RCOM...A BUY...????

Higher FCF to improve RCom balance sheet: Axis Capital| Published: Aug 29 2014, 02:24 ISTSUMMARYRecent QIP and warrants issue helped RCom raise Rs 6,100 crore (~15% of FY14 net debt).Recent QIP and warrants issue helped RCom raise Rs 6,100 crore (~15% of FY14 net debt). Funds are expected to be primarily utilised for repaying high-cost rupee debt (which was ~35% of total debt in FY14)More deleveraging initiatives expected to unfold. We value Globalcom at 5.5x FY16E EV/Ebitda (in line with average for global peers). It has leadership in carrier, enterprise, and voice businesses.We assume ~Rs 6,000 crore from securitisation of tower rentals (likely to accrue in H2CY14). Major assets include 135 acres at DAKC (Dhirubhai Ambani Knowledge Centre), Navi Mumbai, and 4 acres of prime property at Connaught Place, New Delhi. DTH has 4.8 million subscribers, valued at 20% discount to Dish TVHigher FCF generation to further improve balance sheet. Higher Ebitda and capex-light strategy to generate better cash flows. Going forward, Ebitda growth will be led by GSM outpacing CDMA (which has stabilised). RCcom has low regulatory payout at $441 million (considering absolute payments over 10 years). However, present value (PV) is just $255 million. Upfront payment in 2016 is likely to be $65 millionIf RJio opts for underlying network of RCom (2G intra-circle roaming arrangement for voice capability). Stable regulatory environment and consolidation among Top 5 telcos (may lead to better tariffs).Axis Capitalhttp://www.financialexpress.com/news/higher-fcf-to-improve-rcom-balance-sheet-axis-capital/1283403................TECHNICALLY THE STOCK SHALL NOT FALL BELOW 98-102 RANGE ON ANY GIVEN DAY...THE STRICT STOP LOSS SHALL BE AT 92 LEVEL.......THE STOCK IS IN THE CONSOLIDATION PHASE AND ONE SHALL ACQUIRE IN SMALL QUANTITIES FROM 104-98 AND WHEN BOUNCES ABOVE 118-120 THE LARGE CHUNK CAN BE ACQUIRED FOR LONG-TERM GAINS.......THE HIGH BETA STOCKS ARE ALWAYS RISKY WHEN THE MARKET FALLS....SO IS RCOM...........

GDP-GOING GOOD FOR NOW..!!!!

Between Q1 India GDP numbers: Green shoots and red flags

ENS Economic Bureau | New Delhi | Published: Aug 30 2014, 08:05 IST

Led by strong industrial activity and a better-than-expected agricultural performance, the economy grew at a rate of 5.7 per cent in the quarter ended June, its fastest pace in two-and-a-half years, according to government data released on Friday.

GDP growth was 4.7 per cent in the corresponding quarter a year ago. Economic growth has been largely subdued marked by sub-5 per cent growth for the last two fiscals, with growth during the fourth quarter of last fiscal (January-March 2014) coming in at 4.6 per cent.

Here are positives and negatives on the GDP growth surge:

GREEN SHOOTS

* Early signs of a cyclical uptick in the broader economy

* A better-than-expected agricultural performance

* Visible surge in export growth during June quarter

* Energy, civic sector output exhibited a sharp pick-up

RED FLAGS

* Surge aided by a favourable base effect, including for manufacturing, power

* Moderation in services, especially financial and community services

* Delay in kharif sowing could reflect in lower agricultural output in Q2FY15

* Slowdown in electricity expected in coming quarters due to coal shortage.

http://www.financialexpress.com/news/between-q1-india-gdp-numbers-green-shoots-and-red-flags/1283756

STEEL GOING IS GOOD...!!!

Over two-thirds of the total steel consumption is in the construction sector

Steel consumption in the country grew at a slower pace during April-July 2014 at 0.6 per cent, but a 30 per cent growth in exports helped swing the demand-supply balance in favour of demand.

Domestic consumption during the first four months of the fiscal 2014-15 stood at 25.72 million tonnes as compared to 25.57 million tonnes in the same quarter last year, data from the Joint Plant Committee, a wing of the Ministry of Steel, showed. In India, over two-thirds of the total consumption of the metal is in the construction sector.

