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									November 21, 2009

WEEKLY SAMACHAR

INDICES SNAPSHOT
INDICES SENSEX NIFTY BANK NIFTY BSE MIDCAP BSE SMALLCAP 20 - Nov 17021.85 5052.45 9219.05 6465.61 7527.32 weekly change 1.0% 1.1% 0.7% 0.7% 1.6%

Week in Retrospect
Benchmark indices extended its winning streak gaining by around 1% for the week on sustained buying by foreign funds. It remained lackluster for the first four days with the market finally staging a smart recovery in the second half of Friday to close near the days high after government clarified that they are not considering imposing a tax to curb influx in overseas funds. The recovery can also be attributed to the huge short covering in the Nifty futures as well as the stock futures in the current series with simultaneous fresh long positions being built in the December series. Market is witnessing selling pressure at higher levels in the absence of any major positive trigger in the near term. Among the Fund activity, FII’s were net buyers to the tune of Rs 14.6 bn, while Domestic Funds were net sellers to the tune of Rs 8.4 bn respectively. Sugar stocks witnessed heavy selling pressure as sugarcane farmers stopped supplies to mill owners in anticipation of higher prices at Rs 200 per quintal against mill owner’s rate of Rs 180. However, we remain positive on the sector per se on back of demand – supply mismatch. Hopes of consolidation among PSU banks boosted shares of state-run banks. Corporation Bank, Andhra Bank, and Dena Bank have emerged as strong takeover targets among the large PSU banks. Metal stocks gained on rising commodity prices. Also the JSW-JFE deal, 20% stake sale in steel major SAIL and Tata Steel issuing new convertible bonds as part of a plan to reduce costs, boosted the sentiments further. Global markets closed flat to negative this week. Dow Jones closed 0.5% for the week. ECB upped collateral requirements to tighten liquidity measures this week. The raising of growth forecast for leading developed economies by OECD and Bank of Japan keeping interest rates unchanged were positive takeaways from the week.

WORLD INDICES
INDICES DOW JONES NASDAQ S&P 500 FTSE 100 NIKKEI HANGSENG 20 - Nov 10318.16 2146.04 1091.38 5251.40 9497.68 22455.84 weekly change 0.5% -1.0% -0.2% -0.8% -2.8% -0.4%

INDEX FUTURES
INDICES NIFTY BANK NIFTY CNXIT change in index 1.3% 0.9% 1.6% OI change -19.1% -15.4% 12.9% weekly change 0.2% 0.5% 0.6% 1.9%

CURRENCY MOVEMENT
CURRENCY USD GBP EURO YEN (per 100) 20 - Nov 46.58 77.57 69.54 52.49

FII/MF ACTIVITY- CASH
DATE 13th Nov 16th Nov 17th Nov 18th Nov 19th Nov FII Net Inflows* 144.50 679.30 593.70 522.40 -334.30 MF Net Inflows* 98.50 -49.20 -308.60 -300.70 -176.70

* Rs crs

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TOP WEEKLY GAINERS – BSE 500
GAINERS BF UTILITIES VISHAL RETAIL KALYANI STEEL LOK HOUSING MADHUCON PROJ 20 - Nov 1356.75 77.10 167.00 41.25 167.25 weekly change 52.2% 39.7% 27.5% 23.7% 20.0%

From our desk
We expect the market to continue its upward momentum next week. Intra day volatility would continue to remain high in coming days with F&O expiry next week. Indices are currently trading in a vary narrow range with tepid volumes as players are sitting on sidelines waiting for breakout either side. Fresh buying and short covering seen in frontline stocks can take the Nifty to higher levels. F&O data suggests bullishness with fresh long build-up in the December series. The dramatic recovery in the second half of Friday underlines the fact that the underlying momentum is pretty strong. Liquidity will remain the driving force and so one should keep an eye on the dollar index. Global cues of course will continue to have a major influence. We advise players to adopt a buy on dips strategy and trade with strict stop losses. Essar Oil would remain in limelight as Shell is in advanced talks to acquire a 10% stake in the company. Tata Steel will be focus as the company declares consolidated Q2 Sept 09 results on 26 Nov 09. The next day Tata Motors unveils consolidated Q2 results. RIL would remain in limelight as it has set 27 Nov as the record date for 1:1 bonus share issue. GVK Power & Infrastructure Ltd will attract trading interest as its 100% subsidiary is in the process of acquiring 17% stake in Bengaluru International Airport Ltd (BIAL) from L&T. Investors will closely watch the debate in parliament on three key reform bills - the State Bank India Amendment Bill, the Pension Fund Regulatory and Development Authority, and the Insurance Bill. Prime Minister Manmohan Singh has left for a visit to Washington. Though there are no big-ticket items on the agenda, one needs to keep an eye on any developments.

