure sectors, like roads, ports, airports and construction, and the other industrial sectors are expected to drive the volumes for the welding industry. Being the market leader ESAB India is expected to make the most of this boom. We maintain our Buy recommendation on the stock with a price target of Rs575.

NDTV Results

2008-04-18T02:44:00.000-07:00

NDTV (consolidated) has reported revenue growth of 32% at Rs3.7bn, EBITDA loss of Rs1.4bn and net loss (pre ESOP) of Rs1.7bn in FY08. Revenue growth during the year was driven by 30% growth in core news operations, while new channels (NDTV Imagine, NDTV Lifestyle, Metro Nation) beginning to contribute to the topline. As expected, operating expenditure has almost doubled to Rs5bn on account of heavy investments towards content and marketing on new launches (NDTV Imagine in particular). What excites us in NDTV is the sustained high growth momentum in the core news broadcasting property as indeed the fact that new channels have begun to contribute within the very first few quarters of operations.

In line with our thesis, NDTV is rapidly scaling up as a comprehensive media conglomerate with presence spanning across multiple genres of broadcasting (news broadcasting, GEC, lifestyle, regional), Media Process Outsourcing, International consulting, internet, new media, etc. Sensing the urgency of execution, NDTV in the current year has added 5 broadcasting properties including the GEC venture – NDTV Imagine and lifestyle channel – NDTV Good Times, besides various regional and international channels. NDTV is further enthusing confidence in its execution ability with NDTV Imagine grossing GRPs of over 80 within first quarter of launch and fighting neck to neck with Sony for number three position in the genre. To further strengthen its endeavour to emerge as a leading media conglomerate, NDTV has roped in NBC Universal as a strategic investor in NDTV Networks (USD150m invested for 26% stake). NBC, we believe, would bring immense strategic value for NDTV for the broadcasting as well as proposed film and sports broadcasting operations. NDTV, with over USD270m of fund raise in the last one year, is fully funded for its expansion. With a view to rope in strategic partner in the step down properties as also unlock value, NDTV is proposing demerger of the news operations from non news businesses. Our positive bias on the business model and confidence in NDTV’s execution prompt us maintain NDTV as our top pick in the sector. Reiterate Outperformer.

Letter from Sharekhan CEO

2008-04-18T02:42:00.000-07:00

Dear Friend,

The BSE Sensex slipped from a high of 21,000 to below 15,000 in the first three months this year. But as we start the new financial year, we remain Tigerish about the stock market.

Tigerish? You heard me right–not bullish, or bearish–but tigerish.

What exactly do we mean when we say we are tigerish?

By tigerish, we are talking of the qualities of a tiger, and more importantly an eternal optimism about the stock market. It doesn't matter where the Sensex is-- 21,000, 15,000, 18,000--the markets are known for their highs and lows, but continuous investment in equities, irrespective of the stock market conditions, will always pay dividends in the long-run.

Sure, there are going to be the ups and downs, but the tiger isn't bothered about such daily fluctuations--the tiger is able to spot the opportunity and can wait patiently for the right time to strike.

And that right time is NOW! We have put together 8 such stocks for you to invest in the coming months. These are companies that are fundamentally strong and will give great results, but are trading at all-time lows or at discount to what should be their fair market value.

When the brands you always wanted are at a sale, what do you do? Instead of being bearish, should you not be tigerish and go out and buy these stocks.

Happy stock picking.

For any further information, please feel free to contact us on 1800-22-7500(toll free) / 39707500 (Local)

Warm Regards,
Tarun Shah
CEO, Sharekhan Ltd.

Sector Update:: BSNL

2008-04-18T02:25:00.000-07:00

BSNL drives the volume growth
GSM operators (excluding Reliance Communications) reported a robust addition of 7.3 million subscribers during March, taking the total subscriber base to 192.3 million. The GSM subscriber base grew by 4.0% during the month, which is higher than the average growth of 3.6% reported during the previous four months.

This growth in the subscriber base can be attributed to the year-end push by BSNL (Bharat Sanchar Nigam Ltd) and the launch of aggressively priced schemes by various players. As mentioned earlier, it is important to watch the expansion in minutes of usage due to reduction in rates.

