Inflation 7.82% Vs 7.83%

India's wholesale price index rose 7.82 percent in the 12 months to
May 10, holding near the previous week's annual rise of 7.83 percent,
government data showed on Friday.

The rate was slightly above a median forecast of 7.77 percent in a
Reuters poll of analysts.

Inflation for the week ended March 15 was revised sharply upwards to
8.02 percent from 6.68 percent.

The annual inflation rate was 5.62 percent during the corresponding
week of the previous year.

The wholesale price index is more closely watched than the consumer
price index, which is published monthly, because it covers a higher
number of products and is published weekly.

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Top stories on kences1 at 12PM

Top stories on kences1 at 12PM
  Friday, May 23

* India May 10 WPI inflation rate 7.82% vs 7.83% week ago.
* Cabinet clears farm debt relief package; to cost 717 bln rupees.
* Govt to decide on relief package for state-run oil cos in 3-4 days.
* Spice Comm to invest $200-300 mln in Punjab, Karnataka circles FY09.
* Reliance Communications net added 1.62 mln subscribers in Apr.
* Era Infra gets 320-mln-rupee order from Sahara India Commercial.
* Mercator Lines gets delivery of one dredger.
* HSBC MF's 370-day debt plan to open Tue; NFO to end Jun 9.
* India's wheat procurement hits all-time record at 20.71 mln tn.
* Farm minister says to meet PM shortly on commodity transaction tax.
* State govt invites bids to sell 100% stake in UP State Sugar Corp.
* India's crude oil basket at new high of $129.08/bbl Thu, up $3.8
 

 

 

Mundra Port-Buy says Edel with a PO of Rs 1331

 

Mundra Port-Buy says Edel with a PO of Rs 1331

 

Mundra Port & SEZ-Buy

PO: Rs 1331 says Edelweiss

 

Strong growth momentum in Indian port traffic likely to continue

 

With Indian merchandise export and import registering healthy double digit growth, the country's port traffic has grown at a CAGR of 8.7%, touching 650 mn tonnes in 2006-07. This growth momentum is expected to continue and the traffic is expected to reach 1,009 mn tonnes (at CAGR of 9.2%) over 2011-12E. Considering the massive infrastructure rollout in the country, the port capacity is expected to keep pace with the rising traffic.

 

National Maritime Development Programme to create strong infrastructure

 

To keep pace with the growing potential of cargo traffic, the Government of India (GoI) had undertaken an ambitious capacity expansion plan (outlay of INR 558 bn till FY14) under the National Maritime Development Programme (NMDP) 2005. The total capacity of all ports is expected to increase 2.14x from 736.9 mn tonnes to 1.5 bn tonnes by 2011-12E.

 

Major ports set success benchmark for minor ones

 

Major Indian ports enjoy logistical advantages of proximity to industrial belts and export destinations, which allows their cargo composition being skewed in favour of a particular commodity. The business model of these major ports is so well-established in terms of the traffic flow that one can practically gauge the viability of a minor port in their vicinity. 

 

Strong margins and cash flows make investment in ports lucrative  

 

Port operation is highly capital intensive with fixed assets accounting for ~40% of the total assets. These disadvantages are however mitigated, to a large extent, by extremely low working capital requirements of this business. All major ports are expected to generate positive cash flows in each year of projection, going forward. Further, cash from operating activities, including changes in working capital as a percent of net profit for each of the projected years, is more than 100%. With strong margins and positive cash flows, we believe investment in ports is highly lucrative.

 

Business models of ports highly profitable

 

The business model for ports provides multiple revenue streams for the terminal operator. With consistent growth in port traffic, revenues for all major ports are expected to increase from INR 54.4 bn in 2007-08 to INR 81.1 bn in 2011-12E at a CAGR of 9%.

 

 EBITDA margins for all major ports, put together, are expected to rise steadily from 32% in 2007-08 to 49% in 2011-12E. Net profit for all major ports is expected to increase from INR 14.9 bn in 2007-08 to INR 31.1 bn in 2011-12 at a CAGR of 20%; net profit margin is expected to improve from 27% in 2007-08 to 38% in 2011-12E.