TOP WEEKLY LOSERS – BSE 500
LOSERS CALS REF. PATNI COMP HIND OIL EXPL APTECH WIRE & WIRELESS 20 - Nov 0.55 442.95 285.25 169.20 19.40 weekly change -12.7% -12.4% -10.1% -9.1% -8.7%

TOP OPEN INTEREST GAINERS (WOW)
COMPANY CONCOR CIPLA DENA BANK PATNI HDIL OI change 300.0% 57.4% 56.9% 54.9% 40.9%

TOP OPEN INTEREST LOSERS (WOW)
COMPANY GLAXO GTL ASIAN PAINTS M&M MARUTI OI change -79.8% -64.6% -54.2% -53.0% -51.3%

ADR MOVEMENT
ADRS ICICI HDFC BANK TATA MOTORS DR REDDY INFOSYS PATNI WIPRO MTNL 20 - Nov 38.04 134.12 13.78 24.02 51.23 19.36 20.48 3.12 weekly change -2.2% 1.5% 0.9% -0.8% 0.7% -11.4% 3.2% -4.0%

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Domestic Market & Economy
The Business Confidence Index (BCI) reported a sharp rise of 21%, with a rating of 143.7 points in October 2009, compared with 118.6 points in July 2009, according to the latest NCAER (National Council of Applied Economic Research)-MasterCard Worldwide Index of Business Confidence. BCI ratings in April 2009 were at their lowest, at 81.6 points, after the global financial crisis hit world economies. The sharp rise in the BCI indicates that there is optimism about an improvement in the overall economic conditions and investment climate over the next six months. Food inflation rose to 14.55% in the first week of November fuelled by higher prices of staple items like potatoes, onions and pulses. On a weekly basis, inflation rose 0.87% points from 13.68%. Economists and analysts surveyed by the RBI revised downwards India's GDP projection to 6% for 2009/10 from 6.5% in the previous round of survey. The Organisation of Economic Co-operation and Development (OECD) raised India's 2010 GDP growth forecast to 7.3% from 7.2% earlier. OECD sees 7.6% growth in India's GDP in 2011. In a bid to speed up the process of fund mobilisation and listing, the SEBI is working towards bringing down the time frame for listing of an IPO on the stock exchange to seven days from the current 20 days. This would be mildly negative for banks, which use the money collected for the IPO in the escrow account for making a quick buck. The government is set to dilute its holding in SAIL by 20%. While the company will make a fresh issue of 10% equity, the government will divest 10% of its stake. At current prices, the combined 20% sale would raise almost Rs 17,000 crore from the market. Reliance Industries plans an aggressive exploration campaign, investments in petrochemicals and overseas acquisitions as it prepares itself for the next phase of growth. The company will work towards attaining global scale for its conventional energy platform petrochemicals, refining and oil and gas exploration and invest in its new businesses such as retailing and alternative energy. JSW Steel has forged a grand alliance with Japan's second-largest steelmaker JFE Steel Corporation which, among other things, could entail JFE's buying 10% stake into JSW Steel by paying up to 30 - 50 billion yen. The stock has already appreciated quite a lot. However we remain positive on the company from long term point of view. Suzlon Energy, which is reeling under nearly Rs 14,000 crore of debt, raised about Rs 1,735 crore by selling a 35% stake in Belgium-based gearbox maker Hansen Transmissions International BV. The stock price has already appreciated by 25% in the current month and looks fully priced at these levels. The takeover battle for Great Offshore is likely to intensify with both ABG Shipyard Ltd and Bharati Shipyard Ltd receiving regulatory approvals for their open offers for a stake in Great Offshore. While ABG Shipyard has received approval from the Sebi to acquire management control, Bharati can only increase its stake, but not gain control. India Power Corp Ltd (IPCL), a consortium promoted by Srei Infrastructure Finance and Bhaskar Silicon has bought 57.17% stake in Andrew Yule group firm Dishergarh Power Supply Company (DPSC) for Rs 172 crore. IPCL aims to double DPSC's turnover of Rs 250 crore over the next 2 years.

