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Photo: Maffat.com

Vedanta Ltd is a diversified natural resources company. The Company's International arm, Vedanta Resources Plc  is engaged in exploring, extracting and processing minerals and oil and gas. Its segments include Zinc-India, Zinc-International, Oil & Gas, Iron Ore, Copper-India/Australia, Copper-Zambia, Aluminum and Power. The Company produces zinc, lead, silver, copper, aluminum, iron ore, oil and gas and commercial power and has presence across India, Zambia, South Africa, Namibia, Ireland, Australia, Liberia, United Arab Emirates and Sri Lanka. The Company is also in the business of port operations in India. The Company's zinc operations are located in India, Namibia, South Africa and Ireland. The Company's iron ore operations are located in India and Liberia. The Company's copper smelting and mining operations are located across India, Australia and Zambia.

The promoters' holding in Vedanta Ltd, stood at 59.52 % while Institutions and Non-Institutions held 22.99 % and 9.91 % respectively.  

Vedanta Ltd is the only company who has resumed iron ore mining in Goa after the Supreme Court lifted its 2012 ban. The company resumed mining operation in the state in August this year.  

However, the rates at which iron ore is to be transported is the bone of contention between the mining companies and truckers. The issue started with the transportation of e-auctioned iron ore. The state government had sold a total of 7.4 million tonne of iron ore through 13 e-auctions out of the 16.56 million tonne identified for e-auction. The directorate of mines and geology had notified a rate of Rs.12.33 per tonne per km for the transportation of the e-auctioned ore on April 21. Around 1,300 trucks were engaged to transport e-auctioned and freshly mined ore from Codli to Amona/Surla by Vedanta Ltd.

Now, while, the Truck Owners Association is demanding a rate of Rs.17.63 per km, the mining firms, already reeling under the impact of a meltdown in iron ore prices and plethora of taxes, have offered to pay Rs.8 per km. 

According to Aniruddha Joshi head, corporate affairs, Vedanta Ltd, around 600 truck owners have already agreed to ply at the rate of Rs.8 per tonne per km. This brings some visibility, in the ongoing tussle between Vedanta Limited and truck owners transporting iron ore.

Therefore, the stock at the CMP of Rs.84.30, remains one of the best buys for the next 2-3 months perspective, with a SL of Rs.77 and a target price of Rs.109. 

You must have remembered that I recommended Pipavav Defence Ltd at Rs.38.75, as a sure shot BUY for 18 months  price-target of Rs.90; on 27 September, 2014 (amid all so-called-uproars and acquisitions of pumping up a loss-making-no-future-company).

I then asked all the long term investors to accumulate the scrip on all declines. After that Pipavav Defence Ltd, had almost doubled from the recommended rate, made a 52-week high of Rs.85 and is now trading at Rs.79.45. 

In a similar way, the long time investors will see  value additions, in their investments in Vedanta Ltd from the CMP of Rs.84.30, over a period of time. It is a must BUY, for all the long term investors.

Rolta India Ltd: Buy

CMP: Rs.95.50

Rolta India Ltd, has bid for the Rs 60,000-crore project to design and build a Fighting Infantry Combat Vehicle (FICV) under Make in India in Defense, along with a host of other companies. 

Moreover, ending months of speculation, and for the first time in nearly a decade, the US Federal Reserve's rate-setting Federal Open Market Committee (FOMC) raised its Federal Funds Rate by 25 basis points from the 0-0.25% range to a target of 0.25-0.5%. 

The historical move, anticipated for over a year, marks the exit of the zero interest rate policy, which had been into place in the wake of the financial crisis of 2008. 

The decision comes on the back of some particularly strong macroeconomic data emerging out of the world's largest economy: the unemployment rate recently hit a seven-year low while jobs growth, too, has been steady.

This move gives some indication that probably the wounds of the US economy from the 2007-2009 financial crisis are gone and it's finally more or less on its own, without any crutches. 

This is positive especially for India IT, as IT budgets of US companies will expand now and demand will grow. 

Buy the shares of Rolta Ltd at the CMP of Rs.95.50 for short term targets of Rs.104-111.

Note: Anticipating a rate hike Rolta Ltd was recommended to the Paid Group members yesterday at around Rs.92.75.

Jindal Steel and Power Ltd: Buy

CMP: Rs.93.60

The scrip of Jindal Steel and Power Ltd, an O P Jindal Group company, is trading above its 50D, 100D, 150D and 21D, SM and EMAs.

