Fw: Sharekhan Mutual Fund Finder - January 2012

 

Sharekhan Mutual Fund Finder [December 27, 2011] Please see the attachment for details  Sharekhan www.sharekhan.com

Summary of Contents Sharekhan Mutual Fund Finder Top equity picks Top SIP picks SIP calculator Crorepati calculator Fund of the month: ICICI Prudential Discovery Fund Performance of debt funds and ETFs Click here to read report: Mutual Fund Finder

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Fw: Investor's Eye: Update - Sintex Industries (Price target revised to Rs120 ), Real Estate (Bangalore real estate stable now but to edge lower)

 

 

Investor's Eye [December 26, 2011]  Sharekhan www.sharekhan.com

Summary of Contents STOCK UPDATE Sintex Industries       Cluster: Apple Green Recommendation: Buy Price target: Rs120 Current market price: Rs71 Price target revised to Rs120  Our interaction with the management of Sintex Industries leads us to believe that the demand in the domestic as well as the international markets is moderating. Factoring the moderating demand, high crude prices and open forex exposure in the form of foreign currency convertible bonds (FCCBs: $110 million), we have reduced our FY2012 and FY2013 earning per share (EPS) estimate by 26% and 21% respectively. Our revised EPS for the stock is Rs13.5 (Rs18 earlier) and Rs16 (Rs20.3 earlier) respectively. On the stock performance side, Sintex Industries has underperformed the benchmark indices in the last six months (it has lost 52% while the Sensex has declined 11% in the same period). We believe that this underperformance on account of concerns related to moderating demand, slow execution pace and FCCBs is overdone and is getting reflected in the near bottom valuation of the stock (the stock is ruling at 4.4x its FY2013E earnings). Thus, we believe that this correction provides an attractive entry point for the investors and maintain our Buy rating on the stock with a revised price target of Rs120. Our price target implies an FY2013 price-to-earnings (PE) multiple of 7.5x, which is at a 30% discount to the average PE multiple of the last ten years. We feel this discount is warranted on account of the slower growth, the balance sheet risk and the company's exposure to an uncertain Europe. SECTOR UPDATE Real Estate     Bangalore real estate stable now but to edge lower  Residential demand at Bangalore fairly stable in comparison to other markets but might taper off in future Residential sales have been dropping in the prime cities of India, except for Bangalore, which is seeing somewhat steady sales comparatively. Volume in Bangalore fell by just 7% year on year (YoY) as compared to 23% and 31% fall in Mumbai and Delhi respectively. In fact in Q3CY2011, Bangalore-based developers outperformed peers, with a strong sales volume. However, with the information technology (IT) industry also slowing down, the demand in Bangalore is also expected to be affected going ahead. Bangalore's commercial market scores better but could edge down Even Bangalore's commercial market is doing fairly well compared to other markets. While the commercial market in other prime cities is facing heat with commercial leasing touching one-year low in Q3CY2011, the Bangalore market was much better off. Slower demand from IT/ITES may affect Bangalore developers The inventory level is already high for Brigade Enterprises (Brigade) and Puravankara Projects (Puravankara). Now if the inventory level rises further, it would further affect the cash flow of the companies, putting strain on their balance sheets. Except for Prestige Estates (Prestige), the net debt to equity for the rest of the southern developers is already in the range of 0.7x to 0.8x. Going ahead, a slowdown in demand, rising working capital pressure and negative free cash flows will result in higher debt requirement. Infact the return on equity (RoE) is very poor across all south based developers except Prestige. Outlook The sector has highly underperformed over the last one to two years, making valuations very attractive. However, we are still cautious as the real estate market will take time to revive. Though the interest rates seem to have peaked out, the demand will revive only once the overall economy improves and with the developers adopting meaningful price cuts.   Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.   Click here to read report: Investor's Eye

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Fw: NHAI Tax-free Bond Issue - Opening on 28 Dec 2011

 

