Punj Lloyd has sold its 19.43% stake in Pipavav Shipyard for Rs6.56bn (Rs50.75 a share, a 20% discount to the market price). This stake sale, in our view, is aimed at boosting its liquidity position, which was badly affected by execution delays. Punj, as co-promoter of Pipavav Shipyard, had invested in it to gain a valuable fabrication facility. This would have helped it construct offshore platforms, etc. According to the company, Punj would continue bidding for projects jointly with Pipavav where their interests converge. (more…)
Month: March 2010
HUL exits Capgemini Business Services (India)
FMCG major Hindustan Unilever (HUL) has divested its remaining 49% stake in Capgemini Business Services (India), earlier known as Unilever India Shared Services (UISSL), according to the terms of agreement entered between the company and Cap Gemini SA.
In September 2006, HUL and Cap Gemini SA had inked an agreement as per which the former had agreed to sell its 51% controlling stake in UISSL to the latter. After executing the said agreement, both parties in October 2006 further agreed for dilution of the balance 49% stake of HUL in favour of Cap Gemini SA by March 31, 2010. (more…)
Cements Differntial Valuation – Small Cap Vs Large Cap
Small cap vs. large cap discounts in Indian Cement companies is at historical highs. The disconnect – Smaller companies pricing in near distress, while large companies pricing in upturn. The discount to replacement cost ranging between 20% and 60% and the discount to large-cap peers between 40% and 70%. (more…)
Status of Ultra Mega Power Projects
Till now, the government has awarded four UMPPs (two each on domestic and imported coal). Reliance Power [Reliance ADAG Group Company] has won three of them (Sasan, Krishnapatnam, and Tilaiya) and Tata Power has been awarded one (Mundra). Following the absence of significant action in the past 12 months on bidding, Power Finance Corporation (PFC), which is the nodal agency for UMPPs, has invited RFQs for a fifth UMPP in Sarguja. (more…)
Market Expectations from Infosys
The guessing game begins as volume growth and dollar revenue to remain strong in Q4 FY10, boosted by the ongoing IT budget recovery. Analysts expect Tier I vendors to report 5-5.4% dollar revenue growth, backed by similar growth in volumes.
Infosys guidance for rupee EPS is likely to be 117-120, implying YoY growth of 6.6-9.4%. Expect dollar revenue guidance at 15-18% and rupee revenue guidance at 12-15%. This could disappoint investors who are pricing in 18-20% EPS growth, as indicated by valuations at 22.7x FY11E. We believe Infosys EPS guidance needs to come in at (more…)
Corporate Free Cash Flow Positive – The Big Turn?
The tide has almost completed its turn on India: growth is well and truly back, cash (market flows) is coming, and corporates are beginning to turn in cash.
India’s high-investment-growth phase has been fuelled/dependent on capital markets, in part given its FCF-negative status in recent years. As India Inc turns FCF- positive, could this change? There are caveats – growth lies outside top corporates/SPVs, so not captured by estimates; fiscal deficit is divestment-dependent; corporate capex is still subdued, but could rise with confidence /capital
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