 

As a play on port infrastructure development, we prefer Mundra Port and SEZ (MPSEZ) in the sector, given its first mover-advantage, and hence, scalable business model, diversification of cargo category, and integration into allied services like SEZ and container train. Our sum-of-the-parts (SOTP) valuation for MPSEZ stands at INR 1,331 and we maintain 'BUY' recommendation on it.

 

Equities seen higher on positive global cues; inflation eyed

MUMBAI: Equities are expected to open higher tracking positive global
cues and as crude prices retreated from record highs.

Cautious investors keenly await key inflation data is forecast to have
risen 7.77 percent in the 12 months to May 10, slightly below a 7.83
percent rise a week earlier, which was the biggest rise since November
6, 2004. But economists say the actual rate may be closer to nine per
cent due to sharp upward revisions in provisional readings recently.

"The market is in a consolidation mode. The biggest worry that is
haunting investors is the relentless rise of crude oil prices. The
government has to consider raising petrol and diesel prices among
other measures to bailout state run OMCs that have been reeling under
unprecedented high crude prices. But if any move is made in that
direction, it will add to inflationary pressures," said Siddharth
Purohit, analyst at Latin Manharlal Securities.

US stocks rose modestly on Thursday after two days of steep declines
after an unexpected drop in jobless claims and the retreat in oil
prices spurred optimism that the economy can avoid a recession.

Asian stocks edged higher on Friday, helped by a slight dip in oil
prices from record highs and positive cues from Wall Street. The
Nikkei rose 1 per cent, Straits Times climbed 0.13 per cent while Hang
Seng slipped 0.62 per cent.

US light crude for July delivery was up 24 cents at $131.05 a barrel,
having surged to $135.09 on Thursday, before traders took profits and
sent the contract settling down by more than $2 to $130.81, the first
time in five sessions that it settled lower.

Back home, stocks remained under pressure Thursday faced with negative
global cues. Bombay Stock Exchange's Sensex closed at 16,907.11, down
336.05 points or 1.95 per cent. The 30-share index swung over 240
points between intra-day high of 17,104.59 and low of 16,863.38.

National Stock Exchange's Nifty declined 92.20 points or 1.80 per cent
down to close at 5025.45. It touched a high of 5118.90 and low of
5010.70.

Foreign institutional investors turned net sellers of equity worth Rs
537.35 crore while mutual funds net bought Rs 415.16 crore of equity,
according to provisional data on NSE.

Source : Economic Times

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CM Analysis: Bharat Forge - A flat year

 

 

 

Bharat Forge

A flat year

Bharat Forge, the flagship company of the US$ 2.1 billion Kalyani Group and a leading global supplier of forged and machined components on a consolidated basis has posted Total Income and PAT after exceptional item reached Rs.4752 Crores & Rs 302 Crores, a growth of 11% and 4% respectively.

On a Standalone basis for the quarter ended Mar'08 the net sales revenue stood at Rs 579.67 crore which was 12% higher when compared with corresponding previous quarter last year. The OPM (Operating Profit Margin) Increased by 60 basis points to 24.8%. The subsequent Operating Profit for the quarter under review stood at Rs 143.65 crore that was 15% higher when compared with corresponding period last year. The ensuing PAT for the quarter under review stood at Rs 82.85 crore which was 29% higher on Y-o-Y basis.

Standalone

Quarterly Analysis

For the quarter ended Mar'08 the net sales revenue stood at Rs 579.67 crore which was 12% higher when compared with corresponding previous quarter last year. The OPM (Operating Profit Margin) Increased by 60 basis points to 24.8%. The subsequent Operating Profit for the quarter under review stood at Rs 143.65 crore that was 15% higher when compared with corresponding period last year.

Sales within India for the quarter ended Mar'08 stood at Rs 378.08 crore which was 4% higher when compared to corresponding previous quarter last year. Sales outside India for the quarter ended Mar'08 stood at Rs 246.46 crore indicating a growth of 23% when compared with corresponding period last year.

The Raw Material cost and manufacturing expenses decreased (as a % of sales net of stock adjustment) from 47.1% to 45.8% and from 16.9% to 16.4% respectively. The employee cost and other expenditure increased (as a% of sales net of stock adjustment) from 5.4% to 6.4% and from 6.7% to 7.1% respectively.

