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Wednesday, September 5, 2007
Buy Satyam Computers: Edelweiss Research
Since declaring Q1FY08 results on July 20, 2007 Satyam Computer Services has returned -7.8% (negative 7.8%), underperforming the BSE-IT index slightly (-6%), the Sensex (flat) and Infosys (-4.8%). We felt that some amount of correction was due given the run-up prior to the results which we believe has happened. Satyam derives a relatively smaller proportion of its revenues from the BFSI segment relative to its peers such as Infosys and TCS, which is about 24% of overall revenues. Thus, should it not be better placed relative to peers in the current environment? We spoke to Mr. V Srinivas, CFO to understand if Satyam senses any incipient impact of the ongoing weakness in the sub-prime mortgage segment in the US. We also wanted to understand whether the company is doing anything differently to deal with this situation. We asked Satyam 10 questions on the above-mentioned subject, to which, the company responded in the following manner:
Questions and Answers
1. How do you see the environment in the US affecting Satyam?
A. We have just concluded our routine monthly review meeting with the top-40 business unit heads and senior managers. As part of this exercise, we dissect the progress of each client account, review the behavior of all practices and see how these data points emanating from such a granular level feed into shaping our outlook. This is commonly a 3-day exercise. Our August-end review suggests to us that it’s business as usual. We are not seeing any impact as of now on account of the difficulties in the US.
2. Satyam’s application development and maintenance exposure (ADM) has grown over the last four quarters at just over 25% on a y-o-y basis. Hasn’t Satyam’s growth in the recent past accrued from “discretionary” spend? What is the relative ADM exposure in Satyam’s BFSI segment?
A. The ADM market is generally a slower-growth market than the rest of IT-Services such as package implementation, infrastructure management, independent testing and system integration. So, our growth has been very much in line with this trend. We have a higher-than-company average concentration of the ADM type of work in our BFSI segment. To this extent, our exposure to the BFSI segment is relatively defensive.
3. Are you concerned by the increasing concentration of your revenues in enterprise solutions which contributed over 44% of your revenues in Q1FY08?
A. We must deconstruct the composition of this segment that we at Satyam characterize as enterprise solutions. The classical ERP type of applications account for only a part of this (about 30% of overall revenues) with the rest coming from business intelligence, data warehousing, analytics, supply chain management and CRM solutions. Further, only about 50% of the pure-ERP portion (i.e. about 15% of the overall revenues) accrues from new implementations as the balance comes from support (mainly done offshore) which tends to be relatively stable. In essence, therefore, ERP work that one might classify as “discretionary” accounts for about 15% of our overall revenues or about a third of our overall exposure to enterprise solutions. Moreover, a good part of our exposure in enterprise solutions derives from the manufacturing and TIME vertical, outside the BFSI segment.
4. Are there any segments of your BFSI exposure (especially BFS), that you are worried about? Exposure to investment banking clients or any others?
A. Our direct exposure to sub-prime mortgage lenders is negligible, and to the mortgage segment as a whole, is less than 1% of our revenues. Only about 24% of our FY07 revenues came from the BFSI segment, most of the work is done for large, diversified financial institutions. The BFS accounts for about 17% of this while insurance, which is stable, contributes the balance 7%. Our 17% BFS exposure is split roughly equally across the three line viz. commercial/retail banking, financial services and investment banking (or capital markets). Thus, our capital market exposure is about 6% of revenues and though we haven’t seen any indications of any fallout yet in this subsegment, we believe that if there were to be some hiccups in this area broadly speaking, our modest exposure to this places us in a favorable position to manage them.
5. Are you seeing any impact on business that can be termed as “discretionary spending’?
A. High-growth services such as business intelligence, analytics, CRM, SCM and consulting are relatively more discretionary. At the moment they continue to show traction and we so far not seeing a slow-down in such higher-margin discretionary services, but are keeping a watch. We believe that businesses increasingly regard this spend as essential to their competitiveness. More so, we provide such services outside the BFSI segment and largely in the manufacturing and TIMES vertical. Together these verticals contributed about 48% of Q1FY08 revenues).
6. Is it impacting the way you are building order books, building sales pipeline or winning repeat business? New Clients and promised volume growth from existing clients – are they all coming through?
A. There is no change in the near-term outlook for the business. The improvement in pricing is tracking expectations. Our order book is healthy. There are at least 20 large deals up for grabs, each of them of the order of USD 50 million plus and we are in fairly advanced stage negotiations in about 10 of these.
7. Are your hiring plans on track or is there some element of a wait-and-watch policy you are now adopting given this global uncertainty?
A. At this point, hiring is progressing as planned. We have indicated towards hiring about 15,000 – 16,000 people (gross) and that remains.
8. Do you have any mortgage clients in your BPO? If so, what is the impact?
A. Our BPO business has negligible exposure to mortgage clients. We have not seen any impact on our business from the recent events.
9. Are you getting any sense of how CY08 IT budgets of your key clients is shaping up?
A. Clients are yet to firm up their IT-budgets for the forthcoming calendar. We will get a sense from them within a month’s time in October. So far, we cannot see the crisis in the US as affecting our clients’ CY08 IT budgets. We are carefully monitoring the situation and currently feel comfortable about our clients’ engagement levels with us.
10. How will a potential slowdown impact Satyam?
A. A slowdown in the US may set us back by 3-6 months. Today, we are in a better position to manage our order books and if developments in the US unexpectedly slow us down, we can get back on track within a quarter or two. We have flexibility in managing our exposure across clients, practices, geographies. We are seeing traction in infrastructure management and that’s relatively immune to a potential slowdown. So, we do not believe that a slowdown should impact our growth rates beyond a quarter or two.
Valuation:
We believe that Satyam will continue to grow in a good macro environment. Satyam’s BFSI exposure is relatively lower compared to peers and that puts the company in a relatively good position in the event of weakness in this space. The company is likely to post leading-industry growth in FY08 over FY07 (near-40% in USD terms) but this is already partly factored in at current stock price levels. We will watch out for how Satyam manages its margins in the coming quarters which we believe could be a strong stock driver hereon. In the event of a significantly tougher environment in the US affecting corporate spending on a broad basis, the signs of which we have not yet seen, we would prefer players such as Infosys and TCS by virtue of their relatively higher defensive exposure.
Investors are unlikely to rush into buy front-line technology stocks because they believe that the bottom is sometime away as further concerns continue to be priced in. In our opinion, further declines in stock prices hereon only make the risk-reward balance more favorable for investor. We believe that Satyam’s valuations have become fairly reasonable for investors at this point in time. It is at a 20% discount to Infosys on valuations at current levels, which is just about fair and which we believe should not increase. It currently trades at 18.6x FY08E and 14.4x FY09E, and we maintain our ‘BUY’ rating on the stock.
Questions and Answers
1. How do you see the environment in the US affecting Satyam?
A. We have just concluded our routine monthly review meeting with the top-40 business unit heads and senior managers. As part of this exercise, we dissect the progress of each client account, review the behavior of all practices and see how these data points emanating from such a granular level feed into shaping our outlook. This is commonly a 3-day exercise. Our August-end review suggests to us that it’s business as usual. We are not seeing any impact as of now on account of the difficulties in the US.
