Omaxe ltd

Omaxe ltd recently announced its annual results which came as a pleseant surprise for the holders of the stock. The company managed a turnover of Rs 2281 crores and a consolidated profit of Rs 498.4 crores on an equity base of 173.56 crores resulting in an eps of Rs 29 after extraordinarly items. Its resrves stood at Rs 1239.6 crores. The public shareholding is just 10.72 percent. The company has been in news over the past for good. In feb the company won a contract from Naya raipur developement autourity to build a township which would include resdiential and commercial buildings, golf villas and a hotel and the project cost stands at Rs 1200 crores. It then tied up with thai based company for spa franchasie in north india. Then came the news that the company had floated a subsidiary National Affordable Housing and Infrastructure which will be building the affordable houses. In all, Omaxe plans to build about 10 lakh low-cost houses. Proposals have already been sent to the state governments of Delhi, Madhya Pradesh, Punjab and Rajasthan. The company has earmarked Rs 200 crore for slum rehab projects. Such projects will help Omaxe in acquiring land at a cost which will make development of affordable or low-cost houses a feasible option. The latest new around is that the promoters are scouting buyers to sell a part of their stake in the company to raise around Rs 1500 crore. If this deal goes through this would be big boost for the stock and one can expect fireworks here. I personally am keeping a close watch on the stock and would be putting money here in tranches.

stock markets in for a tough time

With the govt having a tough time taming inflation the indian stockmarket is going to have a tough time in the near term. What is even more worring is that the govt has till date artificially controlled inflation by keeping a controlled price on petrol, diesel, kerosene and LPG. But with the subsidy burden balloning beyond control we can expect an increase in the prices soon which is going to add to the already heavy inflation. This price hike may well take inflation near double digits forcing the govt to take further corrective action which could be by cutting of the money supply leading to heigher interest rates and inturn would hurt growth. All this scenerio is going to bring in bad days for the stock market. Todays results in karnatka elections could just make thing worse and there would be more pressure to take politically correct actions forcing the govt to keep growth at bay for the time being and purely focus on politics which is demanding lower inflation. So its time to be careful before investing in the market.

depreciating rupee

The rupee has been depreciating and this is likely to change the economics for many. The depreciating ruppee is going to jack up the bill for the govt as far as imports of crude oil is concerned and add to it the rising crude prices, the govt is most likely to now take steps to attract foreign investments. The purpose is simple try to control the deprecaiting ruppee. This could be good news for companies who plan to raise foreign loans as some relaxation is expected on this front. FII's too can hope for some change in rules which could ease investments in the capital markets. This depreciated ruppee could also be good news for the companies and banks who had made provisions for the losses on forex derivatives. It could well be a windfall gain in their balance sheets in the current quarter.

Govt likely to approve merger of NMDC and SIIL

The government is likely to consider tomorrow the merger of Sponge Iron India Limited with country's third most valued company National Mineral Development Corporation. The proposal of merger of SIIL with state-owned blue chip NMDC is slated to be considered by the union cabinet tomorrow, sources said. SIIL, manufacturer of sponge iron, has been facing acute raw material shortage for a couple of years. "The company has been facing acute shortage of iron ore during the year. This problem would be permanently solved once the company merges with NMDC," SIIL Chairman and Manging Director V K Uppal said in his message on the company's website. The merger of SIIL was recommended by the expert group constituted by Ministry of Steel under the chairmanship of former steel secretary B L Das.

poly medicure results

Poly medicure has announced its results for the quarter ending march 08. It managed sales of Rs 232 million and a net profit of 14.69 million which is quite lower than its previous quarter when it clocked a net profit of Rs 22.21 million. A close analysis shows that the interest cost has risen by 0.72 million and depreciation by 2.87 million resulting in a fall in the eps from 3.87 to 2.59. The cash eps too has fallen from 6.52 to 5.67 which reflects that there has been a fall in the margins of the company. The good news is that the china project is expected to commence production in the current quarter which would have positive effect on the topline as well as bottomline. The board of directors have also recommended a dividend of 25% i.e Rs 2.50 for the year 07-08.

cement firms to be effected by price control

Cement companies' latest quarterly performance shows that they have begun to feel the pinch of the government's anti-inflationary measures.

The latest price cut of 1.5 to 3 per cent at the government's persuasion and a decision to hold prices for the next three months could impact earnings even more.

An analysis of the 2007-08 fourth-quarterly performance of major manufacturers points to the lower profitability over the corresponding quarter of 2006-07.

