Today's Call

Buy BHEL at Rs.146, T: Rs.150, SL: Rs.144. The management of  BHEL has given a very good outlook for the company.

Addressing shareholders at the 52nd annual general meeting of the company,Bharat Heavy Electricals' (Bhel) chairman & managing director, Atul Sobti, said that enhanced focus on project execution has resulted in Bhel creating history by way of commissioning/synchronizing an all-time high 15,059 megawatts (MW) of power generating equipment during the year. Despite intense competitive pressure in the power and capital goods markets during the year, Bhel achieved the highest order booking in the last five years, at Rs 43727 crore, a 42% leap over 2014-2015. The company ended the year with a total order book of Rs 110730 crore for execution in 2016-2017 and beyond.

Bharat Heavy Electricals (Bhel)'s net profit jumped 54.2% to Rs 77.77 crore on 29% growth in net sales to Rs 5522.76 crore in Q1 June 2016 over Q1 June 2015.

Winning Strokes: Think Different

Prajay Engineers Syndicate Ltd (Rs.10.80) recommended several times in this blog hit 20% upper circuit today. The real estate prices in Vijayawada is shooting over the roof and this is having positive effect in Hyderabad based real estate prices too.  The book value of the shares of the company is Rs.87.64. Where is the stock heading? To know this, join me at Whatsapp; only if you are either a Premium member or is trading through my recommended brokerage house.

Reliance Communications today clocked good delivery volumes. The scrip is consolidating at the CMP of Rs.48.40 before taking an upward leap; as RJio files application to buy the lucrative 700 MHz spectrum. RCom has a tie up with RJio regarding spectrum sharing on pan India basis. I am looking for a target of Rs.71-75, within a short time.

MBL infrastructure recommended here at around Rs.91.70 touched Rs.123. The Investors were suggested to book profit the day it came of the UC. The stock hit non stop UCs, after it was recommended here.

Gold prices have started to surge, as the US election date nears. Therefore, keep adding the share of Shrenuj & Co Ltd (Rs.2.15) on declines. Once Rs.2.55 is broken the stock should surge up.

Film Financier/s Required

I am looking for a partner for a Bollywood and a Bhojpuri Film, starring Rani Chatterjee, with an investment capacity of Rs.25-30 (Bhojpuri) lakhs to Rs.2 crores (Bollywood Hindi movie) in phases for the two films..

The director has around 25-30 years of experience in Hindi Film industry (Bollywood) and I will be one of the assistant directors and publicity head. So you don't have to worry much about the correct utilization of funds.

The interested candidates can send me a mail at: suman2005s@rediffmail.com or sumanm2007s@gmail.com.

Do You know?

Simplex Infrastructure got a contract from Mumbai Metro to build a portion from Andheri to Dahisar.

Now Simplex Projects Ltd (Rs.27) also has Raghav Das Mundra as one of the promoters, apart from Lata and Vallabh R Bhansali, the veteran investors. 

The promoters' holding has also increased marginally in June, 2016 quarter.

Today's Recommendations

1. Buy Simplex Projects Ltd at Rs.27.40, for short term targets of Rs.37-41.

2. You can continue to add the shares of Reliance Communications Ltd (Rs.50.70) on all declines.

3.You can book some profits in MBL Infrastructure, when it comes out of UC.

4. The diamond Jewelry sector is set to do well after the US elections. So, you can buy and hold Shrenuj & Co (Rs.2.15).

Today's Recommendations

1. Buy Simplex Projects Ltd sr Rs.27.40, for short term targets of Rs.37-41.

2. You can continue to add the shares of Reliance Communications Ltd (Rs.50.70) on all declines.

3.You can book some profits in MBL Infrastructure, when it comes out of UC.

4. The diamond Jewelry sector is set to do well after the US elections. So, you can buy and hold Shrenuj & Co (Rs.2.15).

Today's Recommendations

1. Buy Simplex Projects Ltd sr Rs.27.40, for short term targets of Rs.37-41.

2. You can continue to add the shares of Reliance Communications Ltd (Rs.50.70) on all declines.

3.You can book some profits in MBL Infrastructure, when it comes out of UC.