2. Satyam’s application development and maintenance exposure (ADM) has grown over the last four quarters at just over 25% on a y-o-y basis. Hasn’t Satyam’s growth in the recent past accrued from “discretionary” spend? What is the relative ADM exposure in Satyam’s BFSI segment?
A. The ADM market is generally a slower-growth market than the rest of IT-Services such as package implementation, infrastructure management, independent testing and system integration. So, our growth has been very much in line with this trend. We have a higher-than-company average concentration of the ADM type of work in our BFSI segment. To this extent, our exposure to the BFSI segment is relatively defensive.
3. Are you concerned by the increasing concentration of your revenues in enterprise solutions which contributed over 44% of your revenues in Q1FY08?
A. We must deconstruct the composition of this segment that we at Satyam characterize as enterprise solutions. The classical ERP type of applications account for only a part of this (about 30% of overall revenues) with the rest coming from business intelligence, data warehousing, analytics, supply chain management and CRM solutions. Further, only about 50% of the pure-ERP portion (i.e. about 15% of the overall revenues) accrues from new implementations as the balance comes from support (mainly done offshore) which tends to be relatively stable. In essence, therefore, ERP work that one might classify as “discretionary” accounts for about 15% of our overall revenues or about a third of our overall exposure to enterprise solutions. Moreover, a good part of our exposure in enterprise solutions derives from the manufacturing and TIME vertical, outside the BFSI segment.
4. Are there any segments of your BFSI exposure (especially BFS), that you are worried about? Exposure to investment banking clients or any others?
A. Our direct exposure to sub-prime mortgage lenders is negligible, and to the mortgage segment as a whole, is less than 1% of our revenues. Only about 24% of our FY07 revenues came from the BFSI segment, most of the work is done for large, diversified financial institutions. The BFS accounts for about 17% of this while insurance, which is stable, contributes the balance 7%. Our 17% BFS exposure is split roughly equally across the three line viz. commercial/retail banking, financial services and investment banking (or capital markets). Thus, our capital market exposure is about 6% of revenues and though we haven’t seen any indications of any fallout yet in this subsegment, we believe that if there were to be some hiccups in this area broadly speaking, our modest exposure to this places us in a favorable position to manage them.
5. Are you seeing any impact on business that can be termed as “discretionary spending’?
A. High-growth services such as business intelligence, analytics, CRM, SCM and consulting are relatively more discretionary. At the moment they continue to show traction and we so far not seeing a slow-down in such higher-margin discretionary services, but are keeping a watch. We believe that businesses increasingly regard this spend as essential to their competitiveness. More so, we provide such services outside the BFSI segment and largely in the manufacturing and TIMES vertical. Together these verticals contributed about 48% of Q1FY08 revenues).
6. Is it impacting the way you are building order books, building sales pipeline or winning repeat business? New Clients and promised volume growth from existing clients – are they all coming through?
A. There is no change in the near-term outlook for the business. The improvement in pricing is tracking expectations. Our order book is healthy. There are at least 20 large deals up for grabs, each of them of the order of USD 50 million plus and we are in fairly advanced stage negotiations in about 10 of these.
7. Are your hiring plans on track or is there some element of a wait-and-watch policy you are now adopting given this global uncertainty?
A. At this point, hiring is progressing as planned. We have indicated towards hiring about 15,000 – 16,000 people (gross) and that remains.
8. Do you have any mortgage clients in your BPO? If so, what is the impact?
A. Our BPO business has negligible exposure to mortgage clients. We have not seen any impact on our business from the recent events.
9. Are you getting any sense of how CY08 IT budgets of your key clients is shaping up?
A. Clients are yet to firm up their IT-budgets for the forthcoming calendar. We will get a sense from them within a month’s time in October. So far, we cannot see the crisis in the US as affecting our clients’ CY08 IT budgets. We are carefully monitoring the situation and currently feel comfortable about our clients’ engagement levels with us.
10. How will a potential slowdown impact Satyam?
A. A slowdown in the US may set us back by 3-6 months. Today, we are in a better position to manage our order books and if developments in the US unexpectedly slow us down, we can get back on track within a quarter or two. We have flexibility in managing our exposure across clients, practices, geographies. We are seeing traction in infrastructure management and that’s relatively immune to a potential slowdown. So, we do not believe that a slowdown should impact our growth rates beyond a quarter or two.
Valuation:
We believe that Satyam will continue to grow in a good macro environment. Satyam’s BFSI exposure is relatively lower compared to peers and that puts the company in a relatively good position in the event of weakness in this space. The company is likely to post leading-industry growth in FY08 over FY07 (near-40% in USD terms) but this is already partly factored in at current stock price levels. We will watch out for how Satyam manages its margins in the coming quarters which we believe could be a strong stock driver hereon. In the event of a significantly tougher environment in the US affecting corporate spending on a broad basis, the signs of which we have not yet seen, we would prefer players such as Infosys and TCS by virtue of their relatively higher defensive exposure.
Investors are unlikely to rush into buy front-line technology stocks because they believe that the bottom is sometime away as further concerns continue to be priced in. In our opinion, further declines in stock prices hereon only make the risk-reward balance more favorable for investor. We believe that Satyam’s valuations have become fairly reasonable for investors at this point in time. It is at a 20% discount to Infosys on valuations at current levels, which is just about fair and which we believe should not increase. It currently trades at 18.6x FY08E and 14.4x FY09E, and we maintain our ‘BUY’ rating on the stock.
Brokerage Recomendations
Motilal Oswal research is bullish on Grasim Cement and has maintained buy rating on the stock with target of Rs 3558, which implies upside potential of 21%.
HDFC Securities is bullish on Gujarat State Fertiliser and has maintained market performer rating on the stock with target potential of 12% upside.
Morgan Stanley is bullish on Parsvnath Developers and has maintained Overweight raiting on the stock with target of Rs 472.
HSBC Global research is bearish on TVS Motors and has maintained underweight rating on the stock with target price of Rs 55 with Potential return of -16%.
Motilal Oswal research is bullish on Union Bank and has maintained buy rating on the stock with target of Rs 180.
Edelweiss is bullish on Nicholas Piramal and has maintained buy rating on the stock. Research firm believe that the EPS for stock could move up from 13.2 in FY08E to 15.7 and from 17.3 to 20.4 in FY09E.
P-Sec research is bullish on M&M (Mahindra & Mahindra) and has maintained buy rating on the stock. Recent correction in stock prices over concerns of rising interest rate gives good upside from current level.
Sharekhan research is bullish on Tata Motors and has maintained buy rating on the stock with target price of Rs 792.
Sharekhan Stock Broking firm is bulllish on Bharat Electronics and has maintained buy rating on the stock with target price of Rs 1975.
Sharekhan reserch is bullish on Tata Tea and has maintained buy rating on the stock with target price of Rs 970.
HSBC Global research has maintained underweight rating on NTPC from neutral rating and set a target price of Rs 179.
HDFC Securities is bullish on Gujarat State Fertiliser and has maintained market performer rating on the stock with target potential of 12% upside.
Morgan Stanley is bullish on Parsvnath Developers and has maintained Overweight raiting on the stock with target of Rs 472.
