DLF mkt cap gits Rs 1 lakh Cr mark; DLF 10th Co to hit mkt cap of Rs 1 Lakh Cr

DLF has touched an intra day high of Rs 590 and an intra day low of Rs 567. Currently, the share is quoting at Rs 589.20, up Rs 17.45, or 3.05%. It is trading with volumes of 79,07,598 shares. Yesterday the share closed down 0.51% or Rs 2.95 at Rs 571.75. The company has now entered the elite club of Rs 1 lakh crore mark and it is the 10th company to enter this club.

Motilal Oswal has recommended a buy rating on DLF with target price of Rs 674. Target price is at a 25% premium to estimated NAV of Rs 539 per share. The company's recent IPO was the biggest in the country so far.

The reports indicate that DLF, India's largest real estate company, is the best proxy for playing the promising domestic real estate opportunity. We are excited about DLF’s dominant presence in emerging segments of premium apartments, commercial offices and retail, which are highly profitable businesses with strong entry barriers.

Thus, DLF is relatively better placed to face the challenging macro environment, which, in our opinion, will encourage lower risk premiums going forward.





Revenue impacted by Rs 287 Cr due to Rupee rise; BPO margins down from 21-22% to 16-17%: Infy

Infosys management said due to Rupee rise impacted revenues to the extent of Rs 287 crore. Growth in North America has been at 7.5% while in Europe it has been at 8.5%. The Rupee appreciation impact was on EPS as well as on margins. We absorbed 7% cost increases and margins were impacted by only 3.5%. Visa cost was up 1% while wages were up 2.5%. Volume growth of 6.9% witnessed in Q1.

OPMs could be impacted by 100-200 bps in FY08. The company has factored in Rs 40.58 on the exchange rate. They are seeing 9.3% growth in non top-10 clients. 26000 employees will be added in FY08. The company has added 10 $ 1 million clients in Q1.

The offshore wages were up 12-15% and onsite was up 5-6%. Almost 73% of the company's revenues come in Dollar terms, 13% in Pound and 5% in Euro terms.

All round growth is seen in all geographies. We are seeing 3-4% improvement in billing in new contracts. We mitigated 4.5% from 7.3% hit on the margin. We have $ 4 billion target in FY08 for revenues. Pricing has been stable with an upward bias. Utilization increased by 1.5% for Q1, the compan says. There will be no price rise assumed in guidance. BPO business could be significantly impacted by Rupee rally. Consulting grew by 22% which forms 4.9% of revenue. Subprime exposure is less than 1%.

Infosys said that the company is comfortable with high of 70% and low of 80% utilisation. Meanwhile the Infosys management declined to comment on Capgemini acquisition. The company is actively looking at US, Europe for inorganic growth.

The company is hedging for short-term to cover 2 quarters. Company has hedged $ 925 million as of June end agianst $ 470 million QoQ. The Rupee is likely to move between 39-41/ $ in the short-term.

Margins from BPO business are down from 21-22% to 16-17%. Tax sops for BPOs should be continued for next 5 years. Price of renegotiated financial deals seen 1.5 % higher.






Mkt reactions on Infy earnings: FY08 guidance of Rs 78-79 in line with market expectations

Devesh Kumar, Centrum Finance said Infosys' muted earnings guidance will not go down well with the markets. I expect the stock to correct. Sentiment for all dollar driven companies may turn negative post the Infosys guidance.

Vibhav Kapoor, IL&FS said Infosys FY08 guidance of Rs 78-79 is in line with market expectations. We need some more clarity on the other income component. Overall, the business seems to be doing well & I expect the company will beat full year guidance. A bounce is expected in the Infosys stock as there could be some short covering. The stock should settle between Rs 2,000-2,100 in the short-term.

Nilesh Shah, Envision Cap said Infosys stock is fairly valued at current price. Case for contraction of premiums enjoyed by Tier-I IT companies. Frontline tech sector is expected to underperform in next 1-2Q. Market should look at this quarter as a one off event.

Going ahead, currency will not be a spoilt sport. Infy is likely to trade below 25x FY08 EPS for the next 2 quarters. Probable P/E range for Infosys to be 23-25x. Actual FY08 EPS could inch towards Rs 80. Infy could trade between 23-26 times over the next 6 months. Tech sector will not provide a meaningful growth to investors, Nilesh added.






Ranbaxy gets a jolt in Pfizer row; Loses Lipitor patent case in Ireland to Pfizer

Pfizer's global battle against Ranbaxy to protect the patent rights of its blockbuster drug Lipitor has taken a fresh turn with the Dublin High Court giving a ruling in favour of Pfizer, stating that Ranbaxy’s generic atorvastatin will be infringing on Pfizer’s patent rights, reports the Business Standard.

The decision prevents Ranbaxy from launching its drug before the basic Lipitor patent expires in November 2011 in Ireland, a million market for Lipitor.