Trade Recommendation: Ranbaxy Laboratories, Infosys, Zee News, HCL

2008-04-18T01:50:00.000-07:00

Trade Recommendation:: Ranbaxy Laboratories
Trade Recommendation: Buy
Price target: Rs625
Current market trading price: Rs482

Ranbaxy settles on Nexium; price target revised to Rs625

Key points

Ranbaxy Laboratories (Ranbaxy) has entered into an out-of-court settlement relating to the launch of generic Nexium, Astra Zeneca's blockbuster drug for gastroesophageal reflux disease.
Under the terms of the settlement, Ranbaxy can launch generic Nexium in the USA on May 27, 2014 with a 180-day exclusivity. This is ahead of the drug's patent expiry in 2018. Further, Ranbaxy will also supply a significant portion of Astra Zeneca's requirement for Nexium in the USA from May 2010 onwards and supply esomeprazole magnesium (the active pharmaceutical ingredient for Nexium) from May 2009 onwards.
In a separate agreement, Ranbaxy has also been designated as the authorised generic player for two older Astra Zeneca products--the heart drug Plendil, or felodipine, and the 40mg version of ulcer pill Prilosec, or omeprazole. Ranbaxy will be compensated for its distribution services on standard commercial terms.
Nexium clocked revenues of $5.2 billion in 2007 and is Astra Zeneca's biggest product. Using the discounted cash flow (DCF) approach, we value Ranbaxy's Nexium deal with Astra Zeneca at Rs70 per share.
We are upgrading our price target for Ranbaxy to reflect the value of the Nexium opportunity. We continue to maintain our earnings estimate at the previous levels for the base business. Hence we arrive at a revised price target of Rs625 (20x CY2009E earnings of base business plus Rs135 for exclusivity opportunities).
Clarity on the launch of generic Lipitor both in the USA as well as in the other world markets, along with news flow on further Para IV first-to-file (FTF) opportunities, would act as trigger for the stock. At the current market price of Rs482, Ranbaxy is trading at 22.5x its base CY2008E and 19.7x its base CY2009E earnings (excluding exclusivity opportunities). We maintain our Buy recommendation on the stock with a revised sum-of-the-parts price target of Rs625.

Trade Recommendation:: Infosys Technologies
Trade Recommendation: Buy
Price target: Rs1,940
Current market trading price: Rs1,510

Result highlights

Infosys Technologies (Infosys) reported a revenue growth of 6.3% quarter on quarter (qoq) and 20.4% year on year (yoy) to Rs4,542 crore during the fourth quarter. The sequential growth in the revenues was contributed by a volume growth of 4.9% in its consolidated information Technology (IT) service business, an increase of 0.2% in its blended realisation and a depreciation of 0.9% in the rupee.
The operating profit margin (OPM) decreased by 10 basis points qoq to 32.5% in Q4FY2008. The operating profit grew by 6.2% qoq to Rs1,478 crore.
The other income component declined to Rs139 crore in Q4FY2008 from Rs158 crore during the corresponding period last year primarily due to a foreign exchange (forex) fluctuation loss of Rs45 crore during Q4FY2008 as compared to a relatively lower loss of Rs14 crore in Q3FY2008. The company also recorded a tax reversal of Rs20 crore during the quarter compared to Rs51 crore in Q3FY2008. This led to a 1.5% quarter-on-quarter (q-o-q) increase in the net income to Rs1,249 crore. After adjusting for these tax reversals, the company's earnings grew by 4.2% sequentially to Rs1,229 crore.
The company announced a final dividend of Rs7.25 per share and a special dividend of Rs20 per share. The company also intends to increase its dividend payout ratio from 20% to 30% of the net profit.
In terms of guidance for FY2009, the revenues are guided to grow by 19% to 21% and the earnings are guided to grow 16.7% to 18.7% in dollar terms (Rs92.3-93.9 per share in rupee terms). This is in line with our expectation and higher than street expectations. However, the guidance for Q1FY2009 is quite muted. In rupee terms, the revenues are guided to remain flat sequentially (with a growth of less than 1%), whereas the earnings are expected to decline sequentially to Rs20.7 per share (down from 3.5% sequentially).
In terms of demand environment, the management indicated that 76% of its clients expect their IT budget to decline or remain flat. Moreover, the company is also witnessing some deal cancellation in the retail vertical. On the positive side, there has not been any cancellation of projects in the Banking Financial Services & Insurance (BFSI) vertical.
We have revised our earning estimates for FY2009 downward by 2.6% on account of lower other income, as the company plans to increase its dividend payout ratio. We have also introduced FY2010 estimates and expect the company's earning to grow by 4.8% to Rs99.8 per share. The lower earning growth rate will be primarily due to an increase in the effective tax rate from 15% in FY2009 to 22% in FY2010 due to withdrawal of Software Technology Park of India (STPI) benefits. At the current market price, the stock is trading at 15.9x FY2009 earning estimates and 15.1x FY2010 earning estimates. We maintain Buy recommendation on the stock with revised price target of Rs1,940.

