Thursday, July 07, 2016

Today's Recommendations
(i) The investors can take fresh positions in Reliance Communications Ltd at Rs.53 for short term targets of Rs.57-60-71. Its merger with Aircel is only a done only it is time that you need to wait for some wonderful gain from the CMP of around Rs.53. 
PE investment in retail real estate at Rs 1,000 crore in Jan-May 
[Editor: Since the end of last year  (2015), the real-estate developer Unitech Ltd (Rs.6.95) has adopted a new strategy in its shopping malls: first lease to tenants before building the structure. The stock of Unitech Ltd is all set to cross Rs.10-12, in the coming days, due to improving fundamentals of the company and also at the same time a (positive) change in sector outlook. The interest cost  of Unitech Ltd, is likely to come down in the near future due to some drastic measures taken by it during the last few quarters. Meanwhile, my recommended J P Associates Ltd (Rs.12.20) has given wonderful returns to the share holders in the short term]
NEW DELHI: Indian retail real estate has become attractive again for global investor as private equity (PE) investment in this segment has reached $149 million in the first five months of this year and likely to break previous record of 2008, according to property consultant JLL. 

During the entire 2008 calendar year, PE investment in retail real estate stood at $267 million. 

"As of May 2016, the total PE investment into Indian retail real estate stood at $149 million or Rs 10 billion. This has beaten most industry experts' expectations," JLL India Managing Director - Capital Markets & International Director Shobhit Agarwal said in a report. 

The figure has exceeded investment attracted by the Indian retail real estate industry in the year 2007 and could very well cross the previous high seen in 2008, he added. 

"PE investment into retail almost dried out after 2008 until the year 2015, with 2012 being the only exception," Agarwal said. 

Stating that retail real estate has become attractive again for PE investment, he said investment by PE biggies into retail properties would continue in the next six months.

Courtesy: The Economic Times
PE investment in retail real estate at Rs 1,000 crore in Jan-May 
[Editor: Since the end of last year  (2015), the real-estate developer Unitech Ltd (Rs.7.95) has adopted a new strategy in its shopping malls: first lease to tenants before building the structure. The stock of Unitech Ltd is all set to cross Rs.10-12, in the coming days, due to improving fundamentals of the company and also at the same time a (positive) change in sector outlook. The interest cost  of Unitech Ltd, is likely to come down in the near future due to some drastic measures taken by it during the last few quarters]
NEW DELHI: Indian retail real estate has become attractive again for global investor as private equity (PE) investment in this segment has reached $149 million in the first five months of this year and likely to break previous record of 2008, according to property consultant JLL. 

During the entire 2008 calendar year, PE investment in retail real estate stood at $267 million. 

"As of May 2016, the total PE investment into Indian retail real estate stood at $149 million or Rs 10 billion. This has beaten most industry experts' expectations," JLL India Managing Director - Capital Markets & International Director Shobhit Agarwal said in a report. 

The figure has exceeded investment attracted by the Indian retail real estate industry in the year 2007 and could very well cross the previous high seen in 2008, he added. 

"PE investment into retail almost dried out after 2008 until the year 2015, with 2012 being the only exception," Agarwal said. 

Stating that retail real estate has become attractive again for PE investment, he said investment by PE biggies into retail properties would continue in the next six months.

Courtesy: The Economic Times
Reliance Communications Ltd: Buy
CMP: Rs.52.20


In the other two circles (Assam and North-East), Reliance Communications already had liberalized spectrum (which allows telecom operators to use any technology to deliver mobile services such as 3G and 4G) in the 850MHz band, bought in the last auctions in March 2015.

Reliance Communications (RCom) and the promoters of Aircel are set to ink a "binding definitive" pact in around two weeks to merge their wireless businesses, which would create a strong No. 4 telco through India's first such pan-India deal. 

"RCOM and Maxis Communications Berhad (MCB) and Sindya Securities and Investments Private Limited (Sindya), the shareholders of Aircel the proposed transaction for the combination of the Indian wireless business of RCOM and Aircel very shortly," the Anil Ambani-owned carrier said. 

Meanwhile, RCom's customers of its erstwhile CDMA services will be able to start using 4G services starting with users in Mumbai from July 1 under the company's spectrum sharing agreement with Reliance Jio Infocomm. Customers in Delhi, Kolkata, Gujarat and Andhra Pradesh will gradually follow in the first phase. 

"It's a done deal. Just formal approvals are left to be tied up," said a person familiar with the discussions. "The deal should close in the next six to seven months." 

RCom will demerge its wireless business and merge it with the existing unlisted Aircel, with promoters of both sides owning 50% each in the new entity. 

Therefore, the investors can take position in the shares of Reliance Commuications Ltd at the CMP of Rs.52.20, for short term targets of Rs.57-60-66-71.

Tuesday, July 05, 2016

Adani Ports and  SEZ Ltd: Buy
CMP: Rs.215
The company in its meeting held on July 2, 2016 has accorded in-principle approval for exploring the acquisition of TM Harbour Services. 

TM Harbour Services is engaged solely in providing tug services to The Dhamra Port Company (DPCL), a wholly-owned subsidiary of the company. 

This acquisition will help the company provide effective and efficient marine services to DPCL. The acquisition is subject to due diligence, final negotiations between the parties and obtaining of requisite regulatory approvals.

The Union government has reversed a Rs.200 crore penalty along with several strict measures issued against Adani Ports & SEZ in 2012 for allegedly damaging the environment and violating green laws in connection with the construction of a port project in Mundra in Gujarat, the Business Standard reported.