HSBC Global research is bearish on TVS Motors and has maintained underweight rating on the stock with target price of Rs 55 with Potential return of -16%.
Motilal Oswal research is bullish on Union Bank and has maintained buy rating on the stock with target of Rs 180.
Edelweiss is bullish on Nicholas Piramal and has maintained buy rating on the stock. Research firm believe that the EPS for stock could move up from 13.2 in FY08E to 15.7 and from 17.3 to 20.4 in FY09E.
P-Sec research is bullish on M&M (Mahindra & Mahindra) and has maintained buy rating on the stock. Recent correction in stock prices over concerns of rising interest rate gives good upside from current level.
Sharekhan research is bullish on Tata Motors and has maintained buy rating on the stock with target price of Rs 792.
Sharekhan Stock Broking firm is bulllish on Bharat Electronics and has maintained buy rating on the stock with target price of Rs 1975.
Sharekhan reserch is bullish on Tata Tea and has maintained buy rating on the stock with target price of Rs 970.
HSBC Global research has maintained underweight rating on NTPC from neutral rating and set a target price of Rs 179.
Morgan Stanley maintain Overweight rating on Sesa Goa, raise price target to Rs 2,247
Morgan Stanley maintain our Overweight rating on Sesa Goa (Sesa) and raise our price target to Rs2,247, implying 20% upside. Iron ore prices look set to stay strong for the next three years, which should benefit Sesa, the only iron ore sector stock in India.
Vedanta has purchased a 51% stake in Sesa from Mitsui and therefore has to make an open offer to Sesa’s minority shareholders to buy another 20% stake.
Sesa is trading at an F2009e P/E of 7.8x and EV/EBITDA of 3.8x, which we think reflects neither the likely iron ore price strength nor the company’s ability to increase production. As a result, the stock is pricing in lower earnings growth and a lower multiple than it deserves as a mid-cycle commodity stock. We emphasise that we expect iron ore prices to remain strong for the next three years.
Morgan Stanley forecast strong iron ore prices for the next three years, which should benefit Sesa as the only iron ore sector stock in India. Accordingly, we have a strong positive view on the stock. Also, by puting forward strong volume growth and attractive valuations as two additional investment positives for the stock. We estimate an 8.2% sales volume CAGR for F2008-10. As mentioned, the stock is trading at what we view as attractive F2009e multiples of 7.8x P/E and 3.8x EV/EBITDA.
Iron ore is one of MS preferred commodities because they believe supplies are finding it difficult to catch up with growing demand from China. An impending tapering off of ore exports from India is compounding the supply shortage. India has been a large swing supplier of iron ore to China in the past three years.
Sesa Goa has touched an intra day high of Rs 2,020.00 and an intra day low of Rs 1,959. Currently the share is quoting at Rs 2,009, up Rs 48.80, or 2.49%
It is trading with volumes of 74,784 shares, compared to its 5-day average of 45,349 shares, an increase of 64.91%. It is trading with volumes of 74,784 shares, compared to its 30-day average of 20,480 shares, an increase of 265.16%.
Yesterday the share closed up 0.75% or Rs 14.55 at Rs 1,960.20
Vedanta has purchased a 51% stake in Sesa from Mitsui and therefore has to make an open offer to Sesa’s minority shareholders to buy another 20% stake.
Sesa is trading at an F2009e P/E of 7.8x and EV/EBITDA of 3.8x, which we think reflects neither the likely iron ore price strength nor the company’s ability to increase production. As a result, the stock is pricing in lower earnings growth and a lower multiple than it deserves as a mid-cycle commodity stock. We emphasise that we expect iron ore prices to remain strong for the next three years.
Morgan Stanley forecast strong iron ore prices for the next three years, which should benefit Sesa as the only iron ore sector stock in India. Accordingly, we have a strong positive view on the stock. Also, by puting forward strong volume growth and attractive valuations as two additional investment positives for the stock. We estimate an 8.2% sales volume CAGR for F2008-10. As mentioned, the stock is trading at what we view as attractive F2009e multiples of 7.8x P/E and 3.8x EV/EBITDA.
Iron ore is one of MS preferred commodities because they believe supplies are finding it difficult to catch up with growing demand from China. An impending tapering off of ore exports from India is compounding the supply shortage. India has been a large swing supplier of iron ore to China in the past three years.
Sesa Goa has touched an intra day high of Rs 2,020.00 and an intra day low of Rs 1,959. Currently the share is quoting at Rs 2,009, up Rs 48.80, or 2.49%
It is trading with volumes of 74,784 shares, compared to its 5-day average of 45,349 shares, an increase of 64.91%. It is trading with volumes of 74,784 shares, compared to its 30-day average of 20,480 shares, an increase of 265.16%.
Yesterday the share closed up 0.75% or Rs 14.55 at Rs 1,960.20
Escorts leads gainers in 'A' group
Tractor maker Escorts soared 11.63% to Rs 105.55 and it topped the gainers in the BSE’s A group shares.
Gujarat-based power generating firm Gujarat Industries Power Company spurted 8.62% to Rs 69.95. It was the second biggest gainer in A group. Recently, its board approved expansion of its lignite-fired power generating capacity at an investment of Rs 1300 crore by installing two units of 250 mega watts each. The estimated investment covers the plants at Surat in south Gujarat. The project would be financed by debt and internal accruals.
Small-cap electronic durables maker MIRC Electronics moved up 6.13% to Rs 19.05 and came third among top gainers in A group.
India’s largest batteries manufacturer by sales Exide Industries advanced 4.88% to Rs 64.45. It was the fourth biggest gainer in A group. Earlier on 28 August 2007, the company’s board had approved to raise Rs 150 via rights issue in the ratio of 1:15 i.e one rights share for every 15 shares held at Rs 30 per share.
Mid-cap IT company iGate Global Solutions rose 4.70% to Rs 233 and came fifth among top gainers in A group.
Sensex end near days low amid choppy session
Markets end at near days low amid choppy session; volatility was seen in last half an hour. Choppiness was seen ahead of Fed's Beige Book & BoE & ECB interest rate announcement.
Sensex went down 19.2 points at 15446; slips 135 points from days high. Nifty fails to closes above 4500 for 2nd consecutive day. Nifty futures discount widens to 60 points vs 45 points yesterday.
