Fw: IPO Note - Shemaroo Entertainment Ltd

 

Shemaroo Entertainment Ltd: Subscribe Issue opens 16-Sep-14, Issue closes 18-Sep-14, Price band Rs155-170 Shemaroo Entertainment Ltd. (SEL) is one of India's largest Film and Entertainment Content House involved in content aggregation, distribution, production and post-production. Its content library spans over 2,900 titles of which over 700+ titles are perpetual rights (wholly owned) and the remaining 2,000+ titles are aggregate rights (partially owned). SEL's primary distribution channels are Broadcast Syndication (Satellite, Terrestrial and Cable TV), which generates over 50% of the Company's revenues, New Media (Mobile, IPTV, YouTube, etc), Home Video (VCD, DVD, Blu-ray) and Others (In-flight entertainment and overseas sales). SEL has posted strong revenue growth of 26.4% and maintained profitability in the last 4 years. Valuations for the company stands at 15.4x FY14 earnings (post issue diluted equity at lower price band), which we believe to be fair given how peers such as Eros International, JMD Telefilms, Media One and! Prime Focus are currently priced, based on FY14 earnings and their respective growth and risk characteristics. We recommend clients to subscribe to the issue in the price range of Rs155- Rs165 and further avail the 10% discount available to retail investors.

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Warm Regards, Amar Ambani

Fw: Idea Cellular: Renewed vigour - BUY

 

Annual Report Analysis: Idea Cellular: Renewed vigour - BUY Idea enters a crucial period over the next 12-18 months as it seeks to renew nine licenses in the crucial 900MHz band even as FY14 performance and recent fund raising gives us confidence about its renewal capabilities. Idea ticked all the right boxes in the year gone by with 18% revenue growth, ~480bps margin expansion and 100bps increase in revenue market share. Blended (2G+3G) data volumes increased ~112% in FY14 and even though pricing/MB declined, data share of non voice revenues grew 350bps yoy through the year (and a further 140bps in Q1 FY15). Operating cash flow jumped ~86% yoy on doubling of pretax profit and easing of working capital cycle. However spectrum purchases in Feb auctions plus FY14 capex led to negative free cash flow for the year; as a corollary net D/E inched up to 1.3x to provide for the deferred spectrum payment liability. Overall license renewals remain the key near term risk but we remain optimist on Id! ea's ability to fund spectrum purchases; retain BUY with unchanged 9-12mth target of Rs200.

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Warm Regards, Amar Ambani

Fw: Express Idea: Auto Component Sector; Call Success and Updates: Oil India, Lumax Auto

 

Express Idea: Auto Component Sector - Set to Zoom Indian auto sector after witnessing tough times in the past couple of years is set to see strong revival from H2 FY15. The key drivers for this growth include 1) improvement in consumer sentiment, 2) pause in diesel price hikes, 3) peaking out of interest rates, 4) pick up in industrial and infrastructure activity and finally 5) partial lifting of ban on mining activities. Internationally too, while developing economies in Africa, Middle East and rest of Asia continue to see strong growth, US is showing robust recovery and Europe is showing signs of stability. Such scenario, we believe, provides large business opportunities for Indian Auto Component manufacturers, which over the years have built a strong reputation with domestic OEMs and also globally. The large caps auto component players, on this premise, have seen a strong re-rating in the past few months leading to widening of valuation discount for small players. Here we pick three such stocks viz Banco Products, MM Forgings and Phoenix Lamps. Recommendation Summary Company CMP (Rs) Target (Rs) Upside Exit trigger* (Rs) Banco Products 155 190 22.6% 130 MM Forgings 447 540 20.8% 375 Phoenix Lamps 133 160 20.3% 110 Horizon: 1-3 months * Exit trigger is the price level below which investor should exit position

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Call Success & Update: Oil India Reco Price Rs600, Previous Target Price Rs650, New Target Price Rs720 We had recommended a BUY on Oil India in Q3 FY14 result update released on February 13, 2014 with a price target of Rs550. We extended the target to Rs600 in a call update released on May 14, 2014 and further to Rs650 in a call update released on May 19, 2014. The stock surpassed our target in today's trading session. We advise investors to hold on to their investments in the company as we remain bullish on its future prospects for a target of Rs720.

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Call Success: Lumax Auto Technologies Reco price Rs200, Call Closure price Rs245 We had recommended a BUY on Lumax Auto Technologies in an Express Idea released on Septermber 02, 2014 with a price target of Rs245. The stock surpassed our target in today's trading session yielding 22.5% return in three trading sessions.