In a statement, however, the Environment Ministry has said the Adani Port and SEZ Ltd may have to pay a larger fine than the one issued by the UPA government, and said the Rs.200 crore fine “was not backed by any law under the Environment Protection Act and not legally correct.”

If Rs.200 crore fine was not backed by any law, that means the Rs.200 crore penalty ceases to exist at this point of time. Meanwhile, Adani Ports & SEZ has denied all claims of wrongdoing while maintaining that the state government had supported the company.

Therefore, buy the shares of Adani Ports and SEZ Ltd at the CMP of Rs.215, for a short term target of Rs.229.
Real estate market may be on revival path, says report
In the first half of the year, home sales in top eight cities rose 6.6% from a year ago, unsold inventories declined 7%
Mumbai/New Delhi: 05 July 2016: The Indian real estate market, which has been in a slump for the past three years, could be on the path to recovery, property consultant Knight Frank India suggested, citing better home sales and lower unsold inventories in the first six months of 2016.

In the first half of the year, home sales in the top eight cities, including Mumbai, the National Capital Region (NCR) and Bengaluru, rose 6.6% from a year ago, while unsold inventories fell 7%, according to a Knight Frank report released on Monday.

During the period, 135,000 homes were sold, while unsold inventory fell to 660,000 units from 710,000 units recorded in the first half of last year.

Mumbai and Bengaluru registered the maximum growth of 23% and 18%, respectively.

The report also pointed out that new launches fell 9% in the six months to 107,000 units as developers focused on selling stock before bringing new inventory into the market.

“For the first time, after two successive H1s (first halves), we are seeing a point of inflection in the residential market. After two consecutive falls in H1, for the first time, in the all-India aggregate market, we are seeing an actual uptick happening. So the point here in question is: are we seeing the worst behind us and are we now on the path of sustained growth?” said Shishir Baijal, chairman and managing director, Knight Frank India.

Measures such as the Real Estate Regulatory Act (RERA), the recent amendments to real estate investment trust (REIT) norms, a correction in prices in most markets and a lowering of interest rates in the past six months have helped in improving the overall sentiment of both investors and homebuyers in the country.

However, NCR, India’s largest real estate market, continued to struggle.

During the period, home sales in NCR declined 3% while new launches fell a record 41% from the year-ago period.

According to the report, NCR home prices fell by 4% in the first half of 2016, the first time in three years.

The report attributed the price correction to cash-strapped developers, high inventories and a trust deficit among customers.

“NCR is an investor-driven market and investors are out of real estate because prices are not rising,” Omaxe Ltd’s chief executive Mohit Goel said, adding that in the next four years, real estate will be a clean sector.

Commercial real estate continued to show positive momentum during the January-June period, with transactions rising 12% to 20 million sq. ft, while average rental values across the top six cities rose 8% from a year ago.

The report also forecast that total absorption of office space is expected to touch 42.7 million sq. ft, up from 41 million sq. ft by the end of this year, led by manufacturing and information technology(IT)/IT-enabled services.

However, e-commerce companies which have lapped up office space in the last two years have lost steam, with transactions in the segment falling around 78% during the period.

Baijal said commercial real estate has grown from “strength to strength” and if the same positive momentum continues, “2016 is poised to become the best year after the global financial crisis in 2008”.

In the residential segment, while new launches in the Mumbai metropolitan Region (MMR) grew by 29%, sales saw a jump by 23% during the January-to-June period.

Unsold inventory in the city was also down by 20% in the last two years, with a few micro markets in the suburbs of the city like Thane and Navi Mumbai continuing to show significant improvement in sales, particularly in the mid-income and budget segments.

“The new draft development plan that was released recently has brought a lot of clarity for city-based builders. Plus, robust office space demand and enhanced infrastructure are boosting demand for residential real estate in Mumbai. We forecast a 16% growth sales in Mumbai in 2016 over 2015,” said Samantak Das, chief economist and national director at Knight Frank India.

Most developers remain hopeful of the real estate market picking up further with a good monsoon and more policy reforms kicking in over the coming months.

“We are very hopeful that with the monsoon and GST (goods and services tax) coming in, the real estate market is going to do better and, by Diwali, we should see a stable market. Homebuyers have also realized that this is as low as home prices can go. They are actually going forward and closing deals. The only thing is that they are choosy about the developers and the budget but the bottom line is that transactions have started happening,” said Getamber Anand, president, Confederation of Real Estate Developers’ Associations of India, a real estate lobby.

Courtesy: Live Mint
7th Pay Commission bonanza; 5-fold increase in equity investment cap to 75 per cent under NPS likely
Photo: India.gov.in
4 July 2016: Close on the heels of the 7th Pay Commission recommendations being approved by the Union Cabinet, Government employees could soon have the option to invest up to 75 per cent of their contributions to the National Pension System (NPS) in equities.

This would be a five-fold jump in the maximum equity exposure allowed for government NPS. Existing investment guidelines for government employees mandate investment in equity to a maximum of 15 per cent with the floor level set at 5 per cent. The rest has to be invested in fixed-income securities including government securities and corporate bonds.

“We have submitted our proposal to the for the government for approval of two new life-cycle funds under NPS. We want these additional choices available to the government sector NPS also. The proposal is under very serious discussion in the government. We expect some clarity soon,” Chairman, Pension Fund Regulator and Development Authority (PFRDA), Hemant Contractor, told FeMoney.

The two new life-cycle fund proposed by PFRDA has been called the 'Aggressive life cycle fund' with equity allocation of 75 per cent at age 35 and 'Conservative life cycle fund' with equity allocation of 25 per cent at age 35. The only life cycle fund that PFRDA offers at present provides equity allocation of 50 per cent at age 35. The equity component in all these funds reduce with age with a proportionate increase in fixed income investment to ensure safety of retirement funds.

