HDFC Bank Q1 Net Profit at Rs 321 Cr vs Rs 239 Cr

HDFC Bank has announced its numbers. The Q1 Net Profit is at Rs 321 crore vs Rs 239 crore. Q1 CNBC-TV18 Poll saw Net Profit at Rs 316.5 crore.

The bank earned total income of Rs 2,641.7 crores for the quarter ended June 30, 2007, as against Rs 1,795.2 crores in the corresponding quarter ended June 30, 2006. Net revenues (net interest income plus other income) were Rs 1,558.1 crores for the quarter ended June 30, 2007, an increase of 40.5% over Rs 1,108.6 crores for the corresponding quarter of the previous year.

The bank added 69 branches during the quarter ended June 30, 2007 taking the branch network to 753 outlets in 320 cities from 535 outlets in 228 cities in June 2006. As of June 2007, the number of debit cards issued by the bank were over 4.3 million, while credit cards issued crossed the 3 million mark. Portfolio quality as of June 30, 2007 remained healthy with net non-performing assets remaining stable at 0.4% of advances.

During the quarter ended June 30, 2007, the bank had obtained the Board and shareholder approvals to raise equity capital of US$ 1 billion or Rs. 4200 crores, whichever is higher, either as domestic public offering or as public or private offerings in one or more international markets. Approvals from the Board and shareholders were also obtained to allot 1,35,82,000 equity shares of Rs. 10/- each at a premium of Rs. 1013.49 per share on a preferential basis to Housing Development Finance Corporation Ltd. (HDFC) aggregating Rs. 1390.1 crores. The said allotment to HDFC was done on June 29, 2007.

The Bank's Capital Adequacy Ratio (CAR) was at 13.1% as of June 30, 2007, of which Tier I CAR was 9.2%.




HSBC raises ratings on ICICI Bk, HDFC Bk from Neutral to Overweight; Also puts Overweight on Bank of Baroda, Canara Bank and Corporation Bank

HSBC has raised its ratings on ICICI Bank, HDFC Bank from Neutral to Overweight. It has raised price target on ICICI Bank to Rs 1,108 while it has raised price target on HDFC Bank to Rs 1,270.

HSBC has also puts Overweight on Bank of Baroda, Canara Bank and Corporation Bank.

New equity issuances in FY08 are likely to be more positive for new private banks as market share continues to rise However, we prefer state-owned banks as the convergence in operating ratios suggests an unjustified discount, the report by HSBC says.

They have raised ratings on ICICI Bank, and on HDFC Bank (Underweight to Neutral). However, we perceive larger
potential upside in state-owned banks where we rate Bank of Baroda, Canara Bank and Corporation Bank Overweight. UTI Bank and ING Vysya Bank both rated Underweight have the largest potential downsides.

"A key risk factor is further increase in NPL provisions, particularly in state-owned banks where they stay below the long-term mean. Another risk is possible decrease in NIMs when deposit re-pricing gathers pace," the report adds.

The following target prices are applied to a 12-month horizon as they have roll forward the target date by a
quarter to June 2008.


Bank of Baroda - Raises target price to Rs 379
Canara Bank - Revises target to Rs 369
Corporation Bank - Raises target price to Rs 419
HDFC Bank - Revises target price to Rs 1,270
HDFC - Revises target price of Rs 1,985 points to a very small potential upside, retain Underweight rating
ICICI Bank - Raises target to Rs 1,108
ING Vysya Bank - Raises target price to Rs 231 and retain Underweight rating
Punjab National Bk - Revise target price to Rs 591 and retain Neutral rating
SBI - Raise target price to Rs 1,506 but estimate limited potential upside and retain Underweight rating
UTI Bank - Raises target price to Rs 577 but retain Underweight rating






Two wheeler companies gear up for the festive season with premium segment bike models

Two wheeler makers are waiting for the festival season to bail them out from the slow down. And, they are banking on innovative and premium segment bikes. The auto industry has seen a slowdown for last 3 months. Manufacturers are looking to the festive season for relief. They are banking on new launches. TVS has launched the Apache 160 cc and will launch another two or three bikes in the coming months.

