UBS: Positive on Infy, Price Target of Rs 2,500; Risk of missing guidance lower for TCS & Satyam

Trideep Bhattacharya of UBS says that the Infy guidance looks conservative on higher hiring target and pricing. He is positive on the stock and gives it a price target of Rs 2,500. Infy FY08 EPS is seen at Rs 82 and FY09 at Rs 103, Trideep adds. They are assuming 9% rupee rise in FY08 and 3% more in FY09 for Infy. He expects better revenue growth, margins for Infy in the September-quarter and adds that the company may mitigate currency pressure by capacity utilisation and pricing.

On the rupee appreciation, he says that majority of rupee appreciation already done for CY07. The risk of missing guidance is lower for TCS & Satyam. Satyam may meet rupee guidance and may revise $-guidance up. TCS margin is expected to fall by 250-300 bps on wage hike impact:, Trideep says. Satyam's margin erosion is seen lower as wage hike will come in Q2.




New bike in Sept, Bajaj continues to lead in 125cc-plus segment, to ramp up new bike prodn to 50000 units within few months, 100cc to be history by 2010: Bajaj Auto

Rajiv Bajaj, MD of Bajaj Auto said the entire industry is in a slight de-growth phase. Scooter and 125cc segments are growing while de-growth is witnessed in 100cc segment. We would have scaled back at Akurdi irrespective of demand. We would like to think about measures other than shut down of the plant. We have already streamlined production from April. Situation of Akurdi has been like this since April. We will have to push production 25% more but we will not do that at Akurdi. Platina was not profitable till it was moved to Pant Nagar plant. No further productions cuts are seen. Our new bike will be rolled out in September.

We have built 45000 motorcycles, which is fewer than retail sales. There has been slight dip in market share more due to stock adjustment. Our stock is at a healthy position of 2-3 weeks. In 125 cc and above, we are strong; we are market leader there. In 100cc, Hero Honda continues to have hold. They have over 90% market share there. TVS has 10% market share. TVS has a challenge before itself to not only sell but to sell profitably, Bajaj said.

He added 150cc segment grew at 25% in Q1. 100 cc segment fails to grow because of product fatigue. Things will turn around post launch of new motorcycle in September. New motorcycle will be launched on 9th of September. We expect to ramp up production of new motorcycle to 50,000 a few months post the launch. We don't need to consider competitive pricing for new bike. Product will be priced few thousand Rupees higher than Platina. We are betting on volume pick-up September onwards, post new bike launch.

Rajiv further said any cannibalisation will only improve product-mix profitability. 100cc segment will be history by 2010. We expect to sell 1 million bikes in H1FY08, 1.4 million In H2FY08 and are targeting 2.5 million motorcycles for the whole year. We see higher volumes, lower raw material prices ahead. We are maintaining FY08 sales guidance of 10%. Margins will improve (QoQ), we see at 15% levels by October. 3-wheelers sales will pick up in Q2. 3-wheeler volumes should pick up. July - September is the best period for 3-wheeler sales.



Finance Secy: Govt directs banks to cut interest rates for exporters; Exports sops to cost govt Rs 800 Cr in FY 0, Sops to be applicable till Dec 31

Finance Secy says that there has been some anticipated gains in rupee has been seen in recent months. The government has also directed the banks to cut interest rates for exporters. Finance Secy added that they will give interest grant of 2% to banks giving export sops and that the rupee movement is market driven.

Textile, leather, handicarfts, marine products are eligible for lower credit, which will not exceed 180 days. The RBI is expected to issue a circular soon.

The Finance Secy says that the increased rates of drawback will be applicable from April 1. Export sops will cost the government Rs 800 crore in FY08. The govt will adjust duty drawback rates. The export sops will be applicable until Dec 31. The Pre, Post Shipment credit for SME Exporters will not exceed BPLR-4.5%. The govt has raised the duty drawback rates on cotton shirts to 10% and also raised duty drawback rates on finished leather to 7.5%

The Secy adds that the sops to help india meet $ 160 bn FY 08 export target.




Board of Approval approves 20 SEZs including RIL

The Central government's Board of Approval gave final approval to 20 proposals for special economic zones, including that of Reliance Industries. "The Board today granted formal approval to 20 SEZs, including RIL's 1,250 multi-product SEZ in Navi Mumbai, subject to certain conditions being met," Commerce Secretary G.K. Pillai said.