“We are confident of our position and will file a timely appeal against the court ruling,” a Ranbaxy spokesperson said.

“Today’s decision is yet another affirmation of the strength of the intellectual property behind Lipitor,” said Pfizer General Counsel Allen Waxman.

“It is also an important outcome for Pfizer and other medical innovators, who invest in high-risk research to develop life-saving medicines, and for the patients who benefit from those medicines,” he said.

Ranbaxy is involved in a legal battle with Pfizer in more than 17 countries, including the United States, over patent infringement of Pfizer’s Lipitor.

A couple of months ago, a Norway court had ruled in favour of Ranbaxy on the same case when it invalidated four patent claims of the US pharma giant.

Lipitor had brought in revenues worth .89 billion for Pfizer in 2006. Ranbaxy, which spent about million during 2004-05 to fight the patent battle related to Pfizer’s Lipitor, also has high stakes in the legal battle.





Banks send an SOS to RBI - bring back the borrowers; interest rates have peaked, says HDFC Chairman

Banks have seen the lowest loan growth in six years and bankers are clearly a worried lot. A group of big bankers have approached the Reserve Bank of India to take some action to bring back the borrowers.

In the past 3 years the banking industry has seen its loans gallop by 30%, every year, but now, in just one quarter, bankers are watching this trend grind down to just 24%. With loan growth hitting a 6 year low, sources say three or four big bankers from the private and public sector, have made an informal representation to the Reserve Bank, to tackle this situation.

Sources say these bankers have pointed out that corporate have for many years now preferred foreign loans because of the high cost of Rupee loans. But this year even retail borrowers have started shying away leaving them with little business. They have therefore suggested that the RBI look at moderating interest rates

They have also requested the RBI to reduce risk weights on certain sectors like real estate, home loans and hospitality as this can help them reduce rates on these loans and boost demand.

Though the first quarter traditionally is a slow month for loan growth, bankers say that sanctions have dropped too sharply and they expect disbursals to remain subdued in the second quarter as well.

Bankers are also complaining that the high cost of bulk and retail deposits are squeezing their margins. Bankers hope that the RBI will take some concrete steps in the review of the monetary policy on July 31.

Interest rates have peaked. So says veteran banker and Chairman of HDFC, Deepak Parekh. He says RBI is unlikely to hike interest rates further.

Parekh said, “Inflation is under control, I’ve always said that interest rates have peaked. It’s unlikely to go up further but they've stabilised at the moment. I don’t think that interest rates will come down drastically, but the chances of going up are also remote.”





Dow loses 148 points on earning concerns, subprime jitters; Oil briefly tops $ 73/bbl

US stocks fell sharply on Tuesday, sending the Dow Jones Industrial Average down by 148 points, with investor enthusiasm hit right at the outset of earnings season after both Home Depot Inc. and Sears Holdings lowered their forecasts. Concerns about housing and credit markets were revived by a possible rating action on subprime mortgages from Standard & Poor's. Financials came under pressure after S&P said it put $ 12 billion worth of subprime mortgage-backed securities on CreditWatch negative.

Two hedge funds owned by Bear Stearns were brought near to collapse due to their heavy exposure to the subprime mortgage-backed securities. Adding to the jitters about housing, home-building bellwether D.R. Horton Inc. early Tuesday said quarterly orders for new homes fell 40% from a year earlier and that it expects to post a loss after impairment charges. The dreary outlooks suggested that the sluggish housing market may dampen consumer spending.

The outlooks followed Monday's news that aluminum producer Alcoa Inc.'s second-quarter sales missed estimates and that printer manufacturer Lexmark International Inc. slashed its second-quarter earnings forecast. Together, the reports dispirited investors who had been counting on corporate America's performance giving a boost to the stock market, which has been stuttering in recent weeks.

Crude oil prices briefly topped the $ 73 a barrel adding to the market's nervousness, while a speech by Federal Reserve Chairman Ben Bernanke failed to shed light on the central bank's plans for interest rates. Bond prices soared, pushing down the 10-year Treasury note's yield to 5.03% from 5.16% late Monday. The plunge in yields failed to boost stocks, largely because the decrease was caused by worries about the housing market rather than confidence that inflation is easing.

The Dow fell 148.27, or 1.09%, to 13,501.70, near its low of the session. Broader stock indicators also declined. The Standard & Poor's 500 index fell 21.73, or 1.42%, to 1,510.12, while the Nasdaq composite index was off 30.86, or 1.16%, at 2,639.16.

Declining issues outnumbered advancers by nearly 3 to 1 on the New York Stock Exchange, where consolidated volume came to 3.20 billion shares, compared to 2.68 billion shares Monday.

In European trading, Britain's FTSE 100 fell 1.22%, Germany's DAX index fell 1.39%, and France's CAC-40 fell 1.40%.