The 7th Pay Commission had recommended that the government, in consultation with the PFRDA, provide different life cycle investment options with different investment mix under NPS. “The Commission recommends that the investment choices under NPS be calibrated on a life-cycle approach and the choices be offered in a simple manner to that any lay person can understand and act accordingly,” the Commission had said.

All central government employees who have joined on or after April 1, 2004, have to mandatorily invest 10 per cent of their salary and dearness allowance to NPS to create a pension corpus.

The PFRDA constitued G N Bajpai Committee on NPS investment issues too had proposed giving wider options. The Bajpai Committee had said that new life cycle funds should be considered “keeping the core principle of 'decreasing risk appetite with increasing age” intact with lower and higher ceiling in equity to cater to both conservative subscriber and subscriber with a higher risk appetite.”

Justifying higher equity allocation, the Bajpai Committee had said, “ The design of the mandated investment norms in vogue today with predominance of low-risk fixed-income securities, that too mainly Government securities, has lower tolerance for risk, but a high tolerance level for lower returns especially in case of the Government Sector employees. This is unfair for investors who may need a combination of low risk with moderate returns or even higher returns with higher risks. This is especially true for those in the early stages of their saving curve. There can be no denying that in the pursuit of risk-free investment, investors are getting the short shrift and are therefore revealing a preference for physical assets.”

The panel had also suggested harmonisation of investment guidelines between private and Government sector NPS to bring about a more unified pension regime in the country.

Courtesy: Yahoo.com

Monday, July 04, 2016

WINNING STROKES: THINK DIFFERENT
Rolta India Ltd recommended at around Rs.63.50, last week today closed at Rs.67.50, after making a high of Rs.68.65 in the BSE. The next target for the stock is Rs.71, which will be achieved in this week. The first target of the scrip has been reached. 

Allahabad Bank Ltd recommended at Rs.54 and Rs.57, today made an intra-day high of Rs.75.85 before closing at Rs.75.35. The investors should do well to book some profits in the counter and hold the rest with a SL of Rs.71.60. 

Union Bank Ltd, which was recommended around Rs.123 and Rs.117.50, today made an intra-day high of Rs.137.45, before closing at Rs.134.90. The investors should book some profits as the both the short term targets of Rs.129 and Rs.132, has been achieved. 

Unitech Ltd today closed at Rs.6.40, after some corrections, during the last trading session. The next targets are Rs.7.5 and Rs.8.30, which will be reached by next week, as the momentum in the counter is very strong. Today the percentage of Deliverable Quantity to Traded Quantity was 29.90% which was quite good. 

There is no stopping of Vedanta Ltd, as the scrip closed at Rs.138.65, which making an intra-day high of Rs.139.55. 

My recently recommended J P Associates Ltd today touched Rs.9.27, in the BSE before closing at Rs.9.08. The investors should wait for the scrip to close above Rs.9.20, before taking fresh positions. However, it will reach Rs.12-13, within a short time. 

Friday, July 01, 2016

Millions of voters didn’t want Brexit. Why should they lose EU citizenship?
Anti-Brexit campaigners gather outside
the Houses of Parliament 
Friday 1 July 2016: The EU Council has spoken on Brexit, but what did it decide? Nothing. No compromise, no pick and choose for the UK, and no need to reform. The EU stays as it is and anyone who does not accept this is wrong and thrown out. It’s a huge blow for Nicola Sturgeon and the SNP, who seem to be the only ones passionately defending the European project.

The downgrading of Sturgeon’s attempt to engage negotiations with the EU to an internal “British issue” – Donald Tusk and most heads of states refused to talk to her – is the best example of how deeply the EU’s representatives overlooked the key message of the Brexit vote: that the citizens, and not nation states, are sovereign. The framing of Brexit as a British problem is misleading. The idea of the European Union’s founding fathers was to build a democracy beyond nations.

The Scottish case proves what the French sociologist Pierre Rosanvallon last April dubbed “the lie on which the European Union was built”. Speaking in Warsaw, he argued that we are all paying a high price for that founding lie, anchored in the treaty of Maastricht, that the EU is a union of states and of citizens. Citizens do not have much say in the EU, despite the fact that – no matter how often states claim otherwise – citizens are sovereign. There is no state-independent citizenship of the EU – not for Englanders, not for Scots, not for anybody: the union of citizens is a fallacy. As a result, British voters were hostages of the British government and the Tories’ Eurosceptic wing. Now that the UK is leaving, Brits will lose their citizenship of the EU. The result is not national pride, but a rush for Irish passports.

Brexit is just another example of today’s Animal Farm EU, where some citizens are more equal than others, above all the Germans, who have benefited most from the single market and the euro without sharing. Or even the Dutch, who believe they alone have the right to vote over the EU’s Ukraine policy. A political project can never function like this and politics is what Europe lacks most.

The treaties of the Levellers and the Putney Debates of 1647 elaborated on this concept of equal liberty, insisting that, within a political entity, all citizens must be treated equally in front of the law. The EU does not offer this.

The next European project must make a compelling offer to all European citizens, one that goes beyond nation-state affiliation. It must be based on the principle that all European citizens have political equality: in elections, before the law and in taxes. Cicero called this ius aequum. A government for the people and by the people. A nation state is not the only frame for a democracy.