4. The diamond Jewelry sector is set to do well after the US elections. So, you can buy and hold Shrenuj & Co (Rs.2.15).

Today's Recommendations

1. Buy Simplex Projects Ltd sr Rs.27.40, for short term targets of Rs.37-41.

2. You can continue to add the shares of Reliance Communications Ltd (Rs.50.70) on all declines.

3.You can book some profits in MBL Infrastructure, when it comes out of UC.

Crore-pati Scheme

If anyone or a business group can invest around Rs.25-30 lakhs in Indian Share Market in select stocks, just as investment, then his portfolio can became Rs.1-2 crores using some recent technicians, in 3-4 years.

The recent trend in the market, gives us some indication that the next level of rally will come from the small and micro caps, where the growth potential is astronomical.

If any investors is interested then send me a mail at: suman2005s@rediffmail.com or sumanm2007s @gmail.com.

This will be  mainly investment based with very little trading. I will take 25% of profit at the end. The investor/s will hzve to sign court agreement for the same.

Crore-pati Scheme

If anyone or a business group can invest around Rs.25-30 lakhs in Indian Share Market in select stocks, just as investment, then his portfolio can became Rs.1-2 crores using some recent technicians, in 3-4 years.

If any investors is interested then send me a mail at: suman2005s@rediffmail.com or sumanm2007s @gmail.com.

This will be  mainly investment based with very little trading. I will take 25% of profit at the end. The investor/s will hzve to sign court agreement for the same.

Today's Call

1.Buy MBL infrastructure Ltd at Rs.91.75 - 92, for short term targets of Rs.115 --130.

2. Reduce your holding in Unitech Ltd if it closes below Rs.6.30. This is only, if you are a short term player. The long term investors can hold with a SL of Rs.5.60.

3. You can increase your holding in Reliance Communication Ltd at Rs.51.20, as most of the shares from ADA group are showing a good uptrend.

4. Rolta Ltd (Rs.65.50) needs to close above Rs.67, to begin the next round of upmove.

Winning Strokes: Think Different

Reliance Communication Ltd showed good upmove today, closing near Rs.51. We can look for targets of Rs.57-61 very soon.

Unitech Ltd closed flat today, after massive upmove yesterday. The stock is headed towards Rs.12 in the coming days.

As expected Shrenuj & Co (Rs.2.30) hit the buyer freezes in both the exchanges. The company is preparing to rake in moolah from the on going festival season.

Today my recommended Reliance Defense and Engineering moved above Rs.71 to close at Rs.68.85. Unless Rs.67 is broken on the downside, the stock could be held by medium term investors. The short term traders might have booked some profit, near the first target of Rs.71.

The stock of Rolta India Ltd was recommended today, at Rs.64.10 for short term targets of Rs.71-75. The company is having a board meeting next week.

The company was recently invited to bid for a multi-million dollar 'Make in India' project and project of Rs.60,000 crore in consortium with BEL is also progressing well.

On other deal front, the company won USD 15 million project in West Asia for smart city & 3D mapping. It also won a deal with a housing authority in West Asia for land administration.

Rolta Ltd plans to streamline the defence business as a separate and distinct wholly owned subsidiary mainly because the regulatory environment is different for the defence and IT businesses.

Moreover, it would also help them to completely focus on defence business since Rolta is one of the few companies that have been repeatedly invited for ‘Make in India’ projects.

Most of the demerger news are generally positive for the shareholders.

Winning Strokes: Think Different

Reliance Communication Ltd showed good upmove today, closing near Rs.51. We can look for targets of Rs.57-61 very soon.

Unitech Ltd closed flat today, after massive upmovd yesterday. The stock is headed tpwatdd Rs.12 in the coming days.

As expected Shrenuj & Co (Rs.2.30) hit the buyer freezes in both the exchanges. The company is preparing to rake in moolah from the on going festival season.

Today my recommended Reliance Defense and Engineering moved above Rs.71 to close at Rs.68.85. Unless Rs.67 is broken on the downside, the stock could be held by medium term investors. The short term traders might have booked some profit, near the first target of Rs.71.