BSE Oil & Gas, Cap Goods Indices down over 0.75% CNX Midcap Index down 0.3%; SBE Small-cap Index ends flat, NSE Advance Decline ratio at 5:6. Total market turnover at Rs 58718 vs Rs 54570.65 cr on Tuesday
CURRENCY MOVEMENT
Rupee appreciates by 17 bps at 40.91 (hits intra-day high of 40.89)
Yen depreciates by 7 bps at 115.94 (hits intra-day low of 116.47)
F&O SNAPSHOT
Nifty futures discount at 45 points Vs 45 points yesterday
Nifty futures add 21.8 lakh shares in OI
Nifty futures turnover at nearly 25% of total FNO turnover
Long positions seen in fertilizer, sugar, pharma & some specific stocks
Fresh shorts seen in metal, telecom and some large cap stocks
Long Positions
Fertilizer/ Chemicals: Triveni Eng, GNFC (short covering)
Sugar: Balrampur Chini, Shree Renuka Sugar, Baja Hind
Non-Index stocks: Escorts, Triveni Eng, IDBI, LIC Housing Fin, DLF, Punj Lloyd
Power: Tata Power, NTPC, Suzlon
Pharma: Sun Pharma, Cipla, Matrix
Fresh Shorts
Metal: SAIL, Hindalco, Tata Steel
Telecom: Bharti Airtel, R Comm
Others: ITC, GMR Infra, RIL, JP Hydro
Short Covering
Ashok Leyland, Orchid Chem, Andhra Bank, GNFC, Cummins, BILT
BUZZING STOCKS
Shreyas Shipping: acquires 51% stake in Haytrans India
Gayatri Projects: bags order worth Rs 311.89 cr from Orissa govt
L&T: consortium bags order worth Rs 1,205 cr from Bhushan Steel
Raj Rayon: rub-off effect of textile space buzzing
SBI looking to raise Rs 18,000-20,000 cr via rights issue: Sources
Ambika Agar: has gained nearly 65% in last 4 days
Sensex went down 19.2 points at 15446; slips 135 points from days high. Nifty fails to closes above 4500 for 2nd consecutive day. Nifty futures discount widens to 60 points vs 45 points yesterday.
BSE Oil & Gas, Cap Goods Indices down over 0.75% CNX Midcap Index down 0.3%; SBE Small-cap Index ends flat, NSE Advance Decline ratio at 5:6. Total market turnover at Rs 58718 vs Rs 54570.65 cr on Tuesday
CURRENCY MOVEMENT
Rupee appreciates by 17 bps at 40.91 (hits intra-day high of 40.89)
Yen depreciates by 7 bps at 115.94 (hits intra-day low of 116.47)
F&O SNAPSHOT
Nifty futures discount at 45 points Vs 45 points yesterday
Nifty futures add 21.8 lakh shares in OI
Nifty futures turnover at nearly 25% of total FNO turnover
Long positions seen in fertilizer, sugar, pharma & some specific stocks
Fresh shorts seen in metal, telecom and some large cap stocks
Long Positions
Fertilizer/ Chemicals: Triveni Eng, GNFC (short covering)
Sugar: Balrampur Chini, Shree Renuka Sugar, Baja Hind
Non-Index stocks: Escorts, Triveni Eng, IDBI, LIC Housing Fin, DLF, Punj Lloyd
Power: Tata Power, NTPC, Suzlon
Pharma: Sun Pharma, Cipla, Matrix
Fresh Shorts
Metal: SAIL, Hindalco, Tata Steel
Telecom: Bharti Airtel, R Comm
Others: ITC, GMR Infra, RIL, JP Hydro
Short Covering
Ashok Leyland, Orchid Chem, Andhra Bank, GNFC, Cummins, BILT
BUZZING STOCKS
Shreyas Shipping: acquires 51% stake in Haytrans India
Gayatri Projects: bags order worth Rs 311.89 cr from Orissa govt
L&T: consortium bags order worth Rs 1,205 cr from Bhushan Steel
Raj Rayon: rub-off effect of textile space buzzing
SBI looking to raise Rs 18,000-20,000 cr via rights issue: Sources
Ambika Agar: has gained nearly 65% in last 4 days
Market ends its eight-day rally
Domestic stock markets snapped its eight-day winning streak today, 5 September 2007, as profit booking emerged at higher levels in late trade. It saw volatile movements towards the later half of the day, in sync with Asian and European markets, which also swung in and out of positive zone. Buying was seen in software, sugar and realty stocks. While selling was witnessed in capital goods and oil & gas stocks.
The BSE 30-share Sensex declined 19.25 points or 0.12% at 15,446.15. It opened higher at 15,535.35 and advanced further to hit a high of 15,580.86. It settled at lowest point of the day at 15,407. It oscillated in a range of 173.86 points for the day
The Sensex had surged 1,301 points, or 9.18%, in eight trading sessions, from 14,163.98 on 23 August 2007 to 15,465.40 on 4 September 2007. A fall in inflation and robust economic data along with steady inflow of FIIs has helped the market rally in the recent past.
The S&P CNX Nifty slipped 3.40 points or 0.08% at 4,475.85. The Nifty September 2007 futures settled at 4416.15, a sharp discount of 59.70 points as compared to spot closing
The market breadth which was strong throughout the day, eased in late-afternoon session. On BSE; 1,403 shares advanced as compared to 1,331 that declined, while 65 remained unchanged. This is in contrast to morning session, when 1253 shares advanced, 324 declined and 29 were unchanged.
The BSE Mid-Cap Index rose 0.11% to 6,773.34 while the BSE Small-Cap Index gained 0.23% to 8,289.81. Both these indices outperformed the Sensex.
Most of the sectoral indices on BSE settled higher. The BSE Health Care Index (up 0.50% at 3,698.69), BSE Consumer Durables index (up 1.07% to 4,448.64), BSE Realty index (up 0.77% to 7,520.04), BSE PSU index (up 0.08% to 7,200.09), BSE FMCG Index (up 0.35% at 2,001.21), BSE Metal Index (up 0.17% at 11,598.59), BSE TecK index (up 0.02% to 3,635.58), BSE Auto Index (up 0.05% at 4,876.96) BSE Bankex (up 0.15% at 8,018.42), and BSE IT Index (up 0.44% at 4,646.29) outperformed the Sensex.
However, BSE Capital Goods Index (down 0.48% at 13,566.71) and BSE Oil and Gas Index (down 0.56% at 8,141.59), were underperformers.
The total turnover on BSE spiked today to Rs 5,167.23 crore as compared to Rs 4207 crore on Tuesday, 4 September 2007.
The NSE’s F&O NSE F&O turnover was Rs 42642.91 crore as compared to Rs 39013.75 crore on Tuesday, 4 September 2007.
From 30-member Sensex pack, 18 slipped while the rest gained.
India’s third largest pharma company by sales, Cipla gained 2.17% to Rs 183.50 on 9.27 lakh shares. It was the top gainer from Sensex pack.
Ambuja Cements, India's third-largest cement maker, gained 1.98% to Rs 138.80 after the company said during trading hours on Wednesday, 5 September 2007, its cement shipments rose 3% to 1.15 million tonnes in August 2007 over August 2006.
India’s largest power generation company by sales NTPC advanced 1.74% to Rs 184.50. The stock hit an all-time high of Rs 188.60. As per reports, NTPC is looking at the possibility of acquiring Karnataka-based public sector firm Tungabhadra Steel Products (TSPL). TSPL is a supplier of hydraulic gates, radial and vertical gates for hydel power plants, equipment for sponge iron and thermal power plants, and even oil rigs.
ICICI Bank (up 1.45% to Rs 917.25) and Grasim (up 1.06% to Rs 3055) were the other gainers from the Sensex pack.
IT pivotals gained on fresh buying. Wipro (up 1.08% to Rs 471), Infosys (up 0.20% to Rs 1892.30) and TCS (up 0.87% to Rs 1075) rose
However India’s fourth largest software company by profit, Satyam Computers slipped 0.72% to Rs 446 on high volumes of 14.26 lakh shares after a block deal of 11.61 lakh shares was struck on the counter on BSE at Rs 453.30 by 09:58 IST.
