Five hot stocks - 2013

27 DEC, 2012, 12.08PM IST, ECONOMICTIMES.COM 

Five hot stocks to watch out for in 2013

MUMBAI: The New Year 2013 promises to be an exciting one for Indian equities. The FIIs have been bullish and consistently buying into stocks throughout the year. They have bought stocks worth $3.4 billion in the month of December and have invested around $23 billion in 2012. Domestic institutions and retail investors are expected to join the FIIs next year and take the benchmarks to new highs.
Vinay Khattar, Head Research (Individual Clients),Edelweiss Financial ServicesBSE 3.95 %, has cherry-picked five stocks that are expected to be on investors' radar in 2013:
Larsen & Toubro:
Larsen and ToubroBSE 0.20 % (L&T) is India's largestinfrastructure and EPC company with presence across major verticals like process industries, hydrocarbons, power, infrastructure, defence and railways. It has a dominant position and market share in verticals such as oil & gas, process, roads, bridges and industrial structures. L&T has also ventured into new business verticals like ship building, power BTG and nuclear energy to enhance its revenue base. L&T has done a commendable job even during the current challenging macro environment, with order inflows (at Rs 40,600 crore, up 26 per cent YoY in H1FY13) and RoEs sustaining at creditable levels (~17 per cent). Another positive is that the company's consolidated EBITDA margins would sustain in the 13-13.5 per cent range. In addition, L&T has comfortable debt-equity ratio and robust operating cash flows.
L&T has a strong order backlog of Rs 1.59 lakh crore (3x FY12 standalone sales). The company management has guided for 15-20 per cent growth in revenues and order inflows for FY13. With interest rates heading south, the capex cycle is also set for a material improvement over the next few months. L&T will be among the biggest beneficiaries of the revival in the capex cycle in FY14. The stock is trading at a reasonable valuation of 16.8x FY14E consolidated earnings. One can buy L&T with a target price of Rs 1,941 for the next 12 months.
Tata Steel:
Tata SteelBSE -0.59 % is among the top ten global steel companies with an annual crude steel capacity of over 28 million tonnes per annum (mtpa). It is the lowest cost manufacturer of steel in the world, and makes higher EBITDA/tonne of $350 as against average of $250-280/tonne. Tata Steel is also one of the world's most geographically-diversified steel producers, with operations in 26 countries and a commercial presence in over 50 countries.
The global steel industry has been sluggish over the past several months, as deteriorating economic prospects in the developed world and slowdown in China have hit the overall demand. Tata Steel's European operations have been adversely affected.
However, things appear to be finally looking up across the globe. Key Chinese economic indicators, viz. fixed assset investment (FAI) growth, industrial production, floor space sold and PMI, have stabilized. We see prospects of a recovery in Chinese demand for CY13. A similar picture seems to be emerging in India as lead economic indicators point towards a demand pick-up in FY14. Sequential growth in projects under implementation across three categories -- infrastructure, capex and construction -- has improved in the past 1-2 quarters.Overall, the phase of weakening global demand for industrial metals seems to be over. However, we expect a modest recovery unlike the rapid recovery seen in 2009. Tata Steel is expected to witness strong improvement in earnings in H2FY13 led by: (i) robust volumes in India (~28 per cent rise in H1FY13); and (ii) reduction in raw material cost for both Indian and European operations (partly negated by decline in steel prices). The company is also expected to maintain its margins from the current levels. Despite the short-term issues, Tata Steel looks attractive, with a target price of Rs 516 for the next one year.
Wipro:
Over the past 50 years, WiproBSE 1.31 % has evolved into one of the leading global IT companies. Wipro has over 140,000 employees and clients across 57 countries. It had few hiccups in FY12, which led to the company undertaking management reorganization. The management recast seems to be paying off now, as Wipro has started showing initial signs of improvement. It is likely to benefit from traction in deal wins as well as improvement in operating metrics.

Also, the company's management has stated that the deal pipeline has improved considerably (particularly in IMS, BPO and retail banking). Many IT deals are coming up for renewal over the next few months. This will provide an incremental fillip to WiproBSE 1.31 % to outstrip muted growth assumptions. Wipro is likely to benefit from the surge in deals ininfrastructure services, given its strong presence in this space. The fast growing energy & utilities segment and the recent stability in the troubled BFSI space will add to its strength.
The demerger of the non-IT businesses is also a step in the right direction. Additionally, Wipro has ample scope to improve its utilisation levels (ex-trainees at 78 per cent) to the earlier 80 per cent-81 per cent as seen in FY10 and FY11 and increase the offshoring, which would act as a trigger for the EBIT margin to bounce back to 22-23 per cent from the current level of 20-21 per cent. One can buy Wipro with a target price of Rs 437 for a 12-month period.
Yes Bank:
As a new-generation private bank, Yes BankBSE -0.71 % has expanded considerably ever since starting operations in FY05. The bank listed on the bourses in July 2005. Yes Bank is managed by a well-qualified and experienced board. Yes Bank has maintained growth rate twice the industry average. Yes Bank's loan book is expected to grow at a CAGR of ~35 per cent over the next 3-4 years.
Asset quality too is among the best in the industry, with gross NPA ratio at 0.2 per cent and net NPA ratio of 0.04 per cent. Yes Bank's margins have also improved to around 3 per cent. Also, Yes Bank generates ~22-23 per cent ROEs, which is among the highest in the Indian banking industry.
Being relatively new, Yes Bank has a low CASA ratio to total deposits, but the bank has been taking initiatives to increase its CASA base. Yes Bank was among the first bank to take advantage of the savings rate deregulation move announced by the RBI. It has seen strong momentum on the CASA front since increasing the savings rate.
With the expectation of interest rates peaking, we expect Yes Bank to maintain NIM's of ~2.5 per cent. The stock is currently trading at attractive valuation of ~2.3x FY13E adjusted book. One can buy with a target price of Rs 560 for a 12-month period.
ZEE Entertainment:
ZEE is India's oldest private cable television broadcaster and one of the largest media companies in India. Besides Zee TV and Zee Cinema, the company has an attractive bouquet of several other channels. ZEE also has an impressive bouquet of regional channels. The company has 650mn viewers in total.
ZEE will be a major beneficiary of digitization, with its large channel bouquet, strong distribution muscle, sound balance sheet, cash flows, large dividend payouts and ability to garner higher share of the subscription revenue pie.
As of FY12, subscription revenues contributed ~44 per cent to ZEE's total revenues. We expect subscription revenues to contribute ~56 per cent to ZEE's total revenues by FY16. ZEE's international revenues will further add to the company's profitability prospects. Further, ZEE and STAR group have merged their distribution arms recently to form MediaPro. Digitization, coupled with the MediaPro distribution JV, will enable ZEE to grow its subscription revenues aggressively over the next few years.At the CMP of INR 190, the stock trades at a PE multiple of 23x FY14E earnings. One can buy ZEE EntertainmentBSE -0.32 % with a target price of Rs 250 for the next 12 months.