The stock of Rolta India Ltd was recommended today, at Rs.64.10 for short term targets of Rs.71-75. The company is having a board meeting next week.

Rolta India Ltd: Buy

CMP: Rs.64 -- Rs.64.10

Winning Strokes: Think Different

Unitech Ltd (Rs.6.35) hit the UC today, though cooling down a bit in the fag end of the day. The stock is headed towards Rs.10-12 in the short term. This happened after a favourable High Court observation.

Reliance Communications Ltd today tried to clear the resistance zone of Rs.50.70-51.50, but failed to so, closing at Rs.49.95. The company has already said that it would not cut the tariff rates; as it perhaps knows the business strategy of Reliance Jio, whose Services seems to flop after prolonged advertising blitzkrieg. The RJio customers are already complaining of slower speed, network issues, etc. This is likely to slow the migration of non-Jio players-- an advantage for Reliance Communications Ltd. I am expecting the stock to touch Rs.72 in the short term.

The diamond jewelry maker Shrenuj & Co today closed at Rs.2.21 in the BSE, which indication the resumption of the next wave of uptrend. I am holding some shares of the company and is looking for short term target of Rs.6.

Reliance Defense and Engineering Ltd is finding difficulties to cross the resistance zone of Rs.67.50-68. Once this is crossed indication on the upside, we can look for targets of Rs.72-73. The above photo is from The Hindu.

Note: I am still not having net connection, aftermath, the change of my location in Bombay. Please bear with me.

Winning Strokes: Think Different

Unitech Ltd (Rs.6.35) hit the UC today, though cooling down a bit in the fag end of the day. The stock is headed towards Rs.10-12 in the short term. This happened after a favourable High Court observation.

Reliance Communications Ltd today tried to clear the resistance zone of Rs.50.70-51.50, but failed to so, closing at Rs.49.95. The company has already said that it would not cut the tariff rates; as it perhaps knows the business strategy of Reliance Jio, whose Services seems to flop after prolonged advertising blitzkrieg. The RJio customers are already complaining of slower speed, network issues, etc. This is likely to slow the migration of non-Jio players-- an advantage for Reliance Communications Ltd. I am expecting the stock to touch Rs.72 in the short term.

The diamond jewelry maker Shrenuj & Co today closed at Rs.2.21 in the BSE, which indication the resumption of the next wave of uptrend. I am holding some shares of the company and is looking for short term target of Rs.6.

Reliance Defense and Engineering Ltd is finding difficulties to cross the resistance zone of Rs.67.50-68. Once this is crossed indication on the upside, we can look for targets of Rs.72-73. The above photo is from The Hindu.

Govt offers fin relief to realty cos

[Editor: This is expected to be a sort of boon for the established real estate players like DLF Ltd (Rs.149.90), Unitech Ltd (Rs.5.25), Parsvnath Developers Ltd (Rs.16.80), HCC Ltd (Rs.35.55), etc. who are reeling under high debt burden; with a squeeze on cash flow. I continue to maintain a buy on Unitech Ltd with short term targets of Rs.9-12] 

Sep 1, 2016:  The government on Wednesday announced a package to ease the financial stress on construction companies, including a possible loan restructuring package for the real estate sector — a move that could prompt property developers to resume work on stalled projects.

"The department of financial services and the RBI will try and prepare a policy on how to deal with those companies which have got a lot of stressed assets in the real estate sector. We hope that a series of these decisions would pump in a lot of liquidity in the sector, activate a lot of real estate and infrastructure projects which have been stranded for some time and support the entire process of dispute resolution in relation to construction and real estate," finance minister Arun Jaitley told reporters after the Union cabinet cleared the package.

As reported by TOI on August 26, the package prepared by the NITI Aayog seeks to ensure release of 75% of funds locked up in projects where an arbitration award has been made in favour of a construction company. In case where the award has been challenged, agencies such as National Highways Authority of India would transfer 75% of the award amount into an escrow account against margin free bank guarantee. This amount can be used to repay loans and generate liquidity besides easing the burden on companies.