It is what the EU’s founding fathers had in mind in postwar Europe: a real post-national democracy, with the autochthon, or tribal, European regions – Catalonia, Scotland, Moravia, Bavaria, Auvergne, Silesia or Brabant – as constitutional holders, to prevent the big nation states dominating the others, as Walter Hallstein, the first European president of the European commission, said in his inaugural speech in Rome in 1964.

The challenge is to define this European democracy and its parliamentary institutions, which, in contrast to the current trilogy of European council, commission and parliament, must be built on a real division of power: a legislative body that controls an executive body.

That such ideas sound like heresy in Brussels indicates just how far the EU has strayed from English political thinkers such as John Locke, Edmund Burke or Adam Smith. All were masterminds of modern parliamentary liberalism, and none could have imagined what appears self-evident in today’s EU: that a people can be governed by a single market, that deregulation is the goal and that anyone who proposes social controls of markets is a dangerous Marxist radical.

The question now is how to organise a Schumpeterian “constructive destruction” of the EU. Whenever in history sovereign citizens have embarked together on a political project, they have founded a republic based on that principle of political equality. This should be the vision and mission for Europe in the 21st century.

Courtesy: The Guardian
Buy Coal India Ltd at Rs.311
T: Rs.325 
SL: Rs.306

Triggers:
  • After sluggish demand in April and May, June brought some good news for Coal India Ltd, as power plants started stocking fuel once again increasing coal off-take by 7-8%. According to sources, off-take for April-June period grew by 3% compared to the same period last year.
  • The company recently announced signing two agreements with Solar Energy Corporation of India for implementation of solar power project in Madhya Pradesh. Coal India and Solar Energy Corporation of India (SECI) signed two agreements on 28 June 2016, for implementation of 200 megawatts (MW) solar power projects in Madhya Pradesh for the beneficial utilisation of solar power by Northern Coalfields (NCL) and South Eastern Coalfields (SECL) at an estimated cost of Rs.650 crore. NCL and SECL are subsidiaries of Coal India.
  • There was a block deal of 500000 shares in Coal India at Rs.311.00 per share, valued at Rs.15.55 crore on BSE today. 
  • Citigroup maintains a buy rating on Coal India with a 12-month target price of Rs.380. Round I of linkage auction concluded recently, and Round II to commence soon. Round I for sponge iron saw muted response while Round II for cement is likely to commence in a week.
  • Coal India's consolidated net profit rose 0.2% to Rs 4247.93 crore on 0.1% fall in net sales to Rs 20759.45 crore. Coal India is an organized state-owned coal mining corporate. The Government of India holds 79.65% stake in Coal India (as per the shareholding pattern as on 31 March 2016).
'Our nation is in peril': Tony Blair urges calm in Brexit talks
Photo: The Telegraph UK
Friday 1 July 2016: Tony Blair has called for “serious statesmanship” in the talks with the European Union that will shape the future of the UK after Brexit.

The former prime minister warned “our nation is in peril” after the vote to leave the EU and the negotiations on the UK’s future relationship with the other countries would be of “extraordinary complexity”.

He urged the contenders in the Tory leadership race to act with “genuine patriotic regard” to the country’s future as he accepted his own party was “effectively disabled”.

In an article in the Daily Telegraph, Blair said: “There is going to be a negotiation of extraordinary complexity where there are a thousand devils in every detail. Those we used to call ‘our European partners’ are, unsurprisingly, divided and uncertain themselves.”

He said some countries wanted a quick divorce, while others favoured a delay in commencing the article 50 process, which starts a two-year countdown to Brexit.

“This needs serious statesmanship,” he said. “So before any formal negotiation begins, we need to get a high level sense of where the boundaries are going to be, the things that might be compromised, the things that are red lines.

“The psychology of the other 27 countries is crucial to feel and shape: they could decide that other secessionist movements should be deterred and so be disinclined to flexibility; or they could decide that the British view – especially on immigration – reflects something strong across Europe and have a measured response which tries to accommodate that sentiment.”

In a stark assessment of the task, he added: “Our nation is in peril. To allow us to come safely through this we need to be adult in our politics, to proceed with calm, maturity and without bitterness; because our future as a nation in the world and as the UK itself is at stake.”

The former Labour leader said that Britain “should keep all our options open” but went on to insist that “is not an argument for another referendum”.

He warned that Ukip leader Nigel Farage’s performance in the European parliament could damage the country’s ability to secure a favourable deal.

In highly charged exchanges in the wake of the Brexit vote, Farage was booed and barracked by MEPs as he accused them of being “in denial” about the failure of their single currency and their attempt to create political union in Europe.

The Ukip leader said he had been laughed at when he arrived in Brussels 17 years ago with a message that Britain must leave. And he told MEPs: “You’re not laughing now.”

Blair said: “Don’t underestimate the damage having Nigel Farage address the European parliament in that way does to our interests. Remember who has to agree any new deal for Britain: the European parliament.”

With David Cameron set to leave the stage, the next leader of the Conservative party will have the task of negotiating Brexit.

“On the leave side, there are some who are triumphalist and some more inclined to reach out,” said Blair. “Those leave leaders now so powerful within the politics of our nation should demonstrate they are in ‘reach out’ mode fast.

“With the Labour party effectively disabled we need the Conservative party to conduct its leadership battle with genuine patriotic regard for our nation’s interest.”

Courtesy: The Guardian
Unitech Ltd: Is it still a buy... ?
Unitech Ltd is one of India's leading real estate player. It has a diversified product mix in real estate comprising of commercial complexes, IT/ITes parks, special economic zones (SEZs), integrated residential developments, schools, hotels, malls, golf courses and amusement parks.