During the quarter ended Mar'08 the Other Income stood at Rs 12.64 crore indicating a fall of 36% when compared with corresponding period last year. Pending utilisation, funds raised out of FCCB and GDR have been temporarily placed in Fixed Deposits and investments, which generated an income aggregating Rs 10.605 crore during the quarter. During the quarter there was also an exchange loss of Rs 15.81 crore as compared to an exchange gain of Rs 2.09 crore during the corresponding period last year.

The resultant PBIDT for the quarter ended Mar'08 was Rs 140.49 crore which was 4% lower when compared to the corresponding previous quarter last year. The Interest cost and depreciation charges for the quarter ended Mar'08 increased by 7% and 33% respectively to Rs 24.91 crore and Rs 35.60 crore respectively when compared to the corresponding previous quarter last year.

Consequently, for the quarter ended Mar'08 the PBT before EO of Bharat Forge stood at Rs 79.98 crore indicating a fall of 17% when compared with the corresponding previous quarter last year.

During the quarter under review there was EO income stood at Rs 30.35 crore as compared to nil during the corresponding previous quarter last year. The Company, as a step to reorganise and restructure its holdings in its Global ventures has, during the year, sold its interest in BF Beteilingungs GmbH, a wholly owned subsidiary to CDP BF GmbH, also a wholly owned subsidiary, at a fair value determined by a valuer. Consequently, the Company has recognised a profit of Rs 30.35 crore

The ensuing PBT after EO stood at Rs 110.33 crore, which was 14% higher when compared with corresponding previous quarter last year. Provision for tax (including deferred tax and fringe benefit tax) for the quarter ended Mar'08 stood Rs 27.48 crore resulting in PAT of Rs 82.85 crore for the quarter ended Mar'08 as compared to Rs 64.28 crore in the quarter ended Mar'07 indicating a rise of 29%.

Year ended Mar'08

Bharat Forge, on a stand-alone basis has achieved Total Income of Rs 2,285 crore for the year ended March 31, 2008 up by 18% from Rs. 1,945 crore previous year. Net Profit of Rs 274 crore marks a jump of 14% over the previous year.

Export revenues demonstrated an impressive 28% growth in rupee terms & 40% in dollar terms to reach Rs 961 crores. US contributed 50% of exports, Europe 45% while Asia Pacific (including China) contributed the rest of BFL's exports.

For the year ended Mar'08 the net sales revenue stood at Rs 2196.50 crore which was 18% higher when compared with corresponding previous quarter last year. However the OPM (Operating Profit Margin) decreased by 130 basis points to 23.8%. The subsequent Operating Profit for the year under review stood at Rs 522.16 crore that was 12% higher when compared with corresponding period last year.

Sales within India for the year ended Mar'08 stood at Rs 1408.11 crore which was 11% higher when compared to corresponding period last year.

The Raw Material cost decreased (as a% of sales net of stock adjustment) from 45.8% to 45.6%. The employee cost and other expenditure increased (as a% of sales net of stock adjustment) from 5.7% to 6.5% and from 6.7% to 7.2% respectively.

During the year ended Mar'08 the Other Income stood at Rs 62.34 crore which was 20% lower when compared with corresponding period last year. Pending utilisation, funds raised out of FCCB and GDR have been temporarily placed in Fixed Deposits and investments, which generated an income aggregating Rs 52.267 crore during the year under review. During the year there was also an exchange gain of Rs 26.06 crore which was 948% higher when compared with corresponding previous quarter last year.

The subsequent PBIDT for the year under review stood at Rs 610.56 crore which was 11% higher when compared with corresponding period last year. The Interest expense and depreciation charges for the year under review stood at Rs 104.99 crore and Rs 138.94 crore respectively which was 28% and 39% respectively higher when compared with corresponding period last year.

Consequently, for the year ended Mar'08 the PBT before EO of Bharat Forge remained flat at Rs 366.63 crore. During the year under review there was EO income to the tune of Rs 30.35 crore as compared to an EO expense to the tune of Rs 6.75 crore during the corresponding period last year. During the year under review the Company, as a step to reorganise and restructure its holdings in its Global ventures has, during the year, sold its interest in BF Beteilingungs GmbH, a wholly owned subsidiary to CDP BF GmbH, also a wholly owned subsidiary, at a fair value determined by a valuer. Consequently, the Company has recognised a profit of Rs 30.35 crore

The ensuing PBT after EO stood at Rs 396.98 crore, which was 10% higher when compared with corresponding period last year. Provision for tax (including deferred tax and fringe benefit tax) for the year ended Mar'08 stood Rs 123.39 crore resulting in PAT of Rs 273.59 crore for the year ended Mar'08 as compared to Rs 240.95 crore in the year ended Mar'07 indicating a rise of 14%.