Jindal Steel and Power Ltd (JSPL)’s consolidated performance for the September, 2015 quarter was marginally better than Street expectations. Sales at Rs.4,880 crore and operating profit at Rs.976 crore were better than the Street’s estimates of Rs.4,572 crore and Rs.968 crore, respectively. However, the company reported losses of Rs.618 crore due to exceptional items that included an impairment loss of Rs.227 crore in a foreign subsidiary and a foreign exchange loss of Rs.212 crore.

Given the pressure on realisations, the steel segment’s performance was in line, while the power segment disappointed. Steel deliveries declined 8% sequentially to 780,000 tonnes, and long-product prices declined sharply. The segment revenue, however, increased 3% sequentially at the standalone level.

Overall earnings before interest and taxes (EBIT) at Rs.319 crore were better than the Rs.115 crore in the June quarter, though down 32 per cent over the year-ago period. At the consolidated level, international subsidiaries saw an improvement in earnings before interest, tax, depreciation, and amortisation (EBDITA).

However, the power segment EBITt at Rs.188 crore was lower than the Rs.217 crore in the June quarter and Rs.245 crore in the year-ago period, despite higher power production sequentially. During the June, 2015 quarter, company shut down two 250-megawatt (Mw) units. Rising fuel costs due to a higher price for coal hit performance. Higher coal cost in the absence of captive mining is hurting performance and is a key concern of the Street.


The company is restructuring assets by selling power assets from a standalone entity to Jindal Power (96.4% stake). This will include a 6x135-Mw power plant at Angul and 2x55-Mw power plant at Raigarh.

Earlier,  Jindal Steel and Power Ltd (JSPL) told a special court that it was not involved in any conspiracy to get a coal block in Jharkhand and was the only eligible firm to get it.

Jindal Steel said it was looking to cut production costs and bring down its debt by selling some of its non-essential assets in the current fiscal year ending in March.

China makes nearly half the world's 1.6 billion tonnes of steel. With growth slowing at home, it is expected to export a record 100 million tonnes to world markets this year to help address its spare steel-making capacity.

India imposed a 20% import tax on some steel products in September to mitigate the damage to domestic companies.

Buy the shares of the company at Rs.93.60, for short term targets Rs.99-109-117. The scrip could double, in the next 9-12, months. Therefore, those who are having a little patience, can keep on adding the stock on all declines, keeping a SL of Rs.77.

Brokerage Report: Nifty, Metals and Energy Market Updates 

The Metal Stocks are likely to gain in future as the Reserve Bank of India (RBI) has kept its benchmark interest rate unchanged, after a monetary policy review. 

The RBI kept its benchmark interest rate viz. the Repo rate unchanged at 6.75% after a monetary policy review yesterday, i.e. on 1 December 2015. 

The central bank also kept the cash reserve ratio (CRR) for commercial banks unchanged at 4% of net demand and time liability (NDTL). 

Now coming to Nifty Futures, it can be said that as long as it does not close BELOW, 7920, the market is NOT expected to go DOWN, much from here.... 

In fact the current trend in the Nifty_Futures, is likely to take it towards the first weekly resistance of 8010 mark in this week. 

However, today Nifty_Futures (31 December, 2015) closed at 7959 (down 28.75 points) which is below this resistance level.

Now, if tomorrow there is further selling in the opening hours then this might take Nifty_Futures, towards the trend deciding point of 7920--further selling pressure here could change the immediate trend to negative. 

In such cases, the Nifty_Futures might slip towards 7860 mark or 7780 mark depending on the supply pressure. 

On the other hand, if tomorrow the demand remains strong and the Nifty_Futures are able close above 8010, the Bulls could see the next higher level of 8060, followed by 8140 mark.

Today the Bank_Nifty closed at 17283 (down 191.60 points). However, during this week as long as it does not close BELOW the level of 17275, it is NOT expected to go much BELOW, from here. The current trend is expected to take the Bank_Nifty towards the first weekly resistance of 17510 mark. 

Now, if the Bank_Nifty closes above the first resistance point of 17510, then the immediate trend could take it towards the next level of 17685 mark or 17920 mark, depending on the demand pressure. 

On the other hand, if the Bank_Nifty fails to close above 17510 in this week, then there are chances that it might slip towards 17275 mark. 

A further selling pressure at this level (of 17275) could turn the intermediate trend in Bank_Nifty, to negative and it might nosedive to 17100 or 16865, depending on the supply pressure.