http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/five-hot-stocks-to-watch-out-for-in-2013/articleshow/17774483.cms?curpg=2

Bharti Infratel shares drop 13 %- IPO FAILURE....

Bharti Infratel shares drop 13 percent in market debut

By Devidutta Tripathy and Denny Thomas

NEW DELHI/HONG KONG | Fri Dec 28, 2012 4:25pm IST

 (Reuters) - Bharti Infratel, backed by billionaire Sunil Mittal, dived 13 percent in its trading debut after raising about $760 million in India's biggest IPO in two years, weighed down by a cautious outlook for mobile tower operators.

The IPO, priced near the lower end of an indicative range to ensure success, struggled to find interest from retail investors and was supported mostly by overseas institutional buyers, a key pillar in the Indian stock market. Bharti Infratel's poor trading debut is unlikely to deter future offerings in India, bankers said, with strong foreign fund bids expected to underpin the share market. "It's early days and the stock should settle in the course of the next day or two. If the foreign flows continue, the market will remain buoyant which should translate into more deals," a person familiar with the Bharti Infratel IPO said. "If not IPOs, there should be more follow-on offerings." 

Already, privately owned Axis Bank Ltd(AXBK.NS) has announced plans to raise fresh equity capital, and the source said a possible listing of National Stock Exchange is among the other IPOs that investors can expect. Bharti Infratel's listing follows a tepid first half in IPO deals, and is the biggest after state-run Coal India's $3.5 billion issue in 2010.  The listing pushed India's IPO volume to $1.28 billion this year, shy of last year's $1.36 billion, according to Thomson Reuters data. But that is still short of the record set in 2007 when Indian corporates raised $8.65 billion through IPOs. IPO volumes are expected to improve further on rising foreign capital inflows. Several high-profile deals including the potential IPO of Vodafone Group Plc's (VOD.L) India unit are likely to hit as earlier as next year, bankers said. 

Including follow-on share offers, share sales volumes in India jumped 70 percent from a year earlier to $14.8 billion, according to Thomson Reuters data. The market will likely remain busy in 2013 with two large share sales in state-run Oil India Ltd (OILI.NS) and NTPC Ltd (NTPC.NS) set to come in the next few weeks as part of the government's plan to raise around $5.5 billion by exiting part of its stakes across a slew of companies. "The quality of companies do matter a lot. Investors are latching on to good quality names or where corporate governance and business risks are far lower," said Dhananjay Sinha, the Mumbai-based co-head of institutional research at Emkay Global Financial Services. Bharti Infratel, a unit of top Indian mobile phone carrier Bharti Airtel Ltd (BRTI.NS) and partly owned by KKR & Co Ltd (KKR.N), closed at 191.65 rupees, having fallen as much as 14.3 percent during trade on the National Stock Exchange. Bharti Infratel had issued shares at 220 rupees to funds and wealthy investors, who received the majority of the allocation. The company sold shares to retail investors at 210 rupees and to cornerstone investors at 230 rupees. The broader Nifty, which has surged about 28 percent this year and is Asia's third best-performing market, ended 0.65 percent higher. 

POOR SHOWING 

Bharti Infratel's share performance was poor compared with the surge in shares of Credit Analysis and Research Ltd and PC Jeweller Ltd, both of which made their market debut this week after raising around $100 million each. Weighing on the outlook for mobile tower operators, an Indian court this year revoked permits of several wireless carriers while demand growth for third and fourth-generation mobile data services slowed. 

"The business of towers is under stress," said K.K. Mital, a portfolio manager at Globe Capital in New Delhi. "This is a business with a long gestation period and also not something retail and HNIs (high net worth investors) easily understand." 

Shares of GTL Infrastructure Ltd (GTLI.NS), the only other mobile tower operator listed in India, have slumped 90 percent in the last two years, hit by debt repayment worries. Bharti Infratel priced its IPO at lower valuations to overcome those concerns, and managed to attract more than a dozen cornerstone investors including units of Morgan Stanley (MS.N) and Citigroup Inc (C.N). 

