Sunday, December 30, 2012
Relief for Reliance Industries.....
Relief for Reliance Industries, 12th Five Year Plan for gas producers charging market prices
PTI: NEW DELHI, DEC 28 2012, 17:16 IST
New Delhi: Natural gas producers like Reliance Industries should be allowed to charge market prices, the Plan for next five years adopted by the nation's highest planning body, headed by the Prime Minister, has said. The 12th Five Year (2012-17) Plan adopted by National Development Council (NDC) yesterday said, "Natural gas prices charged to producers must be determined by market forces". Currently, majority of the natural gas produced in the country is priced at USD 4.2 per million British thermal unit, which is almost a third of the rate at which gas in its liquid form, called liquefied natural gas or LNG, is imported. RIL and its partner BP Plc have been pitching for market price for the natural gas produced from eastern offshore KG-D6 fields. "The concept of uniform gas price across consuming sectors also needs to be examined afresh as the desire to keep prices low for certain sectors tends to distort pricing; it is inconsistent with the principle that the price of gas will be determined by market forces," it said. Addressing the NDC, Prime Minister Manmohan Singh had yesterday stated that natural gas as also coal and other liquid fuel rates in India were "well below international prices".
"If domestic energy prices are too low there will be no incentive to increase energy efficiency or to expand supply," he had said, adding, "Immediate adjustment of prices to close the gap is not feasible, but some phased price adjustment is necessary." Demand for natural gas, the 12th Plan document said, will increase from 194 million standard cubic meters per day in 2011-12 to 286 mmscmd in the current fiscal. This is expected to rise to 466 mmscmd by the end of the 12th Five Year Plan in 2016-17. The Plan document said there was a need for clarity on fiscal incentives on exploration of natural gas under New Exploration and Licensing Policy (NELP). Currently, a seven year holiday from payment of income tax is available only for crude oil produced from an area awarded under NELP. Natural gas produced from the same well does not get any tax incentives. It called for providing 'Declared Goods Status' for natural gas/LNG so that it is available at uniform price in most of the States. The Plan document called for eliminating "the uncertainty that has arisen regarding gas pricing from NELP production sharing contracts by implementing a new design of contracts." The recommendation of the Rangarajan Committee may be an important input in finalising this policy, it said. "Appropriate steps should be taken to resolve conflicts in existing contracts where the interpretation of the contract term is open to multiple options."
http://www.financialexpress.com/news/relief-for-reliance-industries-12th-five-year-plan-for-gas-producers-charging-market-prices/1051457/2.
Ramanujan’s “deathbed” puzzle
American mathematicians solve Ramanujan’s “deathbed” puzzle
Ramanujan's legacy is much more important than anything anyone would have guessed”
American researchers claim to have solved a cryptic formula that renowned mathematician Srinivasa Ramanujan believed came to him in dreams while on his deathbed, the Daily Mailreported on Saturday.
The formula was contained in a letter he wrote to his mentor, the English mathematician G.H. Hardy, from his deathbed in 1920 outlining several new mathematical functions that had never been heard of before, together with a theory about how they worked. It had baffled mathematicians for more than 90 years, but new findings — presented at a conference at the University of Florida last month — reportedly show that Ramanujan’s “hunch” about his formula was right — that it could explain the behaviour of black holes.
“We've solved the problems from his last mysterious letters,” said the well-known American mathematician Ken Ono of Emory University.
“For people who work in this area of math, the problem has been open for 90 years … Ramanujan's legacy, it turns out, is much more important than anything anyone would have guessed when Ramanujan died.”
He said the so-called “deathbed puzzle” which, according to Ramanujan, was revealed to him by the goddess Namagiri, may unlock secrets about black holes. “We proved that Ramanujan was right. We found the formula explaining one of the visions that he believed came from his goddess. No one was talking about black holes back in the 1920s when Ramanujan first came up with mock modular forms, and yet, his work may unlock secrets about them,” said Professor Ono.
The Mail said that Ramanujan’s letter described several new functions that behaved differently from known theta functions, or modular forms, and yet closely mimicked them.