Investment Opportunity: Interest rates are at peak level; best time to invest in fixed income tax free instruments. Interest rate cycle has peaked out Given the sharp slowdown in the industrial activity and softening of the food inflation, the interest rate cycle has peaked out. Reserve Bank of India has restrained from increasing the interest rates in the last policy review meet and is expected to begin reducing rates in March or April 2012. Bond yields correct sharply The bond yields which had increased close to 9% levels have corrected significantly to around 8.3% which shows easing of pressure on rates. The banks have also kept their demand deposit rates stable since past couple of months despite the increasing policy rates. High post tax yield for triple A rated product Tax free bond with yield of 8.2-8.3% is comparable with yields offered on government bonds and offer extremely attractive pre-tax yield close to 12% for a long period of time. The bond issue has got AAA (stable) rating from the three agencies -- Crisil, CARE and Fitch. The bonds would also be listed and tradable on NSE/BSE. About NHAI: National Highways Authority of India (Authority) is an autonomous organization of Government of India and was constituted mainly to survey, develop, maintain and manage the National Highways, to construct offices or workshops, to establish and maintain hotels, restaurants and rest rooms at or near the highways vested in or entrusted to it, to regulate and control the plying of vehicles, to develop and provide consultancy and construction services and to collect fees for services or benefits rendered in accordance with Section 16 of the NHAI Act. As per NHAI Act, 1988, certain stretches of National Highways have been entrusted to NHAI by the Government for development, maintenance and management.

Tranche Series-I Series-II Tenor 10 Years 15 Years Face Value Rs1,000/- per bond Rs1,000/- per bond Issue Price At par i.e. Rs1,000/- per bond At par i.e. Rs1,000/- per bond Coupon Rate 8.20% p.a. 8.30% p.a. Interest Payment Annual Annual Put & Call Option None None Redemption Amount (Rs./ Bond) Repayment of the Face Value plus any interest that may have accrued at the Redemption Date Repayment of the Face Value plus any interest that may have accrued at the Redemption Date Credit Rating "CRISIL AAA/Stable" by CRISIL, "CARE AAA" by CARE and "Fitch AAA(ind)" by FITCH Mode of Holding Dematerialized as well as in physical form Minimum Application 50 bonds (Rs50,000/-) and in multiples of 1 bonds (Rs1,000/-) thereafter Listing Proposed on BSE/ NSE Who can apply Category-I Category II Category III Reservation for Categories 40% of overall issue size 30% of overall issue size 30% of overall issue size Basis of allocation in case of over-subscription On first-come-first-serve basis On first-come-first-serve basis On prorata / proportionate basis * For more details, please refer to the Terms and Conditions.

Sharekhan Ltd.: BSE Cash-INB011073351; F&O-INF011073351; NSE - INB/INF231073330; MAPIN - 100008375; DP: NSDL-IN-DP-NSDL-233-2003; CDSL-IN-DP-CDSL-271-2004; PMS INP000000662. Sharekhan Commodities Pvt. Ltd.: MCX-10080; NCDEX-00132; MAPIN - 100013912, for any complaints email at igc@sharekhan.com. Regd/Admin Add:- Lodha iThink Techno Campus, 10th Floor, Beta Building, Off. JVLR, Opp. Kanjurmarg Station, Kanjurmarg (East), Mumbai 400 042, Maharashtra. Please carefully read the risk disclosure document as prescribed by SEBI & FMC and Do's & Don'ts by NCDEX. Disclaimer: Sharekhan Limited is engaged as a distributor for distribution of IPO/Bonds/NCD. Sharekhan or any of its group concerns do not in any manner recommends any product or any of its characteristics. The client is advised to take his / her own independent decisions for investing in any financial product after understanding their respective nature and risk and returns involved. The client may also approach his / her own consultants for investing in financial products or in relation to the tax related aspects. We do not solicit any action based upon this promotional material. Please note that the product does not take into account any particular investment objectives, financial decisions or needs of individual recipients. Neither Sharekhan nor any person connected with Sharekhan accepts any liability arising out of investment suggested in the material above.