While domestic demand grew slowly, demand for the metal produced at Indian blast furnaces was supported by the growth in exports. During April-July 2014, exports grew nearly 30 per cent to 1.84 million tonne as compared to 1.42 million tonne.

Steel production too kept pace with the consumption growth. During the four months, steel production grew 0.9 per cent to 27.39 million tonnes as compared to 27.15 million tonnes.

More than half of this production came from Steel Authority of India Ltd and Tata Steel’s plants. The two companies had over 15 million tonnes of production during the four months.

The improved market dynamics reflected on the financials. SAIL reported an 18 per cent increase in net profit to ₹529.88 crore for the first quarter of fiscal 2014-15 while JSW Steel reported a net profit of ₹801 crore, turning around a loss in the same quarter last year.

Tata Steel’s business from India also improved with the company’s net profit growing 67 per cent to ₹2,267 crore.

Credit rating agencies expect the performance of steel companies to improve further in the coming months.

“Fitch expects steel demand growth to start to improve from the second half of fiscal 2014-15, supported by a pick-up in consumption following rising consumer sentiments and an expected improvement in economic growth,” said Fitch Ratings in a statement.

Fitch added that the improving consumer sentiment is reflected in the passenger vehicle sales data compiled by SIAM which has shown sales volumes increasing in June and July 2014 as compared to a fall last year. “Steel demand was weak in the last fiscal due to slow growth in the key steel consuming industries of automobiles, infrastructure, construction and engineering,” Fitch stated. In fact, Fitch expects steelmakers to pass on the increased costs due to the hike in iron ore royalty rates to customers because of the improved demand environment. “The higher royalty rates will raise the input costs of Indian steel producers by $2-5 per tonne of steel produced, depending on the type and grade of iron ore used. Fitch expects steel producers to be able to pass on their higher costs to consumers because of a likely improvement in steel demand in India,” the rating agency stated.

Meanwhile, ICRA pointed to the lower international prices of coking coal aiding steel producers. Coking coal is almost entirely imported with very little domestic production. According to the rating agency, coking coal prices have declined by 16 per cent in the first quarter of 2014-15 as compared to the same quarter last year. This drop follows a 13 per cent decline in coking coal prices over the course of 2013-14 fiscal.

“We expect the domestic players producing steel through the blast furnace route to benefit from the continuing weakness in international coking coal prices, a trend which has already been observed in the financial results posted by a number of companies in the first quarter of 2014-15,” said ICRA in a research note.

India’s domestic consumption of steel in 2013-14 was 73.93 million tonnes. Global audit and consultancy firm Ernst & Young expects India’s steel consumption to grow to 83 million tonnes by the end of 2014-15.

(This article was published on August 26, 2014)

http://www.thehindubusinessline.com/economy/macro-economy/steel-industry-back-on-the-growth-path/article6354248.ece?homepage=true

COAL GOLD ILLEGAL ALLOTMENTS...!!!!!!!......??????

Coal scam: Anxious moment till judgement day

Some say coal blocks could be auctioned, while others say that existing users would be allowed to continue to operate after paying a fine

Shishir Asthana  |  Mumbai  

August 26, 2014 Last Updated at 18:19 IST

Metal stocks reacted sharply on the day Supreme Court declared all captive coal blocks allotted since 1993 as illegal. But after the dust settled, metal stocks recovered part of the lost ground the very next day.

 

So what changed overnight? Nothing except that market participants had more time in their hand minus the noise in the market to carefully go through the Supreme Court order. Experts commenting on the issue too helped in controlling the panic.

 

Panic was created when reports of Rs 2 lakh crore of investments will be hit because of the Supreme Court order were flashed. Investors hit the sell button on all those companies who were allocated coal mines not bothering to check the text of the Supreme Court judgement. No one even bothered to check before selling Tata Steel that the company has been allocated coal blocks before 1993.

 

Nowhere did the honorable Supreme Court say that they would be de-allocating the mines, at least not yet. Though the court said that allocations have been illegal and arbitrary but they have not been cancelled. Future course of action will be decided after further hearings.

 

Emkay Global Financial Services in their comment on the event have said that as per their discussion with lawyers engaged in the case a committee is likely to be set up to decide the future course of action on the coal blocks that have been declared illegal.