“Functions are equations that can be drawn as graphs on an axis, like a sine wave, and produce an output when computed for any chosen input or value. Ramanujan conjectured that his mock modular forms corresponded to the ordinary modular forms earlier identified by Carl Jacobi, and that both would wind up with similar outputs for roots of 1,” it said. Nobody at the time understood what the Indian mathematical genius was talking about. “It wasn’t until 2002, through the work of Sander Zwegers, that we had a description of the functions that Ramanujan was writing about in 1920,” Prof. Ono said.
His team, which used modern mathematical tools to solve the puzzle, was “stunned” to find the function could be used even today.
http://www.thehindu.com/news/american-mathematicians-solve-ramanujans-deathbed-puzzle/article4253593.ece?homepage=true
SEBI slaps Rs 1.5 cr fine IPO - FRAUD CASE
SEBI slaps Rs 1.5 cr fine on individual in IPO case PTI
MUMBAI, DEC 28:
Market regulator SEBI on Friday imposed a penalty of Rs 1.50 crore on Purshottam Budhwani for his alleged role in fraudulent trading practices in IPOs of 13 firms including Yes Bank and Suzlon Energy between 2003-2005. Budhwani was also allegedly involved in manipulative activities related to Initial Public Offers (IPOs) of IL&FS, IDFC, Shoppers Stop, MSP Steel and Power, SPL Industries, Provogue, Tata Consultancy Services, Gateway Distriparks, Gokuldas Exports, Nectar Lifesciences, Sasken Communication Technologies. SEBI said Budhwani acted as key operator in concert with certain other entities and was involved in the scheme of cornering of shares in the IPOs. “...the noticee had indulged in fraudulent and manipulative activities and employed deceptive device and scheme to corner the shares reserved for retail individual investors in the aforesaid 13 IPOs with the intention to defraud retail individual investors,” SEBI said in its order.
A SEBI probe in shares of certain companies during their IPOs between 2003 and 2005 had found that certain entities had opened large number of demat accounts and bank accounts which were in the names of fictitious persons or were benami. The entities had purchased shares of various companies in the IPOs by making applications in fictitious names with each application being of a value so as to make it eligible for allotment under the retail category. Following the allotment, the shares from such fictitious allottees were transferred in the demat account of key operators like Budhwani before the listing on stock exchanges, SEBI said. The key operators then transferred the shares through off market deals to certain entities called the “financiers”. The regulator said it observed that the key operators retained a portion of shares for themselves which were then sold in the market, earning them huge gains illegally. As per SEBI, the scheme was designed to corner shares from the quota reserved for retail investors in the IPOs of various companies and to make profit by selling the shares. In May, 2011, SEBI had directed Budhwani to disgorge Rs 9.39 crore which included the amount of unlawful gains made by him along with an interest of 10 per cent per annum for six years.
http://www.thehindubusinessline.com/markets/sebi-slaps-rs-15-cr-fine-on-individual-in-ipo-case/article4249159.ece?homepage=true&ref=wl_home
PE pours money into India health care
| PE pours money into India health care |
| Bet on growing numbers of patients to pay two or three times more for better-equipped clinics |
| Reuters / Mumbai Dec 30, 2012, 00:11 IST |
Private equity funds quadrupled their investment in India's primary healthcare, betting the sick and ailing will stop seeing family doctors in often cramped and dingy quarters and check into modern chains sprouting up across Asia's No.3 economy. Goldman Sachs Group, Warburg Pincus LLC, Sequoia Capital and the Government of Singapore Investment Corp are among investors that pumped $520 million into India's basic healthcare industry this year, compared with $137 million in 2011, according to Thomson Reuters data. Some analysts predict investment will surpass $1 billion in 2013. Organised healthcare providers including Apollo Hospitals Enterprise Ltd and Fortis Healthcare Ltd are betting that growing numbers of patients will be willing to pay two or three times more for better-equipped clinics - all under a model that can be replicated fast and offers investors the potential for quick returns. "The family doctor concept is slowly phasing out as migrants in cities look out for a brand rather than visiting a general physician next door," said Santanu Chattopadhyay, CEO of NationWide Primary Healthcare Services, in which U.S.-based Norwest Venture Partners has invested $4.6 million.