Fw: NHAI Tax-free Bond Issue - Opening on 28 Dec 2011

 

Investment Opportunity: Interest rates are at peak level; best time to invest in fixed income tax free instruments. Interest rate cycle has peaked out Given the sharp slowdown in the industrial activity and softening of the food inflation, the interest rate cycle has peaked out. Reserve Bank of India has restrained from increasing the interest rates in the last policy review meet and is expected to begin reducing rates in March or April 2012. Bond yields correct sharply The bond yields which had increased close to 9% levels have corrected significantly to around 8.3% which shows easing of pressure on rates. The banks have also kept their demand deposit rates stable since past couple of months despite the increasing policy rates. High post tax yield for triple A rated product Tax free bond with yield of 8.2-8.3% is comparable with yields offered on government bonds and offer extremely attractive pre-tax yield close to 12% for a long period of time. The bond issue has got AAA (stable) rating from the three agencies -- Crisil, CARE and Fitch. The bonds would also be listed and tradable on NSE/BSE. About NHAI: National Highways Authority of India (Authority) is an autonomous organization of Government of India and was constituted mainly to survey, develop, maintain and manage the National Highways, to construct offices or workshops, to establish and maintain hotels, restaurants and rest rooms at or near the highways vested in or entrusted to it, to regulate and control the plying of vehicles, to develop and provide consultancy and construction services and to collect fees for services or benefits rendered in accordance with Section 16 of the NHAI Act. As per NHAI Act, 1988, certain stretches of National Highways have been entrusted to NHAI by the Government for development, maintenance and management.

Tranche Series-I Series-II Tenor 10 Years 15 Years Face Value Rs1,000/- per bond Rs1,000/- per bond Issue Price At par i.e. Rs1,000/- per bond At par i.e. Rs1,000/- per bond Coupon Rate 8.20% p.a. 8.30% p.a. Interest Payment Annual Annual Put & Call Option None None Redemption Amount (Rs./ Bond) Repayment of the Face Value plus any interest that may have accrued at the Redemption Date Repayment of the Face Value plus any interest that may have accrued at the Redemption Date Credit Rating "CRISIL AAA/Stable" by CRISIL, "CARE AAA" by CARE and "Fitch AAA(ind)" by FITCH Mode of Holding Dematerialized as well as in physical form Minimum Application 50 bonds (Rs50,000/-) and in multiples of 1 bonds (Rs1,000/-) thereafter Listing Proposed on BSE/ NSE Who can apply Category-I Category II Category III Reservation for Categories 40% of overall issue size 30% of overall issue size 30% of overall issue size Basis of allocation in case of over-subscription On first-come-first-serve basis On first-come-first-serve basis On prorata / proportionate basis * For more details, please refer to the Terms and Conditions.

Sharekhan Ltd.: BSE Cash-INB011073351; F&O-INF011073351; NSE - INB/INF231073330; MAPIN - 100008375; DP: NSDL-IN-DP-NSDL-233-2003; CDSL-IN-DP-CDSL-271-2004; PMS INP000000662. Sharekhan Commodities Pvt. Ltd.: MCX-10080; NCDEX-00132; MAPIN - 100013912, for any complaints email at igc@sharekhan.com. Regd/Admin Add:- Lodha iThink Techno Campus, 10th Floor, Beta Building, Off. JVLR, Opp. Kanjurmarg Station, Kanjurmarg (East), Mumbai 400 042, Maharashtra. Please carefully read the risk disclosure document as prescribed by SEBI & FMC and Do's & Don'ts by NCDEX. Disclaimer: Sharekhan Limited is engaged as a distributor for distribution of IPO/Bonds/NCD. Sharekhan or any of its group concerns do not in any manner recommends any product or any of its characteristics. The client is advised to take his / her own independent decisions for investing in any financial product after understanding their respective nature and risk and returns involved. The client may also approach his / her own consultants for investing in financial products or in relation to the tax related aspects. We do not solicit any action based upon this promotional material. Please note that the product does not take into account any particular investment objectives, financial decisions or needs of individual recipients. Neither Sharekhan nor any person connected with Sharekhan accepts any liability arising out of investment suggested in the material above.