"HCC will immediately be able to reduce its debt by almost half as a result and will be able to reduce it even further within 12 to 24 months. With this, HCC will be able to participate in country's infrastructure development in a much bigger way," said HCC chairman and managing director Ajit Gulabchand. The company which is under financial pressure has around Rs.3,000 crore caught in disputes with government agencies.

There is gain for individuals too as some of the real estate developers have delayed delivery of projects citing lack of funds.

"If the banks extend the repayment schedule, developers will use the cash flow in completing the projects instead of repaying the loan. This will help the sector and the economy," said ATS Infrastructure CMD Getamber Anand, who is also heads real estate lobby group Credai.

In case of construction companies the government has sought to speed up the arbitration process, Jaitley said. Public sector companies and the government would seek the consent of contractors to transfer cases initiated under the earlier law to the amended act.

And, to avoid a build-up of cases in future, the government also wants its arms to set up Conciliation Committees to ensure speedy disposal disputes.

Source: The Times of India 

Reliance Communications Ltd: Should We Buy...?

CMP: Rs.49.20

In a move seen as aggressive, Reliance Jio has announced free voice calls across network and data charges that are 30-50% lower than that charged by incumbents including Vodafone and Airtel. A number of brokerage houses cut the price targets of incumbent telecom players Bharti Airtel and Idea Cellular fering that Jio's launch would disrupt the $28-billion Indian telecom market.

Influential foreign brokerages Goldman Sachs, Credit Suisse and JP Morgan have cut their 12-month price targets for Airtel and Idea by as much as 19%. Jio's commercial launch will be on September 5, 2016, but it plans to offer unlimited data, voice, video and SMS until December, 2016 as part of its 'welcome offer'. The newest telecom entrant is targeting 100 million customers in 'shortest possible time'.

Therefore, while an entire spectrum of telecom-analysts are getting heebie-jeebies over Reliance Jio's 4G launch and its potential negative effects on the revenue/earnings on the top four operators -- Bharti Airtel Ltd, Idea Cellular Ltd, Vodafone Ltd and Reliance Communications Ltd,  let us focus our attention primarily on Reliance Communications Ltd Vis-a-Vis Reliance Jio's historical launch. It is pertinent to mention here that most investors are probably missing out on the other key developments that can offset the impact of slower industry revenue growth, following Jio's launch; at least partially.

(i) Jio offerings are restricted to 4G handset subscribers, therefore, the impact on existing telcos will be gradual while it would be interesting to see how they cope up with the new challenges. 

(ii) Reliance Communications has already started to move its five million CDMA customers to Jio's 4G LTE network from May 4, 2016. While the users will continue to be RCom subscribers, the network will be powered by Jio's all-IP based next generation network. 

The Anil Ambani-led RCom is leveraging the spectrum sharing pact it had signed with elder brother Mukesh Ambani-led Reliance Jio Infocomm for 4G services. The company will deploy its own 4G network and pre-dominantly use Reliance Jio infrastructure to deliver 4G services. The upgrade will happen in a phased manner.  RCom paid Rs.5,383 crore in January this year to DoT to liberalise spectrum in the 800 MHz band across 16 circles. 

(iii) If Reliance Jio (RJio) garners Rs.200-250 average revenue per user (ARPU) while switching offerings from voice to data, incumbents’ ARPU base could be protected given their current ARPU base of Rs sub-200, wrote Motilal Oswal in their recently published research report. 

(iv) In 2013, the Ambani brothers had entered into a comprehensive agreement for optimal utilisation of the existing and future (telecom) infrastructure of both companies on a reciprocal basis.

While the spectrum trading and sharing agreements will give older brother's Jio access to the much-needed spectrum in the 800 MHz band, Anil Ambani's RCom subscribers can now enjoy high-speed mobile broadband seamlessly on both the networks. The arrangement will be similar to intra-circle roaming arrangements that telcos currently have. The migration of RCom's customers to Jio's network will also be a good test case. Following the deal, both RCom and Jio will have over 10 MHz spectrum in the 800-MHz band in all 22 circles or service areas across India. Jio has acquired spectrum in this band in 10 circles and RCom has it in all 22 circles..