..........amidst a spew of litigation against Unitech Ltd, stood a company that was a shadow of its former self. From the wrong choice of domain or its misadventure into the telecom sector, to absence of big launches, to slow pace of project construction coupled with a high debt servicing cost, to cash crunch, to customer complaints, to sentencing of the promoters by Courts, et all - -the company has gone through all.... 

This doesn't factor in the absence of any return on the telecom investment the company made. Its biggest problem, though, is a huge liquidity crunch. 

In January 2008, the Unitech Ltd's stock had peaked on the BSE, at Rs.546.80; however, it closed at Rs.6.41 in the BSE, yesterday. 

Few years ago, in 2007-08, the company's net profit stood at Rs.1,669 crore. Today, it has slipped to a loss of Rs.275.62 crore for financial year 2015-16. 

However, the company Q4FY16, numbers were not too bad, as is made out to be......A quick look at the figure on the right will show that, the losses deepened in Q4FY16 primarily due to two reasons: 
(i) The increase in Other Expenses component to Rs.721.74 Cr in Q4FY16 from Rs.239.51 Cr in Q3FY16 and 
(ii) Increase in Interest Charges to Rs.142.70 Cr in Q4FY16, from Rs.84.56 Cr in Q3FY16.

Meanwhile, the company's management is taking all the measures, to decrease the debt on the books, apart from the new RBI measures, which speaks of converting a part of the unviable debt into equity.

At the time of announcement of results, Sanjay Chandra, Managing Director of Unitech said that the company's focus has been primarily on completing the ongoing projects and delivering the finished product to its customers. Balance expected receipts from these ongoing projects combined are sufficient not only to meet the remaining construction expenses but also to service the debt, if any, against these projects. The company has been taking various measures, such as creation of project specific escrow accounts, to boost customer confidence and improve conditions so as to generate liquidity needed for completing the ongoing projects. Apart from improving collections, company is also mobilising funds from banks and financial institutions. With these measures company is hopeful of completing the ongoing projects in the next few quarters in a phased manner, he added.

Over and above the good news for the company is that the problem with anemic results doesn't apply only to Unitech Ltd alone, but applies across the sector; thanks to bleak market conditions.

Another positive point is that the telecom fiasco is now almost over; though the old case is still pending. However, all the liabilities in the erstwhile telecom arm, have been taken care of by the company. 

Also, a source close to says that the management is making frantic efforts to reduce its debt through its operating cash flow. 

Hence, Unitech Ltd is far from being written off. It has the ability to rebound, admit many top industry executives. Its fairly substantial land bank is one of the reasons why these executives bank on its eventual recovery. 

The name of Unitech Ltd still figures among the best developers of India. Just focusing on its core real estate business should see it through. Besides, in India, when a company reaches a certain level, it naturally gets support from the system; despite the telecom mess, the Unitech brand has managed to retain retail confidence.

This is not the first time that Unitech Ltd is in the midst of a crisis. When real estate was down in the dumps in the aftermath of the global economic slowdown of 2008-09, it too, went through a rough patch; only to came out of it, successfully managing all odds. But some critics point out that this time Unitech Ltd's problems are much deeper and it will require a considerable effort to shed the baggage of the past, negotiate the slowdown and revive its business.

Apart from this, there were recent media inputs that the capital market regulator SEBI is likely to consider proposals for relaxed norms for REITs. Among the changes, the regulator’s board is looking to examine a proposal to make Real Estate Investment Trusts (REITs) more attractive to investors by allowing them to invest a large portion of funds in under-construction assets, sources said.

Regarding REITs, SEBI plans to remove the restriction on the SPV (Special Purpose Vehicle) to invest in other SPVs holding the assets, which in turn would allow REITs to invest in a holding company owning stake in SPVs.

Regarding the valuation of its huge pool of land all over India, I would like to say that Unitech Ltd’s 14 lakh sq meter plot of land in Noida had a reserve price of Rs.2,660.56 crore and that too at distress (half rate) rate. 

Now we are talking of whooping 300 million sq. ft of land reserves of Unitech Ltd....

Let us do some rough calculations: 14 lakh sq.meters is approximately equal to 151 lakh sq.ft or 15.1 million sq.ft. Right?

So, this gives the value of 300 million sq.ft of land as Rs.52,858.80 crore and that too at distress rates. Unitech Ltd's debt as of 31st March, 2016 is Rs.7,165.70 crore.

Moreover, selling of land by the lenders at distress rates will soon be a thing of past due to RBI's new policy guideline, on distress assets. Also, the pay hikes, lower interest rate trajectory and the recent data on the sector, raised hopes of a swift recovery in demand for the Real Estate sector. 
The Economic Times, wrote on 9 June, 2016: 
There are reports that the authorities in Greater Noida may soon implement an exit policy to allow builders to surrender surplus land. Authorities of Noida, Greater Noida and Yamuna Expressway will soon firm up a proposal on this and send it to the Uttar Pradesh government for approval, said Arun Vir Singh, CEO of Yamuna Expressway Industrial Development Authority (YEIDA), an ETRealty.com report said. 
But one should remember that raising money, in part, requires a reasonably solid reputation, and unfortunately for Unitech Ltd, the ghost of telecom will continue to haunt it for a couple of quarters. So, it remains to be seen how much the company is able to rake in fresh capital through Qualified Institutional placements.

However, Unitech Ltd has recently raised Rs.85 crore from Piramal Group and is in talks with two private equity players to raise more funds for the development of a land parcel in Noida and to repay the LIC loan.

Therefore, you can now take your decision, whether to buy the shares of Unitech Ltd at the dirt cheap price of Rs.6.41.....