Units in the Navi Mumbai SEZ can only come up when the contiguity is completed, Pillai said. Last month, Maharashtra government had sent its report giving a clean chit to Reliance Industries' proposed multi-product special economic zone in Navi Mumbai.

Among other proposals that received clearance are those of Mangalore Refineries and Petrochemicals, Hindalco Industries and Unitech. Pillai also said in-principle nods have been given to SEZ plans of Indian Foundry Association, Videocon Industries and SKIL infrastructure, among others.

Pillai said SEZ proposals in Uttar Pradesh have been deferred on the request of the state government. Three more proposals, besides those in Uttar Pradesh, were pending before the Board which will now be taken up in the board's meeting August 3.

Pillai said investments to the tune of Rs 43,100 crore have already been made on SEZs as on July 10. By the end of December, investments are estimated to touch the Rs 10,000 crore mark, he said.




GMR Infrastructure Futures turnover crosses Rs 4000 Cr, adds 11.6 lakh shares in OI

In F&O, GMR Infrastructure Futures turnover has crossed Rs 4,000 crore which is higher than Nifty. It added 11.6 lakh shares in Open Interest.

GMR stock is up 13%. The company recently won a hotly contested tender for construction of a new terminal at the Sahiba Gokcen International Airport (SGA) at Istanbul, Turkey. The build-operate-transfer project involves construction of terminal with a 10 million capacity in 30 months besides managing the existing domestic and international terminals (with passenger capacity of 3.5 million per annum.

The consortium (GMR - 40%, Insaat Sanay San Ve Tic A.S Turkey (Limal) — 40% and Malaysian Airport Holdings Berhad — 20%) will pay a total concession fee of Euro 1.93 billion (approx. Rs 11,000 crore) to the Turkish goverment authority over 20 years to run the airport. The GMR consortium won against competition that included major airport operators like Fraport — Germany, Venice Airport — Italy, TAV - Turkey and Chicago Airport - USA.

With the win, GMR will now have three airport projects under its belt. It is already expanding the New Delhi airport at a cost of $ 1.5 billion by 2010 in time for the commonwealth games.

The company's Hyderabad airport, being built at a cost of $ 500 million, will be ready next year. Apart from just running the airport, GMR will also develop the real estate around these airport to build shopping complexes and facilities for passenger. There is an estimated 5000 acres available for development around the Delhi airport, which will be up for development.

The latest bid in Turkey is expected to hasten the progess of GMR as an airport infrastructure company. This far, when it bid for airport projects in India, it has had to bring in foreign partners to show experience in building airports. As the company is planning to bid for a new airport in Chennai and other modernisation programmes of airports across the country, it may well get a chance to go alone citing its experience.




No negative impact on current business, to enter truck financing business: Bajaj Auto Finance

Bajaj Auto Finance wants a share of the truck finance business. It plans to start with financing of used trucks by October this year. It has also set up its first Call Centre to expand its presence in the Rs 3,000 crore personal loan market.

Dipak Poddar, MD Bajaj Auto Finance predicts no negative impact on their current business. He further said the company is into financing 35000 vehicles for this month. 60% of the total revenue contribution comes from bajaj auto and the balance comes from consumer durables and personal computers. Their investment of Rs 370 crore in fixed deposits is going to be disbursed for new personal loan. This month the company is not going to deal in truck financing.



Bajaj Auto Q1 Standalone Net Profit at Rs 226 Cr vs Rs 276.4 Cr (YoY); Net Sales at Rs 2109.11 Cr vs Rs 2202.66 Cr; Rajiv Bajaj says may shut down Akurdi plant

Bajaj Auto Q1 Standalone Net Profit is at Rs 226 crore vs Rs 276.4 crore (YoY). CNBC-TV18 Poll saw net profit at Rs 242.5 crore.

The Q1 Standalone Net Sales are down at Rs 2109.11 crore from Rs 2202.66 crore (YoY), according ot NSE. CNBC-TV18 Poll saw Net Sales at Rs 2,044.7 crore.

Q1 Operating Margin is at 13.1% vs 16.4%. The Other Income is at Rs 103 crore vs Rs 94.5 crore. Rahul Bajaj says new platform for bikes will start with 15,000 units in September. He adds that the gap between Bajaj Auto & Hero Honda could be 50,000-60,000 in July.

Bajaj Auto MD Rajiv Bajaj says that the company may have to shutdown Akurdi Plant and reduce production by 100k to 350k units in '07.