Compared to the steep rise in net profit in Q4 2006-07, the corresponding quarter of 2007-08 has seen either significantly slower growth or a fall for all the companies concerned.

The trend change is primarily due to the inability of cement companies to increase prices since April 2007 despite an increase in raw material and fuel costs.

Over the last one and a half years, the government has taken several measures to check cement prices to control inflation, which has mostly stayed above the central bank's target level of 5 to 5.5 per cent.

The latest restrictions have been an export ban and a 12 per cent ad-valorem duty on cement selling above Rs 250 per 50 kg bag.

Last year, the government made cement import duty free. Cement has a weight of 1.73 per cent in the wholesale price index (WPI).

"Continuous government intervention has resulted in an uncertain price environment, which together with a significant increase in input costs will have an adverse impact on margins," an Ultratech Cement release said.

According to ACC, India's largest cement producer, production costs went up 12 per cent during the quarter due to significant cost pressures in respect of major inputs such as coal, gypsum, power, freight and so on. Coal prices alone increased around 31 per cent.

"Despite all these unprecedented cost-push factors, the company absorbed most of this escalation and our cement prices went up by only 3 per cent quarter-on-quarter," an ACC spokesman said.

The cement industry added a capacity of 10 million tonnes in 2007-08, taking total capacity to 175.6 million tonnes. According to the Cement Manufacturers Association (CMA), the industry is likely to create an additional capacity of 32 million tonnes in 2008-09.

Garden silk mills to double yarn capacity

With demand for polyester yarn and chips increasing in South American and European markets, Surat-based Garden Silk Mills is planning to double its capacity by March 2009.
A one-time leader in polyester sarees and dress materials under the brand name Garden Vareli, the textile company is now focusing on yarn and chips, demand for which has risen in domestic and global markets. Garden Silk Mills will invest Rs 350 crore for the expansion, said a company official.
According to the capex plan, Garden Silk Mills will double the existing capacities of 700 tonnes per day of polyester chips, 300 tonnes per day of partially oriented yarn (POY) and 120 tonnes per day of polyester textured yarn (PTY).
The company will increase the share of exports in its total turnover from 5-10 per cent to 30-40 per cent, the official added. Currently, polyester yarn and chips form 95 per cent of the company's total production. Garden Silk also manufactures filament yarn.
Meanwhile, the company has decided to maintain a status quo in the capacity of polyester fabric and finished products such as sarees and dress materials at 50 lakh metres per month and 25 lakh metres per month, respectively.
Post-expansion, Garden Silk Mills is expecting its turnover to rise significantly from over Rs 400 crore that the company registered in the financial year 2007-08.

Honeywell automation india ltd

Established in 1988, at that time known as tata honeywell, Honeywell corporation is a subsidary of Honeywell asia pacific inc which in turn is a subsidary of US$ 30 billion Honeywell INtl Inc USA. HAIL is indias leading process management and control system solutions provider. It supplies industrial automation and control solutions to core industries like petrochemicals, refining, oil and gas, mining, power and metals.
Spread over 36000 sq ft, HAIL's production facility at Pune is certified by Honeywell and several govt and defence establisments.
It has five strategic business divisions: Global services, Control services, Process solutions, Building solutions and Honeywell security group.
Looking at its financials we find that the company has reserves of 225 cr on a equity base of 8.8cr. This makes this stock a potential bonus candidate. For the year ended 31st dec the company managed an eps of Rs 73 and paid a dividend of Rs 10 per share.
The 52 week high low stands at Rs 2624 and Rs 1309. The stock now trading at 1364 is near its lows and has a good chance of moving up. Over 81% of the stock is held by the promoters, 3.68% by mutual funds and hardly 15% is held by the public. The only hitch i find is that it is not actively traded stock.

Lafarge buys Larsen and tubro concrete for Rs 1480 cr

Lafarge, the world's second biggest cement maker after Holcim, said it agreed to buy Larsen & Toubro's (L&T's) ready-mix concrete (RMC) business for an enterprise value of Rs 1,480 crore ($349 million) as part of its plan to expand into emerging markets and establish its leadership in India.
Lafarge will buy 66 concrete plants of L&T located in key markets, including Delhi, Kolkata, Mumbai and Bangalore, with a total estimated volume of 4.1 million metric cubic capacity in 2008.
With this acquisition, Lafarge's third in the country, the French firm will lead the Indian RMC market and capture a market share of 25 per cent in India.

