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

Regards, The Sharekhan Research Team myaccount@sharekhan.com Manage your newsletter subscriptions

 

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

Regards, The Sharekhan Research Team myaccount@sharekhan.com Manage your newsletter subscriptions

 

Fw: Sharekhan's top SIP fund picks

 

 

Mutual Gains [For December 20, 2011] Sharekhan www.sharekhan.com

Summary of Contents   MUTUAL GAINS Sharekhan's top SIP fund picks Large-cap funds Multi-cap funds Principal Large Cap Fund ICICI Prudential Discovery Fund Franklin India Bluechip Reliance Equity Opportunities Fund Birla Sun Life Frontline Equity Fund - Plan A Tata Dividend Yield Fund Tata Pure Equity Fund Birla Sun Life Dividend Yield Plus DSP BlackRock Top 100 Equity Fund UTI Opportunities Fund BSE Sensex BSE 500 Mid-cap funds Tax saving funds SBI Magnum Sector Funds Umbrella - Emerg Buss Fund ICICI Prudential Taxplan IDFC Premier Equity Fund - Plan A HDFC Taxsaver DSP BlackRock Small and Midcap Fund Fidelity Tax Advantage Fund Sundaram Select Midcap Franklin India Taxshield UTI Mid Cap Fund Taurus Taxshield BSE Midcap S&P Nifty Fund focus ICICI Prudential Discovery Fund       Click here to read report: Mutual Gains

Regards, The Sharekhan Research Team myaccount@sharekhan.com Visit www.sharekhan.com to manage your newsletter subscriptions

Fw: Thematic Report (Shift from Asian Paints to GSK Consumer Healthcare)

 

 

Thematic Report [December 20, 2011] Sharekhan www.sharekhan.com

Summary of Contents Thematic Report Shift from Asian Paints to GSK Consumer Healthcare Key points Asian Paints-slowdown in discretionary spend to hit sales volumes: Empirical evidence shows that the prevailing inflationary and gloomy macro-economic environment can result in a sharp slowdown in the demand for the consumer discretionary spend-led sectors like paints. A slower growth in the key user segments of real estate and automotives can dent the volume offtake in the paint sector. In FY2009, when the gross domestic product (GDP) growth rate had declined to 6.7% year on year (YoY) from 9.2% YoY in FY2008, Asian Paints' sales volume growth had declined to 13.4% from a strong 17.5% YoY in FY2008. Moreover, the company's financial performance could also get dented by a slowdown in the international business, volatility in input cost and foreign exchange (forex) fluctuations.  GSK Consumer-demand for daily consumption items to stay relatively resilient: The sales of daily consumption items such as packaged foods, biscuits, beverages, soaps and toothpaste may not suffer in the current environment. The packaged foods companies like GlaxoSmithKline Consumer Healthcare (GSK) are likely to witness a steady volume growth in the range of 10-12% in the coming quarter. This can be attributed to the increased demand for health and wellness products, improvement in rural penetration and stable product portfolio that caters to the needs of different consumer sections in India. Moreover, GSK's better pricing power would enable it to protect its margin. Prefer GSK to Asian Paints: In the current environment, there is a high risk of a downgrade of the consensus earnings estimate for Asian Paints driven by both a lower than expected volume offtake and higher margin pressure. Currently, the street is factoring in an earnings compounded annual growth rate (CAGR) of 15% for Asian Paints over a two-year period of FY2011-13. On the other hand, we are quite comfortable with the compounded annual growth of high teens in the earnings of GSK due to its better pricing power and demand environment. Thus, it would be better to switch from Asian Paints to GSK for better returns over the next 6-12 months.    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: Thematic Report

Regards, The Sharekhan Research Team myaccount@sharekhan.com Manage your newsletter subscriptions

 

Fw: L&T Infra Bonds with Income Tax benefit

 

Dear Investors,

 

Greetings from Integrated.

L&T Long Term Infrastructure Bonds with an attractive interest of 9% !!! 

Investment up to Rs.20,000/- is eligible for Income Tax benefit of up to Rs.6,180 u/s. 80-CCF.

This is over and above Income Tax benefit u/s.80-C, 80-CCC & 80-CCD.

Along with the Income Tax benefit, you will get an effective return of upto 19.14% based on your tax slab.

If you are in 10% slab -- 9% + 80CCF benefit  = 11.85% return
If you are in 20% slab -- 9% + 80CCF benefit  = 15.17% return
If you are in 30% slab -- 9% + 80CCF benefit  = 19.14% return

Bonds can be credited in your existing Demat account. Physical option also available.

For further informations & application forms, kindly contact your nearest branch of Integrated.

Issue closes on 24/12/2011. Hurry up !!!  Hurry Up !!!

For list of branches, please visit http://www.iepindia.com/contact.aspx

Regards,
Integrated Enterprises (India) Ltd.