Consolidated results

Year ended Mar'08

On a consolidated basis for the year ended Mar'08 the net sales revenue stood at Rs 4652.28 crore which was 11% higher when compared with corresponding previous quarter last year. However the OPM (Operating Profit Margin) decreased by 40 basis points to 15.1%. The subsequent consolidated Operating Profit for the year under review stood at Rs 704.45 crore that was 9% higher when compared with corresponding period last year.

Sales within India for the year ended Mar'08 stood at Rs 1408.11 crore which was 11% higher when compared to corresponding period last year. Sales outside India for the year ended Mar'08 stood at Rs 3416.78 crore indicating a growth of 11% when compared with corresponding period last year.

During the year ended Mar'08 the Other Income stood at Rs 78.18 crore which was 15% lower when compared with corresponding period last year. During the year under review there was an exchange gain of Rs 21.12 crore which was 372% higher when compared with corresponding period last year.

The subsequent PBIDT for the year under review stood at Rs 803.75 crore which was 8% higher when compared with corresponding period last year. The Interest expense and depreciation charges for the year under review stood at Rs 126.94 crore and Rs 227.06 crore respectively which was 19% and 21% respectively higher when compared with corresponding period last year.

Consequently, for the year ended Mar'08 the PBT before EO of Bharat Forge remained flat at Rs 449.75 crore. During the year under review there was no EO item as compared to an EO expense to the tune of Rs 12.14 crore during the corresponding period last year. The ensuing PBT after EO stood at Rs 449.75 crore, which was 3% higher when compared with corresponding period last year.

Provision for tax (including deferred tax and fringe benefit tax) for the year ended Mar'08 stood Rs 158.94 crore resulting in PAT of Rs 290.81 crore for the year ended Mar'08 as compared to Rs 283.47 crore in the year ended Mar'08 indicating a rise of 3%. After Share of Profit of Associates and Minority Interest the Income attributable to the consolidated group stood at Rs 301.52 crore as compared to Rs 290.59 crore during the corresponding period last year indicating a growth of 4%.

Managements Comment

Commenting on the results of the company Mr. B N Kalyani, Chairman & Managing Director said that "the year 2008 has been full of challenges on both the domestic & export front. Two of our major markets, witnessed a slowdown which was compounded by the appreciating rupee. In these testing times, the company has posted moderate growth in the domestic market & an excellent growth of 28% in the exports revenue and is expanding our business in Europe by using strong customer relationship of our European operations. This success is attributable to the de-risked business model that BFL has systematically developed over the years. The strategy of de-risking was conceived with the intent to absorb such shocks arising from downturn in market cycles."

"In this year the company further strengthened its position in the non – auto space by creating a world class manufacturing platform which will start production in the coming year. This will further de-risk the business & accelerate growth thru new customers & market segments", he added.

Dividend

The company proposed a dividend of 175% (Rs 3.50 per Share)

Other Developments

Bharat Forge is planning to raise funds upto Rs.400 crores by means of rights issue of non-convertible debentures with warrants attached.

During the year ,the Company has made provision for the employee benefits in accordance with the AS-15( revised) . Further, in accordance with the transtional provision, the additional provision towards employee benefits amounting to Rs 25.1 crore net of deferred tax assets) has been adjusted from General Reserve.