Trade Recommendation:: Zee News
Recommendation: Buy
Price target: Rs79
Current market price: Rs57

Q4FY2008 results: First-cut analysis

Result highlights

Zee News has delivered a blow-out performance for Q4FY2008. Beating our and consensus estimates the revenue from its operations grew by a robust 59.1% year on year (yoy) to Rs113.1 crore in the quarter. The net profit after minority interest zoomed multifold to Rs15.3 crore during the same period.
The advertising revenues soared by 84% yoy to Rs86 crore while the subscription revenues that had grown by a meagre 7.6% in M9FY2008 grew by 49.7% yoy and 36.3% quarter on quarter (qoq) to Rs22 crore. A break-up of its channels into the existing and new businesses shows that the revenues from the existing businesses grew by a handsome 53% yoy whereas the new businesses recorded a 153% growth in their revenues.
The operating profit margin for the quarter stood at 23.7% against -1.3% for Q4FY2007. Thus the operating profit grew to Rs26.8 crore against an operating loss of Rs0.9 crore in Q4FY2007. The improvement in the margins of the existing businesses continued and stood at 37.2% for the quarter. The operating loss for the new businesses declined from Rs15.3 crore in Q4FY2007 to Rs10.1 crore.
Zee Marathi and Zee Bangla, which are number one channels in their respective genres, increased their gross rating points (GRPs) by 35.7% and 18.5% respectively over Q4FY2007 whereas Zee Telugu and Zee Kannada, which form a part of the new businesses, increased their GRPs by 74.3% and 123.4% respectively. We believe that with the continuous gain in viewership the new businesses would break even in FY2009.
The company will launch Zee Tamil by the end of July 2008 against which it has charged Rs1.39 crore as expenses in the quarter. The south Indian regional entertainment diaspora is highly competitive. However, considering the Zee group's established track record in entertainment and the size of this market, we remain positive on Zee News' prospects in these markets. We believe that its entertainment channels in the southern regional languages remain the key drivers of its growth in the longer term.
At the current market price of Rs57.2 the stock trades at 18.6x its FY2010E earnings per share of Rs3.1 and at FY2010E market cap/sales of 2.6x. We maintain our Buy recommendation on the stock with our price target of Rs79.

Trade Recommendation:: HCL Technologies
Trade Recommendation: Buy
Price target: Under review
Current market trading price: Rs246

Q3FY2008 results: First-cut analysis

Result highlights

HCL Technologies has reported a revenue growth of 7.1% quarter on quarter (qoq) and 23.3% year on year (yoy) to Rs 1,944.8 crore for the third quarter ended March 2008. In dollar terms, it has reported a sequential growth of 5.2% in its consolidated revenues to $484.9 million. The sequential growth in the revenues was driven by a volume growth of 6.6% (a 5.3% growth in software services, a 8.5% growth in IMS and 4.5% growth in BPO services), which was partially mitigated by the adverse impact of offshore shift (0.3%) and lower material billing in the IMS business (1.1%) during the quarter.
The operating profit margin (OPM) improved by 88 basis points to 22.3% on a sequential basis. The margin improvement was aided by higher realisations (7 basis points), hedging gains (22 basis points), revenue mix (26 basis points) and efficiency gains (48 basis points). This positive affect was however partially offset by higher infrastructure expenses of around 10 basis points.
In terms of segments, the earnings before interest, tax, depreciation, and amortisation (EBITDA) margins of all the three business lines improved on a sequential basis. The IMS and software services businesses reported margin improvement of 113 basis points and 93 basis points sequentially. The BPO services reported a 16 basis-point sequential improvement in its margins.
However, the foreign exchange (forex) losses of Rs27.1 crore as compared to forex gains of Rs5.8 crore in Q2FY2008 resulted in a relatively lower earning growth of 2.9% quarter on quarter (qoq) to Rs342.5 crore. This is largely in line with our estimates.
In terms of operational highlights, the company has signed deal worth $500 million during the quarter. However, it has maintained its full year revenue growth guidance of around 35% implying a relatively muted sequential growth in Q4FY2008. This is largely due to a slowdown in business from two of its top 10 clients as fallout of the scenario in the USA. Moreover, the company added just 1,848 employees in Q3FY2008 and has scaled down the recruitment target to 9,000 employees in FY2008 (down from 12,000 employees earlier).
At the current market price, the stock trades at 13.3x FY2008 and 10.3x FY2009 estimated earnings. We maintain our Buy recommendation on the stock, but would revise the earning estimates and price target in the detailed update.