Fw: Investor's Eye: Thematic Report (Switch from Reliance Power to NTPC or CESC depending on your risk profile); Update - Power (Shunglu panel suggests steps to end power sector's woes)

 

 

Investor's Eye [December 23, 2011]  Sharekhan www.sharekhan.com

Summary of Contents THEMATIC REPORT Switch from Reliance Power to NTPC or CESC depending on your risk profile Prefer NTPC, CESC: We have compared Reliance Power with NTPC and CESC on various parameters like operational efficiencies, progress on expansion, balance sheet strength, risk and prevailing valuations. Given the multiple concerns for the power generation companies (like coal linkage, execution delays, forex fluctuations etc), we believe it is better to stick with companies with power generating assets (that provide free cash flows), assured returns and higher certainty of future earnings. Thus, it is better to switch from Reliance Power to NTPC (for conservative investors) or CESC (for more aggressive investors). Key points Reliance Power - execution delays and uncertainty of coal usage issues: Reliance Power is having just 600 MW of operating capacity currently and expects to add 1200 MW in the next one year period. The company has an ambitious plan to add above 18000 MW in future. However, two major developments have turned negative for company; which in effect are likely to delay or bring uncertainty in the execution of two of its projects. NTPC - high return ratio with large generating assets: NTPC is the largest power generating utility in India and also one of the most efficient players. We like its large operational assets which are generating healthy cash to fund future growth. Moreover, with it having a FSA with Coal India, it has relatively high safety of coal supply. Also, the assured high return on equity (RoE; 14%) which could be sustained despite capacity addition is difficult to ignore. CESC - extremely attractive valuations; retail spin off is additional trigger: CESC is one of the cheapest utility stocks available in the Indian market, despite it being one of the most integrated utilities. We believe the discount in its valuation is overdone as the financial health of its retail business is improving since FY2011. Further, a possible break even of the retail segment by FY2015 coupled with growing scale of the utility business would consequently reduce the impact of the retail business' drag on the overall balance sheet of the company. SECTOR UPDATE Power     Shunglu panel suggests steps to end power sector's woes  Power distribution has turned out to be the rusted part of the total power sector value chain. The mounting losses of the state electricity board (SEBs) are now affecting the entire sector. Given the severity of the situation, the prime minister under the aegis of the Planning Commission appointed a high-level panel led by VK Shunglu, former head of the Comptroller and Auditor General of India (CAG), to look into the financial problems of the SEBs and suggest corrective steps. The entire report could be summarised in two parts: (1) highlighting the messy financial status of the SEBs across the country and the reasons behind the same; and (2) recommendation of measures for both the immediate issue and the long-term issues. Key recommendations Tariff hike only an immediate relief. Bail-out plan: SPV route recommended if honour of restructured loans fails. View: We believe the SPV route suggested by the panel would help to immediately clean up the accumulated losses in the form of bad loan in the books of banks; it will be positive for banks (especially the public sector banks), Power Finance Corporation and Rural Electrification Corporation. Also, the proposed regular revision in the tariffs would check the losses. We believe the committee has rightly weighed and criticised the existence of managerial or operational inefficiency which should not be offset using tariff hikes always. Hence, simultaneously several steps have been recommended to improve the efficiency in the long term. However, we believe it will be a challenge to implement the recommendations especially the one to improve efficiency. Some of those may require political will too at the local or regional level, which could be a time-consuming process if undertaken.   Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.   Click here to read report: Investor's Eye