(v) Analysts have raised questions on Jio's ability to offer voice services purely on LTE (VoLTE) as it would not have the conventional method of delivering voice through wireless networks. Jio intends to offer voice through its data networks, which is similar to making calls on Skype or WhatsApp. The partnership with RCom to offer the fallback on voice in select markets could be a game-changer for Jio.

(vi) A sector executive said with Jio finally announcing its commercial launch, the picture is much clearer and they could now frame a strategy to counter the competition. He said it would not be so easy for Jio to add customers, as data growth had already slowed and new customers would have to make a one-time investment of at least Rs.3,000 to avail its service.

(vii) A majority of data customers at existing operators are either using 2G or 3G; 4G is still gaining traction. Analysts expect Jio to expand the data market and data revenues would grow at a 22% compounded annual rate over the next few years. If the data market spikes, then this will invariably have a positive effect on the top and bottomlines of the incumbents (read, R-Com). 

(viii) Reliance Jio announced its tariff (rate) plans starting at Rs.149 for 28 days, offering unlimited voice - - this is higher than the voice average revenue per user (Arpu) of Bharti and Idea, at Rs.138 and Rs.130, respectively.

(ix) An analyst said for the incumbents, there would be an impact on the lower-tier segment, as the Rs.149 offer by Jio would appeal to voice-only customers, who will be able to make unlimited free voice calls.

(x) UBS in a report said RJio, being a 4G operator, would find the addressable market only around five percentage of India's mobile users. "Also, we do not expect high-end customers to switch to RJio overnight, abandoning their existing operator," it added.

(xi) Equinomics Research & Advisory wrote: "Post RIL AGM, Bharti Infratel stock price fell about 4% from its intra-day peak. We feel the fear is unwarranted. The aggressive launch of 3G and 4G services, and also pressure on the existing players to improve the transparency will lead to increase the demand for telecom towers. Ultimately Bharti Infratel would be a major beneficiary of expanding scope of mobile telecom services". Or in other words, the impact (if any) has either been factored in the prices of the shares of the incumbents or will play only for the short to to medium term (As RJio's unlimited offerings and free usage are valid only till December 2016). 

(xii) Ahead of the impending launch of Reliance Jio’s 4G services, telecom operator Reliance Communications recently announced app-to-app 4G calling dubbed as Calling Ka Naya Tareeka' for subscribers across India and worldwide at Re 1. The Anil Ambani-led firm will bundle 300 minutes of app- to-app talking, valid for 30 days at Re 1, translating into 10 minutes usage per day under the limited period offer. Users will get a daily data credit of 7 MB into their accounts that can be used to make these calls.

The service, according to it, will be available on 4G LTE network in the 850 MHz spectrum band which is recognized as the most optimal frequency for voice and data services.

The plan will allow RCOM's subscribers to make calls worldwide through various data-based apps that include WhatsApp, Facebook Messenger, Skype, Google Hangouts, Viber and JioChat.

India's fourth-largest telecom operator is eyeing data robust data growth, and has already entered into a strategic spectrum sharing deal with Mukesh Ambani-controlled Reliance Jio Infocomm which is making its 4G debut soon.

RCOM is also partnering with e-Commerce companies and device makers to drive the fast-evolving ecosystem and has set up demo zones at Reliance Mobile Stores across the country.

(xiii) In 2002 Mukesh Ambani said :

This is the largest infrastructure and services rolled out by any new entrant anywhere in the world. In terms of complexity, it spans voice, data, video, audio and value added services.With an ‘every time, every place, every device’ network ethos, a sweeping span of services and a new breed of entrepreneurs, Reliance Infocomm will prepare India to take on the mantle of leadership in the knowledge age. Sure. Sounds familiar right? These exact claims are being made today. 

Reliance Infocomm the birth child of this offer has since then converted to Reliance Communications, the launch was considered a total failure and set precedent that no payment plans could work in a country like India. Hence, we pay outright for iPhones and Galaxy S flagships, instead of a payment plan seen in most countries, Thanks Reliance!