The opportunity is vast: India's unorganised primary healthcare system is worth $30 billion and is growing at least 25 percent a year. The challenge will be convincing the sick to give up their trusted family doctors.
The country's primary healthcare sector will draw at least $1 billion annually in private equity investment over the next couple of years, said Shantanu Deb Mookerjea, executive director at Mumbai-based advisory firm LSI Financial Services.
"Single-speciality chains and diagnostic laboratories will be the game changer," he said, adding that they are easy to set up and expand to suit demand. Another attraction is that primary healthcare providers such as outpatient clinics and diagnostic centres are not capital-intensive, so investors don't have to write out big cheques. Also, unlike many restrictive Indian industries, from insurance to real estate and telecoms, there are no limits on foreign ownership in healthcare.
Think like restaurants
Health care, like restaurant chains, is a play on rising spending power in India, although valuations tend to be lower than the retail sector. Investors pay single-digit multiples on price-to-earnings in primary healthcare, compared with 15 to 18 for food and other consumer chains.Valuations could improve if private healthcare operators also adopted a restaurant franchise model.
Health care, like restaurant chains, is a play on rising spending power in India, although valuations tend to be lower than the retail sector. Investors pay single-digit multiples on price-to-earnings in primary healthcare, compared with 15 to 18 for food and other consumer chains.Valuations could improve if private healthcare operators also adopted a restaurant franchise model.
Under such a model, a healthcare operator would allow a franchisee to use its brand and 4provide expertise and support in exchange for a fee. The franchisor would avoid forking out money to set up new clinics - investments that will be borne by the franchisee."We would prefer to value our company based on our franchisee consumer model like a pizza (chain) rather than as a pill made by a drugmaker," said Atul Bhide, director of finance at Mumbai-based Vaidya Sane Ayurved Laboratories, which operates 160 clinics providing traditional ayurvedic treatment.
As a result, healthcare has been a rare bright spot for private equity in India, where overall investment fell 17 percent this year to about to $3.3 billion."From small hospital chains and specialised treatment facilities, we are witnessing increased institutionalised activity, which could attract a lot of institutional investment interest," said Vishakha Mulye, CEO of ICICI Venture, the private equity arm of ICICI Bank Ltd.Last year, Mulye's fund sold its stake in diagnostic chain Metropolis Healthcare to Warburg Pincus for 3.92 billion rupees, a 10-fold return on its 350-million-rupee investment in 2006.
Convincing patients
The biggest challenge will be convincing patients such as Chandrashekhar Khandke, a 30-year-old software professional at IBM in Pune, who said he has visited modern clinics a few times but still prefers his family doctor.
The biggest challenge will be convincing patients such as Chandrashekhar Khandke, a 30-year-old software professional at IBM in Pune, who said he has visited modern clinics a few times but still prefers his family doctor.
"If I buy grains from a grocery store or from a supermarket, it doesn't make much of a difference but when it comes to health, a family doctor matters a lot," he said. Overcoming the draw of a trusted doctor may prove harder than it seems, even in a country where healthcare infrastructure is poor, electronic medical records are rare, and the quality of doctors and other medical professionals is patchy. "Although branded clinics have potential, they find it tough to pull patients from a strong local doctor. Also, if there is a big hospital in the vicinity, then they lose out on patients," said Deepak Malik, analyst at Mumbai-based brokerage Emkay Global Financial Services Ltd.
While fees at modern clinics range from 150 to 600 rupees for treatment of routine illness, sole general practitioners charge patients anything between 50 and 300 rupees per visit. "While these chains have a unique brand, a trusted doctor is even a bigger brand," said Anil Advani, a doctor who operates an old but modest 800-square-foot (75-square-metre) clinic in Thane, outside Mumbai.
http://www.businessstandard.com/india/news/pe-pours-money-into-india-health-care/497113/
The Best and Worst Investments of 2012 !!!