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Fw: Muthoot Finance Ltd NCD - Issue Opens on 22 Dec 2011 on First-come-first-serve basis

 

Issue of secured non-convertible debentures (NCDs) on first-come-first-serve basis Issuer Muthoot Finance Ltd Issue Public issue of NCDs aggregating up to Rs300 crore with an option to retain over-subscription up to Rs300 crore. Issue opens December 22, 2011 Issue closes January 7, 2012 Stock exchange proposed for listing of the NCDs BSE Issuance and trading Compulsorily in dematerialised form Trading lot 1 (one) NCD Depositories NSDL and CDSL Rating AA-/Stable by CRISIL and ICRA Pay-in date 3 (Three) business days from the date of receipt of application or the date of realisation of the cheques/demand drafts, whichever is later. Deemed date of allotment Shall be the date as decided by the duly authorised committee of the board constituted by resolution of the board dated July 25, 2011. Day count basis Actual/Actual Security First pari passu charge on the identified immovable property and a first pari passu charge on current assets, book debts, loans and advances, and receivables including gold loan receivables. Who can apply Please refer to the terms and conditions. Specific terms of the issue Options I II III IV Frequency of interest payment Annual Annual Annual Cumulative Minimum application Rs5,000 (5 NCDs; for all options of NCDs, namely Options I, Option II, Option III, and Option IV either taken individually or collectively) In multiples of (in Rs) 1,000 (1 NCD) 1,000 (1 NCD) 1,000 (1 NCD) 1,000 (1 NCD) Mode of interest payment Through various options available Face value of NCDs (in Rs) 1,000 1,000 1,000 1,000 Issue price (per NCD - in Rs) 1,000 1,000 1,000 1,000 Coupon rate (%) for NCD 13.00 13.25 13.25 NA Effective yield (% per annum) 13.00 13.25 13.25 13.43 Tenor (in months) 24 36 60 66 Redemption date (in months from the deemed date of allotment) 24 36 60 66 Redemption amount (in Rs; per NCD) Repayment of the face value plus any interest that may have accrued on the redemption date. 2000

Sharekhan Ltd: BSE Cash-INB/ INF 011073351; NSE - INB/INF /INE 231073330; MCX-SX INE 261073330 DP: NSDL-IN-DP-NSDL-233-2003; CDSL-IN-DP-CDSL-271-2004; PMS INP000000662. Sharekhan Commodities Pvt. Ltd.: MCX-10080; NCDEX-00132; Regd/Admin Add:- Lodha iThink Techno Campus, 10th Floor, Beta Building, Off. JVLR, Opp. Kanjurmarg Station, Kanjurmarg (East), Mumbai 400 042, Maharashtra. for any complaints email at igc@sharekhan.com. Sharekhan Disclaimer: Sharekhan Ltd is engaged as a distributor of IPOs/ Bonds/ NCDs/ FDs/ Mutual Funds. Sharekhan or any of its group concerns do not in any manner recommends any product or any of its characteristics. The client is advised to take his / her own independent decisions for investing in any financial product after understanding their respective nature and risk and returns involved. The client may also approach his / her own consultants for investing in financial products or in relation to the tax related aspects. We do not solicit any action based upon this promotional material. Please note that the product does not take into account any particular investment objectives, financial decisions or needs of individual recipients. Neither Sharekhan nor any person connected with Sharekhan accepts any liability arising out of investment suggested in this material.