Bharti Infratel sold about 146 million new shares, or more than three quarters of the shares on offer, while four of its private equity investors, including Singapore state investor Temasek Holdings and the private equity arm of Goldman Sachs Group Inc (GS.N), sold a total of 42 million shares as they cashed out of some of their early investments.The selling price was at a steep discount to the $1 billion that seven funds including Temasek and Goldman arm had paid in 2007 for a combined 9 percent stake in Bharti Infratel. KKR separately invested $250 million in 2008, but its exact holding is not known. 

Bharti Airtel, which owned 86 percent of the tower operator before the IPO, did not sell any shares in the process.Bank of America Merrill Lynch, Barclays Plc, Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase & Co, Standard Chartered Plc and UBS AG were the foreign banks underwriting the IPO. Kotak Mahindra Bank and Enam Securities were the domestic banks handling the share sale. Bharti Infratel has about 34,000 towers and owns 42 percent of Indus Towers, the world's largest tower operator. Along with Indus, Bharti Infratel has a 38 percent share of the Indian telecommunications tower market. 

(Additional reporting by Manoj Dharra; Editing by Rafael Nam and Ryan Woo)

http://in.reuters.com/article/2012/12/28/bharti-infratel-listing-idINDEE8BR02M20121228

Financial stability at risk - RBI CONCERN !!!

'Financial stability at risk on falling growth, high inflation'

Last Updated: Friday, December 28, 2012, 20:27

Mumbai: India's financial stability remains potentially at a risk on falling growth, persistent elevated level of inflation and high twin deficits, the Reserve Bank on Friday said in a report.  "...Lower growth, elevated inflation, high fiscal and current account deficits remain potential risks to financial stability," RBI said in its Financial Stability Report December 2012. Finance minister P Chidambaram yesterday had said it was imperative to contain the fiscal deficit -- occurs when total expenditure exceeds the revenue -- by augmenting resources and controlling expenditure.
For 2012-13, the fiscal deficit has been revised upwards to 5.3 percent, from 5.1 percent in view of increased expenditure and lower-than-estimated revenue realisation. Also, the CAD (current account deficit) in 2011-12 was 4.2 percent and the government expects to bring it down to below 4 percent in the current fiscal. CAD occurs when a country's total imports of goods, services and transfers is greater than the country's total export of goods, services and transfers. Amid global slowdown and uncertainty, the Indian economy remains sluggish, held down by slowing investment, weakening consumption and declining exports, RBI said.
"The loss of growth momentum which started in 2011-12, extended in the current year with growth remaining below the trend, however, inflation continued to remain above the Reserve Bank?s comfort zone.On the external front, the current account deficit (CAD) remains above the comfort level and the Indian rupee witnessed depreciation pressure, RBI said. The wholesale price index based inflation declined marginally to 7.24 percent in November from 9.46 percent in the same month a year ago. However, retail inflation for the month moved up to 9.90 percent from 9.75 percent in October.
RBI said various domestic and external factors caused significant deceleration in economic growth of the country in last few quarters. "GDP growth remained low at 5.3 percent during Q2 2012. On the domestic front, structural impediments such as fall in domestic savings, persistently high inflation, regulatory and environmental issues resulting in a fall in investment demand and moderation in consumption spending have contributed to the fall in growth," it said. The Reserve Bank has lowered this fiscal's economic growth projection to 5.8 percent, from 6.5 percent earlier.
PTI 

http://zeenews.india.com/business/news/finance/financial-stability-at-risk-on-falling-growth-high-inflation_67140.html

WORLD PREDICTIONS GO WRONG...SO IS SENSEX...

When the world didn’t end for the markets Published: Saturday, Dec 29, 2012, 9:28 IST  By Sachin P Mampatta | Place: Mumbai | Agency: DNA It wasn’t just the Mayans who thought 2012 would be a bad year.Market mavens felt nearly as glum about Indian equities.In fact, predictions for the BSE Sensex went as low as 11000-12000, according to a note by a large foreign brokerage released in December 2011.The Sensex instead gained 3989.92 points or 25.82% to close at 19444.84 on Friday, with one last session to go on Monday.FIIs were net buyers by rS1.27 lakh crore, the highest since the 1.36 lakh crore they poured in during 2010.  The banking sector was the highest gainer on hopes of interest rate cuts, its index gaining 56.56%. The debt-laden Realty index followed at 51.92% for the same reason.The fast moving consumer goods (FMCG), consumer durables, auto and healthcare indices gained between 38-50% on the domestic demand story.The only index to end with losses was the one tracking the information technology sector, down 1.13% on weak global sentiment.Sanjay Sinha, founder, Citrus Advisors, stated that the government’s moves towards economic reforms such as reducing fuel subsidy helped improve sentiment.“The sudden surge of energy in government circles enabled the economy to start coming out from its long slumber,” he said noting that this helped reverse a bout of negative sentiment following the unveiling of harsher tax provisions through the General Anti-Avoidance Rules (Gaar) which was announced in the budget and put off later in the year. Mavens are now predicting new highs for the market, albeit on the back of earnings growth rather than an expansion in price/earnings multiples.“The primary concern is the resolution of the US fiscal cliff crises(an impending budget tightening which may negatively impact the American and the global economy). In the event that this is amicably sorted and we have FII flows repeating the trend of the first quarter of 2012, then it is quite likely that we may have a front-ended rally in 2013,” said Sinha.N Sethuram Iyer, CEO, Daiwa Asset Management (India) said political and reforms developments would be a key driver for the market. “It is quite possible we could be looking at 15-20% upside which would put us at new highs.”The neglected cyclicals could be the ones to watch out for in 2013. “If we are going to have higher growth then it has to be anchored by the infra structure...growth has to come from construction, infra and capital goods space. Activity in the segment is likely to pick up around the budget when one could expect some announcements for the segment,” said Iyer. http://www.dnaindia.com/money/report_when-the-world-didnt-end-for-the-markets_1782907

Rs4160,000,000,000--NSE VOLUME !!!