WINNING STROKES: THINK DIFFERENT

IVRCL Ltd recommended to the Paid Groups at Rs.11.70, reached the first target of Rs.11 (intra-day high of Rs.11.23) and is now trading at Rs.10.66. 

Photo: The Financial Express

Vedanta Ltd today touched Rs.96.15, intra-day and is now trading at around Rs.94.70. This blue chip is likely to give good returns to the Patient Investors. 

Rasoya Proteins Ltd (Re.0.25), today hit the buyer freeze in the BSE. The scrip is likely to cross Re.0.30, this time. 

Tata Steel Ltd today touched Rs.245.65, intra-day and is now trading at Rs.243.20. By March, 2016, the scrip is likely to touch Rs.320, as the construction work gathers momentum. 

Reliance Communication Ltd has again touched Rs.78.90, intra-day and is now trading at Rs.78.50. You can look for targets of Rs.82-84, in the short term. 

IVRCL Ltd: Buy

IVRCL Ltd got its debt of Rs 7,350 crore restructured in June last year, but its journey since then has been full of thorns. In the quarter ended September, its net loss shot up to Rs.305 crore, while revenue remained stagnant at Rs.641 crore. To add to its woes, its accumulated losses for the first time exceeded its net worth at Rs.941 crore.

The company is currently facing a tough situation as lenders are reluctant to give new loans, even though it was sanctioned a fresh non-fund credit of Rs.1,800 crore in bank guarantees and letter of credit, in addition to a cash credit limit of Rs.200 crore as part of the CDR deal.

As part of the corporate debt restructuring, the company has a moratorium on interest payments on term loans till September 2015. The repayments are expected to start only from March next year. This means it has less than four months to fix things to enable IVRCL to improve its cash flows.

However, there seems to be some silver lining on the cards. The company is contemplating to sell some assets and divest equity in existing projects to regain control of its finances. 

Meanwhile, IVRCL Ltd has restarted negotiations with Tata Realty and Infrastructure for three of its projects, including the Chengapalli Tollways, a special purpose vehicle set up for widening the road from Chengapalli to Walayar via Coimbatore, which began toll collection from October 14.

There were recent media reports that this Hyderabad-based infrastructure player will get Rs.400 crore from the sale of three road projects in Tamil Nadu as the delayed monetisation ended up in losses.

Apart from monetising the assets, there are six more in line, it has decided to focus on realising the claims amounting to over Rs.6000 crore from various government projects. The company wants to utilise the new arbitration law that brings down the time limit for the settlement of a commercial dispute, for this purpose.

It is also looking at taking on more engineering procurement and construction projects where the role of an infrastructure company is limited to construction of projects within a prescribed budget. IVRCL Ltd has an order book of Rs.18,000 crore.  The success of the company now solely rests on its ability to generate enough cash flows.

Recently, IDBI Bank  said it has acquired an additional stake in IVRCL  Ltd, raising its total stake in the latter to over 5%. It said the acquisition was done through conversion of Funded Interest Term Loan (FITL) into equity.

Hence, high-risk-taking investors can buy the scrip of IVRCL Ltd at the CMP of Rs.8.95 for a short term target of Rs.11. Please keep a SL (must) of Rs.7.70, for any short term play.  The stock was already recommended to the Paid Groups a couple of days back at Rs.8.70.

First Source Solutions Ltd

This scrip of First Source Solutions Ltd, was recommended repeatedly around Rs.27-28 during the last few months, the scrip made a 52-week high yesterday at Rs.43.80 and closed at Rs.42.55.

Congratulations to all those who are still holding the scrip. 

Vedanta not to shut down refinery

[Editor: Vedanta Ltd (Rs.90.30) is the largest copper producer, while Hindalco Industries Ltd (Rs.73.75) is the biggest aluminum maker in India. Last month, Mehraboon Irani of Nirmal Bang Securities told a business channel that he had turned positive on metals; as he believed that global economy might recover over the next two years. I also somewhat feel that non-ferrous pack might have  bottomed out. Hence, I would suggest the investors, to have at least one of the scrips in your portfolio]

Bhubaneshwar, Nov 25, 2015: Vedanta Ltd on Tuesday said it would not close down its one million tonne per annum (mtpa) refinery at Lanjigarh since the state government has assured to sort out its raw material crisis.