 

Harish Salve, Senior Advocate, Supreme Court has been quoted in CNBC saying “Unless something is brazenly unconstitutional, every illegality or every irregularity, every arbitrary action does not necessarily need the court to invalidate where invalidation of an individual action will be more productive  of public mischief, or cause public injury, greater than public good. That's a well established principle.”

 

Salve also said that the court is perfectly conscious of balancing the need of industrialization and added that in his interaction with the Judges he feels that there will be a committee to three retired judges that will be set up to inform the Supreme Court of the action plan ahead.

 

Vinayak Chatterjee, chairman, Feedback Infrastructure also in an interview to CNBC said that the SC is unlikely to disrupt operations. It is unlikely to do anything drastic that will affect production of the mines or its production to other sectors of the economy.

 

With some clarity that supplies will not be disturbed or alternate sources would be available for the companies the doomsday scenario has been substantially downplayed. Worst case scenario would be that profitability of the companies would be affected rather than the earlier premise of units having to shut down their operations.

 

As for the argument that Rs two lakh crore of investment would be jeopardized an article inScroll.in points out that the actual figure that would be affected is only Rs 4,000 crore. The article points out that only 39 of the 218 blocks allocated since 1993 have started production till December 2013. Government’s own numbers point out that Rs 8,777 crore of investment has gone in to 30 blocks which are in production and 17 which are nearing production.

 

Though some of the companies which were allotted mines have recovered banks and finance companies continue to be battered. Analysts expect that anxiety will continue till September 1, 2014 when the Court would hear the consequences of the illegality of the coal blocks. Chatterjee feels that there will be a transition from an old system of allocating coal to a new system that is more transparent etc and in the meanwhile steps will be taken to see that business does not suffer.

 

Broking firms are speculating on the options that the Supreme Court has in front of it. Blocks could be auctioned while others say that existing users would be allowed to continue to operate after paying a fine.

 

Emkay Global sums it up well by saying that till there is clarity on the part of the government and Supreme Court on future course of action, overhang might continue.

http://www.business-standard.com/article/economy-policy/coal-scam-anxious-moment-till-judgement-day-114082600946_1.html.

........................................

I PERSONALLY FEEL THAT THE SUPREME COURT WILL TAKE A PRAGMATIC STEP AND MAY FOLLOW THE GAS EXPLORATION MODEL WHERE REVENUE SHARE AND PROFIT SHARE TO LOCAL PANCHAYATS THE RETROSPECTIVE FINE OVER THE MINING WILL IMPACT THOSE WHO MADE THEIR WAY IN GARNERING THE EARLY OPPORTUNITY...!!!

THE ECONOMY NEEDS TO BE TAKEN CARE AND WILL ASK TO FILE CASES AGAINST THE MINISTERS AND BUREAUCRATS WHO MADE THEIR CHUNK....SO, NET NET THE ISSUE WILL CREATE LOT OF UNCERTAINTY IN THE MARKETS AND WILL CREATE CHAOS...

BE CAREFUL...ALL THE BIG CORPORATES MAY SEE SOME SCREENING.....

LONG TERM --ALL are dead STOCKS..!!!

THE STORY OF LONG-TERM NEEDS TO BE EXPLAINED....

DURING THE INFRA BOOM TIMES, SOME PERSON CLOSE TO ME BOUGHT 500 SHARES OF PUNJLLOYD AT 370 RANGE,100 SHARES OF ABB AT 1020-1040, ALSO 3500 SHARES OF IDEA AT 138-140 RANGE during 2008.

THIS WAS HAPPENED DURING 2008 BOOM TIMES WHEN INFRA STOCKS ARE SACRED AND THE 3-G CALLING.....

FRIDAY PRICE CLOSING: IDEA IS AT 156, PUNJ IS AT 38, ABB AT 1005. THEY ARE THE BEST IN THEIR SECTOR, BUT THE INVESTED AMOUNT WAS NOT REALLY REALISED. HAD THE DECISION BEEN TAKEN TO INVEST IN FIXED DEPOSIT, THE MONEY WOULD HAVE DOUBLED...
SO VISUALISE THE FUTURE EARNINGS AND CO-RELATE THE CURRENT PRICE, WHETHER FULLY PRICED IN ON YET TO CATCH-UP MARKET ATTENTION......THEN DECIDE. THERE ARE MULTI-BAGGERS OF 5-10 TIMES DURING THIS PERIOD..!! OTHER WISE....LONG TERM  STORY-A TALE OF-"ALL are dead STOCKS"..!!!