Rs4160,000,000,000: Algos steer Street volume record

Published: Friday, Dec 28, 2012, 2:39 IST | Updated: Friday, Dec 28, 2012, 18:10 IST 
By Nitin Shrivastava & Sachin P Mampatta | Place: Mumbai | Agency: DNA

Total trading volumes on the stock market are moving faster than you think. So much so that on Thursday, it hit off its highest ever level, with securities worth Rs4.16 lakh crore changing hands during the day.This is the second month in a row that volumes scaled a new peak on the date of expiry, coming in at Rs3.91 lakh crore on the last Thursday of November when derivative contracts for the month expire.Experts attribute the trend of rising daily volumes to a shift in derivatives trading towards options and a higher usage of high frequency trading (HFT).Yogesh Radke, head of quantitative research at Edelweiss Securities, has specifically pointed to the higher proportion of derivatives to the overall volumes. “The option volumes now constitute 70-75% of derivative volumes and with evolution in technology like high frequency trading, colocation and algorithmic trading for intra-day trades, the daily turnover has seen a surge which otherwise would not have been possible by manual trading,” said Radke.Siddarth Bhamre, head (derivatives) at Angel Broking, puts it down to an active BSE derivative segment because of which the daily turnover has gone up considerably. “The BSE derivatives segment where most of the volumes come from market making has helped the overall market volumes. Otherwise, FIIs this month were not at all active in the futures and options (F&O) market even as they continued buying in the cash market. The rollovers have been good with most people carrying forward their positions to January,” he said.Derivative volumes surged to Rs4 lakh crore for the first time on record even as total cash market turnover stood at Rs16,328.63 crore, or less than a third of their 2009 high of Rs51,933 crore. BSE derivative volumes accounted for Rs1.72 lakh crore of the traded value, also a record for the exchange’s derivatives segment. Its cash segment had volumes of Rs2,519.61 crore. The National Stock Exchange had total volumes of Rs2.41 lakh crore of which only Rs13,809.02 crore came from the cash segment.The best part is the sentiment remains positive for the next month. “The market-wide rollover at 75% has been in line with previous months’ average, with banking and metal stocks reporting decent rollovers. The roll cost was high indicating positive sentiment going into January series. However, Nifty rollover was slightly below average,” said Radke.“The upcoming January series should be good with foreign institutional investors (FIIs) coming back in the first week of January. Though a lot of hue and cry is being raised over the fiscal cliff, the FIIs don’t seem to be concerned about the same much as they continue pumping money into global equity markets. Also in India, the volatility index (VIX) index continues to remain at around 14% levels which does not indicate too much uncertainty,” said 

http://www.dnaindia.com/money/report_rs4160000000000-algos-steer-street-volume-record_1782465

Rs 8000cr to Rs 4,62,000cr m-cap--RATAN TATA

Fri, Dec 28, 2012 at 11:45

Tata Group: Journey from Rs 8000cr to Rs 4,62,000cr m-cap

Ratan Tata took over as the chairman of the Tata Group in 1991 and in the last 21 years he has steered the company through some turbulent times, we saw a massive slowdown from 1996 to 2003.

Ratan Tata took over as the chairman of the Tata Group in 1991 and in the last 21 years he has steered the company through some turbulent times, we saw a massive slowdown from 1996 to 2003.

Thereafter, he steered the group through exuberance 2003-2008 and followed by another severe downturn and cash crunch that hit all markets in 2008 end and thereafter a double slowdown, first the financial crisis slowdown and sovereign debt crisis. But, in the last two decades the perception that is spoken about is that the Tata Group has not been a wealth creator for its shareholders. But numbers however show a different story.

Sajeet Manghat of CNBC-TV18, in his analysis on the group points out that Ratan Tata took charge of the group in 1991, when the country was opening up to liberalization. His work is reflected with the way he has expanded various companies.  

In 1991, the marketcap of the entire Tata Group was below Rs 8,000 crore and Tata Steel was the largest company which accounted for nearly 50 percent of the marketcap followed by Tata Motors . At that point of time there were 18 listed companies.

Today, the group's market cap has crossed Rs 4,62,000 crore. Tata Consultancy Services ( TCS ) is the largest company by marketcap, and accounts for nearly 52 percent of total group's marketcap. Today, the group has around 32 companies listed on the stock exchanges.

In 1994, the total revenue of the group was around USD 6 billion, nearly Rs 18,000 crore and now it stands at nearly USD 100 billion. When we look at the composition, nearly 58 percent of the revenue comes from the international markets. Between the year 1996-2003, Ratan Tata decided to take a global route so that the group grows beyond domestic market. In FY2004, the group's international revenues stood at nearly USD 4.7 billion, which was 27 percent of the group revenues. Today, it stands at USD 58 billion, and contributes to 58 percent to the group revenue. 