Wednesday, June 29, 2016

7th Pay Commission approved by Cabinet; Real estate sector may get a boost, Bengaluru, Pune among best bets
June 29, 2016: Realty experts feel that the 7th Pay Commission will have a positive impact on the sector and provide opportunity to middle class government employee to own a house with increased disposable income.

Photo: Phoenix Real Estate
Wednesday proved to be an important day for central government employees as the Union Cabinet cleared the implementations of 7th Pay Commission recommendations, which is expected to benefit to over 1 crore government employees and pensioners. Realty experts feel that the 7th Pay Commission will have a positive impact on the sector and provide opportunity to middle class government employees to own a house with the increased disposable income. Hike in salary indicates an increased spending power and better economic growth. The government has approved rise in salaries and pension for public sector employees.

The 7th Pay Commission recommendation will be effective from January 1 and the Cabinet will decide if the arrears for the six months have to be paid in one go or in installments.
The real estate sector is already reeling under pressure and revival looks tedious and a long drawn process. Developers are already offering discounts to get buyers back into the market. 7th Pay Commission’s is seen as a step that would boost the demand and home ownership sentiment.

“In 2015, the 7th Pay Commission’s decision to hike the salary of state as well as central government employees by almost 23.6% was seen to have a positive impact on the demand side of residential real estate, as it would boost sentiment for home ownership among a set of buyers who have traditionally been very conservative in matters pertaining to large financial commitments. The increase in demand would be uniformly seen across India’s more affordable cities. Pricier cities would not see much of an impact on this account, as this segment of potential home buyers will be looking primarily for budget homes, ” Ashwinder Raj Singh, CEO – residential services, JLL India said.

Endorsing Ashwinder’s thought, Ankur Dhawan, chief business officer – PropTiger said the 7th Pay Commission implementation will be a positive move and raise the affordability of the government employees. Dhawan further added that the developers would come up with schemes to bring in public sector employees to invest into realty sector after approval to the 7th pay recommendations.

Real estate is under huge stress with high unsold inventory across the country. However, along with 7th pay commission, the discounts being offered by developers is seen as another big step to attract the homebuyers. “With huge inventory lying unsold across the country and developers finding it difficult to offload the existing stock, the road to recovery looks tedious. Knowing that the developer community is focused on liquidating the existing inventory and that they are offering a plethora of discounts to get buyers back to the market, it is a good time to invest in real estate, ” Narasimha Jayakumar, chief business officer, 99acres.com said.
Dhawan said that cities like Noida, Pune – due to its proximity with Mumbai- and Navi Mumbai may attract the public sector employees to look for a house in the affordable sector after 7th pay Commission approval.

Jayakumar added, “One should look out for investing in cities that are witnessing a buoyant commercial and office space market. To this end, cities like Hyderabad, Bengaluru and Pune are the ones to look out for. Riding high on infrastructure wave with a number of connectivity links such as metro, elevated roads and flyovers in the pipeline, these cities are attracting IT/ITeS firms and start-ups to their shores. This, in turn, is befitting the residential landscape by propelling demand. Further, locations such as Noida, Gurgaon and Faridabad in NCR are also touted as investment hotspots, considering the fast-paced infra development, and expansion in retail and commercial sectors. However, anyone investing now should be prepared for a lock-in period of at least 4-5 years to reap healthy returns.”

Amit Modi, Director ABA Corp and V-P CREDAI western UP, said, “the 7th Pay Commission recommendation is an important milestone in the real-estate cycle as an increase in salaries of government employees is likely to boost the demand for home purchases. 

Housing sector is expected to be the biggest beneficiaries of the rise in income and spending capacity of government employees.”

Modi further added that over the last couple of years there has been government focus on “affordable housing”, and a public desire by the Modi government to provide housing for all, hence the affordable segment (sub Rs 50 lakh) continued to command the largest shares of total residential sales and more than 50 per cent of total sales in all four quarters of the financial year came from the segment. The segment is expected to see further traction.
He has listed Bhiwadi, Jaipur, Ghaziabad, Delhi (L-zone) and Faridabad as good real estate investment picks in North India along with Gurgaon, Noida, Jaipur, Neemrana and Lucknow. Thane and Navi Mumbai that gave investors maximum returns in the past four years will continue to give best returns to its investors.

Courtesy: The Financial Express
Retail real estate back in favour with PE investors 
BENGALURU / MUMBAI, Jun 29, 2016: India's retail real estate sector received $149 million or about Rs 1,000 crore of private equity investment in the first five months of 2016, according to a report by JLL India. This accounted for 8% of the total PE investment in India during the period, beating expectations of most analysts and marking a turnaround after the lack of investor interest since 2008 baring the singular exception of 2012. 
To Expand Please Click on it..

With PE investment in the segment exceeding that in 2007, some experts said it might well cross the previous high seen in 2008. 

"India's growing reputation across the globe as an investment destination thanks to Prime Minister Narendra Modi's jaunts, coupled with the slowdown in China's economy, has led to an upswing in private equity investment flowing into the country," said Shobhit Agarwal, managing director, capital markets at JLL India. 

Experts said that the government's efforts to make real estate sector and various sub-segments of it more competitive and organised are yielding results. Infrastructure development around retail hubs will push the growth further and attract more funds inflow, they said. 

"With the simultaneous growth in quality real estate and infrastructure, Indian retail sector can prove to be a game changer, if developed in a planned manner. It is important that the development of organised retail is done in line with the infrastructural developments in that area, in order to maintain the much needed equilibrium, especially in urban areas," said Rubi Arya, executive vice chairman of Milestone Capital Advisors. 