"We will not shut down the plant as we are hopeful that the state government will help us meet our requirement of raw materials to run the plant," said chief executive officer (CEO) of Vedanta (Aluminium) Abhijit Pati, following a high-level meeting with chief secretary G C Pati.

The CEO said the plant requires at least 3 lakh metric tonne of bauxite ore per annum to run its refinery. "At present, the production capacity of the refinery has fallen by about 50% due to non-availability of adequate raw material," he added.

On August 25, Vedanta, which has been struggling for around 10 years to arrange raw material, had announced to shut down its refinery in a phased manner. At present, the plant is operating on a daily loss of Rs 3 crores. The plant generates employment opportunities for around 10,000 people in Kalahandi district. Earlier, in December 2012, the company had temporarily shut down its plant due to lack of raw material. After a closure of around seven months, the plant was reopened in July 2013. After that, the company was running its refinery at Lanjigarh by sourcing bauxite from Gujarat and Chhattisgarh, official sources said.

Vedanta faced a jolt after rejection of its bid to mine the bauxite reserve at the ecologically sensitive Niyamgiri Hill, home to the particularly vulnerable Dongaria Kondhs as the gram sabhas held to decide the mining project had rejected the mining plan.

State steel and mines minister Prafulla Mallik said the state government has applied for a mining lease of Kodingamali bauxite reserve in Rayagada district in favour of the Odisha Mining Corporation (OMC). "We hope to get the mining lease very soon. Through the OMC, we will facilitate long term ore linkage to Vedanta," he added.

The minister also said that the OMC has applied for prospecting license of Sasubohumali and Karlapat bauxite mines, which would further resolve the bauxite requirement of aluminium plants in the state.

Stay updated on the go with Times of India News App. Click here to download it for your device.

Courtesy: The Times of India

DO YOU KNOW?

Lanco Infratech Ltd was recommended at around Rs.3.25 some months back to the Paid Members. The scrip closed at Rs.6.40 in the BSE, at a kissing distance from the 2nd target of Rs.7.

The power producer has reported a consolidated net profit of Rs.98.98 crore for September quarter against loss of Rs.527.5 crore in year-ago period, driven by strong operational performance and favourable power tariff order.

Today, another scrip in the construction space was recommended to the Paid Group members. What is its name? And what to do with Lanco Infrastructure Ltd now?

Meanwhile. Gammon India Ltd hit 19.98% buyer freeze in the BSE and 19.92% buyer freeze in the NSE to close at Rs.15.49 and 15.65 today, in the respective exchanges. This looks a little queer when the lenders to the company led by ICICI Bank proposes to invoke the rules for strategic debt restructuring as a step to recover Rs.100 bln (1 billion= 100 Cr) of dues, from the company. 

Government spending key for revival of Indian steel sector: Fitch 

Photo: Live Mint

New Delhi, 23 Nov, 2015: Spending on infra projects such as housing for all and smart cities is the key for the revival of the Indian steel industry, which faces headwinds like cheap imports, global agency Fitch said. 

"Spending by the Indian government on infrastructure will be the catalyst for any meaningful improvement in domestic steel demand. The agency expects India's steel consumption to improve modestly by 7-8 per cent in 2016," the agency said in a report titled '2016 Outlook: Indian Steel Sector'. 

The agency projected that high imports and soft steel prices globally in 2016 are likely to result in continuing profitability pressures for the Indian steel producers. 

"Their margins are likely to be lower in 2015 and improve marginally in 2016, supported by improving domestic demand and the imposition of safeguard duty on imports on certain steel products for 200 days," it added. 

Fitch has a Negative Outlook on the sector, it said. 

It expects the leverage of major Indian steel producers to remain high in 2016 and start to decrease meaningfully only by 2017. 

"The debt levels of major Indian steel producers increased over the last three years due to capacity expansions. The high debt, along with profitability pressure, is likely to result in deterioration of leverage in 2015," it added. 

It also expects global steel prices to remain weak in 2016, driven by weak demand and overcapacity in the industry. Indian steel prices had fallen almost a quarter year-on-year as of end-September 2015 in line with global trends. 

A relatively stronger rupee in 2015 to date, significant import increases and weak steel demand affected steel prices and consequently, profitability of steelmakers.

Still, the imposition of a 20 per cent duty on certain steel product imports, effective September 14, has given them some relief, Fitch said. 

Courtesy: The Economic Times

Rohit Ferro Tech Ltd: Buy

CMP: Rs.5.50

Rohit Ferro-Tech, which is into ferro alloy manufacturing (and Mining & Minerals sector) has been facing several problems like non-availability of  adequate quantities of raw materials, lower capacity utilisation and low absorption of overheads. 