Fw: Investor's Eye: Update - Telecommunications (End of 3G roaming pact among the players- Raises question on 3G revenue model); Viewpoint - Gujarat State Fertiliser Corp (In expansion mode); MF - Sharekhan's top equity mutual fund picks

 

 

Investor's Eye [December 22, 2011]  Sharekhan www.sharekhan.com

Summary of Contents SECTOR UPDATE Telecommunications     End of 3G roaming pact among the players- Raises question on 3G revenue model  The Department of Telecom (DoT) has asked the telecom operators to terminate the 3G intra circle roaming arrangements entered amongst them, with immediate effect. The show cause notices in this respect would be issued to the players today or latest by Friday morning.  We believe that if the 3G roaming pact/ arrangements are not permissible, as stated by the government, then it would be sentimentally negative and would also have a potential revenue impact. Further the entire 3G model would come under question with players having to work their business economics again in the light of changed policy environment. VIEWPOINT Gujarat State Fertiliser Corp        In expansion mode Extensive expansion plans: Gujarat State Fertiliser Corporation (GSFC) has plans to expand its product portfolio across segments especially the chemical segment with a total investment of about Rs1,400 crore. The projects that shall contribute significantly to the total revenue include a methanol plant (at a cost of about Rs350 crore), a TIFERT unit (at a cost of about Rs1,200 crore) and a nylon 6 plant (at a cost of about Rs275 crore). These three proposed plants will contribute nearly Rs1,825 crore at full capacity utilisation. The methanol plant will be operational by Q4FY2012 whereas the TIFERT unit would start production by Q1FY2013 and the nylon-6 project will commence production in Q3FY2013.  Cash rich with almost no debts on books: The planned capital expenditure of about Rs1,400 crore for the debottlenecking and brownfield projects will be fully funded through internal accruals. This will help the company to remain debt-free and utilise the huge cash at its disposal for growing in future through investing in projects related to its core competence. The company's management has clarified that it will invest only in projects related to the company's product portfolio and will not diversify in non-core areas. At the end of the Q3FY2012 GSFC has cash balance of Rs850 crore, which is enough to fund its future projects. Outlook and stock view: Though we believe the company should be able to report a 9.0-9.5% compounded annual growth rate (CAGR) in its revenues over FY2011-13, its earnings could at best remain flat, if not decline, due to the margin pressure in both the fertiliser and the chemical business. On the positive side, its valuations are supportive and the company has a strong balance sheet with a huge cash of Rs850 crore (30% of its market capitalisation) at the end of Q3FY2012. Its return on equity was healthy at over 25% in FY2011. At the current market price the stock is trading 3.5x and 4.0x its FY2012E and FY2013E earnings respectively and has a dividend yield of 2%. We do not have a rating on the stock. . MUTUAL GAINS Sharekhan's top equity mutual fund picks Large-cap funds Mid-cap funds Multi-cap funds ICICI Prudential Focused Bluechip Equity Fund - Ret SBI Magnum Sector Funds Umbrella - Emerg Buss Fund ICICI Prudential Discovery Fund Principal Large Cap Fund IDFC Premier Equity Fund - Plan A Reliance Equity Opportunities Fund Franklin India Bluechip Religare Mid Cap Fund - Growth Mirae Asset India Opportunities Fund - Reg Birla Sun Life Frontline Equity Fund - Plan A HDFC Mid-Cap Opportunities Fund Tata Dividend Yield Fund Tata Pure Equity Fund Sundaram Select Small Cap Fund UTI Opportunities Fund Indices Indices Indices BSE Sensex BSE MID CAP BSE 500 Tax saving funds Thematic funds Balanced funds ICICI Prudential Taxplan UTI India Lifestyle Fund HDFC Prudence Fund HDFC Taxsaver Birla Sun Life India GenNext Fund HDFC Balanced Fund Religare Tax Plan Fidelity India Special Situations Fund Birla Sun Life 95 Fidelity Tax Advantage Fund Canara Robeco Infrastructure Fund Canara Robeco Balance Franklin India Taxshield DSP BlackRock Natural Resources & New Energy Fund - Ret ICICI Prudential Balanced Indices Indices Indices CNX500 S&P Nifty Crisil Balanced Fund Index Fund focus SBI Magnum Sector Funds Umbrella - Emerging Bussiness Fund   Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the companies mentioned in the article.   Click here to read report: Investor's Eye

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