(xiv) Reliance has always been big on promises but poor on deliveries. A company that lacks a general direction of customer service and rates extremely low on the customer satisfaction index. Reliance is operating the JIO offer without an actual go ahead from the Government, this offer in which you the user, are using the services which allow Reliance Industries to do business without really paying the government spectrum charges and other fees that a commercially launched network has to pay. So each of the 1.5 million users are accomplices in a scam of a colossal scale. Cellular Operators’ Association of India (COAI), the network industry body, accused Reliance of falsely claiming that it is in testing mode...... it seems that things are already sketchy before launch, fake promises of launch among  an already poor infrastructure of voice services.

(xv) The JIO network also requires VOLTE to communicate effectively, however, no other provider at the moment offers VOLTE, so that will only work between JIO to JIO calls. Also, VOLTE as a technology is not available on every 4G enabled phone, which could restrict usage to either no voice calls, or buying a new phone with your new service. 

Every one on JIO using the services is extremely impressed by the speeds of the 4G network, which will go down monumentally the minute millions of users jump on their network and start to use the services in busy cities. 

(xvi)  Most people are extremely happy with services of a provider that works for them. Some are loyal to Airtel and some to Vodafone, while Tata Docomo  (Indicom ) users swear by the good network strength (where it works ).

(xvii) Here are a few things that are already established,

• JIO is not yet operating within the rules set by the Government.
• There are already reports (acknowledged by JIO) of an extremely poor voice network.
• Too much hype and too little product.
• Poor customer service and Customer recall.
• Lowest levels of customer satisfaction.
• Past Failures in Mobile telephony.
• That being said, we should not judge people for their past mistakes, especially if they have paid heavily (or incurred heavy losses)

Reliance is once again trying to change the mobile industry in India exactly 14 years after its first failure. However, it seems that the approach is too similar to ignore. Cheaper than usual handsets (LYF smartphones), promise of high quality service, and free data offers. Reliance has always focused on making things cheap, for the masses, but has often disappointed.

(xviii) It’s evident that no network is perfect, but the JIO launch is far from it, and as consumers Indians are much smarter than they were in 2002. But, as a community, our consumers are often temped by something that is cheap. Reliance JIO promises to be the cheapest Data and Voice carrier in the country and for now that sells, just like hot cakes.

People needs to be careful before signing on to a postpaid contract, read the document carefully, you may be charged for services that you may not need. JIO’s end aim is to monetise the millions of customers it can retain from its free campaign, which at the end is a full blown marketing stunt, categorised under modern advertising.

(xix) Telecom players Reliance Communications Ltd (R-Com) and Aircel Ltd are expected to sign an agreement for merger of their businesses by the first week of September.

“Term sheet between the two companies have been finalised. Definitive agreement for merger between the two companies is expected to be signed in a week or 10 days,” a person with direct knowledge of the matter said.

The R-Com and Aircel talks, if successful, would lead to formation of the third-largest telecom operator in the country with a subscriber base of over 196 million.

The new entity, which is in the works, will hold spectrum across all allocated bands—800 megahertz (MHz), 900 MHz, 1,800 MHz, 2,100 MHz and 2,300 MHz—for 2G, 3G and 4G services.

On the other hand, R-Com and Sistema (MTS) are in process of merger. Sistema will hold 10% stake in the new entity that will formed post its merger with R-Com.

The merged entity is expected to have Rs.25,000 crore business from the first day of its operation and is estimated have Ebitda (earnings before interest, taxes, depreciation and amortization) of Rs.7,000 crore and finance cost of about Rs.3,000 crore.

“R-Com and Aircel have had nil free cash flow for a long time but the resultant entity is being structured in a manner to have Rs.4,000 crore free cash flow which it can use for investments in network,” the person said.

(xx) Reliance Jio may have brought a large number of customers on its network even before the formal launch of its 4G LTE service by offering three-month free data but analysts are sceptical that this strategy would yield long-term financial returns.

According to some analysts, the disruptive pre-launch strategy, which has earned the ire of the incumbents in the sector making them to respond with similar offers, reveals the suppressed demand for data in the country. But, attracting customers with a free offer may not necessarily transform into financial gains.

(xxi) Garnering a large number of subscribers in a short span is clearly Jio’s ambition. The company intends to acquire 100 million subscribers in the first year of its launch.

There are fears that Jio may not be able to attract new subscribers as there are numerous issues that are currently preventing penetration.