Earlier this year it sold its Jajput unit to Balasore Alloys Ltd (formerly Ispat Alloys Limited), which is part of the Ispat Group, due to severe financial stress owing to its high debt exposure.  In other words, the company decided to dispose off the Jajpur unit so as to ease its financial burden and improve its cash flow requirement.

It also has units located at Bishnupur and Haldia in West Bengal. 

The current market capitalization stands at Rs.62.58 crore. The current book value of the shares of the company is Rs.19.74.

Buy the shares of the company with a six-month perspective for a target of Rs.7.30--9.50.

Vedanta Ltd: Buy

CMP: Rs.91.70

The much talked about merger of Vedanta Ltd with Cairn India Ltd may happen in the next couple of months. 

Vedanta already has a 59.88 per cent stake in Cairn India. State-owned insurer Life Insurance Corp (LIC), Cairn India's second-largest minority shareholder, and which together with Cairn Energy controls about 19 per cent of the Indian company, too had earlier expressed reservations about the deal.

Vedanta has already pushed back the deadline for the merger to June quarter of 2016 as against the first quarter stated previously. 

Buy the shares of the company, for short term targets of Rs.97-104 and medium term target of Rs.125. 

DO YOU KNOW?

32% of Chinese zinc smelters surveyed by SMM are optimistic toward zinc prices and expect prices to rise to 14,000-15,000 yuan per tonne in the near future. 

Meanwhile, Vedanta Resources Plc said it would maintain its low-cost production of the metal, as well as continue with its plans for a $630 million zinc development in South Africa. 

Earlier Glencore Plc, the world’s largest commodities trading company— announced, in October that it plans to cut zinc output by a third rather than sell it cheaply;  suggesting that more producers may curb supply. 

JPMorgan Chase & Co. said October 16, 2015: "More capacity shut-downs are probably needed to tighten the market".

However, according to ICBC Standard Bank Plc: "Refined zinc production will exceed demand this year and in 2016". 

Commodity Demand: Past, present, future

Photo: Wikipedia

November 8, 2015: Over the past 15 years, China’s impact on global raw material demand has been nothing short of phenomenal.

The spectacular growth in COMMODITY demand between 2005 and 2010 led to the term “commodity supercycle”.

But this was no ordinary commodity cycle, as the nation with a population of more than 1 billion people rapidly urbanised.

Today, despite the slowdown in COMMODITY demand since 2011, there are still many analysts who have the firm conviction that the world remains in a commodity supercycle and that the globe is currently experiencing a pause before the acceleration in the demand for commodities resumes.

Bearing these views in mind, as well as the current impact on global MARKETS being caused by China’s growth slowdown, it is worth taking a moment to review the impact of China’s industrialisation and the rapid increase in commodity demand in the past.

Equally important is taking STOCK of current commodity demand fundamentals and looking to the future and China’s likely impact on commodity demand.

The death of Chinese communist leader Mao Zedong in 1976 saw the end of the Cultural Revolution and the introduction of economic liberalisation in the Chinese economy. This change in economic policy led initially to a period of gradual industrialisation followed by a phase of rapid acceleration of the economy, with an emphasis on fixed-asset INVESTMENT.

 Economic acceleration

In the 1980s economic growth accelerated off a low base, gathered further momentum in the 1990s and, in the 2000s, the Chinese economy grew rapidly during a time of loose global monetary policy and excessive credit extension.

Evidence of this industrialisation is illustrated by the growth in China’s commodity demand.

In the 1980s and 1990s the demand growth for commodities such as steel, aluminium, copper, zinc and nickel expanded at less than 10 percent a year. However, in the period between 2000 to 2010 demand for these commodities increased between 12 percent and 20 percent a year.

This rapid increase in demand caught the companies that produce commodities flat-footed and scurrying to increase production by investing heavily in mine expansions and new mine development.

The fruits of these INVESTMENTS are only now coming into full production and this is one of several reasons why there is currently an oversupply of many commodities.

This, in turn, has placed downward pressure on commodity prices.

The evolution of the Chinese economy and its impact on commodity demand can be seen in terms of China’s share of global commodity consumption.

If the 20-year period from 1994 to 2014 is examined, the following statistics stand out:

In 1994 China’s share of global commodity demand was less than 10 percent.