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Warm Regards, Amar Ambani

Fw: Equity Eagle Eye: An X wave effect

 

A Sharekhan technical research newsletter | For July 16, 2014 Contents of Eagle Eye PUNTERS CALL An X wave effect The Nifty snaps five-day losing streak. SMART CHART CALLS If you are a positional trader, Smart Charts present the best positional trading calls in the market today.  MOMENTUM SWING  We have renamed Momentum Calls as "Momentum Swing". Needless to say, short-term traders can continue to enjoy market swings by trading in the Momentum Swing calls that come with a time frame of 1 to 5 days. DAY TRADERS HIT LIST  A keen day trader? Look no further for the trading ranges of the stocks that are currently the flavour of the market. INDEX TRIGGERS  With the benchmark indices creating new all-time highs every second day, the time has come for swift trading in indices.  It appears that the benchmark indices have come out from their sideways movement and this will help traders to trade  with a high risk/reward ratio. Keeping this in mind we have come out with a new intra-day product on Nifty and  Bank Nifty named ''Index Triggers''.  Regards, The Sharekhan Research Team www.sharekhan.com

 

Fw: Union Budget 2014-15 - Good to begin with...

 

Union Budget 2014-15: Good to begin with… The most anticipated event after a record election victory is now behind us. Mr. Arun Jaitley's Budget speech evoked confused response with wild swings during and after the Budget presentation. There was a feeling among certain sections of the market that bolder reforms were warranted given the strength of this government's mandate. Akin to the Railway Budget, the details were missed although the broad picture was conveyed reasonably well. Gross tax revenue projection was cut by ~Rs15,000 crore compared to interim Budget numbers - Indirect tax revenue projected to grow by 20.3% yoy and direct tax by 15.7%. While customs and service tax projections appear reasonable, excise duty growth projections at 15.4% appear steep. On the direct tax front, personal income tax projection has been substantially reduced (by Rs22,200 crore) compared to interim Budget, but still appear high. Perhaps, the government expects additional income from advance ruling settlement in case of individual tax-payer disputes. Otherwise, there is a risk of falling short of the tax revenue target set by Rs10,000 crore. Along expected lines, spending on Plan expenditure was substantially increased to support growth. Plan expenditure growth is targeted at 21% to be spent towards agriculture, capacity creation in health and education, rural roads, national highways, rail network expansion, among others. Surprisingly, non-Plan expenditure was not projected to grow at a slower rate than set during the interim Budget. Nevertheless, non-Plan growth is much lower than what is being spent on the Plan side. Subsidies have been pegged at 2% of GDP and only marginally higher than the interim Budget – petroleum subsidy seems to be under control with continued diesel deregulation and assuming gradual increase in LPG and Kerosene prices. Food subsidy target is reasonable but fertilizer subsidy looks under-provided, which could result in a working capital crunch for the sector. On MGNREGA, the minister aims to put this money to more productive us! e. To make up for the 13% yoy growth in total expenditure and Rs9,000 crore shortage in net tax revenue, revenue from economic activities, particularly telecom auctions and other non-tax revenue targets have been raised higher. Non-tax revenue is estimated to be 18% of the total revenue composition, Rs32,000 crore higher than interim Budget numbers. By doing so, the Finance Minister stuck to the fiscal deficit target of 4.1% that his predecessor had set. This is certainly a stretched target and could be missed by 20 basis points. Yet, that would not be seen as an under-achievement. The revenue deficit is pegged at Rs378,248 crore, 2.9% of GDP. With only a few weeks to prepare, the FM announced some important steps like opening up FDI in defence and insurance sectors. Increasing the capital budget for defence by Rs5,000 crore was also an important move. A major step undertaken was to boost financial savings and provide some relief for negative real returns in the economy. As opined in our pre-Budget note, the Minister raised individual tax slabs to Rs2.5 lakhs and also hiked the deduction under Section 80C to Rs1.5 lakhs. To boost savings further, the annual ceiling on PPF was raised and Kisan Vikas Patra and National Savings Certificate with insurance cover, were introduced. The Budget was particularly positive for infrastructure, housing and agriculture. While the FM touched upon the need for capital infusion in PSU banks, the figure of Rs13,400 crore allocated this year was much lesser than Rs15,800 crore the previous year. While banks were asked to lend to infra projects for the long term, it remains unclear whether their long term borrowings attract lower CRR and SLR norms. While end of retrospective taxation was needed to build confidence for investing in India, nothing concrete came in the Budget. The biggest negative from a capital market viewpoint was the increase in rate of long term capital gains (LTCG) in debt mutual funds to 20% and the period for LTCG raised to 3 years instead of 1 year. The Budget lays a broad roadmap for economic recovery and attempts to set in order the accounts, both in terms of deficit and quality of spending. The actual implementation on the ground will propel the economy and the market to a new orbit.

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Warm Regards, Amar Ambani