Steel Sector Update: Jan-Mar 2008 earnings

2008-04-15T20:36:00.000-07:00

With an unprecedented increase in raw material (iron ore and coking coal) prices in the last few years, the steel industry is witnessing a structural upward shift in cost structures. Iron ore and coking coal contract prices have surpassed all estimates and are up by 65% and 210% yoy respectively for 2008. However, despite concerns that the US may be slipping into a recession, steel manufacturers have globally demonstrated strong ability to pass on the incremental costs. In addition, Indian steel manufacturers are bearing the brunt of rising inflation in the domestic market and grappling with government intervention to control steel prices in the country. Even as we see the measures announced/ proposed by the government having a limited impact on numbers, investor sentiment has been hurt badly. Reacting to these concerns, Indian steel stocks have seen a sharp correction in multiples and the valuation discount to global peers has further widened. Even as we believe that this gap is unlikely to narrow in the near term, investors should use the opportunity to invest into these otherwise strong businesses. Once the dust settles, we see a bounce-back in steel stocks.

Financials Sector Results

2008-04-15T20:35:00.000-07:00

In the last quarter, banking stocks have been hammered due to multiple concerns and ensuing expectations of weak sector earnings in Q4FY08. We foresee muted NII performance in Q4FY08 especially PSU banks, owing to slower credit growth and negative pressures on margins outweighing the positives in the short-term. Also, strong treasury gains of Q2FY08 and Q3FY08 would be amiss this quarter, given the high volatility in equity markets. Banks’ AFS bond books would suffer from MTM provisions with yields reining higher than the December 2007 cut-off level (by ~15bps). On the other hand, private banks (excluding ICICI Bank) would continue to march on with robust bottom-line forecasts, driven by strong loan growth, stable-rising NIMs and robust fee income growth. This strong income profile would enable these banks to absorb the expected downside in derivative business (fees and MTM losses). While increased credit losses on the unsecured retail portfolio would dent profits of these private banks, ICICI Bank would be additionally hit by MTM provisions on credit derivatives. We expect a 13% yoy growth in NII and 19% yoy rise in net profit of our banking universe for Q4FY08. Axis Bank, HDFC Bank and Bank of India are our top result picks for Q4FY08 with least risk to earnings forecasts.

Stock Recommendation:: Reliance Industries

2008-04-15T20:30:00.000-07:00

RIL stock price has corrected by over 22% from its peak resulting in drop in expectation value. With atleast 9 discoveries under appraisal (two more discoveries over the last three weeks), highly competitive off-gas based petrochem complex on the anvil, we believe, risk-reward has turned favourable and presents a well diversified growth opportunity. We are upgrading the stock from Neutral to Outperform, with a base case target price of Rs3025/share, an upside of ~19% from current levels. RIL is now our top pick in the oil and gas / Petrochem space.

Key arguments:

1. Potential risk to refining margin is overstated. Margins remain robust.

We maintain that refining margins are headed down. However, we believe, the risk to refining margins is being overdone. Refining margins remain robust, with March month Singapore complex averaging US$8.5/bbl (our long term Singapore GRM average is USD 6/bbl and USD12.75/bbl for RIL). Though, this is seasonal (peaking in the month of May) and is not sustainable, we believe, a crash to below US$5/bbl on a sustained basis is highly unlikely. While weak global economic growth and its impact on OECD oil demand remains a concern, with a relatively weak demand elasticity and support from developing countries, global demand, is reasonably well placed. A relatively weak supply pipeline and upgradation to higher fuel norms across major consuming countries are set to provide downside support. Squeezed EPC resource base and escalating capex costs are delaying refinery commissioning over the next three years, especially in the Middle-East. While, scheduled capacity commissioning correspond to steady demand growth, we believe, slippages by few months, which are very common, would push it down further, keeping demand-supply fairly balanced, even if demand were to be impacted to global GDP growth.

In the case of RIL, gasification of coke and value addition to refinery off-gases (scheduled for FY11-12) along with ability to produce Euro IV & V fuels, are set to support the margins. We believe, RIL’s refining business deserves a valuation premium to global multiples on account this.