Currently the stock is trading at Rs 293.90

 

KRC BUY - IRB INFRA

 

Market Update	KRC Investment Ideas
MARKET OVER VIEW   Sensex closed at 17,230.18 down 204.76 points, after touching a high of 17,367.13 and a low of 17,136.26. Nifty closed at 5,104.95 down 52.75 points, after touching a high of 5,160.05 and a low of 5,072.40.   Nifty May Futures ended 2.95 points discount at 5,102.00 to the spot Nifty of 5,104.95. Total turnover in NSE's derivatives segment was Rs. 378.76 billion as against Rs. 378.76 billion on Monday.     Market Dynamics         Indices Close % Change Market cap 1 Week 1 Month 1Year In Rs. Cr. Sensex 17,230.18 2.85 4.54 20.46 2,379,765 Nifty 5,104.95 2.93 4.63 21.55 2,982,791 BSE 100 9,138.39 3.25 4.55 24.96 3,794,246 BSE 500 6,847.19 3.12 4.45 23.82 5,378,754 BSE MidCap 7,106.06 2.15 3.94 16.69 816,877 BSE Small Cap 8,658.61 3.11 1.49 19.92 252,283                   FII & Mutual Fund Activity (In Rs.Cr.)         Date FII MF 20/05/2008 57.00 - 16/05/2008 729.90 227.80 15/05/2008 258.10 309.90 14/05/2008 186.30 133.10 13/05/2008 (125.40) (305.40)                            Currency v/s Re.(20/05/2008) INR / USD INR / GBP INR / EUR INR / JPY 100 42.67 (+0.07%) 83.41 (+0.49%) 66.39 (+0.59%) 41.05 (+0.76%)           Commodity – In US$ (20/05/2008) Crude Oil Aluminum Copper Lead Zinc Gold 123.57 3040 (+30) 8439 (+143) 2342 (+66) 2365 (+47) 902	IRB Infrastructure Developers Ltd (BSE CODE: 532947) CMP 6 Months Target Recommendation Rs. 208 Rs. 260 Buy IRB is an infrastructure development and construction company in India with extensive experience in the roads and highways sector. IRB has a strong track record in terms of projects delivery and in few instances has even enjoyed the benefits of early toiling due to early completion of projects. IRB also has an advantage of support of experienced promoters and skilled engineering staff. It has recently diversified into the real estate development sector in order to complement its infrastructure development business. Due to its early entrance in the Built Operate and Transfer (BOT), toll road business, IRB operates a large number of BOT projects which contributes to robust cash flow and a healthy bottom-line. IRB has toiling rights and O&M contract for the entire Mumbai-Pune stretch for 15 years. IRB Infrastructure Developers Ltd. was incorporated to fund the capital requirements of the IRB Group initiatives in the infrastructure sector. The company undertakes development of various infrastructure projects in the road sector through several Special Purpose Vehicles. (Businesses of holding co. and its subsidiaries will be implemented under superintendence, direction and control of the board of holding company, with the objective of maximizing value for all stakeholders.) IRB is having an extensive experience in the roads and railway sector. The company is currently involved in 12 BOT projects in the roads and highway sectors. We have recently diversified our business into the real estate development sector. Our proposed township project is the first real estate development project undertaken by us and is in its preliminary stages of planning and development. We are in the process of acquiring land in Mauje Taje and Mauje Pimploli Taluka in Pune district in the State of Maharashtra in India on which we propose to develop an integrated township. We intend to develop residential and commercial projects and have engaged Stup Design Forum in association with Stup Consultants Private Limited in connection with the development of the proposed township project. Currently, our Land Reserves consist of approximately 925 acres of land Mauje Taje and Mauje Pimploli Taluka in Pune district, and we intend to acquire an additional approximately 475 acres of land for our proposed township project. In connection with our proposed township project, we will be required to obtain various permits, licences and other regulatory approvals and there can be no assurance that these will be obtained on a timely basis or at all. Our Land Reserves consist of agricultural lands and we are yet to obtain the relevant certificates from the relevant regulatory