Announcements by companies already reviewed

Polymedicure ltd
Poly Medicure Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 20, 2008 for considering the approval & authentication of the Audited financial results of the Company for the year ended March 31, 2008 and for considering the proposal for recommendation of dividend respectively.
India glycol ltd
India Glycols Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 23, 2008, to consider and approve Annual Accounts / Audited Financial Results of the Company for the financial year ended March 31, 2008 and recommendation of Dividend, if any, on equity shares of the Company for the financial year 2007-08.

Falling ruppee good for some, bad for others

Falling ruppee may be signifing good times for IT companies and exporters as it would help them in increasing their margins and at the same time making them more competitive too. However there is the other side of the story which should not be forgotten. The weak ruppee has added to costs of imports and this is going to have a negative effect on the oil refineries and would also put pressure on the foreign exchange reserves and could derail the efforts made by the govt to control inflation. Secondly, it is going to have a negative impact on the companies who have taken foreign currency loans and who are close to repay them. They would now have to shell out more ruppees to buy dollars adding to their costs. Two sides of the coin.

Mysore cement to merge group companies with itself

Heideberg the german cement major has announced the merger of its two companies into mysore cement. The merged companies are Indorama cement and Heidelerg india. Both these companies are unlisted.
The shareholders of Indorama Cement will receive 1.3544 equity shares of Mysore Cements for each equity share of Indorama, while the parent will receive 0.1469 shares of Mysore Cements for every share of HeidelbergCement India.
The purpose is to increase synergies and reduce costs which would in turn help in increasing the EPS. There are also plans to increase the capacity to around 12 mt from the consolidated total of around 3 mt now.
The merger would make it easy to undergo expansion as mysore cement is currently sitting on a cash of Rs 250 crore and the proposed expansion needs around 800 to 900 crores. The merger would help leverage resouces. The merged entity will have a turnover of Rs 1200 crore and EBITDA of Rs 150 crore.
Indorama Cement's plant is located in Raigad district of Maharashtra, while Mysore Cement's plants are situated in Madhya Pradesh, Uttar Pradesh and Karnataka, providing Heidelberg with access to markets in central, north and south India.
I had earlier recommended mysore cement for long term and based on its results which i have posted here it looked quite attractive. With great plans around the corner the stock should see good movement on monday.

Larsen and tubro close to selling its Ready mix concrete business

French cement major Lafarge SA, the world's second-largest cement maker, has emerged the frontrunner in the race to acquire the ready-mix concrete (RMC) business of engineering and construction major Larsen & Toubro (L&T). Deal size estimated at over Rs 1,000 crore.
The construction giant sold its cement business to the Birlas in 2003, now UltraTech Cement, but retained the RMC division. The company is the leader in the RMC segment with a market share of 25 per cent. The revenue is Rs 1,000 crore annually.
L&T has 66 RMC plants across the country with an overall annual installed capacity of around 4 million cubic metres. Twenty five of these plants are in the south, while the rest are in the west and the north. Industry analysts said RMC constitutes 3 per cent of the total cement business at present, but the growth opportunities are enormous with spending on infrastructure on the rise.
Lafarge currently has three cement plants in India, two in Chhattisgarh and a grinding station in Jharkhand. It is expanding capacity in Chhattisgarh and Himachal Pradesh, taking its overall capacity to 12 million tonnes by 2010 from the current 6 million tonnes.
L&T would be losing out around 4% of its turnover if this deal goes through. But at the same time it is likely to get a good price for the business and could see an upside from the current levels. I would recommend that one adds in tranches and act according to the actual information flow regarding the deal price from the company.

Airtel seeks new markets

Telecom major Airtel is now looking in for new markets within india. Rural india is what it has found to keep up its growth. After having made a good place in the urban areas of Punjab, Himachal Pardesh and Haryana its now giving additional facilities to the rural areas of the three states. It would provide economical handsets to make mobile with in their reach. It has also tied up with IFFCO as a partner for rural operations so that the agriculturalists additionally get information beneficial to them, including relating to weather, farm prices and on agricultural inputs. The IFFCO members would also be given a calling rate of 50 paise per minute against the normal local tariff of Re one per minute for urban areas. This clearly shows that the management is always targeting big and they see huge potential in the indian rural market. Every attempt is being make to capatalise the same and would have long term positive impact on the working of the company.