The rupee was hovering at 40.94, slightly firmer than Tuesday (4 September 2007)’s close of 40.97/98.
India’s largest private sector entity and oil refiner Reliance Industries (RIL) slipped form an all-time high of Rs 1999.30. It shed 1.28% to Rs 1946.20 on 6.56 lakh shares. CPI (M) on Tuesday, 4 September 2007, joined the row over pricing of gas to be produced from RIL’s Krishna Godavari basin, asking the government to reject what it feels is an artificially inflated price proposed by the company.
RIL said after market closed on Tuesday, 4 September 2007, it had acquired a majority stake in Gulf Africa Petroleum Corp for an undisclosed sum.
India’s top small car maker in terms of net profit Maruti Udyog slipped 2.68% to Rs 869.95 on 1.36 lakh share after it hinted that it may continue to offer discounts on its car models to boost sales in the upcoming festive season. It was the top loser from the Sensex pack.
Ranbaxy Laboratories (down 2.09% to Rs 398.20), and ACC (down 2.05% to Rs 1075.10) were the other losers from the Sensex pack.
India’s largest listed cellular services provider in terms of profit, Bharti Airtel slipped 1.51% to Rs 846.40. As per reports, in the Karnataka circle, Bharti Airtel cannot acquire any operator as it already has a 39.7% market share. The 40% market share cap suggested by the Telecom Regulatory Authority of India (Trai) is likely to make mergers between existing telecom operators extremely tough.
Larsen & Toubro (L&T), India’s largest private sector engineering company in terms of sales lost 1.82% to Rs 2575.55. It’s ECC division in consortium with Paul Wurth, Italy bagged a Rs 1205 crore order from Bhushan Steel. L&T’s share in this project is pegged at Rs 760.5 crore.
Among side counters, Escorts (up 8.94% to Rs 103), Omnitech Solutions (up 20% to Rs 155.30), and Allied Digital (up 9.58% to Rs 350.10) surged.
While SEL Manufacturing (down 17.58% to Rs 147.40), JCT (down 6.90% to Rs 9.99) and Indiabulls Financial Services (down 5.81% to Rs 532.50) slipped
Sugar shares surged on renewed buying. Dwarikesh Sugar (up 2.50% to Rs 55.40), Sakthi Sugar (up 2.99% to Rs 75.75), Triveni Engineering (up 5.09% to Rs 81.55), Balrampur Chini Mills (up 2.18% to Rs 60.95), Shree Renuka Sugars (up 1.10% to Rs 528.90), and Bajaj Hindustan (up 0.75% to Rs 135.05) advanced.
Everonn Systems (Rs 86.77 crore), Reliance Industries (Rs 129.19 crore), Lakshmi Machine Works (Rs 125.48 crore), Take Solutions (Rs 124.66 crore), and Reliance Energy (Rs 117.57 crore) were among the turnover toppers on BSE.
Akruti Nirman moved up 4.34% to Rs 568 on reports that the company has tied-up with a Dubai-based firm Limitless, a subsidiary of Dubai World, to bid for the project for redevelopment of Asia’s largest slum, Dharavi in Mumbai.
Kernex Microsystem (India) jumped 5% to Rs 342.30 on rumors that it may bag a 6-year long railways contract worth Rs 2,000 crore in joint venture with Konkan Railways.
Ashok Leyland had gained 0.91% to Rs 38.70 on reports that the company is open to acquisitions and alliances in medium and heavy truck sectors.
Shreyas Shipping & Logistics had jumped 14.62% to Rs 103.50 after it bought 51% in Sri Lankan transportation and freight forwarding firm Haytrans (India) for an undisclosed amount.
Saregama India jumped 10% to Rs 275.10 after Sonata Investments acquired 10.58 lakh shares of the company, at Rs 260 per share in a block deal on Tuesday, 4 September 2007 on BSE.
Kirloskar Brothers slipped from a high of Rs 477.70 to settle 1.12% lower at Rs 464.95. Its joint venture firm KBL-PLR bagged a Rs 118.27 crore project from Andhra government's irrigation department. Of the total value of the contract, Kirloskar's portion is worth Rs 94.27 crore.
Autoline Industries rose 1.92% to Rs 199. As per reports, is in advanced talks with a US-based maker of sheet metal-based assembled products with $25 million (Rs102.5 crore) in sales. The firm is also in initial talks with a European sheet metal component supplier which it is interested in acquiring.
Gayatri Projects had gained 0.10% to Rs 287.35 on bagging a 3-year long road contract worth Rs 311.89 crore in Orissa.
Cambridge Technology Enterprises rose 1.21% to Rs 50.15 after it said before trading hours on Wednesday, 5 September 2007, its board has approved raising Rs 23.37 crore through the issue of 4.25 million convertible equity warrants at a price of Rs 55 each.
Bombay Burmah Trading Corporation surged 5% at Rs 488.50 on BSE on reports that the company may use its cash reserves to buy Danone’s 25.5% stake in Britannia Industries. As per its latest annual report, it has Rs 608.27 crore in consolidated reserves and surplus.
Hindoostan Spinning & Weaving Mills jumped 5% at Rs 56.10. It had gained 5% yesterday, 4 September 2007 on reports that the firm has sold 8 acres of its defunct mill located near the Siddhivinayak temple at Prabhadevi, Mumbai, for Rs 350 crore to Mumbai-based builder Akruti Nirman.
Gujarat Industries Power Company spurted 8.62% to Rs 69.95. Recently, its board approved expansion of its lignite-fired power generating capacity at an investment of Rs 1300 crore by installing two units of 250 mega watts each.
Exide Industries advanced 4.88% to Rs 64.45. Earlier on 28 August 2007, the company’s board had approved to raise Rs 150 via rights issue in the ratio of 1:15 i.e one rights share for every 15 shares held at Rs 30 per share.
Puravankara Projects was down 1.04% to Rs 371.50. As per reports, it is close to signing a memorandum of understanding (MoU) with France-based hospitality group Accor for the former’s first hotel project in Bangalore.
Pyramid Saimira Theatre (PSTL) was down 4% to Rs 336.90. It hit a high of Rs 361.90 on repots that it is bidding for Hoyts, the largest Australian chain of multiplexes owned by the Kerry Packer group, for around $360 million (Rs 1500 crore).
Jet Airways rose 0.55% to Rs 830, on reports it is delaying a planned $400-million rights issue because of the recent turmoil in the global credit markets.
The government late on Tuesday, 4 September 2007, announced setting up of a 15-member UPA-Left committee which will look into the concerns raised by Left parties on the Indo-US civil nuclear deal. External Affairs Minister Pranab Mukherjee will be the convenor of the committee. The committee will have six members each from Congress and Left parties and one each from UPA constituents RJD, DMK and the NCP.
European markets which opened after the Indian markets, were trading lower. Key benchmark indices in Germany (down 0.80% to 7,660.35), France (down 1.12% to 5,609.40) and United Kingdom (down 0.97% to 6,314.70) slipped.
Asian markets that began trading before the Indian markets, settled on a mixed note. Hong Kong's Hang Seng (up 0.77% at 24,069.17), Shanghai Composite (up 0.31% to 5,310.76) and Singapore's Straits Times (up 2.04% at 3,445.08) advanced.