authorities for the conversion of such agricultural land for purposes of our township project. IRB is having an in-house construction, toll collection and management capabilities. The engineering, procurement and construction (EPC) activities from IRB's funded construction projects as well as the BOT projects are all completed within the IRB group. In the same manner the operation and maintenance activities related to the BOT projects including toll collection are also executed within the IRB group. This enables the company to reduce its dependence on third party sub-contractors and thus exercise greater control over the quality and timely execution of the construction and maintenance work. The company own's a large fleet of construction equipment which enables the company to be less dependent on third parties for implementing various projects. This allows the company to enjoy a competitive advantage over other companies in the similar business segment who outsource their operations to external contractors.   IRB intend to move up the value chain by pursuing funded construction contracts particularly EPC contracts. This will thus enable the company to bid on larger projects, including international projects which would further improve the operating margins of the company.  Working on such higher value projects enables it to reduce operating costs & expenses and realise potentially higher margins.   Government's spending on the road infrastructure sector will be a key component of India's goal of sustained annual GDP growth. IRB's expertise and experience in the development, operation and management of road infrastructure projects along with having an established brand name will enable the company to bid & win large projects and participate in the fast growing infrastructure sector. Thus by targeting to specific project segment the company intends to be active in Western Indian states of Maharashtra and Gujarat along with pursuing suitable opportunity in other parts of India. The construction business of the company complements the Infrastructure business and involves engineering, procurement and construction work for construction projects on a contracted basis. Most of the work of the construction and infrastructure development business is won on a competitive bidding basis. The clients include Government entities that award projects specific contracts to bidders based on certain eligibility requirements.   The company has recently forayed into the real estate business and is in the process of acquiring land in Pune district in Maharashtra on which IRB proposes to develop an integrated township. The company intends to develop residential and commercial projects within the proposed township project. Currently the land reserve consists of 925 acres of land in Mauje Taje and Mauje Pimploli Taluka in Pune district.   The Indian infrastructure industry is experiencing phenomenal growth which is visible throughout the country in the form of new highways, roads, ports, railways, airports, power systems, townships, offices, houses and urban/rural infrastructure, including water supply, sewerage, drainage, irrigation and agriculture systems. The revised draft of the Eleventh plan approach paper states that investment in infrastructure would have to rise from the current 4.6% of India's GDP to an estimated 8.0 percent during the Eleventh plan period to meet India's target GDP growth rate of 9.0 percent.   IRB intends to be a market leader in the Infrastructure sector by building upon its core competency of development of road infrastructure projects, diversifying into real estate sector, entering into strategic alliance to undertake large value projects and moving up the value chain to realize better margins. IRB being one of the largest toll road operators in the country has a stable income thus making it a financially strong company.   IRB's current business is concentrated in the states of Maharashtra and Gujarat. Thus the business is significantly dependant on the activities, conditions and central and state government policies in these states. The company also intends to expand in other parts of India.

