BSEIndia: All Stock Market News

Saturday, September 25, 2010

ICICI Direct Recos

Sterlite Technology : Recommendation date : Sep 22 2010 (Current price: 99)

Target 1: 103.90
Target 2: 105.90
Stop loss : 96.00

Essar oil (Current price:136.25)
Target 1: 143
Target 2: 145.75
Stop loss : 132.1

http://www.icicidirect.com/mailimages/Stockonthemove.pdf

Fw: Investor's Eye: Update - L&T (PT revised to Rs2,046), Glenmark (PT revised to Rs365)

Sharekhan Investor's Eye

Investor's Eye
[September 24, 2010]

Sharekhan
www.sharekhan.com

Summary of Contents

STOCK UPDATE

Larsen & Toubro
Cluster: Evergreen
Recommendation: Hold
Price target: Rs2,046
Current market price: Rs2,016

Price target revised to Rs2,046

Foray into South Africa: Larsen & Toubro (L&T) and Befula Investments (Pty) Ltd, a leading South African engineering and investment company, have signed an agreement to incorporate a joint venture company in South Africa to capitalise on the power transmission and distribution (T&D) opportunity there. Of late, South Africa has been facing a severe demand shortage in electricity. This power shortage has led to a line-up of sizeable investments by the government to augment the T&D network of the country in the next five years. We feel that this foray would help the company to geographically diversify as well as strengthen its T&D business.

Domestic outlook also improved: On the back of the improving investment scenario, there has been an uptick in the domestic capital expenditure (capex) cycle, which has significantly increased the opportunities in the infrastructure sector. An investment opportunity of $1 trillion is expected in the Indian infrastructure sector in the 12th Five-Year Plan (2012-17). We believe that despite the rising competition, L&T is the best bet among the Indian players to capture this opportunity.

Bagfull of orders for IDPL: Its 84.27% owned subsidiary, Infrastructure Development Projects (IDPL), is currently developing infrastructure projects worth Rs40,228 crore. Its project portfolio includes 15 road projects (project size: Rs13,000 crore), two port projects (project size: Rs5,297 crore), 19 real estate projects (five completed) amounting to Rs6,763 crore and the Hyedraabd metro rail project worth Rs15,000 crore. Dhamra Port (a 50:50 joint venture with Tata Steel) is expected to be commissioned in September this year. The company has invested Rs2,260 crore as equity till FY2010 and expects to invest over Rs6,000 crore more in the coming years. The funding requirements will be met through a mix of internal accruals and the parent company?s support.

Upgraded estimates: We have upgraded our stand-alone earnings estimates for L&T after the improved visibility of the company?s revenues and after incorporating the company?s annual report numbers. We now expect L&T to report a 25% compounded annual growth rate (CAGR) in the revenue of its stand-alone business over FY2010-12. Our stand-alone earnings estimates stand revised at Rs60.6 and Rs80.4 for FY2011 and FY2012 respectively. On a consolidated basis, our revised earnings per share (EPS) estimates stand at Rs74.5 and Rs94.9 respectively.

Price target revised to Rs2,046: In line with the revision in our estimates, we are also raising our price target for L&T to Rs2,046. In the recent past L&T has once again displayed its capability to bag large prestigious orders and its recent success in bagging some of the power projects is a big positive for its business. Moreover, the listing of some of its subsidiaries would further act as a positive trigger for the stock. Though we remain positive on L&T, the recent run-up in the stock provides a limited upside to our new price target. Hence, we maintain our Hold rating on the stock. At the current market price, the stock trades at 21.2x FY2012E earnings.

Glenmark Pharmaceuticals
Cluster: Apple Green
Recommendation: Buy
Price target: Rs365
Current market price: Rs287

Price target revised to Rs365

Key points

Key markets back on track: After a subdued performance in FY2010, Glenmark has reported a decent growth in its key markets such as the US and Latin America in Q1FY2011, whereas the domestic formulation growth remained robust. Some niche launches in the US including Tarka should ensure that the growth momentum is sustainable. While adverse currency trends and some de-stocking (in Poland) have hit growth in a few markets, secondary sales trends remained healthy during FY2010.