However, Japan's Nikkei (down 1.60% at 16,158.45), Taiwan Weighted (down 0.10% at 8,913.85), and South Korea's Seoul Composite (down 0.49% at 1,865.59) slipped.
US stocks advanced yesterday, 4 September 2007. The Dow Jones industrial average rose 91.12 points, or 0.68%, to 13,448.86. Broader stock indicators also advanced. The Standard & Poor's 500 index added 15.43 points, or 1.05%, to 1,489.42, and the technology-dominated Nasdaq Composite index surged 33.88 points, or 1.30%, to 2,630.24.
Crude oil rose towards $75 today, 5 September 2007, after predictions of more hurricanes in the Atlantic Ocean raised concern over potential oil and gas outages. US crude was up 70 cents at $74.74 while London Brent crude was up 45 cents at $73.86.
US market makes a strong start for September
Technology and Energy sectors give a strong boost to stocks
Energy and Technology sectors helped the US market make a strong start today for the month of September, 2007. Stocks rallied right out of the gate today, Tuesday, 4 September, 2007 in spite of weak economic data. Higher crude prices helped the energy stocks immensely.
The Dow Jones industrial Average closed higher by 91.1 points at 13,448.9. The Nasdaq Composite Index, finished up 33.88 points at 2,630.24. S&P 500 finished up 15.4 points at 1,489.42. .
General Motors, Verizon and Exxon Mobil were the main Dow winners today. Home-Depot was the main Dow laggard.
Earlier today, the Institute for Supply Management reported its manufacturing index which was registered at 52.9% in August, just shy of the consensus and down from 53.8% in July. But since any reading above 50 signals growth, sellers were restrained.
Intel shares were up today 1.9% after Banc of America Securities increased its price target to $31 from $29, citing strong demand for notebook computers. Apple shares soared by more than 4% after a research firm said the iPhone was the top-selling smart phone in the U.S. during July.
General Morors tops analysts' estimates
General Motors shares today increased by 3.8% after posting a 6.1% increase in light vehicles sales in the U.S. in August, topping estimates from analysts, who forecast a fall of about 4%.
Technology’s biggest winner today was Yahoo! after Bear Stearns named it a top pick. The Financial sector's resilience to Merrill Lynch cutting their estimates on several large-cap banks was also noteworthy today.
Among Indian ADRs, HDFC Bank and ICICI Bank registered gains of 2% and 3.6% respectively. Among Technology stocks Infy and Wipro went up by 1.9% and 2.4% respectively.
Crude-oil futures for light sweet crude for October delivery closed at $75.08/barrel (higher by $1.04/barrel or 1.4%) on the New York Mercantile Exchange. Price rose on speculation that U.S. oil and gasoline supplies fell last week.
Comments from the Organization of the Petroleum Exporting Countries suggesting that the cartel will not increase production levels when it meets next week also helped support crude prices. Prices are up 8.5% from a year ago.
Volume was light with some traders likely still on holiday, with nearly 1.4 billion shares traded on the New York Stock Exchange, where advancing stocks beat declining issues by a margin of more than 4 to 1. At the Nasdaq, more than 1.8 billion shares exchanged hands, and advancing stocks outpaced decliners by nearly 2 to 1.
For tomorrow, traders’ attention will be focused on economic data to help set the tone of trading. July Pending Home Sales is to be released at 10:00 ET. The Energy Dept.'s weekly inventories report is expected at 10:30 ET while the Fed's Beige Book will be out at 14:00 ET.
Daily Calls
BUY TITAN INDS SEPT FUTURES CMP 1303.5 Target 1325 and 1337 StopLoss 1295.5
BUY TATA MOTORS SEPT FUTURES CMP 704.5 Target 713.5 and 719 StopLoss 699.1
BUY TATA MOTORS SEPT FUTURES CMP 704.5 Target 713.5 and 719 StopLoss 699.1
SBI likely to go for rights issue to meet capital requirements, quantum & timing of issue not finalized yet
State Bank of India (SBI), the country's largest lender, is likely to go for rights issue to raise funds for meeting capital requirements, official sources said. "It would most probably be the rights issue," a key official said amid speculation over the mode of raising resources. However, the quantum and timing of the issue is yet to be finalised, the official added.
The rights issue would allow SBI to raise Tier-I capital without diluting government stake, which currently stands at 59.73%. The government had recently bought RBI's entire holding of 59.73% in SBI. The government may dilute its stake up to 55% and a bill to further dilute government's stake in SBI up to 51% is pending in Parliament. The bill was referred to the standing committee whose report was tabled recently. Last month, SBI chairman O P Bhatt said the bank will decide in two months whether to go for a rights issue or follow-on public offer for rising funds.
"It is still taking shape. The decision would be taken in a month or two," he had said. Besides, the bank plans to raise about Rs 15,000 crore during the current fiscal through a mix of Tier I and Tier II bonds to meet capital requirement.
SBI has set up a target to raise over Rs 89,000 crore in the next five years. "Based on the sensitivity analysis of its capital position, capital augmentation programme of SBI envisages raising about Rs 89,600 crore as capital funds during the next five years," Pawan Kumar Bansal, minister of state for finance said. Late last month, the SBI board had approved merger of the State Bank of Saurashtra, while there were plans to merge other associate banks as well.
The government, however, is of the view that the SBI should first list its unlisted subsidiaries for greater unlocking of value before merging them with the parent bank. This, it says, will drive up valuation for the bank. SBI, however, has communicated to its associates that they must put their listing plans on hold. The unlisted entities include State Bank of Hyderabad (SBH) and State Bank of Patiala (SBP). However, top officials in the SBI group feel that allowing associates to list will increase the cost of acquisition for the parent bank.
"We feel that it makes sense to let them list first. It will add to the valuation of SBI later. After all, these are as big as several state-owned banks," a government official said. Both SBP and SBH have a balance sheet size more of than Rs 50,000 crore.
He said that the merging the unlisted associates would take longer. It has already set the ball rolling with its move to acquire State Bank of Saurashtra (SBS), its smallest subsidiary bank. "SBS has an asset size of over Rs 16,000 crore, which may be comparable to the business of a main branch of SBI in a metro," the official added. SBH has put its plan to go in for an initial public offer (IPO) on hold until December. If the merger gets delayed by 12 to 18 months, the bank might go for an IPO, top officials of SBH had said.
"SBI needs to meet its capital requirement by divesting its stake in its larger subsidiaries of Patiala and Hyderabad," a senior SBI official said. Merging these associates will also increase the capital adequacy requirements (CAR) for SBI. The bank is expected to come up with a road map for its subsidiaries before the end of this year. Merging the listed subsidiaries, including State Bank of Mysore, State Bank of Travancore and State Bank of Bikaner and Jaipur, will follow later, sources said.
"It does not make economic sense for SBI to list its associates first and then acquire them at a higher price. Besides, there will be procedural hassles," a top official in the SBI group said. While the unions have consented for merger, agreeing to the terms and conditions put forth by SBI management, it does not mean that merging other associate banks will be as trouble-free. The merger of SBH and SBP with SBI would not be easy, as there would be issues related to human resources and branch rationalisation.