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International Market & Economy
The European Central Bank has tightened the rules for the collateral it accepts against loans as it tries to restore the proper functioning of markets and prepares the ground to unwind emergency liquidity measures. Brazil’s Central Bank imposed tax on certain trades involving ADRs issue by Brazilian companies to contain the appreciation of its currency. South Korea announced measures aimed at tightening controls over currency liquidity to make the banking system less vulnerable to capital outflow. It aims at limiting the size of forward foreign exchange transactions entered by South Korean companies.

The Bank of Japan kept interest rates left interest rates unchanged at 0.1% and raised its economic assessment. The Organization for Economic Cooperation and Development (OECD) doubled its growth forecast for the leading developed economies next year. As per its estimates, the group’s 30 member countries will expand 1.9% next year and 2.5% in 2011. The Organization for Economic Cooperation and Development (OECD) expects India’s central bank to tighten its monetary policy soon to stem inflation. US Treasury two-year note yields fell to the lowest level this year on concern that the rally in risk assets has outpaced growth prospects and as Federal Reserve officials signaled interest rates will remain near zero. South Korea, Asia’s fourth-biggest buyer of crude oil, increased its consumption of petroleum products at the fastest pace this year as the economy recovers. The nation used 66.3 million barrels of oil products last month, up 9.9% from a year earlier. JPMorgan Chase & Co. and Wells Fargo & Co. are arranging an $8 billion loan for Warren Buffett’s Berkshire Hathaway Inc. to help finance the takeover of railroad Burlington Northern Santa Fe Corp. The banks are providing a one-year loan with an interest rate 1 percentage point to 2 percentage points more than the London interbank offered rate. Dell Inc., the world’s third-largest maker of personal computers, reported lower than expected earnings after it lost market share and higher PC component costs cut into profit. Third-quarter net income fell to $337 million, or 17 cents a share, from $727 million, or 37 cents, a year earlier. Sales declined 15% to $12.9 billion. China National Petroleum Corp., the nation’s largest oil company, signed agreements with Sudan to expand a refinery in Khartoum and swap oil production assets. BP Plc, Europe’s second-biggest oil company, has invested $3 billion in alternative energy globally and is on course to meet its commitment made in 2005 to spend $8 billion.

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Sector & Commodity News
Gold demand in the country fell 49% in the July-September quarter when compared with the same period of last year as high prices and a poor monsoon impacted consumer spending and confidence. The demand was higher by 26% from the April-June quarter. We remain positive on Gold in long term. The IMF's sale has raised the profile of gold even higher; particularly when confidence in fiat currencies is waning Gold is now increasingly being recognized as having a stable store value, like currencies. As rates begin to go northwards, inflationary expectations are bound to rise - a scenario gold has always found beneficial. Since 2003 till 2007, when the major central banks were in a tightening mode, gold nearly doubled in its value. Shipping companies are back to making profit after a gap of almost a year, as the freight rates for dry bulk carriers surge on import of iron ore and food grain by China. The Baltic Dry Index has advanced more than 55% in last 15 trading sessions touching 14-month high. The Baltic Dry index reached a 22-year-low of 663 in December 2008, sliding nearly 95 per cent in about seven months from an alltime high of 11,793 in May 2008. The rates had collapsed as steel producers cut output, with recession hitting global consumption. We remain positive on GE Shipping with over 150,000 tonnes deadweight tonne (dwt) capacity, and is currently having a $60,000 per day rate for Atlantic delivery and $54,000 per day for Pacific delivery. The break-even for such ships is a maximum of $30,000 per day, including their interest cost and depreciation. The government has lined up 10 mega highway projects, involving a whopping Rs 45,000 crore investments, besides fast-tracking some of them by inviting interested parties to submit their qualification documents. We remain positive on road construction companies like IRB Infrastructure, Pratibha Industries and C&C Constructions. India, a traditional rice exporter, will import the grain for the first time in 20 years to meet a projected shortfall of the crop hit by drought and floods. The government estimates that there would be a shortfall of over 15 million tonnes in the 2009-10 Kharif (summer) season due to drought and floods in several states. We remain positive on Rice companies like Lakshmi Energy, Kohinoor Foods, L T Overseas and KRBL. The government kicked off the discussion process towards consolidation in the banking sector at a meeting with senior bankers. Corporation Bank, Andhra Bank and Dena Bank has emerged as hot takeover targets. The Reserve Bank of India will give banks six months more to set aside extra funds from their profits to cover non-performing assets, stretching an earlier deadline of September 2010. This would help them to spread the possible adverse impact on their balance sheets over a longer period.