Arya said the recent relaxations in FDI norms will attract many foreign retail brands, thus increasing the need for quality spaces. Access to public transport, parking facilities and closeness to upcoming residential zones will prove catalysts for retail to flourish, she said. 

Suresh Sunagaravelu, executive director retail, hospitality and new business at Prestige Estates Projects said, "There will be traction from private equity funds once real estate investment trust takes off in the country." 

The company, which operates malls under Forum brand, plans to have 3 million sq ft of mall space ready by 2018. 

One deal accounted for the investment received till May, with Singapore-based GIC investing $149 million in Sheth Developers' Viviana mall at Thane. Another major deal is in progress, with a US private equity fund looking to buy a large retail project in Navi Mumbai. 

The industry expects more investments to come in owing to improvement in consumer sentiment amid faster economic growth. 

"Coupled with economic stability, FDI policy liberalisation by the Modi government and improvement in the consumer sentiment are some of the factors expected to help global brands witness a very conducive environment for investment into Indian retail and retail real estate sectors," Agarwal said. 

Quality mall space coming up with strong pre-commitments indicates that retailers continue to remain bullish about the long-term India consumption story, he said. 

Real estate developers pitch for easier lending norms in meeting with RBI
Realtor lobby CREDAI also reiterates its demand to allow banks to fund land purchase
Mumbai, Wed, Jun 29 2016: In a closed door meeting with Reserve Bank of India (RBI) governor Raghuram Rajan on Tuesday, realtor lobby Confederation of Real Estate Developers’ Associations of India (CREDAI) urged the central bank to ease lending norms for real estate projects, while reiterating its demand to allow banks to fund land purchase, according to two people aware of the development.

The hour-long meeting was attended by a few members of CREDAI, including chairman Irfan Razack and president-elect Jaxay Shah.

CREDAI declined to comment on the meeting, saying it was a private and confidential meeting with the governor.

Some of the key recommendations made by CREDAI to the governor include allowing an increase in bank exposure to the real estate sector, reducing risk weightage as well as allowing external commercial borrowing (ECB), according to the first person mentioned above.

CREDAI also pointed the need for funds at lower interest rates in order to build 20 million urban homes as part of the government’s ambitious “Housing for All” initiative by 2020, said the person.

The group also raised its long-standing demand to allow banks to fund land transactions. Currently, most of the land purchase are funded by non-banking financial companies and private equity firms at high interest rates, according to the second person quoted above.

In a shareholders’ letter on 26 June, Deepak Parekh, chairman of the India’s largest mortgage lender HDFC, said banks and housing finance companies should be allowed to fund land transactions, a move he believed can help lower the cost of land.

Parekh said that “merely reducing interest rates is not sufficient” and that one of the primary factors to improve housing affordability is to bring down the cost of land.

Besides, CREDAI urged the RBI to allow loan restructuring as well as increase priority sector lending to the real estate sector.

India’s real estate market has witnessed one of the longest slowdown that has lasted for more than two years. Slow home sales, rising inventory and long delays in completing projects for lack of funds have pulled down the country’s property market.

Courtesy: Live Mint
Real estate stocks surge; Unitech rallies 8%
Mumbai: June 29, 2016: Real Estate stocks ended higher on back of higher volumes.

DLF Ltd ended at Rs. 143.95, up by Rs. 10.45 or 7.83% from its previous closing of Rs. 133.5 on the BSE.

The scrip opened at Rs. 139.1 and touched a high and low of Rs. 147.7 and Rs. 139.1 respectively. A total of 47348340(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 23813.08 crore.

The BSE group 'A' stock of face value Rs. 2 touched a 52 week high of Rs. 142.9 on 09-Oct-2015 and a 52 week low of Rs. 72.5 on 12-Feb-2016. Last one week high and low of the scrip stood at Rs. 141.2 and Rs. 126.7 respectively.

The promoters holding in the company stood at 74.96 % while Institutions and Non-Institutions held 18.07 % and 6.96 % respectively.

The stock traded above its 50 DMA.

Unitech Ltd ended at Rs. 6.32, up by Rs. 0.46 or 7.85% from its previous closing of Rs. 5.86 on the BSE.

The scrip opened at Rs. 5.91 and touched a high and low of Rs. 6.4 and Rs. 5.9 respectively. A total of 124209451(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 1533.15 crore.

The BSE group 'A' stock of face value Rs. 2 touched a 52 week high of Rs. 8.31 on 02-Jul-2015 and a 52 week low of Rs. 3.43 on 11-Feb-2016. Last one week high and low of the scrip stood at Rs. 6.2 and Rs. 5.05 respectively.

The promoters holding in the company stood at 26.77 % while Institutions and Non-Institutions held 14.9 % and 58.33 % respectively.

The stock traded above its 200 DMA.

Indiabulls Real Estate Ltd ended at Rs. 88.9, up by Rs. 1.3 or 1.48% from its previous closing of Rs. 87.6 on the BSE.

The scrip opened at Rs. 88 and touched a high and low of Rs. 91 and Rs. 88 respectively. A total of 14183347(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 4429.48 crore.

The BSE group 'A' stock of face value Rs. 2 touched a 52 week high of Rs. 105.25 on 30-May-2016 and a 52 week low of Rs. 42.25 on 12-Feb-2016. Last one week high and low of the scrip stood at Rs. 97.4 and Rs. 77 respectively.

The promoters holding in the company stood at 47.63 % while Institutions and Non-Institutions held 19.07 % and 33.22 % respectively.

The stock traded above its 50 DMA.