Improving balance sheet: Glenmark?s working-capital cycle remained more or less stable in FY2010 with modest improvements visible in debtor days and inventories. The net debt declined by Rs260 crore in FY2010 to Rs1,869.4 crore and further down to Rs1,600 crore in Q1FY2011, as cash released from working capital (debtor days down to 159 days from 165 days earlier) was used to repay debt. The company restructured its debt to bring down cost, as visible in the sharp 37% dip in interest cost in Q1FY2011. We believe that further improvement in receivables would act as a re-rating factor for the stock as it would ease down one of the biggest concerns amongst investors.

Reduced capex in FY2010: In the past three years, Glenmark has invested approximately Rs1,850 crore in capital expenditure (capex; a large part coming from FY2010), straining its balance sheet. The company has largely invested the capex amount in building capacities for its inhalers, hormones, injectables and oncology products apart from capitalizing its assets. Capex spend in FY2010 stood reduced at Rs392 crore as compared to Rs922 crore in FY2009. We expect the capex to moderate over the next two years in the range of Rs300-350 crore.

Improving cash flow situation: The company?s free cash flow (FCF) deteriorated since FY2005-09 where it generated cumulative negative free cash of approximately Rs1900 crore. Although the FCF remained negative in FY2010 as well, it improved significantly from negative free cash of Rs1,043 crore in FY2009 to a negative 177 crore in FY2010 owing to the company?s enhanced focus on cost optimisation across operating markets where receivables were given prime importance. We anticipate a positive FCF generation of Rs940 crore over the next two years. With approximately Rs1,800 crore in operating profit over FY2011-12E, an improvement in working capital with reduction in receivables and moderation in capex, we expect Glenmark?s cash flow situation to sharply build up on its FY2010 performance.

Concerns on R&D capitalisation ease: Glenmark followed a conservative accounting policy wherein it partially capitalised its research and development (R&D) expenses, which obscured the company?s true profitability (as lower R&D expenses in Profit & Loss [P&L] boosted profitability). The capitalised brands and work in process (WIP; including R&D) reduced to a mere 19.6% in FY2010?s earnings before interest, tax, depreciation and amortisation (EBITDA) as compared to 114% in FY2009. Further the management has highlighted in its annual report that it has stopped capitalizing R&D expenses from FY2010 onwards. Although capitalised expenses on the balance sheet are still high on an absolute basis, the significantly lower addition suggests considerable improvement in the real profitability of the company.

GGL?s IPO plans shelved: The company?s plan to raise capital through an initial public offering (IPO) of its Glenmark Generics (GGL) subsidiary?s shares seems to have been shelved for the time being. With the improving cash flow situation and reducing debt portfolio, Glenmark?s management has decided to delay the GGL IPO indefinitely.

Valuation: Glenmark?s performance in FY2010 exhibits encouraging signs on the balance sheet front. The key monitorables would be reducing the debt position, more out-licensing deals and easing up R&D pressure. At the current market price of Rs287, the stock remains attractively valued at a price/earnings (P/E) of 14.5x FY2011E and 13.5x FY2012E earnings. Given the out-licencing deals and the favourable risk-reward ratio, we maintain our Buy recommendation on the stock with a revised price target of Rs365 (15x FY2011E core earnings for the base business plus Rs39 per share for the R&D pipeline).

Click here to read report: Investor's Eye

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Regards, The Sharekhan Research Team	myaccount@sharekhan.com
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Fw: India Infoline Company Report: Sterlite Technologies – ‘Electrifying prospects’ – BUY

Sterlite Technologies – 'Electrifying prospects' – BUY

CMP Rs100, Target Rs130, Upside 30%

Sterlite Technologies Ltd (STL), a major supplier of power conductors and optical fiber cables, is well poised to leverage strong demand traction in power and telecom sectors. With Government of India laying substantial impetus to its "Power for all by 2020" scheme, demand for transmission equipment such as power conductors is set to witness a quantum leap over the medium term. Demand for optical fiber cables is correlated to telephony and internet penetration in an economy. Both these factors are expected to improve considerably in India and other emerging countries.