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STOCK IDEA
C&C CONSTRUCTIONS LTD.
No. of Shares (Crore) Mkt. Cap (Rs. Crore) Price (03/11/2009) Book Value (Rs.) P/BV BSE Code NSE Code Bloomberg Reuters Volume (weekly) (NSE) 52 W H/L (Rs.) 1.83 420.16 230.10 194.69 1.18 532813 CANDC CCON IN CCCL.BO 26456 283.90 / 87.20

Background
C&C Constructions Ltd. (C&C) is one of the fastest growing construction companies of India, focusing on infrastructure construction segment including highways, airports, water sewerage & sanitation, telecom and power transmission in India and Afghanistan.

Investment Arguments
Robust order book provides revenue visibility
C&C Constructions provides strong revenue visibility with an order backlog of around Rs 3110 crore, which is nearly 4 times its trailing four quarter sales. Of the current order book around 34% will be executed in FY10 and about 44% in FY11 and 22% in FY12.

De-risked business model
The company has a de-risked business model diversified across various verticals, which allows it to capture more opportunities and insulates the company from slowdown in any particular sector. The roads & highways segment accounts for lion's share of 61% of the current order book, buildings accounts 25%, railways account for 13% and water projects account for 2% of the total order book.

Shareholding Pattern Promoters MFs / Banks / Fis Foreign Govt. Holding Non-Promoter Corp. Total Public Total
(as on 30-Sept-2009)

% 70.25 9.34 2.09 0.01 6.14 12.18 100.00

Ownership of high end equipment
C&C owns a very large number of high end and modern construction equipments, which has not only resulted in better utilization of assets, but also induced operational efficiencies & offered flexibility of bidding. C&C has incurred a capex of Rs 75 cr in FY09 and plans to further incur a capex of around Rs 80 cr FY10 and Rs 100 cr in FY11.

Road sector to hog the limelight

Recommendation

BUY
Analyst
ROHIT AGARWAL
Phone: +91-33-22805601/02
E-Mail: rohit.agarwal@cdequi.com

Road sector is expected to be on a high growth path. NHAI has set a target of 135 projects covering 13394 km with an investment of Rs 1000 billion to be awarded by Jun 10. C&C has pre-qualified for orders worth Rs 19000 crore in Joint Venture for 20 odd projects that are expected to be finalized in next 6 months. Of these the company's share will Rs 9000 crore.

Recommendation
We remain positive on the company as it is trading at reasonable valuations and provides revenue visibility for the coming years. P/E on one year forward earnings basis works out to 6.9 x and P/BV works out to 1.0 x. One can buy with a target of Rs 286 in next 9 -12 months. Rupees in Crores Q1FY10 Q1FY09 % VAR. FY08 FY09 FY10E 169.75 129.04 31.55 533.26 750.13 1095.19 0.94 2.33 (59.66) 7.94 5.24 5.29 32.00 26.89 19.00 100.84 157.96 209.09 5.44 4.95 9.90 40.91 41.10 52.29 2.98 2.71 9.90 22.40 22.51 28.64 23.3% 0.5% 27.2% 5.40 7.37 8.03 0.70 0.87 1.05

Net Sales Other Income PBIDT Net Profit EPS EPS Growth (%) P/E (x) P/BV (x)

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STOCK IDEA
SUNIL HITECH ENGINEERS LTD No. of Shares (Crore) Mkt. Cap (Rs. Crore) Price (20/11/2009) Book Value (Rs.) P/BV BSE Code NSE Code Bloomberg Reuters Volume (weekly) (NSE) 52 W H/L (Rs.) 1.23 221.35 180.25 154.16 1.2 532711 SUNILHITEC SUHE IN SUHT.BO 97087 198 / 49.25

Company profile
Sunil Hitech established more than a decade back is engaged in fabrication, erection & testing and commissioning of bunkers, ESPs, boilers, TG sets in the power plants, both in private & public sector. The company is also equipped to perform civil work for thermal power stations up to 500MW as well as erect boilers and auxiliaries up to 660MW.