R Chandramouli, Sr VP, Sales, TVS Motors said, “Commuter segment there is a decline. So focus is on premium segment. We are launching models from October in phased manner, first in October, then in January and so on...”

The second largest player, Bajaj Auto's, first all new platform will be launched in September. More will follow. The bike priced at Rs 40,000 will replace the 100 cc Platina. It will be manufactured at Bajaj's new facility in Pant Nagar.

Rajiv Bajaj, MD, Bajaj Auto said,” Our chosen route to beat this slowdown is the product centric route, bring in a new product that will really bring the consumers back. At the need of the day, it is profitability, how much you sell. So the product we will launch in September will reverse the downtrend for us.”

Hero Honda has delayed the opening of its new plant in Haridwar, because of the slowdown. Others like Bajaj and TVS say the way forward is to launching new, innovative and premium segment products for better margins and profitability. So much so, TVS is working on CNG and LPG technology for its bikes.






Not just a small car - Ratan Tata promises a crossover model, a new-generation Indica, Indigo and Sumo to drive growth

As if building the Rs 1 lakh car wasn't enough, Ratan Tata has promised more launches in the next two years. At the company's 62nd AGM, Chairman Ratan Tata said Tata Motors has plans to launch four passenger cars and a truck.

He said the company would launch a new model, which would be a mix between an SUV and a car. Also on the cards is a new generation truck and, of course, a new generation Indica, Indigo and Sumo.

Ratan Tata is also positive the company will roll out its Rs 1 lakh car in the 1st half of 2008. And while rising costs remain a concern, Ratan Tata says the company will tide over it.

Ratan Tata added that Tata Motors might consider listing some of its profit making arms. The company has 21 profit making subsidiaries of the total 30 across the world.





Bharti, Ericsson set to ink $ 1.5 bln deal

In what will be the biggest network outsourcing and rollout deal globally, Bharti Airtel, India’s largest mobile operator, is set to ink a contract with Swedish telecom major Ericsson estimated to be worth about $ 1.5 billion, reports the ET. This will be Bharti’s second billion dollar deal with Ericsson in less than a year.

When asked on the issue, a top Bharti executive refused to confirm the deal amount, but said it would be much bigger than the recent network expansion contract with Nokia Siemens, valued at US$ 900 million. “Ericsson discussions are ongoing — we will announce it once we reach an agreement,” the executive added.

Sources said the deal with Ericsson was likely to be spread over a three year period where the Swedish network major will be entrusted with design, planning, supply, installation, commissioning and upgrading of Airtel network in 15 telecom circles. It will also involve implementation and project management, handling of local logistics and materials as well as system integration for the base station sites, in these 15 circles, sources added.

The ownership of the networks built by Ericsson will be with Bharti and the actual payment is linked to utilisation of capacity and fulfilment of agreed quality of service parameters. Besides, the contract will also help Bharti to continue its focus and channel its resources and expertise to its core areas of product innovation, value added services, marketing, branding & pricing, while leveraging Ericsson’s expertise in network management.

This will also mark Bharti’s fourth major outsourcing deal with Ericsson in as many years. In February 2004, Bharti signed a similar agreement with Ericsson valued at over $ 400 million to build and manage networks across 13 circles, followed by a $ 250 million deal in June 2005 to provide managed services and expand its GSM/GPRS network in 15 circles. Bharti then topped it up with a $ 1 billion network expansion deal with Ericsson for the same 15 circles in August 2006.

At the same time, Bharti has also signed four network outsourcing deals with Nokia (now Nokia Siemens Networks following the merger of the network arms of both Nokia and Siemens early this year). In May 2004, it had signed a three-year deal with the Finnish company valued at 5 million to build and manage networks across 5 circles, topping it with another $ 125 million three-year agreement in August 2005 for GSM/EDGE expansion in eight circles and followed it up by another deal in October 2006 for the same eight circles for 0 million.

However, the latest $ 900 million deal with Nokia Siemens goes beyond mere network expansion in the eight telecom circles. As per the deal, Nokia Siemens Networks (NSN) will also enhance Bharti’s national and international long distance network with 1.8 million Next Generation Network (NGN) ports. Besides, NSW will also provide the platform for increasing the company’s capacity for its international prepaid Calling Card 4.5 million new users.