Investments
The Best and Worst Investments of 2012
Winners
Best International Stock (+283%): India consumes more than $20 billion worth of whiskey each year—the most in the world—and United Spirits (UNSP) is the nation’s largest distiller. The company’s sales doubled in four years. The United Kingdom’s Diageo (DEO) bought a controlling stake in United Spirits in November.
Best U.S. Large-Cap Stock (+224%): The good news for Regeneron Pharmaceuticals (REGN)shareholders included strong sales for a treatment for eye diseases. Total revenue jumped fourfold last quarter. The Tarrytown (N.Y.)-based company also won approval for a chemotherapy drug and is developing treatments for rheumatoid arthritis and high cholesterol.
Best Bond Fund (+26%): The GMO Emerging Country Debt Fund (GMCDX) invests in debt issued by emerging-market countries, a strategy that’s worked in nine of the last 10 years. Its top holding is Venezuelan bonds, a sign that its managers are willing to take risks in particularly unstable countries.
Best Initial Public Offering (+105%):Retailer Five Below (FIVE)sells candy, stationery, and beauty products priced at $5 or less and aimed at teenagers. Sales are growing 47 percent a year.
Best Equity Mutual Fund (+39%): The Fidelity Select Biotechnology Portfolio (FBIOX) spreads $2.7 billion in assets over 131 biotechnology stocks. A top holding: Gilead Sciences (GILD), the California-based biopharmaceutical company.
Best Commodity (+24%): Wheat prices rose in 2012 as drought cut into supply from the grain belts of Russia, Australia, and the U.S. Wheat is a $14.4 billion crop in the U.S., where it ranks fourth behind corn, soybeans, and hay.
Best Exchange-Traded Fund (+77%): Signs of a housing recovery sent shares of homebuilders soaring this year, boosting the IShares Dow Jones U.S. Home Construction Index Fund (ITB).
Losers
Worst Exchange-Traded Fund (-79%): TheProShares VIX Short-Term Futures ETF (VIXY) holds futures contracts that are profitable when the VIX index, a measure of U.S. stock market volatility, rises. 2012 was a calm year.
Worst Commodity (-35%): Abundant supply is depressing coffee prices. Brazil, the world’s largest grower, has almost doubled its output in the past decade, producing another record crop this year.
Worst Equity Mutual Fund (-17%): TheFederated Prudent Bear Fund (BEARX) holds gold mining stocks and other investments it expects will do well in times of financial stress. That strategy suffers in years such as 2012, when stocks rise.
Worst Initial Public Offering (-30%):Facebook (FB) plunged as much as 53 percent after its $16 billion debut in May. The stock rallied on news that third-quarter sales rose 32 percent, beating analysts’ estimates.
Worst Bond Fund (+.12%): While the GMO U.S. Treasury Fund (GUSTX)may just barely be holding its value at yearend, its extremely cautious strategy means returns aren’t keeping up with inflation. The fund is invested entirely in U.S. Treasury bills, government debt that matures in less than a year.
Worst U.S. Large-Cap Stock (-43%): Hewlett-Packard’s (HPQ)annus horribilis was marked by a third-quarter loss that was its worst ever, including an $8 billion writedown related to the dwindling value of its enterprise services business. HP later took an $8.8 billion writedown related to accounting problems at Autonomy, a software maker it acquired last year. In September, HP announced plans for 29,000 job cuts.
Worst International Stock (-81%): The biggest target for the European Union’s bailout fund for Spanish banks, Bankia (BKIA), forecasts it will lose $25 billion in 2012. The bank, formed last year from the merger of seven regional savings banks damaged by Spain’s real estate downturn, is in the midst of cutting more than a quarter of its workforce.
Best International Stock (+283%): India consumes more than $20 billion worth of whiskey each year—the most in the world—and United Spirits (UNSP) is the nation’s largest distiller. The company’s sales doubled in four years. The United Kingdom’s Diageo (DEO) bought a controlling stake in United Spirits in November.