STL is currently trading at 10.4x its FY12E EPS. Assuming full dilution of equity due to conversion of warrants in FY12E we expect an EPS of Rs9.3. STL's leadership status and demonstrated ability to leverage on industry growth drivers justifies a P/E of 14x based on which we arrive at a target price of Rs130.

http://content.indiainfoline.com/wc/research/researchreports/Sterlite_Technologies_230910.pdf

India Infoline Weekly Wrap – September 24, 2010

http://content.indiainfoline.com/wc/research/weeklywrap/IIWW_240910.pdf

Fw: IPO Flash: Ashoka Buildcon

IPO Flash

[September 23, 2010]

Sharekhan
www.sharekhan.com

Summary of Contents

IPO FLASH

Please find the IPO Flash on Ashoka Buildcon dated September 23, 2010.

Click here to read report: Ashoka Buildcon

Regards,
The Sharekhan Research Team

myaccount@sharekhan.com

Friday, September 24, 2010

[investwise] CWG2010-Misfeasance, malfeasance, non-feasance

TN Ninan In Business Standard

For all one knows, the Commonwealth Games may go off without a hitch. How much that will repair the damage already done to Brand India is a matter of guesswork. All that can be said just now is that if the Games were to be a coming-out party for the country, it has been a botched affair.

The more important question is whether the "misfeasance, malfeasance and non-feasance" (to borrow a phrase from the classic film, Front Page) that have been on display are special to the Games organisers, or typical of the system. When Mr Bhanot uttered his immortal line ("My hygiene and cleanliness standards may be different from theirs"), was he saying more than he knew?

What, after all, is the state of our public toilets (few as they are)? What toilet facilities are made available to the many thousands of pilgrims who make their way to Amarnath and Sabarimala every year? By all accounts, they are worse than "filthy" and "unliveable". Mr Bhanot, you hit the bull's eye.

As for missed deadlines and ramped up costs, how come our TV anchors don't go hysterical at the trebling of the bill for Delhi airport's new Terminal 3? Or cry "scandal" when the Delhi chief minister stalls the electricity regulator's report that calls for a cut in Delhi's power tariffs? Or cry "national shame" when most of the country suffers long power cuts every day?

If all it takes for public consciousness to be raised to fever pitch is for Mr Hooper and Mr Fennell to periodically address the press and use some choice epithets and seek meetings with the prime minister — who then bestirs himself to call daily review meetings — perhaps we should hire these gentlemen as citizens' voices.

In other words, what the Games preparations have shown up in terms of "misfeasance, malfeasance and non-feasance" is what is normal and everyday when it comes to the functioning of our governments — which explains why Sheila Dikshit dismisses the collapse of a foot overbridge (the lead story on the front page in newspapers in half a dozen countries) as a minor issue, and why Jaipal Reddy is able to say that as far as he is concerned the work of the group of ministers overseeing Games preparations was over a week ago.

This when New Delhi's showpiece city centre remains in an unbelievable shambles, the Shivaji Stadium work will remain incomplete even when the Games are over, and no one hears anything about the special metro line to the airport that was sanctioned as a Games project.

What has been obvious for some time is that, even as India's private sector has got better (more effective, more innovative, and more technologically accomplished), the government's ability to deliver — whether it is social infrastructure like public health and education, physical infrastructure like electricity, a public distribution system that reaches the poor and new technology for agriculture — has steadily deteriorated.

We could organise the Asian Games in 1982; we can't organise the Commonwealth Games in 2010.

But what gives one sleepless nights is the worry that the same government might be approaching India's defence preparedness with the same incompetence and corruption — even as China builds new roads and railway lines up to the border, and places more powerful missiles on the Tibetan plateau.

The government's own representatives have written despairingly about the state of the country's border roads, defence hardware acquisitions miss target dates repeatedly, and allocations are unspent year after year, even as the defence budget has been squeezed to the lowest level (in relation to GDP) since 1962.

Risking international embarrassment is bad enough; what about risking national security? And what kind of wake-up call do we need on that front?

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

Nothing in this article is, or should be construed as, investment advice.

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[investwise] David Tepper: We Lead The Herd...The Street Follows Us, We Don't!

Though very few hedge funds on the Street can claim to compare to the 17-year track record of David Tepper's Appaloosa Management, LP, the only thing that is consistent about the performance of the fund is that it is, well, inconsistent.

"We're consistently inconsistent", the legendary billionaire investor says over a lunch of spicy tuna rolls and salad at his office in Short Hills, NJ, earlier this week. "It's one of the cornerstones of our success."