 

Disclaimer: This publication has been prepared solely for information purpose and does not constitute a solicitation to any person to buy or sell a security. While the information contained therein has been obtained from sources believed to be reliable, investors are advised to satisfy themselves before making any investments. Kisan Ratilal Choksey Shares & Sec Pvt Ltd., does not bear any responsibility for the authentication of the information contained in the reports and consequently, is not liable for any decisions taken based on the same. Further, KRC Research Reports only provide information updates and analysis. All opinion for buying and selling are available to investors when they are registered clients of KRC Investment Advisory Services. As a matter of practice, KRC refrains from publishing any individual names with its reports. As per SEBI requirements it is stated that,Kisan Ratilal Choksey Shares & Sec Pvt Ltd., and/or individuals thereof may have positions in securities referred herein and may make purchases or sale thereof while this report is in circulation.

Kisan Ratilal Choksey Shares and Securities Pvt. Ltd. 1102, Stock Exchange Tower, Dalal Street, Mumbai 400 001. Phone : 91-22-66535000 Fax : 6633 8060 Members: BSE & NSE www.krchoksey.com

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Sharekhan Pre-Market Report dated May 23, 2008

. Range-bound moves likely The market is likely to move in a range and could witness selective buying and selling activities.   The market showed resilience in yesterday's trades and is likely to move in a range with select bouts of buying and selling activities today. On the downside, the Nifty has a likely support at the 4980-4930 range and could test higher levels of 5066 and 5118  while the Sensex has a support at 16736 and resistance at 17136.   US indices came off their early highs and ended with slim gains on Thursday. While the Dow Jones added 24 points to 12626, the Nasdaq was up 16 points at 2465.   Indian ADR gainers outnumbered losers on the US bourses. Dr Reddy's flared up 3.59% and HDFC Bank moved up 2.15% while Satyam, Wipro, Infosys, VSNL, Rediff and Patni Computer ended with steady gains. Among losers, MTNL tanked 1.21% while Tata Motors and ICICI Bank also ended at lower levels.   Crude oil prices in the international market declined on Thursday, with the Nymex US light crude oil for June delivery dipping $2.36 to close at $130.81 a barrel. In the commodity space, the Comex gold lost $10.30 to settle at $918.30 an ounce.   Daily trend of FII/MF investment in equities On May 21, 2008 FIIs were net sellers of stocks to the tune of Rs611.40 crore (purchases worth Rs2,830.30 crore and sales of Rs3,441.70 crore) while domestic mutual funds were net buyers of stocks to the tune of Rs13.10 crore (purchases worth Rs622.60 crore and sales of Rs609.50 crore).  INDICES SNAPSHOT ASIAN INDICES at 09:20 IST on May 23, 2008 Index Level Change(pts) Change(%) Nikkei 14080.96 102.50 0.73 Hang Seng 24909.41 133.71 -0.53 Kospi Index 1834.40 -1.02 -0.06 Straits Times 3166.57 5.71 0.18 Jakarta Composite 2492.28 -11.67 -0.47 EUROPEAN INDICES at close on May 22, 2008 FTSE 100 6181.60 -16.50 -0.27 CAC 40 Index 5028.78 1.19 0.02 Dax Index 7070.33 29.50 0.42 US INDICES at close on May 22, 2008 Dow Jones 12625.62 24.43 0.19 Nasdaq 2464.58 16.31 0.67	PRE-MARKET COMMENTARY May 23, 2008| Market round-up, 9:45 IST
	STOCK TO WATCH TODAY BHEL ITC CROMPTON GEOJIT FEDRLBNK   INDIAN ADRs Company Last Close %Change Infosys 44.21 0.66 Satyam 25.88 1.09 Wipro 13.20 1.77 Dr.Reddy's 15.57 3.59 Tata Motors 15.40 -0.84 ICICI Bank 40.91 -0.22 HDFC Bank 100.89 2.15 MTNL 4.90 -1.21 VSNL (TCL)* 23.34 0.09 Rediff 8.51 0.12 Patni Comp 12.80 0.39
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 INP00000066; Mutual Fund: ARN 20669. Sharekhan Commodities Pvt. Ltd.: MCX-10080; NCDEX-00132; MAPIN - 100013912, For any complaints email at igc@sharekhan.com Regd/Admin Add:- A-206, Phoenix House, Phoenix Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai - 400013. Please carefully read the risk disclosure document as prescribed by SEBI & FMC and Do's & Don'ts by NCDEX

 

CM Analysis : Edelweiss Capital - Net up by 121% (Tuesday, May 20, 2008 19:04 Hrs IST)

 

 

Edelweiss Capital

Net up by 121%

Edelweiss Capital for the fourth quarter ended Mar'08 reported 230% increase in income from operations at Rs 323.21 crore. Low other income and coupled with high interest and other operational cost the gross profit for the quarter was restricted to 149% to Rs 149.84 crore. Finally the PAT after minority interest settled at Rs 82.55 crore, up by 121% on y-o-y.

Edelweiss Capital Limited is one of India's largest growing diversified financial services companies. The businesses of the Edelweiss Group include investment banking, institutional equities, private client broking, asset management, wealth management, insurance broking and wholesale financing to corporate, institutional and high net worth individual clients. The company has built strong corporate, institutional & investor relationships backed by a research-driven approach & a proven ability to capitalize on emerging market trends. Edelweiss believes in a unique model of employee ownership and leveraging a strong partnership culture. It operates from 43 offices in 19 Indian cities.

Consolidated Financial: Q4FY08 results

For the fourth quarter ended Mar'08, Income from operations increased by 205% to Rs 404.08 crore. The fee and commission income increased by 93% to Rs 144.49 crore, the income from arbitrage increased by 193% to Rs 134.27 crore, the income from investment and dividend increased by 163% to Rs 16.77 crore and the interest income increased largely from Rs 5.72 crore to Rs 108.55 crore on y-o-y basis.

The other income for the quarter stood at Rs 1.70 crore compared to Rs 3.24 crore in the corresponding previous quarter, restricting the total income to Rs 405.78 crore, up by 199%. Interest expenses increased to Rs 82.94 crore from Rs 7.36 crore in the corresponding previous quarter; also other expenses increased to Rs 173.00 crore, an increase of 153% on account of higher staff cost and other operational cost. Thus restricting the Gross profit to increase by 149% to Rs 149.84 crore. Depreciation increased by 228% to Rs 3.28 crore and further with the provision for tax increasing by 140% to Rs 52.63 crore the Net profit before minority interest stood at Rs 93.93 crore, an increase of 152% on y-o-y. After considering minority interest of Rs 11.38 crore (Rs 0.09 of income in Q4FY07), the final PAT stood at Rs 82.55 crore, a y-o-y increase of 121%.