By 2004 China’s share of commodity demand had increased to about 20 percent, with the exception of steel, which stood at 28 percent.

Ten years later, in 2014, China’s share of commodity consumption had accelerated even further to 45 percent for copper and zinc, and about 50 percent for aluminium, nickel and crude steel.

Accordingly, commodity demand and prices are largely dictated by the ebb and flow of the Chinese economy.

If one examines China’s share of commodity demand growth for this year, the percentages are increased.

For COMMODITIES such as copper, aluminium, thermal and metallurgical coal, zinc and lead, China’s share of demand growth is forecast at between 60 percent and 80 percent.

For steel this number is a staggering 95 percent.

Despite China’s dominant position in terms of global commodity demand, over the last five years there has been a concerted effort to swing the Chinese economy away from INVESTMENT in infrastructure development and real estate, to a consumption driven economy.

Regardless of these efforts, China’s ratio of fixed capital formation to gross domestic product (GDP) remains stubbornly high, at 50 percent.

A reduction in gross capital formation INVESTMENT will inevitably result in slower GDP growth in the future.

This transition to a consumption-led economy has negative consequences for commodity demand.

Notwithstanding this negative commodity demand outlook, continued Chinese urbanisation should provide support for commodity consumption – although not at past growth rates.

At present China’s population is 55 percent urbanised compared with the US at 80 percent and Japan at 90 percent.

For the next few years the commodity complex faces headwinds from China.

Not only is the rate of economic growth contracting but the intensity of fixed-capital formation in the economy is slowing.

 Passing the baton

Consequently, there is a structural decline in commodity demand growth.

The requirement for bulk commodities – including coal, iron ore and steel – will be the most adversely impacted by the slowdown in the rate of growth in fixed-asset INVESTMENT.

Copper and aluminium prices should fare better than the bulk commodities as they are not as negatively affected by a reduction in spending into large capital projects.

So who will take up the COMMODITY mantle from a slowing Chinese economy?

Based on population demographics and rates of urbanisation, the commodity baton should be taken up by emerging MARKET economies such as the Association of Southeast Asian Nations, India, the Middle East, Africa and Latin America.

The increasing demand from these economies will not necessarily offset the slowdown in demand from China, however it will soften the blow.

These emerging MARKET economies together represent about half of the world’s population.

These population demographics are indicative of the fact that there should be significant support for commodity demand over the next 10 to 20 years.

The metals commodity basket is entering a very different era to that of the 2000s. The Chinese economy is deliberately moving away from an infrastructure-led to a consumption-driven economy.

This will impact commodity exporting nations negatively as they will be pressured to find alternative forms of economic growth.

The rapidly urbanising emerging MARKET economies will incrementally shift commodity demand away from China and will take market share away from the “global factory”.

As a result of this shift in urbanisation, the intensity of commodity cycles should diminish as global demand is spread across a great number of industrialising economies.

 Note: Tony Cadle is the head of portfolio construction at Ashburton INVESTMENTS.

Courtesy: www.iol.co.za

DO YOU KNOW?

Though Vedanta Ltd (Rs.93.65) posted a 40% drop in consolidated net profit, due to lower COMMODITY prices during the September, 2015 quarter (Y-o-Y basis); the earnings were higher than analysts’ expectations..

The company, straddling mining, OIL and gas sectors, reported a net profit of Rs.973.97 crore for the quarter ended September, 2015 as against Rs.1,639.93 crore in the same period a year ago. Revenue for the quarter fell 15% to Rs.16,561 crore, compared to Rs.19,549 crore in the same quarter last year.

It showed record production from our Tier I zinc mines, resulting in strong free cash flow during the quarter. The company is continuing to drive efficiency improvements and is optimizing opex (operational expenditure) and capex (capital expenditure) across the business, taking measured steps to reduce net debt and maximize free cash flow.

One significant thing, which needs to be mentioned here is that: during the September, 2015 quarter, the company managed to reduce net debt and finance costs. As of September, net debt was at Rs.27,105 crore compared with Rs.32,440 crore at the end of September 2014.

For the September quarter, the company managed to post profits in its zinc business (which also includes production of lead and silver), copper business and power generation business. However, its two main businesses OIL and gas under subsidiary Cairn India Ltd and aluminium, run under Vedanta Aluminium and Balco Ltd—posted losses during the quarter.