Investment Rationale
Moving up the value chain
Sunil Hitech which has been primarily focusing on constructing steel structures and fabrication, now plans to move up the value chain by undertaking small EPC contracts. The company is set to benefit from the potential arising from the massive power capacity additions in the country over the next few years.

Shareholding Pattern Promoters MFs / Banks / FIs Foreign Govt. Holding Non-Promoter Corp. Total Public Total
(as on 30-Sept-2009)

% 53.21 3.79 12.92 0.00 4.02 26.06 100.00

Strong order book
The order book of the Company stood at Rs 1420 crs as on 30th Oct, 09. This order book appears quite strong as it provides revenue visibility over next one and half years.

Improved operating performance
We expect the Company to report better operating performance this year. With faster execution of projects, topline is estimated to grow at 36%. EBITDA margin is expected to rise by 215 bps. The growth in earnings will be driven by higher margins and moderation in interest costs.

Recommendation

Attractively valued
The scrip at the current market price of Rs 180 is trading at 7.0 x FY10E earnings of Rs 25.60 per share. Strong order book and foray in EPC contracts will support business growth going ahead. The Company will be one of the major beneficiaries of massive power capacity additions in the country. Taking the above in to account, the stock appears to be undervalued. We recommend buying the stock with price target of 218 based on 8.5 x FY10E earnings over a period of 6 months. Rupees in Crores FY09 FY10E 598.21 810.69 4.21 10.07 58.94 97.62 15.62 31.44 12.72 25.60 -27.4 101.3 5.1 7.0

BUY
Analyst
KISHAN GUPTA, CFA
Phone: +91-33-22805601/02
E-Mail: kishan.gupta@cdequi.com

Net Sales Other Income PBIDT Net Profit EPS EPS Growth (%) P/E (x)

H1FY10 395.46 9.07 52.03 17.23 14.03 -

H1FY09 242.33 1.52 37.00 13.78 11.22 -

% VAR. 63.2 496.7 40.6 25.0 25.0 -

FY08 306.30 2.07 49.33 21.52 17.52 123.9 11.0

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Nifty Movement
* S&P CNX NIFTY (4,988.75, 5,063.30, 4,932.80, 5,052.45) 5200 5150 5100 5050 5000 4950 4900 4850 4800 4750 4700 4650 4600 4550 4500

35000

30000 25000 20000
x10000

7 ber

14

22

29

5 October

12

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26

3 November

9

16

23

30 December

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Disclaimer
CD Equi Search Pvt. Ltd. as a firm may have investment positions in the company shares discussed above. This document is meant for our clients only and is not for public distribution. This material is for the personal information of the authorized recipient, and we are not soliciting any action based upon it. This report is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Neither CD Equi Search Pvt. Ltd., nor any person connected with it, accepts any liability arising from the use of this document. The recipient of this material should rely on their own investigations and take their own professional advice. Opinions expressed are our current opinions as of the date appearing on this material only. While we endeavor to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. If you have any questions about this report please get in touch with CD Equi search Pvt. Ltd. Kolkata: CD Equisearch Pvt. Ltd. 37, Shakespeare Sarani, Kolkata 700 017 Phone + 91 (33) 2280 5601 / 5602, Fax + 91 (33) 2289 2557, Mumbai: CD Equisearch Pvt. Ltd. 10, Vaswani Mansion, 2nd Floor, Dinshaw Waccha Road, Mumbai – 400 020 Phone +91 (44) 2283 0652 / 0653, Fax +91 (44) 2283 2276,

Email: research.calcutta@cdequi.com Website: www.cdequi.com

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