The rights issue would allow SBI to raise Tier-I capital without diluting government stake, which currently stands at 59.73%. The government had recently bought RBI's entire holding of 59.73% in SBI. The government may dilute its stake up to 55% and a bill to further dilute government's stake in SBI up to 51% is pending in Parliament. The bill was referred to the standing committee whose report was tabled recently. Last month, SBI chairman O P Bhatt said the bank will decide in two months whether to go for a rights issue or follow-on public offer for rising funds.
"It is still taking shape. The decision would be taken in a month or two," he had said. Besides, the bank plans to raise about Rs 15,000 crore during the current fiscal through a mix of Tier I and Tier II bonds to meet capital requirement.
SBI has set up a target to raise over Rs 89,000 crore in the next five years. "Based on the sensitivity analysis of its capital position, capital augmentation programme of SBI envisages raising about Rs 89,600 crore as capital funds during the next five years," Pawan Kumar Bansal, minister of state for finance said. Late last month, the SBI board had approved merger of the State Bank of Saurashtra, while there were plans to merge other associate banks as well.
The government, however, is of the view that the SBI should first list its unlisted subsidiaries for greater unlocking of value before merging them with the parent bank. This, it says, will drive up valuation for the bank. SBI, however, has communicated to its associates that they must put their listing plans on hold. The unlisted entities include State Bank of Hyderabad (SBH) and State Bank of Patiala (SBP). However, top officials in the SBI group feel that allowing associates to list will increase the cost of acquisition for the parent bank.
"We feel that it makes sense to let them list first. It will add to the valuation of SBI later. After all, these are as big as several state-owned banks," a government official said. Both SBP and SBH have a balance sheet size more of than Rs 50,000 crore.
He said that the merging the unlisted associates would take longer. It has already set the ball rolling with its move to acquire State Bank of Saurashtra (SBS), its smallest subsidiary bank. "SBS has an asset size of over Rs 16,000 crore, which may be comparable to the business of a main branch of SBI in a metro," the official added. SBH has put its plan to go in for an initial public offer (IPO) on hold until December. If the merger gets delayed by 12 to 18 months, the bank might go for an IPO, top officials of SBH had said.
"SBI needs to meet its capital requirement by divesting its stake in its larger subsidiaries of Patiala and Hyderabad," a senior SBI official said. Merging these associates will also increase the capital adequacy requirements (CAR) for SBI. The bank is expected to come up with a road map for its subsidiaries before the end of this year. Merging the listed subsidiaries, including State Bank of Mysore, State Bank of Travancore and State Bank of Bikaner and Jaipur, will follow later, sources said.
"It does not make economic sense for SBI to list its associates first and then acquire them at a higher price. Besides, there will be procedural hassles," a top official in the SBI group said. While the unions have consented for merger, agreeing to the terms and conditions put forth by SBI management, it does not mean that merging other associate banks will be as trouble-free. The merger of SBH and SBP with SBI would not be easy, as there would be issues related to human resources and branch rationalisation.
Asian markets mostly higher on positive global cues
Asian markets were mostly higher today, encouraged by a higher close on Wall Street after a long holiday weekend. Hong Kong shares raced to a record high in early trading, but Japanese stocks gave up early gains to retreat on losses in financials such as Sompo Japan Insurance and Mizuho Financial Group.
Japan's Nikkei was down 0.07% or 11.92 points at 16,408.55. Hong Kong's Hang Seng surged 1.30% or 310.60 points at 24,196.67. Taiwan's Taiwan Weighted gained 0.38% or 33.74 points at 8,956.72. Singapore's Straits Times rose 0.61%or 20.56 points at 3,396.62. South Korea's Seoul Composite advanced 0.18% or 3.37 points at 1,878.11.
Japan's Nikkei was down 0.07% or 11.92 points at 16,408.55. Hong Kong's Hang Seng surged 1.30% or 310.60 points at 24,196.67. Taiwan's Taiwan Weighted gained 0.38% or 33.74 points at 8,956.72. Singapore's Straits Times rose 0.61%or 20.56 points at 3,396.62. South Korea's Seoul Composite advanced 0.18% or 3.37 points at 1,878.11.
Kirloskar Brothers bags orders worth Rs 94.27 Cr
Centrifugal pumps maker Kirloskar Brothers has said its joint venture firm KBL-PLR has bagged a Rs 118.27 crore project from Andhra government's irrigation department. The contract has been awarded under Telugu Ganga project, the company said in a filing to the Bombay Stock Exchange.
The project includes design and construction of micro- irrigation lift system, comprising civil, steel pressure mains, pump houses and electro mechanical works, it said. It also consists of other necessary ancillary works to supply water by lift from foreshore to reservoirs and providing distributory system for 8,750 acres in Anantapaur Dist. Of the total value of the contract, Kirloskar's portion is worth Rs 94.27 crore.
The project includes design and construction of micro- irrigation lift system, comprising civil, steel pressure mains, pump houses and electro mechanical works, it said. It also consists of other necessary ancillary works to supply water by lift from foreshore to reservoirs and providing distributory system for 8,750 acres in Anantapaur Dist. Of the total value of the contract, Kirloskar's portion is worth Rs 94.27 crore.
Bombay Burman’s cash reserves might be used to buy Danone’s stake in Britania
Textiles-to-aviation conglomerate Wadia Group might use its cash reserves in group company Bombay Burmah Trading Corporation to buy French dairy major Groupe Danone’s 25.5 per cent stake in biscuit-maker Britannia Industries. Groupe Danone and the Wadia Group hold an equal stake in Associated Biscuits International Holding (ABIH), which in turn holds 51 per cent in Britannia Industries. Bombay Burmah holds shares in ABIH through a complex web of subsidiaries. Bombay Burmah’s latest annual report shows that the company has more than Rs 600 crore in consolidated reserves and surplus. “This could help in a big way in financing the acquisition of Groupe Danone’s share,” said company sources. A Wadia Group spokesperson declined to comment on the matter. At current stock prices on the Bombay Stock Exchange, Britannia Industries is valued at about Rs 3,900 crore. At market value, the cost of acquiring Danone’s shares will be about Rs 975 crore, though the Wadia Group is expected to acquire the shares at a discount. Both companies have been in discussions for the past seven months to untangle differences over issues that range from IPR issues in Britannia’s popular Tiger brand; a minority stake purchase by Danone in Bangalore-based nutraceuticals firm Avesthagen; and Danone’s application to the government to do business in India on its own. The two groups had met in London on September 3 but their talks were inconclusive. In July, Groupe Danone had agreed to sell its biscuits business globally to foods giant Kraft, excluding India and Latin America, where Danone has joint ventures. Groupe Danone is also expected to buy out the Wadia Group’s stake in another joint venture, Wadia BSN, a move that will pave the way for Danone going solo for its beverages and yoghurt operations in India. In late June this year, Groupe Danone executives had indicated that the company might exit Britannia Industries and stay out of the biscuits business by signing a non-compete agreement. An exit from Britannia would be preceded by dissolving Wadia BSN, formed in September 1995.