“Finance cost at Rs.1,418 crore was lower by Rs.46 crore year-on-year, primarily due to debt refinanced at lower cost… The company was also able to renegotiate spreads on its existing term loan portfolio by an average of ~22 basis points. This, along with the declining interest rate scenario in India, led to a 30 bps reduction in the borrowing cost,” said a note issued by the company, post September, 2015 quarter results. 

Though the near-term MARKET outlook remains challenging, but it's right mix of low-cost assets fuelled with new technologies, is likely to benefit the company, from future demand in India and globally.

Those who are already holding the shares of the company, should add on all declines, for short term targets of Rs.106-111 and medium term target of Rs.125. 

Veddanta Ltd: Buy

CMP: Rs.92.20

A bunch of reforms in the power sector accompanied by smart city projects of the government of India, is likely to increase the demand for the building materials including steel, cement and aluminium. It is to be remembered that Vedanta Ltd is India’s biggest zinc miner.

Meanwhile, there are media reports that local governments and power suppliers, smelter executives in China are saying a bleak outlook for aluminium prices will leave them with no choice but to cut or halt production of the metal if power prices there are not reduced.

Power tariffs account for about 40% of production costs of aluminium smelters in China, the world's top producer and consumer of the metal. Any output reduction in China will help support weak prices of the metal.

Buy the scrip at the CMP of Rs.92.20 (NSE)5, for short term targets of Rs.106-109-112 and medium term targets of Rs.120-125.

Reliance Communications to buy Sistema's India wireless business 

[Editor: Today both Reliance Communications Ltd (Anil Ambani Group, CMP: Rs.79.90) and Reliance Industries Ltd (Mukesh Ambani Group) are up. If you remember Reliance Industries Ltd was recommended in this blog at around Rs.943; today it touched Rs.960. I feel the other Reliance Group companies are soon to follow the trend. Meanwhile, there are recent media reports that the Mukesh Ambani-promoted Reliance Jio Infocomm, will lead the 4G subscriber market share despite the 4G network launch by Vodafone, Idea Cellular and Bharti Airtel]

Photo: Ibnlive

MUMBAI: Reliance Communications Ltd on Monday announced plans to acquire Sistema Shyam's wireless service business for a 10% equity in the combined firm to Russia's Sistema. 

The company which runs the only all-CDMA technology based network under the brand MTS will come without any debt, as its promoters will repay all loans prior to the merger, a joint statement said.Reliance Communications will undertake Rs 392 crore of annual spectrum payment for the next 10 years that are due from Sistema for the 3.75 MHz of airwaves it holds in nine circles. 

While Sistema will not get any board seat of veto rights, for the moment its management continue to run its operations, as per the agreement. 

Courtesy: The Economic Times

TV18 Broadcast Ltd: Latest Shareholding Pattern

CMP: Rs.32.70

You can see in the above photo, that both the FIIs and DIIs have increased their stake in TV18 Broadcast Ltd (A Mukesh Ambani Group company), in the September, 2015 quarter, speaking sequentially.

Moreover, Rekha Rakesh Jhunjhunwala, Reliance Capital Ltd and Government Pension Fund Global are holding 2.32%, 1.21% and 2.67% of the shares of the company, respectively. Also, do you know where, Pension Funds generally put their money (invest)? Please search Internet to get the answer.....

It is to be remembered that on 29 May last year, in the biggest ever deal in India's media sector, Reliance Industries acquired control in Network18 Media & Investments Ltd, including its subsidiary TV18 Broadcast Ltd, for Rs.4,000 crore. Subsequently, the company made open offers to acquire a controlling stake in media group Network18 and its subsidiaries.

In January 2012, Network18 Group and Reliance Industries had joined hands for a multi-layered deal, under which the Mukesh Ambani-led corporate giant sold part of its interest in ETV channels and got access to content and distribution assets of the electronic media group. 

The share of TV18 Broadcast Ltd (Rs.32.70) is moving up with good volume today. The total volume of the shares traded in the NSE has already crossed 1.5 million and is nearing 2 million (Current Volume: 1,807,011). 

It is to be noted that Eenadu Television sold its non-Telugu businesses to the TV18 group, now controlled by Reliance Industries Ltd’s Mukesh Ambani.

In a significant development, Petrochemical major Reliance Industries Ltd, the parent company of TV18 Broadcast Ltd, had earlier beat street expectations with its September, 2015 quarter standalone net profit rising 3.8% sequentially to Rs.6,561 crore, driven by strong operational performance in refining business.

