September, 2007 | Dalal Street

MCX Stake Sale to Merill lynch + Citigroup

September 28, 20071 min read

Merrill Lynch and Citigroup have acquired 5% stake each in Multi Commodity Exchange of India (MCX) from Financial Technologies (India). Company plans to invest proceeds in green field ecosystem ventures such as – India Energy Exchange, National Spot Exchange (NSEL), National Bulk Handling Corporation (NBHC) and others towards the development of complete value chain.

The company, as a part of its strategy, divests its stake in its ventures to key partners that can help propel the growth of its ventures to the next level. It plans to invest the proceeds from the same in organic and other growth opportunities including green field exchanges and ecosystem infrastructure ventures such as NSEL and NBHC among others, in local and global markets.

Breaking Corporate India Earnings News

Stone India + ICICI Bank

September 28, 20071 min read

Stone India has executed a technical collaboration agreement with SMA Technologie AG, Germany for manufacturing of 180 KVA auxiliary power converter for Indian Railways.
This high value product will be manufactured in the new upcoming facility in Nalagarh, Himachal Pradesh.

ICICI Bank’s Bahrain branch has raised $2 billion through a 5-year fixed rate note. The notes have been priced at 237 basis points (bps) over US Libor or at Libor plus 172 bps. The six-month Libor is currently at 5.14%. From an investor breakdown perspective, 32% of the notes were sold to banks, 53% to fund managers and 15% to pension funds and retail. The issue had an order book of $6.05 billion and received interest from 250 investors. Reportedly, this is the first major issuance by an Asian bank, post-subprime crisis.

Equity Research

Buy B L Kashyap – Sharekhan

September 28, 20072 min read

B L Kashyap[BLK] has proven execution skills, reasonably large-scale of operations and an established customer base, BLK is well poised to ride the construction boom in the fast-growing industrial, residential, commercial and retail segments.

BLK’s is our type of company because it focuses on providing contractual construction services to private sector clients and it has consciously avoided exposure to long duration infrastructure projects that are prone to delays and are much more capital intensive. Thus, it does not require regular infusion of funds through debt or equity dilution.

BLK has shown a healthy CAGR of 72.6% in its stand-alone revenues to Rs808 crore over the past three years. What’s more, the strong order backlog of Rs2,100 crore (2.6x FY2007 revenues) provides a robust revenue growth outlook for the coming years. Expect BLK to report CAGR of 48.8% over FY2007-10.

Real Estate Arm: BLK has forayed into real estate development through its subsidiary SSP, which undertakes joint development projects with the existing owners of land. Currently, it is executing six projects with saleable area of 13.2lsf (SSP’s share of around 8.5lsf) and also has rights for around 150-acre land in Bikaner, Rajasthan. Sharekhan value SSP at Rs580 crore.

At the current market price the stock trades at attractive valuations of 12.8x FY2009E and 9.3x FY2010E earnings (after adjusting for the value of its subsidiary: Rs554 per share). SSKI analysts recommends a Buy call on BLK with a price target of Rs2,850.

Breaking Corporate India Earnings News

Yet another acquisition from Wipro

September 28, 20071 min read

Wipro has entered an to acquire Oki Techno Centre (Singapore). The target company is based out of Singapore and is focused on wireless design in the areas of RF and baseband.

The development center set up by Wipro will enable OKI to utilize design resource efficiently and enhance product development capabilities. This will enable OKI to expand its semiconductor business and increase its competitive edge in designing semiconductor products in the global market.

Earlier last month Wipro acquired Infocrossing in the US.

Equity Research

Merill Lynch Neutral on ITC

September 28, 20071 min read

ITC’s cigarette performance in Sept Quarter will not live up to market’s expectations. ITC’s volumes in Sept Quarter are expected to be down 3-4% y-o-y and volumes are lower than June Quarter as the later had the hit of higher prices for only 2 months. Secondly, it bears the full brunt of Uttar Pradesh tax of 32%. UP accounts for 6% of ITC’s volumes and has not implemented VAT of 12.5%.

ITC’s recent shampoo launch marks its entry in the household and personal care (HPC) category. The brand, Fiamma Di Wills has been launched in six SKUs and is priced in between HUL’s Sunsilk and Clinic All Clear. We believe next in the pipeline are shampoo sachets and soaps. These events imply that ITC’s FMCG losses (5% of EBIT) are unlikely to decline in the near future.

ITC is expected to report a fully diluted EPS of Rs 8.27 for FY08 and Rs 9.36 for FY09.

DalalStreet.Biz Recommendation:
We recommend our reader / investors to switch out of ITC into other growth stock.

Breaking Corporate India Earnings News

Restructuring buzz electrifies Reliance Energy

September 27, 20071 min read

Despite Citibank’s SELL Recommendation on Reliance Energy, the stock is moving up. What’s cooking ? Our Analyst has done an exclusive research and here are the findings.

Reportedly, Reliance Energy (REL) wants to be known as an infrastructure player rather than a pure power utility with forays into projects such as roads, metro rail and real estate.

Currently, REL has two key divisions, power and engineering, procurement and construction (EPC). The power division, which includes generation, transmission and distribution businesses, contributes about 64% of overall revenues while balance comes from the EPC division.

As per recent reports, REL’s fast-growing EPC division may be spun off into a separate company.

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