For expansion of business, some of the group companies have acquired nearly 55 companies across the globe, including big companies having a good marketcap. Ratan Tata has used good growth acquisition led strategy to take group to new heights.

http://www.moneycontrol.com/news/business/tata-group-journeyrs-8000cr-to-rs-462000cr-m-cap_800668.html

NSE-Trading holidays-2013

Trading holidays for the calendar year 2013

Sr. No. Date Day Description
1 27-Mar-13 Wednesday Holi
2 29-Mar-13 Friday Good Friday
3 19-Apr-13 Friday Ram Navmi
4 24-Apr-13 Wednesday Mahavir Jayanti
5 01-May-13 Wednesday May Day
6 09-Aug-13 Friday Ramzan ID
7 15-Aug-13 Thursday Independence Day
8 09-Sep-13 Monday Ganesh Chaturthi
9 02-Oct-13 Wednesday Gandhi Jayanti
10 16-Oct-13 Wednesday Bakri ID
11 04-Nov-13 Monday Diwali-Balipratipada
12 14-Nov-13 Thursday Moharram
13 25-Dec-13 Wednesday Christmas

http://www.nseindia.com/content/press/consolidated_holidays_2013.pdf

50 stocks that you can BUY for 2013..

50 stocks that you can BUY for 2013

Here is a list of stocks spanning various sectors that brokerages and research houses across the country are recommending for 2013

Aastha Agnihotri / Mumbai Dec 28, 2012, 00:30 IST Indian equity markets have witnessed overseas inflows of nearly $23 billion in the year 2012, making the benchmark indices - the Sensex and Nifty - the third best-performing index after Thailand's SET and Germany's DAX. Most experts believe that the next calendar year, 2013, does hold promise with the equity segment witnessing an increased retail participation, which inturn, may push the Sensex to new highs in the coming year. Smart Investor's Aastha Agnihotri spoke to a host of analysts across leading research houses and brokerages across the country for their stock picks for 2013.   Auto / Auto Ancillary BUY M&M, Maruti Suzuki, Tata Motors, Exide Industries Banking BUY  SBI, ICICI Bank, HDFC Bank, Axis Bank, Federal Bank, Dena Bank, IndusInd Bank, Karur Vysya Bank, Yes Bank Capital Goods BUY Havells India, Symphony Ltd, BHEL, Larsen & Toubro, Bharat Forge, Thermax, Va Tech Wabag, Cummins India Cement BUY Madras Cement, JP Associates  Consumer Durables BUY Astral Polytech, , Raymond, Mcleod Russel   HOLD Bata India, Titan Industries FMCG BUY ITC   HOLD Hindustan Unilever Healthcare/Pharma BUY Dr Reddy's, Sun Pharmaceuticals, Cipla, Wockhardt, Fortis Healthcare, Lupin, Cadila, Strides Arcolab, Natco Pharma IT BUY TCS, HCL Technologies, Tech Mahindra, Wipro  Media & Entertainment  BUY Zee Entertainment, Dish TV, TV18 Metal BUY NMDC, JSW Steel, Hindustan Zinc, Tata Steel NBFCs BUY Reliance Capital, L&T Finance Holdings,HDFC, IDFC  Power BUY PFC, REC Realty BUY DLF Shipping BUY Adani Ports & SEZ Telecom SELL Reliance Communications http://www.businessstandard.com/india/news/50-stocks-that-you-can-buy-for-2013/200800/on

JAPAN Nikkei - 21-month high!!!

Nikkei vaults 21-month high, heads for best year gain since 2005 Advances 0.9% in mid-morning trade, has rallied 20.2% over the past 6-1/2 weeks on speculation that Abe will pursue policies to weaken the currency Reuters / Tokyo Dec 28, 2012, 07:36 IST Japan's Nikkei average rose to a 21-month high on Friday, heading for its best yearly gain since 2005, as exporters were buoyed by a weaker yen on expectations of aggressive monetary stimulus under new Prime Minister Shinzo Abe. Export-focused firms leading the index higher included Toyota Motor Corp, Honda Motor Co, Canon Inc and Nikon Corp, up between 1.2 and 2.4%. Index heavyweight and industrial robot maker Fanuc Corp gained 1.7%. The Nikkei advanced 0.9% to 10,412.73 in mid-morning of its last trading day of the year, touching its highest level since March 11, 2011 and shrugging off a slump in Japan's factory output in November. "We expect the yen to hit 90, and the Nikkei to reach 11,000 as early as late January or early February," said Shun Maruyama, chief Japan equity strategist at BNP Paribas. "The market is pricing in a new inflation target of 2%. However, the problem is how to achieve the target. The market is focusing on what the BOJ will announce in its next meeting." Maruyama said if the Bank of Japan, which is to hold its next policy meeting on January 21-22, fell short of market expectations, investors would take profit.The benchmark Nikkei has rallied 20.2% over the past 6-1/2 weeks, on speculation that Abe will pursue policies to weaken the currency, which has hurt Japanese exporters' competitiveness and their overseas earnings when repatriated. The Nikkei is up 23.2% this year, on track for its best yearly gain since 2005, while the Japanese currency has lost 12.4% against the greenback this year, and is set to post its biggest annual loss since 2005.The yen hit a more than two-year low of 86.64 to the dollar on Friday. The broader Topix index gained 0.5% to 858.00. Nippon Electric Glass Co, however, shed 3.5% after the glassmaker cut its earning forecast for the nine-month period through December, citing a price decline in glasses used in flat panel displays. http://www.businessstandard.com/india/news/nikkei-vaults-21-month-high-heads-for-best-year-gain-since-2005/200803/on