MRPL likely to sell diesel to Iran

MRPL will soon conclude a deal to sell 250,000 tonnes of diesel to Iran over the next eight months replacing Reliance Industries as a major supplier to the OPEC member. MRPL sold its first spot cargo to Iran last month as the Iranian National Oil Co sought new suppliers after India's Reliance halted sales. Sources said Reliance's bankers refused to confirm letter of credit raised by Iran's central bank due to increasing Western pressure over Tehran's nuclear programme. It would be able to sidestep the payment problems that Reliance faced by settling its deals through the government-run SBI.
The news is likely to have a positive impact on the stock and this would mean a good price for part prouction of the company.

India still a favourite among FII's

Jhon A Thain chairman and CEO of Merril lynch said that high economic growth rate and domestic demand makes india a very attractive market and in a way also immunes india from the slow down in the US economy.Thain believed India would offer huge opportunity in the coming days for the company as on the wealth management side, Merrill Lynch anticipated huge opportunity emanating from the huge amount of wealth being created and on the investment banking side, India Inc is becoming more global with the outbound M&A activity on the rise.

Oil prices on a rise

Crude prices continued to rise and touched $121 a barrel something which we couldnt image 6 months ago. The situation seems to be quite alarming as the need for crude still remains unfulfilled and the houses are expecting the price to rally futher. This i think could have a very negative effect on the growth of the economy. The govt too is not in a hurry to raise prices of fuel as it is already busy trying to cool down rising inflation. This would inturn lead to more and more of subsidies and is not a good news for oil marketing companies.

PNC signs up with sony for 3 movies

Pritish nandy communications have entered in to an agreement with Sony Pictures wherein they will co produce there films. This is likely to give a new opening to indian talent and bring in latest expertise in making movies to india. The films would find a better place as regard to international marketing is concerned. One of the film Raghupati raghav raja ram is at the last stages of finalisation between the two.
The move is surely to have a positive effect on the stock price and we can see some action in this stock. Although i agree that the true effects would be visible only in the long term.

Edelweiss capital gets nod for mutual fund business

There could not have been a better timing for edelweiss to get a MF nod from SEBI when the market conditions are just ripe to get people back in to the market. The company today made a press release that it had been granted a license for the same. Registration has been granted to Edelweiss Mutual Fund and approval has been granted for Edelweiss Asset Management Ltd to act as investment manager to Edelweiss Mutual Fund. Edelweiss Asset Management plans to launch eight to nine products over the next 12 months. The product portfolio will include broad based equity funds, structured products, arbitrage funds, ETFs, and other innovative fixed income and equity funds.
This is likely to have a very positive impact on the share price of edelweiss which has taken a sharp beating from nearly Rs 1725 to around Rs 850 now.

Numeric power systems ltd

Numeric the number one UPS company in india is having operations in chennai. It began its operations in 1984 and became public in 1996. The company has since diversified in to solar power, volatage stabalizers, isolation transformers, invertors, DC power, custom built power conditioners and power management products.
Its clients include nationlised and multinational banks, research and eductional institutions, IT companies like wipro, honeywell, infosys etc, state and central govt bodies, defence and psu's.
The company reported an eps of rs 41for the year ending march,07 and had reserves of 97 crores on an equity base of just 5 crores. The company has reported an eps of rs 17.8, 21, 20.9 in the three quarters in the previous financial. This means that this would result in an eps of Rs 60 is the company maintains the current performance. The stock is currently trading around Rs 640 and is available at a p/e of around 11. The 52 week high of the compay was 1190 and a low of Rs 330. Some of the mutual funds like icici tax saver and principal mutal funds have holding in this company. The collective stake of mutual funds is 7.8% and the promoters and foreign individuals hold 63% inthe company. Kindly note that the volumes of the company are currently low at around 2000 shares a day.

Adani power plans $1 billion listing

Adani Group is planning a $1-1.5 billion initial public offering of its power unit, making it the first power company to come to market since the chaotic debut of Reliance Power in February.
It filed the ipo with the regualator on friday and is said to be the most advanced greenfield project in india.
What i am more interested in and i feel would be inthe interest of the investors too is whether the already listed group companies, mundra port and adani enterprises have a holding in the company and at what price. Secondly, what would be the issue price and thus the resultant gains to the companies on the listing of the company.
The 3i group had earlier aquired 10% stake in adani power for $227MN from adani enterprises whose subsidary adani power is. The current share holding of adani enterprises is not known but one thing seems to be sure that adani enterprises should see an increase in shareholder value once adani power is listed.