HOWEVER, THE INVESTORS TRIES TO KEEP WITH FALLING STOCKS BY FINDING UNWANTED REASON/WICKED EXPLANATION OF THE DECISION.

THE RULE IS VERY SIMPLE..RIDE THE RUNNING HORSE BUT NOT ON THE LAME....

MARKETS ARE ALWAYS SMART TO HANDOVER THE SICK/STICKY PAPER TO RETAIL INVESTORS WITH HIGH-PROJECTION RESEARCH REPORTS......

THE THEORY IS SIMPLE::::: BUY LOW AND SELL HEIGH.....WHO IDENTIFIES CORRECTLY AND EXECUTES ACCURATELY ARE THE WINNERS.....OF-COURSE..ALWAYS...!!!

INVESTORS RUINED.....THE IPO- KILL..!!!

Most IPO investors miss out on the party

BHAVANA ACHARYA

BL RESEARCH BUREAU

60% of the offers made between 2006 and 2008 are languishing below their offer price

August 24, 2014:  

The Sensex and the Nifty are up a good 26 per cent from the previous market highs of 2007-08.

But for investors who bought into the many initial public offerings (IPOs) during this period, this bull party hasn’t delivered any gains. Even as the bellwethers have zipped past their 2008 highs, several IPOs that hit the market in the heady days then are languishing below their offer price.

The period from January 2006 to 2008 marked an IPO boom, with 169 companies making their debut. Of these, 100 stocks, or roughly 60 per cent, still trade below their issue prices.

But for investors blessed by Lady Luck, 20 per cent of the issues gave returns in excess of 100 per cent.

Deep in the red

An analysis of returns on the IPO stocks, after adjusting for splits, bonuses and dividends, shows that just three in every 10 of the issues between 2006 and January 2008 have managed to deliver better-than-market returns.

OnMobile Global is 85 per cent below issue price, as is Parsvnath Developers. Everonn Education is 69 per cent below issue price.

A handful have fallen right off the radar, not registering any trades at all. Koutons Retail, Pyramid Saimira, and Shree Ashtavinayak have been suspended altogether. Yesteryear market darling BL Kashyap is now trading at less than ₹10 a share. Dhanus Technology’s stock price is less than ₹1.

The market mood was euphoric in 2007-08, with most companies posting strong double-digit growth in both revenues and profits. Select companies in fancied sectors, such as power, infrastructure, retail and realty, traded at stiff premiums to the market. Many unlisted companies took advantage of this to line up ambitious expansion plans that ultimately backfired. Issues were priced at high valuations, cases in point being Reliance Power, Hubtown (then Akruti Nirman), Koutons Retail and Vishal Retail.

Others such as C&C Constructions, DLF, Brigade Enterprises, CCCL, Hanung Toys and Mudra Lifestyle were unable to pull through the economic slowdown that followed.

As a result, these stocks could not join the party when the wilting stock market rebounded from September 2013.

But there were a few investors who hit the jackpot even in the 2007-08 IPO boom. Page Industries, Kaveri Seed Co., Astral Polytechnik, and Sadbhav Engineering have turned out to be gold mines. Page Industries, for example, is at ₹7,410 now, against an issue price of ₹360. Kaveri Seed is at ₹832 on an (adjusted) issue price of ₹34.

Better quality

With most of the older issues failing to deliver, it is not surprising that most IPOs made over the last couple of years have found it difficult to attract any investor interest.

The primary market did see brief activity in 2010, but this period was marked by several issues of questionable quality, such as Brooks Labs, RDB Rasayans, Bharatiya Global etc, prompting regulatory action.

Among recent IPOs, the ones delivering reasonable returns include Repco Home Finance, Just Dial, NBCC and the blockbuster, Wonderla Holidays.

(This article was published on August 24, 2014)

http://www.thehindubusinessline.com/markets/60-of-the-offers-made-

between-2006-and-2008-are-languishing-below-their-offer-

price/article6347380.ece