Bitter season of LOSSES- UP's sugar mills

Bitter season awaits UP's sugar mills

Sharp rise in cane prices may lead to more losses, arrears in payments to farmers

Ajay Modi / New Delhi December 27, 2012, 0:09 IST

The sharp increase in cane prices could lead to more losses and arrears in payments to farmers; disaster, says industry, when coupled with Centre’s controls

Uttar Pradesh, the country’s largest sugar producing state, has once again chosen to give politics prominence over economics in deciding the price of sugarcane for the sugar industry. The state is home to the country’s top sugar firms like Bajaj Hindusthan, Balrampur Chini, Dhampur Sugar Mills and Triveni Engineering, among others. The Akhilesh Yadav-led Samajwadi Party government announced an increase on December 7 of Rs 40 a quintal, or 16 per cent, in the state advised price (SAP) of sugarcane across varieties. The new price is Rs 280 and Rs 290 a quintal for normal and early varieties, respectively.

Yadav’s predecessor, Mayawati, had also raised sugarcane prices by Rs 40 a quintal last year as Uttar Pradesh was preparing for elections to the legislative assembly — there are close to seven million sugarcane farmers in the state. No party can afford to antagonise these farmers if it wants to rule Uttar Pradesh. The sharp increase has come at a time when sugar prices have softened considerably from this year’s peak of Rs 3,600 a quintal in September to Rs 3,250 a quintal now. The industry, desperate for a profitable production season this year (crushing of sugarcane starts in October or November and ends in April) after losses in recent years, was all along anticipating a lower increase. According to calculations at the Uttar Pradesh Sugar Mills Association, the mills are in a position to pay only in the range of Rs 238 to Rs 243 a quintal in 2012-13, assuming average sugar prices in the range of Rs 3,350-3,400 a quintal during the year. The higher price, as fixed by the government, will result in losses and more arrears in payments to sugarcane farmers. At the beginning of the season, sugar mills in Uttar Pradesh owed Rs 85 crore to farmers.(STATE-ADVISED CANE PRICE)

Rising costs
Abinash Verma, director general of the Indian Sugar Mills Association, says at the new sugarcane price, the cost of sugar production would be Rs 3,600-3,700 a quintal, which leaves a deficit of Rs 350-450 a quintal over the current market price of Rs 3,250 a quintal. Considering the likely output of 7.9 million tonnes this year, the industry could end the season with a loss of over Rs 3,500 crore. Share prices of sugar companies have crashed up to 20 per cent since the new sugarcane prices were announced on December 7. The industry is perplexed.

Vivek Saraogi, managing director of Balrampur Chini, the country’s second-biggest sugar producer with 10 mills in Uttar Pradesh, is visibly upset with the decision. What can the mills make from sugarcane, he asks. “Nothing other than sugar, bagasse and molasses. The best global benchmarks show that a sugar mill cannot share more than two-thirds of the realisation from the three products with farmers. The remaining one-third is required for wages, interest cost and processing charges,” he says.

According to Saraogi, the two governments, central and state, control the sugar sector and there is a complete lack of autonomy for the mills. The situation is made worse by elections, at one level or the other, every two or three years in the state. “The state government wants to raise sugarcane prices to appease the vote bank, while the Centre wants to control sugar prices to check inflation. This is a perfect recipe for disaster,” says Saraogi. This is why the industry faces cycles where production can decline sharply from 25 million tonnes to 15 million tonnes and then go back to 25 million tonnes within a couple of years. Consequently, the shortage has to be met through imports. Saraogi, who deals with 500,000 sugarcane growers across his 10 mills, says this system is creating inefficiencies in Uttar Pradesh. “Maharashtra and Tamil Nadu (they go with the lower fair and remunerative price for sugarcane fixed by the Commission for Agricultural Costs and Prices at the Centre) have lower sugarcane cost and are, therefore, more efficient like mills in Brazil. In Uttar Pradesh, the sugarcane cost is so high that our cost of producing sugar is higher by Rs 5 a kg. But, we all sell in the same markets at a similar price,” he says. No wonder banks have become extra cautious towards the industry and are not coming forward to lend money. They fear it will raise their non-performing assets.

Brewing crisis
According to Verma, Uttar Pradesh has no alternative crop to compete with sugarcane now that SAP has been fixed at this high level. “Given this price, sugarcane acreage in the state will go down only if the farmers do not get paid in time. Otherwise, we are likely to see a further increase in the sugarcane crop, which will expand sugar output further from this year’s projection of 7.9 million tonnes,” he says. This could lead to more losses and payment arrears. Mills seldom have the option to turn back farmers from their gates. It can become a political issue.

Interestingly, this time, the Uttar Pradesh mills have not legally challenged the increase in sugarcane SAP as it had been doing often in recent years. The industry has instead pleaded with the state government to grant incentives like a waiver of the purchase tax of Rs 2 on every quintal of sugarcane, reducing the society (through which the sugarcane is routed to the mill) commission from Rs 5.1 to Rs 2.1 a quintal and elimination of the three per cent entry tax levied on sugar produced and consumed within the state.