Consolidated: FY08 results

For the year ended Mar'08, the income from operation increased by 195% to Rs 1086.78 crore. The other income declined by 39% to Rs 2.08 crore leading the total income to increase by 193% to Rs 1088.86 crore. With interest expenses and other expenses increasing by 228% to Rs 634.85 crore, the gross profit got restricted to Rs 154% growth at Rs 454.01 crore. Further with the depreciation increasing by 92% to Rs 7.31 crore and tax provision increasing by 138% to Rs 154.02 crore, the PAT before minority interest increased by 166% to Rs 292.68 crore. the PAT after minority interest settled at Rs 273.24 crore after accounting a minority interest of Rs 19.44 crore, up by 149%.

Business Update – Edelweiss Capital Group ("the Group")

The group net worth now stands in excess of INR 2,300 cr. The strong and liquid balance sheet of the company is a key differentiator and enables the Company to support the growth of different business lines and also maintain sufficient liquidity cushion. While overall revenues have posted a robust growth of 193% during FY08, a particular outstanding feature is the strong growth of fee and commission revenues from INR 144.49 cr in Q4FY08 over INR 74.46 cr in the corresponding quarter last year in spite of a severe slowdown in volumes in the domestic capital markets.

All the established businesses continued to grow well and the new businesses have secured a strong foundation despite market volatility in recent times. The Investment Banking business has successfully closed 32 transactions in FY08. Some of the notable transactions include Open Offer and Investment in Deccan Aviation by the UB Group, investment by Citigroup Venture Capital in SVIL Mines, investment by General Atlantic in IBS Software Services Private Limited, Qualified Institutional Placements for Phoenix Mills,SouthIndian Bank and Bank of India and the Initial Public Offerings of Take Solutions, Kolte Patil Developers, eClerx Services, GSS America etc.

Our strong franchise in the Mid-market space is reflected in our number one rank in Bloomberg League Tables for Mid-cap Private Equity transactions in CY2007 and number one rank in Prime Database League Tables for Mid-market IPOs in CY2007.

In addition to these transactions, the Real Estate and Infrastructure Advisory businesses also had significant deal closures. In a period of slowdown in activity in the IPO market, we witnessed a strong demand for our advisory services in Investment Banking imparting stability to revenues.

The Group's Equities Broking business continues to show robust growth both in the Institutional and HNI client segments. The Research coverage has expanded to include 215 stocks across 19 sectors accounting for 70% of the total market capitalization. Our differentiated and thematic research distinguishes Edelweiss from other players and provides unmatched insights into Indian capital markets to our large institutional client base.

The Group has also achieved significant growth in its newer businesses, viz., Alternate Asset Management, Wholesale Financing and Wealth Management. Alternative Asset Management business covers alternate asset classes like Real Estate, Private Equity and multi-strategy fund. Despite the turbulence in the last quarter, the performance of these funds has been reasonably stable. The total assets under management/advice (including our associates') now stand at about USD 625 million.

Edelweiss Capital Limited has recently received final regulatory approval from the Securities & Exchange Board of India (SEBI) to start its mutual fund business. Registration has been granted to Edelweiss Mutual Fund and approval has been granted for Edelweiss Asset Management Limited to act as investment manager to Edelweiss Mutual Fund. Edelweiss plans to shortly launch niche schemes and use this growth engine for building up a stable retail customer base.

The newly started business of Wholesale Financing continues to grow well and has already built up an asset base of about INR 900 crore as at March 08. The interest income from financing business is now growing into a distinct contributor to our revenue streams besides diversifying it. It has grown to INR 141 cr in FY08 compared to INR 7 cr in FY07. During the year under review, the Edelweiss Group employee strength has grown from 755 (as of March 31, 2007) to 1,618 as of March 31, 2008. Our hiring also continues to be strong, setting the trajectory for future growth. We are also investing significantly in internal leadership development.

The scrip of Edelweiss Capital currently trades at Rs 807/-