India’s GST – A Great Step

June 30, 2010

Recent media reports suggest that the Centre and states have agreed over some of the critical issues involved in the goods and service tax (GST). The governments are believed to have concurred on following issues:

Tobacco will be kept within the ambit of GST. However, the Centre will levy excise duty over and above GST. Alcohol, petroleum, and Read more

BGR Energy – Buy

June 29, 2010

Goldman has initiated coverage on BGR Energy with a BUY Rating. BGR will benefit from lack of a sufficient number of turnkey BoP (Balance of Plant) players in the Indian power equipment space – Most individual component makers currently lack the ability to provide turnkey services.

With its order book growing at a CAGR of 84% over FY08-10 and sales CAGR based on FY08-10 reported numbers of 42% over this period, BGR has displayed a strong execution track record. Read more

HPCL + BPCL – Indian Oil -ONGC – Renewed Energy

June 28, 2010

Just after the Government went to De-Regulate Petrol Prices, Brokerages were busy BUYING Oil Marketing Companies and later upgrading the same.

Indian Oil Corporation -Outlook for deregulation has thus brightened. The upside to IOC’s FY11E EPS in this scenario would be 20% to Rs42/share. Even without full reforms government being more generous than assumed by us in compensating R&M companies cannot Read more

Reliance Industries – Overseas E&P production portfolio

June 25, 2010

RIL announced its second JV for shale gas assets in the US, with Pioneer Natural Resources and Newpeck LLC in the Eagle Ford shale formation. RIL will acquire ~118k acres from Pioneer and Newpek for a total consideration of US$1.3bn. RIL will pay a total of US$1.3bn, US$263mn in upfront cash and the remaining US$1.05bn in the form of a drilling carry. The deal implies price of US$11,144/ acre, however, considering the drilling carry is spread over four years, adjusting for time value the deal implies a price of US$9,438/acre using a discount rate of 10%, which is lower than the US$10,797/acre paid by RIL to Atlas in its first transaction.

We are positive on RIL’s recent investments in shale gas and its stated strategy of building a sizeable portfolio there. However, NPV Read more

Shree Renuka Sugars – Equipav – A Fair Deal

June 24, 2010

Shree Renuka Sugars (SHRS) will pay USD 250 mn (INR 11.5 bn) to acquire 50.34% stake in Equipav, 25% below INR 15.3 bn quoted in February 2010. Balance stake in the venture is to be held by the founding Equipav Group – the Toledo, Tarallo and Vetorazzo families. At the revised amount, SHRS says that the EV of Equipav comes to USD 1,147 mn, translating into an EV/tonne of USD 109.

The international raw sugar price bottomed out Read more

Petrol + Diesel Price Hike – Fill up your tanks

June 23, 2010

The Empowered Group of Ministers (EGoM) plans to re-convene on 25th June 2010 to consider petrol price decontrol, according to media reports. We estimate that petrol prices may be hiked by Rs 4/litre (8%), if decontrolled. We believe this will likely be taken positively by the market as the first step towards eventual decontrol of diesel as Read more

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