Verma says the industry also wants the Samajwadi Party government to restore the incentives committed to the industry in its previous tenure under the 2004 Sugar Investment Policy. That policy, announced when Mulayam Singh Yadav was the chief minister and Amar Singh his right hand man, had attracted investments of close to Rs 10,000 crore, in both expansion and new capacity. The policy had provided incentives such as exemption from entry tax, trade tax on molasses, stamp duty and registration charges on purchase of land, purchase tax on cane, society commission on cane and administrative charges on molasses. It had also offered a subsidy on transport of sugar and sugarcane and a capital subsidy of 10 per cent on investment. All these were to be given for five years if a company/group invested a minimum of Rs 350 crore and for 10 years if the investments were at least Rs 500 crore. However, the policy was scrapped by Mayawati immediately after she came to power in May 2007, and most companies could not avail of the full benefits that were promised by her predecessor. No major fresh investment in the sector has been made in the past five years.

Interestingly, the Akhilesh Yadav government is working on a new sugar investment policy that promises incentives for investments in the eastern part of the state, in sugar, ethanol and bagasse-based power. Given the current state of affairs, the new policy is unlikely to draw investments anywhere close to the previous one. While the state plays spoilsport through sugarcane pricing, the Centre does its bit through regressive regulations like levy sugar and a release mechanism. Under levy, every mill in the country is mandated to sell 10 per cent of its sugar production to the government for its public distribution system at a price of Rs 1,900 a quintal, substantially lower than the production cost. The Union food ministry also fixes the amount of sugar that mills can sell in the market.

“We continue to face archaic regulations in the form of levy sugar and release mechanism. When there was a shortage in domestic production, exports were banned. Today, there is surplus situation but imports continue relentlessly at a ridiculous duty of 10 per cent, benefitting farmers in countries like Brazil and Pakistan and impacting our realisation and ability to absorb the shock of this sugarcane price. If things are not rationalised, you will soon see havoc in terms of huge payment arrears to farmers,” says Saraogi. The only way to minimise the impact of the Rs 280 sugarcane price is to ban import of sugar and remove the levy obligation immediately, he adds.

Sugar mills have other revenue streams as well, like molasses and power, but the non-sugar businesses do not account for more than 15-20 per cent of their revenues. In the molasses and extra-neutral alcohol business, most mills enter into annual contracts with liquor companies, which dictate prices. In ethanol, too, the price revision from the current Rs 27 a litre has been hanging fire for more than a year. Some believe that the recent Union Cabinet decision to make it market-linked will help in improving prices to Rs 32-33 a litre. Power is a profitable business, since the cost is fixed and they get Rs 4 per unit for power. This cushions the loss from sugar to some extent.

http://www.businessstandard.com/taketwo/news/bitter-season-awaits-ups-sugar-mills/496891/

How Mindtree - emerged stronger than BEFORE....

27 DEC, 2012, 06.40AM IST, INDU NANDAKUMAR,ET BUREAU 

$1 bn goal: How Mindtree sorted out its problems and emerged stronger

Mid-sized software exporter MindtreeBSE -0.37 % has a simple philosophy to survive in India's competitive $100-billion IT services industry: Get back to the 'basics of doing business'. And, that's what the Bangalore-based company did when profits started to decline and then-chairman Ashok Soota decided to walk out two years ago. "We cleaned up our act and we did it decisively," saysSubroto Bagchi, who co-founded Mindtree with 10 others, including Soota, a former vice-chairman of Wipro. "By the time we ended FY11 — in which Mindtree's profits had fallen over the previous year — we had a strategy in place: To get back to basics," adds Bagchi. Mindtree has come a long way since its debut in 1999. Founded by 10 senior IT professionals from companies such as WiproBSE -0.22 % and Cambridge Technology Partners, Mindtree soon received its first round of funding from Walden International and Global Technology Ventures. 

During the initial days Bagchi focussed on ferreting out new leaders from within the organisation. In just six years, Mindtree's revenues crossed $100 million and it opted to go for a public listing in 2007. The timing wasn't the best. A year later, as the mortgage crisis in the US shook the rest of the world, Mindtree, too, took a hit. The company fell short of its revenue targets and profits plunged. The chairman's objective of hitting revenues of $1 billion became a pipe dream, with Mindtree's revenues between 2008 and 2010 remaining below $300 million. 
It was time for some drastic decision-making. In 2009, Mindtree announced it would go beyond its mainstay of software services.It forayed into designing mobile handsets by acquiring the India R&D centre of Kyocera Wireless. That didn't help. The acquisition not only failed to bring in revenues, it also resulted in huge restructuring costs.In 2010, Mindtree announced its exit from the mobile products business; and, a year later, chairman Soota announced his exit. "Setbacks build muscle tone into the organisation and, today, we are better trained than before," says Bagchi. 

In 2010-11, profits continued to decline — from a 24% fall in the first quarter to a 41% drop in the fourth quarter over a year ago. But Bagchi says this isn't relevant because Mindtree had begun growing its top line "admirably" at over 20%. The turning point for Mindtree was the acceptance that the reason for the decline in profitability was more internal than external. 
By April this year, Bagchi took over as chairman. And, under him, in an effort to do something unique, Mindtree set about cutting down on verticals that weren't delivering and started providing outsourcing services mainly to the manufacturing and banking & financial services sectors. Bagchi says this helped Mindtree focus on building specialisation in chosen verticals, deep account mining and getting prepared for larger deals. The first glimmers of a comeback appeared in the final quarter of FY12 when Mindtree posted a 115% growth in profits over a year ago. In the September-ended quarter of the current fiscal year, Mindtree had 247 active clients and, at the end of FY12, it had four $20 million-plus customers from only one at the beginning of this period.