Meanwhile, a buy call was given to the Paid Group members, on Infinite Computer Solutions Ltd on Sunday, August 30, 2015 at Rs.168.70, for a short term target of Rs.200; the scrip touched Rs.196, intra-day.  

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There has been some unconfirmed reports that Reliance Industries Ltd (Rs.943), is headed for a big bang realignment of its business model; which could be just around the corner or which could happen within the next few months--may be it will commence definitely in this quarter.

Astute investors should now take their call because when a company of the size and stature is aligning its business model, pumping huge chunk of its block in a new business, it could turn out to be a jackpot.

Meanwhile, the statistics say that, percentage change in Open Interest in the scrip is (-)5.69, while the price is down 1.29% at Rs.943. This gives an ideal buy signal for the stock, with a very short time price target of Rs.960.

TV18 Broadcast Ltd: Buy

CMP: Rs.32.75

TV18 Broadcast Ltd. is an India-based television (TV) broadcast network. The Company offers telecommunication, broadcasting and information supply services. It operates through segments, including broadcasting and content, and film production and distribution. The broadcasting and content segment consists of television content and airtime sales. The Company offers news channels, such as CNBC-TV18, CNBC Awaaz, CNBC-TV18 Prime HD, CNN-IBN, IBN7, and IBN-Lokmat, a Marathi regional news channel. It also operates a joint venture with Viacom, Viacom18, which houses a portfolio of entertainment channels, such as Colors, Colors HD, Rishtey, MTV, MTV Indies, SONIC, Comedy Central, VH1, Nick, Nick Jr., Nick Teen and Viacom18, among others. It manages and broadcasts the channel, History TV18. It offers regional channels, such as ETV Urdu, ETV Rajasthan, ETV Bihar/Jharkhand and ETV MP/Chhattisgarh, among others. It also operates digital commerce properties, such as HomeShop18 and bookmyshow.com.
Media company Network18 Media and Investments Ltd, controlled by Reliance Industries Ltd, narrowed its loss to Rs.27.42 crore for the quarter-ended 30 September, benefiting from lower interest costs. The company posted a loss of Rs.36.46 crore in the same period last year. Revenue for the second quarter rose 8% to Rs.801.1 crore from Rs.744.8 crore.

Revenue from its subsidiary TV18 Broadcast Ltd, the company’s television and motion pictures business that also operates news channels CNN-IBN and CNBC TV18, rose 9.8% to Rs.608.5 crore from Rs.553.7 crore.

Colors Infinity, an English GEC channel, was launched during the current quarter, and incurred a loss of Rs.19 crore.

In H1 FY16, there was loss of Rs.19 crore on account of new ETV news channels; there was also a one-time expense of Rs.10 crore for rebranding ETV regional entertainment channels as Colors.

H1 FY15 profitability vis-à-vis H1 FY16 was significantly influenced by advertisement income on account of the General Elections and the Union Budget. 

This means from the following quarters we could see, some improvement in the share price of the group company TV18 Broadcast Ltd. The fall in interest rate, will also act as positive boost for the company.

It is to be noted that today, the 30 plus channels that constitute the TV18 network inform, entertain and engage with disparate audiences across genres and languages.

Moreover, according to the latest shareholding pattern, both the FIIs (from 8.84% to  8.88%) and DIIs (from  3.55% to 4.92%) have increased their stake in the company. Rekha Rakesh Jhunjhunwala holds 2.32%, while Reliance Capital Ltd holds 1.21% of the shares of the company.   

What must have attracted Rakesh Jhunjhunwala to invest in TV18 Broadcast is probably the following:

(i) Liberalized foreign investment (FDI) norms for the broadcasting sector pursuant to which the foreign investment limit has been raised from 49% to 74% in teleports (setting up up-linking HUBs/teleports), Direct to Home (DTH), Cable Networks (Multi-System-Operators operating at National or State or District level and undertaking upgradation of networks towards digitalization and addressability). Foreign investment up to 74% in mobile TV is also permissible;

(ii) Digitization of cable TV will benefit the broadcasters by boosting subscription revenues...

(iii) Reasonable valuations: A market cap of Rs.5000+ crores for a dominant player is not that exorbitant.


Meanwhile, BCG-CII report says India's media & entertainment sector is likely to expand nearly 6-fold in near future, with vast demand, growing market and tech boom...

Buy the scrip of TV18 Broadcast Ltd at the CMP of Rs..32.80, for a short term target of Rs.35-37, SL--Rs.31.70.