Abhishek Gupta, a telecom analyst at IDFC Securities, said: “There are low-hanging fruits for Jio in the form of subscribers with fringe players. We believe the 100-million mark is more like an aspiration. Even if Jio has 40-50 million subscribers in the 12-month from its launch, it would be a reasonably successful.”

(xxii) Getting too many subscribers could also expose Jio to technological challenges.

Jio is currently using a combination of different types of spectrum — 1,800 Mhz, 850 Mhz and 2,300 Mhz.

Convergence Catalyst’s Kolla wrote in his report that the spectrum in the 850 Mhz band is not contiguous in many circles, which will impact delivering quality service in select circles.

(xxiii) According to a report by ICICI Securities, domestic telecom players are likely to gain from Norwegian telecom company Telenor's exit and winding up of CDMA services. 

"In our view, the top three operators would be major beneficiaries of Telenor's exit from the Indian market. The potential buyer will have an opportunity to retain entire subscribers, though all major incumbent operators will benefit from the exit," it said. 

At present, Telenor India operates in seven circles viz: Maharashtra, Gujarat, AP, UP (west and east), Bihar and Assam, contributing 36% to industry's adjusted gross revenue - - which when taken in simple terms means in the likely event of Telenor exiting India, it would throw Rs.3,400 crore adjusted gross revenue (AGR) up for grabs. However, Telenor exit is unlikely to bring in too much benefits for Reliance Communication Ltd. 

(xxiv) Reliance Communications aims to poach customers from top telcos with its latest Re 1 plan valid for 30 days under which users can chose to make app-to-app calls or browse the internet, but unlike competitors Bharti Airtel, Vodafone India and Idea Cellular, won't be cutting data tariffs.

"We have no intention of dropping data prices. We will stay focused on delivering quality," said Gurdeep Singh, chief executive officer, consumer business, Reliance Communications. "We will poach customers and better network will attract customers... It is our time to reverse market share and we're not looking at anything less than leadership in 4G."

The statement comes in the backdrop of data tariff cuts by the top three telcos over the past month or so in the wake of newcomer Reliance Jio Infocomm's three-month unlimited voice and data trial offer, completely free of charge.

(xxv) While RCom is focusing on taking more customers from rivals, it is evaluating options for buying spectrum in the upcoming auction, which may include the efficient yet pricier 700 MHz band. As mentioned earlier RCom has an almost country-wide spectrum-sharing agreement with Jio, which is yet to commercially launch services.

Faced with the impending commercial launch of RJio’s 4G services, telecom operators, including Bharti Airtel and Vodafone are also wooing users through higher data speeds, high definition quality and superior experience on their networks. Recently, Reliance Communications claimed that its 4G LTE network on 850 Mhz spectrum band will provide high-definition quality, instant connectivity and blazing data speeds.

(xxvi) In June, 2016, the rating agency ICRA upgraded its outlook for Reliance Communications Ltd to stable from negative on the long term rating 'BBB+' of the company.  

It has also reaffirmed rating of A2+ for short-term fund based/non fund based limits and commercial papers of the company, RCom said in a statement.

“The reaffirmation in ratings and revision in outlook reflects the improving business profile of the Group with several initiatives being taken by the group to increase its spectrum holding, provide additional focus on data services including the foray into 4G services. These include the deal to acquire wireless operations of Sistema Shyam Teleservices Limited (SSTL), spectrum sharing and trading deal with Reliance Jio Infocomm Limited (RJIL) and proposed merger of wireless business with Aircel Limited,” ICRA said in a release.

Conclusion: Considering the above points, I maintain a CONTRARIAN BUY on the stock of Reliance Communications Ltd at the CMP of Rs.49.20, for short term targets of Rs.57-61. Please keep a SL of Rs.45, in case of any short term play. 

Note: I will be off the air for a few days due to shifting of my location in Bombay. However, my Premium Members, can call me on my mobile number, in case of any suggestion. 

So, during these day play safe using strict stop losses, for short term plays - - all the best and wish you a "Happy Ganesh Chathurthi", in advance. 