Best U.S. Large-Cap Stock (+224%): The good news for Regeneron Pharmaceuticals (REGN)shareholders included strong sales for a treatment for eye diseases. Total revenue jumped fourfold last quarter. The Tarrytown (N.Y.)-based company also won approval for a chemotherapy drug and is developing treatments for rheumatoid arthritis and high cholesterol.Best Bond Fund (+26%): The GMO Emerging Country Debt Fund (GMCDX) invests in debt issued by emerging-market countries, a strategy that’s worked in nine of the last 10 years. Its top holding is Venezuelan bonds, a sign that its managers are willing to take risks in particularly unstable countries.
Best Initial Public Offering (+105%):Retailer Five Below (FIVE)sells candy, stationery, and beauty products priced at $5 or less and aimed at teenagers. Sales are growing 47 percent a year.Best Equity Mutual Fund (+39%): The Fidelity Select Biotechnology Portfolio (FBIOX) spreads $2.7 billion in assets over 131 biotechnology stocks. A top holding: Gilead Sciences (GILD), the California-based biopharmaceutical company.
Best Commodity (+24%): Wheat prices rose in 2012 as drought cut into supply from the grain belts of Russia, Australia, and the U.S. Wheat is a $14.4 billion crop in the U.S., where it ranks fourth behind corn, soybeans, and hay.Best Exchange-Traded Fund (+77%): Signs of a housing recovery sent shares of homebuilders soaring this year, boosting the IShares Dow Jones U.S. Home Construction Index Fund (ITB).
Losers
Worst Exchange-Traded Fund (-79%): TheProShares VIX Short-Term Futures ETF (VIXY) holds futures contracts that are profitable when the VIX index, a measure of U.S. stock market volatility, rises. 2012 was a calm year.
Worst Commodity (-35%): Abundant supply is depressing coffee prices. Brazil, the world’s largest grower, has almost doubled its output in the past decade, producing another record crop this year.Worst Equity Mutual Fund (-17%): TheFederated Prudent Bear Fund (BEARX) holds gold mining stocks and other investments it expects will do well in times of financial stress. That strategy suffers in years such as 2012, when stocks rise.
Worst Initial Public Offering (-30%):Facebook (FB) plunged as much as 53 percent after its $16 billion debut in May. The stock rallied on news that third-quarter sales rose 32 percent, beating analysts’ estimates.Worst Bond Fund (+.12%): While the GMO U.S. Treasury Fund (GUSTX)may just barely be holding its value at yearend, its extremely cautious strategy means returns aren’t keeping up with inflation. The fund is invested entirely in U.S. Treasury bills, government debt that matures in less than a year.
Worst U.S. Large-Cap Stock (-43%): Hewlett-Packard’s (HPQ)annus horribilis was marked by a third-quarter loss that was its worst ever, including an $8 billion writedown related to the dwindling value of its enterprise services business. HP later took an $8.8 billion writedown related to accounting problems at Autonomy, a software maker it acquired last year. In September, HP announced plans for 29,000 job cuts.Worst International Stock (-81%): The biggest target for the European Union’s bailout fund for Spanish banks, Bankia (BKIA), forecasts it will lose $25 billion in 2012. The bank, formed last year from the merger of seven regional savings banks damaged by Spain’s real estate downturn, is in the midst of cutting more than a quarter of its workforce.
Data compiled by Bloomberg from Dec. 31, 2011, to Dec. 17, 2012. Criteria - Bond Funds: 725 bond mutual funds based in the U.S. with assets of $500 million or more. Commodities: 18 global commodities tracked by Bloomberg. Equity Mutual Funds: 796 U.S.-based equity mutual funds with assets of $1 billion or more. Exchange-Traded Funds: 1,062 U.S.-based ETFs, excluding those that use leverage. Initial Public Offerings: 103 U.S. IPOs with an offer size of at least $100 million. International Stocks: The MSCI AC World Index. Large-Cap Stocks: 367 stocks on U.S. exchanges with market value of more than $10 billion.
The Worst CEOs of 2012 !!!