2. E&P related positive newsflow to be the key driver of stock performance

Appraisal of significant discoveries in Cauvery, KG and Mahanadi basins in India along with Yemen discoveries are likely to provide a steady flow of positive news, driving stock performance. Pronouncements by Niko and Hardy oil, minority stake holders in some of these blocks indicate very large reserve potential in the discoveries, comparable to KG-D6. GCA’s (Gaffney, Cline & Associates) report (Competent Person’s report) to Hardy oil indicate potential reserves running into several TCF in D9, while D3 is supposed to be more favourably sited with respect to existing discoveries in KG basin. Pronouncements by Niko too indicate large potential in D4. Atleast nine discoveries are under appraisal in KG-D6, Cauvery, KG D5 etc are likely to add to SOTP value. Further, a large CBM resource base and a mix of highly prospective acreage in prolific basins provide a good base for future upsides from E&P. With scheduled arrival of new rigs for deepsea drilling over the next 12-18 months, new discoveries are likely We have valued the reserves based on P/CF multiple, across three scenarios, base-bull-bear cases.

3. a. Petrochem – polyester could surprise

Petrochem downcycle from 1QCY09 is already in the price as it is the consensus view. No major suprises are likely, as we have already built in decline in margin in all through FY09. We believe, polyester margin recovery would cushion the impact of ethylene-propylene cycle downtrend over the next couple of years and could surprise the market. Buoyant cotton prices further provides scope for polyester price upside. Polyester delta over PTA and MEG is close to its cash cost and could only improve from here.

b. Gas based facilities – superior profitability, deserves valuation premium

With IPCL in its fold, RIL is best placed to leverage high petrochem product prices (primarily a function of high crude prices, though higher margins too contributed). Domestic gas prices have not risen much, leading to vastly superior margins for gas based petrochem producers in the country compared to naphtha based producers globally. Gas based cracker margins are about 30-50% higher than naphtha based ones. With crude prices unlikely to fall below US$60/bbl and gas prices unlikely to move up sharply, we believe, Indian gas based crackers would remain more profitable than naphtha based ones for some time to come. Hence, we believe, they have to be valued at a premium. Domestic C2 prices continue to be linked to natural gas prices, though C3 is linked to international propane price. Some debottlenecking is in the pipeline in IPCL’s gas cracker as well as PVC, which is set to add to value.

c. Off-gas based petrochem plant – vastly superior economics

Off-gas based petrochem plant (scheduled for FY11-12 commissioning) offers vastly superior economics vis-à-vis naphtha as well as domestic gas. The relative feedstock cost advantage is ~0.4x vis-à-vis 0.6x for gas based plant, with 1x being the benchmark based on naphtha based plant. These numbers correspond to a crude price range of about US$70-80/bbl and hence would be even more favourable at current crude prices. We believe this plant too would be also command valuation premium over global averages.

4. Large cashflow – set to fuel growth

With very large cashflows ranging between Rs250-300b from FY10 (not adjusted for capex in the pipeline), we believe, growth is likely to be accelerated. (RIL has traditionally been growth focused and has generated superior return ratios) Potential investment in a new refinery at Jamnagar, most likely under RPL could be a large value creator for RIL on account of the favourable tax benefits under the first RPL refinery. Investment opportunities in E&P, SEZ, City gas projects along with overseas inorganic growth opportunities exist. New investment avenues like semiconductor are opening up and appear highly attractive, especially with the Government providing favourable terms.

5. Robust earnings growth – E&P and RPL key contributors

We forecast standalone net profit growth of 15.4% (excluding RPL stake sale) and 24.6% over the next two years, on the back of gas business earnings, even as petrochem and refining earnings decline. Consolidated profit growth is expected to be stronger at 31% and 36% yoy respectively, driven by RPL refinery commissioning. 4QFY08 is likely to be another strong quarter, with 23.6% yoy growth in net profits, driven by a record high refining margin, thanks to record high diesel spread over crude. Our base case target price implies a P/E of 17.4x FY10E.