Winning Strokes: Think Different

Photo: The Hindu Business Line

If there is a Real Estate Push by the NDA government, then the beaten down stocks, like Unitech Ltd (Rs.5.20), DLF Ltd (Rs.150.20), Prestige Ltd (Rs.187.55), etc, will be one of the major beneficiaries. But Unitech Ltd will give multi-bagger returns in the short term. 

Reliance Communications Ltd is up today, after a subdued morning session. The scrip was recommended yesterday, in this blog and should give good returns to the investors in the short term, as there are media reports that the company is likely to announce the much anticipated merger news in the 1st week of September, 2016 and also due to ensuring launch of Reliance Jio Ltd's services. Moreover,Suresh Mahadevan, managing director and head of Asian telecom and media research at UBS says Reliance Jio entry will actually benefit Airtel, Idea.

IVRCL Ltd recommended some days back around Rs.4.80, today touched Rs.5.70, giving decent returns to the investors. Even Gammon Infra Ltd (Rs.5.14) is up more than 3% today. However, I feel the real estate stocks will be more benefited if the NDA government pumps life into Real Estate sector, through a series of measures. 

Reliance Communications Ltd: Buy

CMP: Rs.49.15

Telecom players Reliance Communications Ltd (R-Com) and Aircel Ltd are expected to sign an agreement for merger of their businesses by the first week of September, according to Live Mint, 26 August, 2016.

“Term sheet between the two companies have been finalised. Definitive agreement for merger between the two companies is expected to be signed in a week or 10 days,” a person with direct knowledge of the matter said.

The R-Com and Aircel talks, if successful, would form India's third-largest telecom operator with a subscriber base of over 196 million.

“At present no regulatory approvals are required. The process for regulatory approval will begin after R-Com and Aircel sign definitive agreement. It should take around 4-6 month time to complete merger and the combined entity will be rebranded,” the person said.

The new entity, which is in the works, will hold spectrum across all allocated bands—800 megahertz (MHz), 900 MHz, 1,800 MHz, 2,100 MHz and 2,300 MHz—for 2G, 3G and 4G services.

On the other hand, R-Com and Sistema (MTS) are in process of merger. Sistema will hold 10% stake in the new entity that will formed post its merger with R-Com.

In December last, the two firms announced entering into 90-day ‘exclusivity period’ for the merger deal that will exclude R-Com’s tower and optical fibre assets for which a separate sale process is ongoing. The talks were later extended twice.

The merged entity is expected to have Rs.25,000 crore business from the first day of its operation and is estimated have Ebitda (earnings before interest, taxes, depreciation and amortization) of Rs.7,000 crore and finance cost of about Rs.3,000 crore.

“R-Com and Aircel have had nil free cash flow for a long time but the resultant entity is being structured in a manner to have Rs.4,000 crore free cash flow which it can use for investments in network,” the person said.

The two mergers are set in a backdrop where the debt-ridden telecom sector is said to have a debt burden of Rs. 3,50,000 crore. Reliance Jio is expected to exert 4G tariff pressure on telecom majors Airtel, Vodafone and Idea.

Earlier, Idea had denied media reports on its merger with the second largest telecom firm Vodafone. According to Telecom Regulatory Authority's February 2016 data, Vodafone had a market share of 19.16 per cent while Idea was close behind with 17.01 per cent market share.

Reliance Communications aims to increase the volume of people using data to make calls on its network, having seen a spike in app-to-app calling by its users, a top official said. Gurdeep Singh, chief executive of RCom's consumer business, said around 6-8% of its users currently make calls using apps, up from around 2% a year ago, and the telco was hoping to convert more of its traditional voice callers to use data for making calls rather than simply using apps to chat.

And going forward, chipset technologies are converging and all future handsets will support multiple spectrum bands, with all new smartphones being multi-band devices, trends which will trigger more calls using data networks. .

Moreover, the launch of Reliance Jio Ltd is positive for the shareholders of Reliance Communications Ltd, due to technology (and tower) sharing agreement. 

Note: I will be off the air from 2nd half tomorrow, (approx) for a week due to shifting of my location in Bombay. However, my Premium Members, can call me on my mobile number, in case of any suggestion.