So, can Mindtree grow closer to the $1-billion goal? "If we do the right things the right way, we will get to the billion-dollar league," says Bagchi.

http://economictimes.indiatimes.com/news/emerging-businesses/entrepreneurs/1-bn-goal-how-mindtree-sorted-out-its-problems-and-emerged-stronger/articleshow/17776413.cms

Sistema vs OVL, RUSSIA Vs INDIA...

FE Editorial : Sistema vs OVL

A A

THE FINANCIAL EXPRESS:  DEC 25 2012, 22:27 IST

Given that India buys 30% of all Russian defence exports, and that Russia actually leased India a nuclear attack submarine (INS Chakra) for a 10-year period, it’s not surprising the ties between the two countries remain deep. While India inked a $3 billion deal for 42 Sukhoi-30s to be put together by HAL from Russian kits and for 71 Mi-17V5 helicopters (in 2010, the original deal was for 59 such machines) when Russian President Vladimir Putin was in the capital on Monday, the ties extend to the $2.3 billion INS Vikramaditya, to cooperation in developing a nuclear ballistic missile submarine, cruise missiles, working on joint development of a fifth generation fighter aircraft and building more nuclear power plants. The ties may have come under some strain with India buying non-Russian weapons systems, but that seems to have been overcome since there is enough ordering being down.

Which is why it is unfortunate that the Sistema telecom licence cancellation has got entangled with ONGC Videsh Limited’s (OVL) request for tax concessions on its Russian investments. While OVL invested in Russia when there were no tax concessions for work in western Siberia, it found the much lower than anticipated recoveries meant it would make losses, especially given the high 35% mineral exploration tax and the 50% corporate tax—hence the request for a 10-year tax holiday along with a waiver of the mineral exploration taxes. Not surprisingly, the Russians have brought up the issue of the Supreme Court cancelling Sistema’s CDMA-mobile telecom licences. Sistema’s argument is that it was not to know the licensing process was flawed and that the licences were valid ones issued by the government; it also argues, and validly, that while there may have been a great demand—and therefore a high price—for GSM licences, there were no takers for the CDMA licences Sistema applied for. To cap it all, Trai decided to arbitrarily recommend using the high prices from the 3G auction in 2010 as the base price for the 2G auction in 2012—it came to a completely unviable R18,000 crore base price for 5 MHz of 1800 MHz spectrum and then said the CDMA spectrum would have a base price of 1.3 times this. The failure of the 2G GSM auctions showed just how flawed this principle was—and there wasn’t even one bidder for CDMA spectrum. While the government cannot just give Sistema its licences back at the original price it paid, it needs to do some realistic pricing, and then work on a compromise with Sistema. Till then, ONGC’s shareholders will have to keep their fingers crossed.

http://www.financialexpress.com/news/fe-editorial-sistema-vs-ovl/1050103/0

Mobile trading ...FUTURE IS IN BUILT....

Mobile trading gains momentum… but still a long way to go PRIYA SHETH

Increasing number of large format mobile screens and tablets help

MUMBAI, DEC. 26: 

With the increasing number of smart phone users and number of brokerages offering mobile trading, the year 2012 saw a steadily increasing mobile trading numbers. Although these numbers are not significantly high, they show an upward rise in the trend towards mobile trading.

The number of mobile trading on the bourses has been increasing consistently over the year. Latest monthly data on the NSE show mobile trading made up 0.39 per cent of the total trades executed on the exchange. The number of clients trading through platform has increased to 29,879 in November from 2,526 in April 2011. The notional turnover increased to Rs 16,129 crore (November) from Rs 709 crore (April 2011). On the BSE, mobile trading constituted 0.10 per cent of the total trades. The number of traders opting for mobile trading has been on the rise since the mobile trading platform launched in October 2010, said brokers.

SIGNIFICANT CHUNK

“We have seen a good response as far as mobile trading is concerned. We have an application that is available on all platforms and across most devices. Right now we are at a basic stage of adoption. In the next five to six years I feel mobile trading will make up a significant chunk of total trades,” said B. Gopkumar, Executive Vice-President and Head Broking, Kotak Securities.

The brokerage has 60,000 customers who trade via mobile (of this 30,000 are customers and remaining are guest users) and about 1.5 per cent of their overall business comes from mobile trading.

Key drivers for adoption of mobile trading are creation of more user friendly applications, better data connectivity and lower data costs. The increasing number of large format mobile screens and tablets is also resulting in more people trading through devices. “We have a product team that is focused on mobility. The distribution channel is very important and the age bracket that we feel will make use of this mobile trading the most is between 24 and 34 years,” added Gopkumar.

TELECOM TIE-UP

Brokerages have also tied up with telecom operators and device makers to build-in the application in mobile stores (Ovi stores, BlackBerry stores). “About Rs 100 crore worth of business is generated through mobile trading for us. This is about 6-7 per cent of our overall business. We have seen a phenomenal growth in this segment.

“We feel that people who are using desktops and laptops for trading will soon move to tablets,” said A. Balakrishnan, CTO, Geojit BNP Paribas, where 20 per cent of their 1,00,000 customers login to their apps on a daily basis.

The brokerage also provides mobile customers facilities to view their portfolio through the application and directly dial into their call centre to place orders. Balakrishnan is very positive about mobile trading and said that it could make up about 10 to 15 per cent of their business next year.

priya.s@thehindu.co.in

http://www.thehindubusinessline.com/markets/stock-markets/mobile-trading-gains-momentum-but-still-a-long-way-to-go/article4242003.ece?homepage=true&ref=wl_home