B-School Life
The Worst CEOs of 2012
Posted by: Louis Lavelle on December 13, 2012
Who are the absolute worst chief executives of 2012? Sydney Finkelstein thinks he knows. The longtime professor at Dartmouth College’s Tuck School of Business is the author of 11 books with such titles as Why Smart Executives Fail and Think Again: Why Good Leaders Make Bad Decisions, so he knows a thing or two about utter failure. He’s been putting out his list for three years now, and last year it included the chief executives ofNetflix (NFLX), Research in Motion (RIM), and Hewlett-Packard (HPQ). Here’s the list (except where noted the companies didn’t respond to a request for comment): 1. Brian Dunn, who resigned as chief executive of Best Buy (BBY) in April after allegations surfaced that he had an inappropriate relationship with a much younger subordinate. That’s not why he’s on the list, though. Declining stock price, cratering same-store sales, loss of market share to more nimble competitors, and an addiction to share buybacks that cost the company $6.4 billion with little to show for it—that’s why he’s on the list. 2. Aubrey McClendon, the CEO of Chesapeake Energy (CHK) who apparently has trouble keeping his company’s finances and his own apart. According to Reuters, McClendon borrowed as much as $1.1 billion over three years in undisclosed loans against his stake in thousands of company wells and ran a $200 million oil-and-gas hedge fund on the side, an “obvious conflict of interest,” Finkelstein says. Use of the company jet (and company employees) for personal purposes and a corporate sponsorship deal for Oklahoma City Thunder while McClendon was an owner of the basketball team also didn’t help. Jim Gipson, a spokesman for Chesapeake Energy, declined to comment. 3. Andrea Jung, who stepped down as chief executive of Avon (AVP) in April but remains as chairman through the end of this year. Jung has been unable to fix the company’s operational problems, failed to groom a successor, and turned down a $10.7 billion offer from the beauty-care company Coty that, in retrospect, it should have leaped at. Since 2004, the company’s market value has fallen under her watch from $21 billion to $6 billion. And the company has had to spend $300 million in legal expenses related to allegations that it violated the Foreign Corrupt Practices Act, which bars bribery of foreign officials. 4. Mark Pincus, the CEO of Zynga (ZNGA), the mobile gaming company that brought the world Farmville,among other online distractions. Zynga stock is down 75 percent so far this year, and the company is losing top executive talent. Pincus has a fairly illustrious pedigree—he got a bachelor’s degree in economics from Wharton in 1988 and his MBA from Harvard Business School in 1993. But Finkelstein says he’s made some rookie mistakes, including hitching his company’s wagon much too securely to Facebook (FB), which Zynga relies on for a big chunk of revenue. And he hardly expressed confidence in the company’s prospects with his move to unload 16 million shares after the IPO lockup period ended. Joe Libonati, a spokesperson for Zynga, declined to comment. 5. Rodrigo Rato, who resigned as chairman of the Spanish lender Bankia (BKIA) in July. Rato is one of Spain’s former finance ministers and a former managing director of the IMF. He’s under investigation for fraud, price-fixing, and embezzlement in connection with Bankia’s spectacular collapse and bailout by the Spanish government. Rato has an MBA from the UC-BerkeleyHaas School of Business. In 2011, Bankia announced profit of €309 million; after Rato resigned, it was restated to a €3 billion loss. Carmen de Miguel Hombria, a spokesperson for Bankia, declined to comment. Two other executives—Mark Zuckerberg at Facebook and Andrew Mason at Groupon (GRPN)—almost made the list. The rap on Zuckerberg is his “massive ego,” while both men get demerits for immaturity and shares that move in only one direction, and not the right one. Says Finkelstein: “There’s no reason to believe they have the management skills to run a major public company.” And don’t get him started on the hoodie. Join the discussion on the Bloomberg BusinessweekBusiness School Forum, visit us on Facebook, and follow@BWbschools on Twitter. Lavelle is an associate editor for Bloomberg Businessweek. http://www.businessweek.com/articles/2012-12-13/the-worst-ceos-of-2012#r=read
Saturday, December 29, 2012
Five hot stocks - 2013
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
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 India India
Including follow-on share
offers, share sales volumes in India 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
Shares of GTL
Infrastructure Ltd (GTLI.NS),
the only other mobile tower operator listed in India
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 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
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
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
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