Stock Recommendation:: Hindustan Unilever

2008-04-14T01:04:00.000-07:00

Hindustan Unilever
Recommendation: Buy
Price target: Rs280
Current market price: Rs235

Price cut to combat competition

Key points

Hindustan Unilever Ltd (HUL) has reduced the prices of three of its soap brands —Lux, Hamam and Rexona—to pass on the benefits of excise duty cut in soaps to the consumers. It has reduced the price of Lux 100gm soap to Rs16 from Rs17 and of Lux 45gm soap to Rs5 from Rs6.
HUL's soap volumes grew by just 1.5% in CY2007. With the recent price cut, the company expects the volumes to improve for some of its strong brands.
In view of the rising palm oil prices, the price cut by HUL seems to be out of place, however this seems to be the right strategy to counter the recent launches in soaps from its major competitor—ITC.
We believe in spite of the steps taken by the government to control inflationary pressures, edible oil prices would settle at higher levels for the near term. However, we sense that the price cut in some of the soap brands by HUL is a short-term phenomena to combat the competition from the new soap launches by ITC, as surging input cost will pressurise the soap margins. Going forward, we expect HUL to drive its growth by expanding its presence in high-margin premium personal care and food segments.
At the current market price of Rs235, the stock trades at 25.2x its CY2008E earning per share (EPS) of Rs9.30. We maintain our Buy recommendation with price target of Rs280.

NSE Online Trading, BSE Online Trading, Stock Prices, Latest News

Budget 2010-2011, Income Tax

Income Tax Rates for Financial Year 2010 - 2011, Income Tax Rates

Income Tax Rates, Income Tax Rates In India, Personal Income Tax

Live Silver price charts 10 years

How to know / predict a Bull and a Bear Markets

Stock symbol and Trading Strategies

Trading holidays for NSE, BSE in 2008 (sessions off)

Best time to buy Mutual Funds and Shares

Stock Recommendations:: Ranbaxy

Stock Recommendations:: Larsen & Toubro, Mahindra & Mahindra (L&T, M&M)

Stock Recommendations:: Mold-Tek, Tata Motors

Stock Recommendations:: Opto Circuits India, Deepak Fertilisers & Petrochemicals Corporation

Reliance Power (Rpower) Bonus Shares Announced June 02, 2008

Reliance Power (Rpower) Bonus Shares Announced

Day Trading Strategies, Intraday Trading Strategies Rules

Day Trading / Intraday Trading, Rules Strategies

1. Don't Fight The TrendGo long a stock only when it is strong (up) on the day. Same for shorts (only short down stocks).

2. Don't OvertradeEnter a maximum of three trades on any given day. Be selective.

3. Consistent Trade SizesEach trade should only consist of buying between 100 to 300 shares. Never more.

4. Buy Near Support LevelsNever chase a stock way above its support levels. Wait for a pullback.

5. Manage LossesNever take a loss of over 10% on any trade. Enter only trades where the stop, if triggered, will result in a loss of less than $10%

6. The 30 Minute RuleNever enter a trade in the first 30 minutes of trading.

7. Overnight RuleAny overnight holding can only consist of 100 shares. Only one holding. Again, be selective.

Gold:: Akshaya tritiya Gold Festival:: biggest gold buying festival

RPOWER Bonus Issue

SBI eZ-Trade Screens

Trade to Trade Scrips:: BSE

Stock Recommendations:: Satyam Computer

Stock Recommendations:: Reliance Industries

SECTOR UPDATE:: Banking

Stock Recommendations: Wipro, TCS, Satyam, Axis Bank

Stock Recommendations:: Bharat Forge

Stock Recommendation for April 21, 2008

Stock Recommendation: BASF India, Esab India

NDTV Results

Letter from Sharekhan CEO

The BSE Sensex slipped from a high of 21,000 to below 15,000 in the first three months this year. But as we start the new financial year, we remain Tigerish about the stock market.

Sector Update:: BSNL

Trade Recommendation: Ranbaxy Laboratories, Infosys, Zee News, HCL

Steel Sector Update: Jan-Mar 2008 earnings

Financials Sector Results

Stock Recommendation:: Reliance Industries

Stock Recommendation:: Hindustan Unilever

1. Don't Fight The Trend
Go long a stock only when it is strong (up) on the day. Same for shorts (only short down stocks).

2. Don't Overtrade
Enter a maximum of three trades on any given day. Be selective.

3. Consistent Trade Sizes
Each trade should only consist of buying between 100 to 300 shares. Never more.

4. Buy Near Support Levels
Never chase a stock way above its support levels. Wait for a pullback.

5. Manage Losses
Never take a loss of over 10% on any trade. Enter only trades where the stop, if triggered, will result in a loss of less than $10%

6. The 30 Minute Rule
Never enter a trade in the first 30 minutes of trading.

7. Overnight Rule
Any overnight holding can only consist of 100 shares. Only one holding. Again, be selective.