Suzlon fund use under lens to find whether it has utilised public money for purposes other than what it was meant for

Wind power major Suzlon Energy may soon have to be ready with some hard explanations, including non-repayment to the company of about Rs 2,200 crore by assorted debtors and other entities to whom the company had made advances, reports the ET.

Minister for corporate affairs Prem Chand Gupta has ordered an inspection into the account books of all the subsidiaries of Suzlon Energy to find out whether Asia’s largest wind turbine manufacturer has utilised public money for purposes other than what it was meant for. Suzlon Energy has confirmed that it has received a communication from the government and is co-operating with it.

The inspection is part of a wider exercise the ministry had started last year to scrutinise all initial public offers (IPOs) since 2004 to find out if anyone has utilised public money for purposes other than those stated while raising funds.

A Suzlon spokesperson told ET, "We do confirm that we have received communication from the concerned government authority on the subject. In adherence to our strict governance policies, we are co-operating with the authorities and are providing them with the required information with complete honesty and transparency. However, we believe that it would be inappropriate for us to comment any further on the matter at this point of time."

The inspection of Suzlon subsidiaries follows a report by the Mumbai registrar of companies (RoC) and the regional director that said an inspection was needed to allay doubts about certain entries in its balance sheet for the fiscal ended 2006. After a technical scrutiny of the balance sheet, the RoC wondered why advances to certain parties have not been paid back to the company.

Also, debtors have not paid a large sum to the company back in cash or kind. This has raised questions and apprehensions that the company may have diverted Rs 2,200 crore to various parties. Therefore, an inspection under Section 209 A of the Companies Act was needed, the RoC said.

The company had hit the primary market towards the end of 2005 to raise funds for its expansion plans. It has different arms for producing wind turbine towers and generator units in India besides its overseas subsidiaries.

The ministry wants to allay suspicion and ensure that investor interest is protected at a time when the market is testing new highs. The government’s scrutiny will cover a large number of companies as a string of IPOs had hit the market in the past three years. They include the IPOs of Reliance Petroleum, Reliance Communication, Mahindra & Mahindra, TCS, Sun TV, IL&FS Investsmart, Deccan Aviation, Biocon and Jet Airways.







Sunil Mittal's partnership with TeleTech may soon be disconnected as TeleTech looks to wind up from Indian market

Sunil Bharti Mittal’s 5-year old BPO partnership with USA's TeleTech Inc may be on the verge of being disconnected and quite literally so. TeleTech may walk out the Indian market altogether.

When USA's TeleTech Inc came to India in 2002, it called on India's biggest telecom player - Sunil Mittal. A joint venture partnership followed and by 2003. TeleTech India grew to a 3000 seater BPO offering voice and non-voice support in sectors like Telecom, banking and finance, healthcare and travel and retail. 4 years later, the headcount's still the same, but the 5-year-old partnership could possibly be at its fag end.

Sources say that TeleTech Inc. maybe looking at winding up from India by selling its 60% stake in TeleTech India. While TeleTech USA has still not commented on a potential deal, joint venture partner - Bharti Enterprises says, it does not comment on market speculation. And the company in question - TeleTech India, says that its majority shareholder - is not selling any stake. In contrast, sources claim that TeleTech Inc has been scouting for buyers for a while now. But the response from buyers may not be overwhelming - considering that many BPOs are up for sale.

Recently Blackstone bought out Intelenet for $ 210 million and now it is learnt that Citigroup global services too may be on the block for about $ 1.2 billion.

So what's driving the valuation game and what can TeleTech expect?

TeleTech's valuations are not known but experts say that it will be revenue based. That's because BPOs command a valuation of about 1.5 times the revenues. Valuations are also margin dependent.

Last year the industry's margins were an average 30 to 40%. But with the Rupee appreciating against the Dollar and increased competition from countries like Philippines and Ireland margins and hence valuations are under pressure. Reason enough for many promoters like TeleTech Inc wanting to opt out while the going is still strong.