Inconsistent maybe. Incredible, certainly. Last year, Tepper's flagship Appaloosa fund returned an eye-popping 132.7%, net of fees, after grossing $7.5 billion by betting on financials early on, more than any other hedge fund firm last year. Through July of this year, the fund is up almost 42%, according to performance documents from an investor.

When Lehman Brothers filed for bankruptcy in September 2008, investors panicked on Wall Street, causing dangerous aftershocks across the markets. And while most of Appaloosa's peers were desperately trying to mitigate losses and stave off redemption requests amidst the market's free fall, Tepper decided it was the perfect time to leap right into the eye of the storm.

So the fund started aggressively buying up depressed bank debt of holding companies like Washington Mutual and common and preferred stock of Wachovia and others.

One has to wonder if the guy eats nails for breakfast.

"We lead he herd," he chuckles. "The Street follows us, we don't follow the Street."

Tepper was sitting on a pile of cash, having sold out of most of his positions in the spring of 2008, and didn't have any debt. So when the U.S. Treasury put out a white paper in February 2009 announcing its Financial Stability Plan, which included the Capital Assistance Program designed to shore up the capital of banks, he took his time and read the fine print.

The white paper and term sheet said the preferred stock the government was buying in the banks would be convertible to common shares at prices far above current trading levels at the time — which meant it was indeed a time to buy, buy, buy.

So he did. The fund began amassing sizable positions in bank-related securities: common and preferred shares, and junior-subordinated debt, to be exact. His targets, Bank of America and Citigroup in particular, as rumors circulating that the banking behemoths would be nationalized in early 2009 edged the stocks to near collapse.

Tepper was able to buy Bank of America preferred shares at just twelve cents on the dollar and Citigroup bonds at just nineteen cents. As those stocks rallied by the end of 2009, Appaloosa raked in the billions.

Appaloosa also was able to buy about a billion dollar's worth of AIG's commercial mortgage-backed securities at nine cents on the dollar. Currently trading at about ninety-three cents, the "AIG ace" was a major coup and contributor to the firm's success in 2009.

"Most of the upside was on the preferred and debt side, " he says. "That's perhaps why so many people missed this trade. They just couldn't see it."

Safe Harbor Statement:

Nothing in this article is, or should be construed as, investment advice.

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[investwise] Traders, Is Recession Officially Over? (100923)

"Officially, the recession is behind us. That's the good news. Officially, it ended in June of '09. The bad news is – so what?...Even since the recession officially ended, more people have gone into the poorhouse than have come out of it...

http://www.stock-investing-software.com/commentary/articles.html?next=15013

Ian

This week's "Tools of the Trade": http://snipr.com/tools-of-the-trade

Explicit NON-commercial advisory: Spot-on, advantageous FREE information, products and/or services presented weekly.
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This week's "Tools" topic: Okay, let's take Hilary up on her offer to provide us with free picks, and her explanation of why her picks are going to make money! (Keep your dough; take others up on giveaways. We point you to them.)

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[investwise] South Indian Bank-Should We Always Look Up The Owners? [3 Attachments]

[Attachment(s) from Maverick included below]

1    India Capital Fund Ltd    10,250,000     9.07
2    Morgan Stanley Mauritius Company Ltd    5,474,727     4.84
3    FID Funds (Mauritius) Ltd    4,694,866     4.15
4    JM Financial Trustee Company Pvt Ltd    4,449,686     3.94
5    Acacia Partners LP    3,741,482     3.31
6    Argonaut Ventures    3,695,484     3.27
7    Life Insurance Corporation of India    3,467,543     3.07
8    India Institutional Fund Ltd    3,250,000     2.88
9    India Capital Opportunities 1 Ltd    3,100,000     2.74
10    Unit Trust Of India Investment Advisory Services    3,062,500     2.71
11    Union Bank of India    2,020,564     1.79
12    Jasvant A Parikh    1,955,317     1.73
13    Federal Bank Ltd    1,625,000     1.44
14    Chirag Parikh    1,208,755     1.07
15    ACACIA Institutional Partners LP    1,162,790     1.03
    Total    53,158,714     47.04

Safe Harbor Statement:

Nothing in this article is, or should be construed as, investment advice.

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Attachment(s) from Maverick

3 of 3 File(s)