Market Cues: FIIs net buy in equity $ 130.6 Mn; Dow up 91 points at 13449; Nasdaq up 34 points at 2630
On Sep 3, FIIs net buy in equity were $ 130.6 million while MFs net buy in equity were Rs 142.5 crore. NSE F&O OI was up by Rs 2,756 crore at Rs 70,695 crore.
On global front, US Fed's Beige Book data will be released today. BoE & ECB interest rate announcement is tomorrow. US markets ended higher and rally was seen in tech and energy stocks. Dow was up by 91 points at 13449 while Nasdaq was up by 34 points at 2630. US 10-year treasury yields were little changed at 4.55%. Oil prices surged 1.4% to over $ 75/bbl following hurricane forecasts.
In Asia, Asian markets were trading mixed with positive bias. In Emerging Markets; Brazil was up 1.1% while Russia was down 1.1%.
In currency market, Yen fell as stock rally spurs investors to resume carry trades. Yen depreciated to 116.17/$; hits intra-day low of 116.47/$.
On global front, US Fed's Beige Book data will be released today. BoE & ECB interest rate announcement is tomorrow. US markets ended higher and rally was seen in tech and energy stocks. Dow was up by 91 points at 13449 while Nasdaq was up by 34 points at 2630. US 10-year treasury yields were little changed at 4.55%. Oil prices surged 1.4% to over $ 75/bbl following hurricane forecasts.
In Asia, Asian markets were trading mixed with positive bias. In Emerging Markets; Brazil was up 1.1% while Russia was down 1.1%.
In currency market, Yen fell as stock rally spurs investors to resume carry trades. Yen depreciated to 116.17/$; hits intra-day low of 116.47/$.
Maruti: Don't expect substantial sales increase ahead festive season; High fuel cost, Interest rates continue to be cause of concern
Maruti Udyog says that they do not expect substantial sales increase ahead of the festive season. High fuel cost and Interest rates continue to be cause of concern. The company also added that Nissan-Suzuki are not resuming talks on bringing small car to India. They are maintaining their focus on volumes and are not perturbed about margins.
Pyramid Theatres to bid for Australia’s chain of Multiplex Hoyts owned by Kerry Packer group, deal size close to $ 360 Mn
India's largest digital theatre chain Pyramid Saimira Theatre (PSTL) is bidding for Hoyts, the largest Australian chain of multiplexes owned by the Kerry Packer group. Sources said the takeover could cost the buyer around $ 360 million (Rs 1,500 crore). The Packer group, which currently controls Hoyts through its two media firms, Publishing Broadcasting and West Australian Newspapers (WAN), has put the largest theatre chain in Australia on the block.
Apart from Pyramid, Paul Ramsay’s Prime Television, American cinema operator Reading, and private equity firms Catalyst Investment Managers and Gresham Private Equity have also lodged their bids for Hoyts with UBS, which is advising the Packer group on the deal. Sources close to the development said PSTL has been qualified in the technical bid round and entered the financial bid round, with September 7 being the deadline for submitting the financial bid. Investment banking firm Earnst and Young (E&Y) is advising PSTL on the deal.
PS Saminathan, managing director, PSTL, declined to comment on the deal. The bid, if successful, will give an entry to PSTL into the western world. Currently, Hoyts operates cinemas in Australia, New Zealand, Argentina, Brazil, Chile and Uruguay. Earlier, it had sold most of its theatres in the US to Regal Entertainment group.
Apart from India, PSTL runs film theatre chains in Malaysia and Singapore. PSTL has 3,00,000 seats across locations, which, according to PSTL officials, is only half of what world’s biggest theatre company, Regal of the US, offers. PSTL had already raised Rs 370 crore through an FCCB issue few months ago and is now exploring various options to raise more funds.
Hoyts is jointly owned (50% each) by Publishing and Broadcasting (PBL), a leading media, gaming and entertainment group, and Western Australian Newspapers Holdings (WAN), a leading newspaper group in Australia. Following PBL’s decision earlier this year to separate its gaming and media businesses, it had declared in May 2007 an intention to monetise its ownership interests in Hoyts.
Australia is a high intensity entertainment place. In fact, the national attitude is derived from sports and entertainment. Filmed entertainment mostly consists of Hollywood entertainment, which accounts for about 95% of revenues. Australia has become a major film production base and also has an outsourcing base for Hollywood films. The total entertainment market in Australia was Australian $ 22.4 billion in 2006. The average ticket price in Australia is approximately Australian $ 10 and the average rate of tax is 10%.
Apart from Pyramid, Paul Ramsay’s Prime Television, American cinema operator Reading, and private equity firms Catalyst Investment Managers and Gresham Private Equity have also lodged their bids for Hoyts with UBS, which is advising the Packer group on the deal. Sources close to the development said PSTL has been qualified in the technical bid round and entered the financial bid round, with September 7 being the deadline for submitting the financial bid. Investment banking firm Earnst and Young (E&Y) is advising PSTL on the deal.
PS Saminathan, managing director, PSTL, declined to comment on the deal. The bid, if successful, will give an entry to PSTL into the western world. Currently, Hoyts operates cinemas in Australia, New Zealand, Argentina, Brazil, Chile and Uruguay. Earlier, it had sold most of its theatres in the US to Regal Entertainment group.
Apart from India, PSTL runs film theatre chains in Malaysia and Singapore. PSTL has 3,00,000 seats across locations, which, according to PSTL officials, is only half of what world’s biggest theatre company, Regal of the US, offers. PSTL had already raised Rs 370 crore through an FCCB issue few months ago and is now exploring various options to raise more funds.
Hoyts is jointly owned (50% each) by Publishing and Broadcasting (PBL), a leading media, gaming and entertainment group, and Western Australian Newspapers Holdings (WAN), a leading newspaper group in Australia. Following PBL’s decision earlier this year to separate its gaming and media businesses, it had declared in May 2007 an intention to monetise its ownership interests in Hoyts.
Australia is a high intensity entertainment place. In fact, the national attitude is derived from sports and entertainment. Filmed entertainment mostly consists of Hollywood entertainment, which accounts for about 95% of revenues. Australia has become a major film production base and also has an outsourcing base for Hollywood films. The total entertainment market in Australia was Australian $ 22.4 billion in 2006. The average ticket price in Australia is approximately Australian $ 10 and the average rate of tax is 10%.
Daily Calls (05-09-2007)
Ashwani Gujral
Buy India Cement with a Stoploss of Rs 240 for a target of Rs 350
Buy Reliance Energy with a Stoploss Rs 760 for a target of Rs 980.
Rajat K Bose
Buy Nucleus Software with a Stop Loss below Rs 367 for target of Rs 384 & Rs 395. This is a day trading recomendation
E Mathew
Buy KIC METALIKS with a stop loss of Rs 66 for a short-term (3 months) target of Rs 107
Buy India Cement with a Stoploss of Rs 240 for a target of Rs 350
Buy Reliance Energy with a Stoploss Rs 760 for a target of Rs 980.
Rajat K Bose
Buy Nucleus Software with a Stop Loss below Rs 367 for target of Rs 384 & Rs 395. This is a day trading recomendation
E Mathew
Buy KIC METALIKS with a stop loss of Rs 66 for a short-term (3 months) target of Rs 107