UK voted for Brexit – but is there a way back?
Several scenarios could see the vote overturned, involving either a Labour or Tory prime minister. But all are speculative
Wednesday 29 June 2016: The British public have voted to leave the EU in an advisory referendum – but there have been voices in business, diplomacy, politics and European polities desperately asking if the issue can be revisited. Is that feasible?

The short answer is yes, just about, but many forces would have to align.

How prepared was the government?
The referendum, for instance, has thrown up big constitutional questions for Britain.

Oliver Letwin, who was appointed by David Cameron, the outgoing prime minister, to oversee the process of withdrawal, is now at the helm of an expanded European secretariat at the Cabinet Office. But it is clear that very little preparatory work has been done. One of the first questions he will face is the future role of the British parliament in Brexit.

The British government has not yet said how parliament should implement the decision to leave. It is not clear, for instance, if and what laws would have to be passed to put the referendum decision to leave the EU into effect.

Could parliament stop Brexit?
At present, there is not a majority for Britain to leave the EU in either the House of Commons or the House of Lords. Indeed, given a free vote, the unelected Lords would probably reject Brexit by a margin of six to one.

One issue that will arise for the next prime minister – be it Theresa May, Boris Johnson or another – will be what happens when they try to push Brexit through a parliament that can delay the process at every turn. This has been described as a “reverse Maastricht”, a reference to the way in which Eurosceptics caused hell for John Major by blocking passage of the Maastricht treaty into UK law.

Could the referendum be treated as advisory?
The Commons might, for instance, seek to prevent the prime minister from triggering article 50, the clause of the Lisbon treaty that provides the framework of an EU member state’s exit from the union. David Lammy, MP for Tottenham, has had opprobrium heaped upon him for suggesting the referendum should be treated as merely advisory in law, and so ignored. It would seem unlikely that a majority of MPs would be willing to disregard the clear majority of the British people who voted for Brexit. 

More plausibly, the Commons might set conditions on the renegotiation, including access to the single market, membership of the European Free Trade Association or the preservation of the union with Scotland. The opportunities to filibuster and delay are innumerable. It is, for instance, disputed whether triggering article 50 requires the authority of parliament. Most legal opinion suggests not, but political necessity may require the endorsement of parliament. 

It may also be the case that parliament will wish to be more than simply informed of the government’s negotiating objectives. Those objectives will be at the heart of the Conservative leadership election. The foreign secretary, Philip Hammond, has put the choice well: in essence, there is a trade-off to be negotiated between the degree of access to the EU single market (the concern of UK business) and the degree of free movement of labour (the concern of politics). In the leadership contest both Johnson and May will have to say how much they will make free trade or free movement of people their primary objective in negotiations.

The candidates would also have to explain whether they believed the settlement at some point, in outline or detail, should be subject to some further democratic test, possibly in a spring 2017 election. 

Scenarios for a second referendum
There is also pressure to hold a second referendum. Few UK politicians – fearful of challenging the verdict of an already angry electorate – will articulate such an argument in public. But Jeremy Hunt, the health secretary, has boldly made the case for a second referendum or another general election on the negotiated terms of exit. Robin Butler, the former head of the civil service, has suggested the same.

Hammond, the foreign secretary, has said the new prime minister will need to think about the democratic legitimacy of the terms of Brexit. At one point even Johnson, and Dominic Cummings, the director of the Vote Leave campaign, made the case for a second referendum on the terms of a Brexit.

Despite the Fixed-Term Parliament Act requiring a parliament to last five years, it is possible for an early election to be called if enough politicians support this.

For the sake of simplicity, three scenarios could then follow. In the first, Johnson wins the election, negotiates the terms of the UK’s departure, puts them to a referendum and they are endorsed. Some form of access to the single market and some deal on free movement – the two central issues – are agreed. It is a bespoke British deal. Britain remains outside the EU but only just.

The Labour option
The second scenario is that Labour, under a new leader, offers itself as a pro-European party, but promises to seek a new deal on free movement of workers within the EU.

A change on free movement is the chief route back to its evaporating working-class vote, as Yvette Cooper, the former shadow home secretary, pointed out in a speech on Tuesday. For this to happen, the EU would need to offer an “emergency brake”, something Angela Merkel, the German chancellor, has steadfastly refused in her talks with Cameron. But many in the Foreign Office hope she would relent, or would be forced to do by the French and Italians.

In its manifesto for a 2017 election, Labour said it would give the British people a second referendum on the precise terms of the negotiations.

Labour would seek to capitalise on a potential new deal on immigration with the EU, the buyers’ remorse of leave voters regretting their decision, evidence of the real world economic chaos created by the prospect of Brexit, and a Labour leader with appeal on the doorstep.

If an election result then returned a second Commons with a pro-EU majority, this could prevent the UK leaving the union. A mandate for a second referendum on the terms of Brexit, or staying in, would have been provided.

Scottish consent
The third, simpler scenario involves the Scottish Nationalists.

The first minister, Nicola Sturgeon, has already said she would tell her MSPs to refuse “legislative consent” if and when the Scottish parliament was required to ratify the UK’s withdrawal from the EU.

Speaking to the BBC, she said: “If the Scottish parliament was judging this on the basis of what’s right for Scotland then the option of saying ‘look, we’re not to vote for something that’s against Scotland’s interest’, of course that’s got to be on the table.”

The constitutional implications of Scottish politicians withholding consent are only now being explored. 

All these scenarios, however, are inherently speculative – and require an accumulator bet coming good – but if you think it is not being discussed in Whitehall and Westminster, you are mistaken.

Courtesy: The Guardian
Today's Recommendations
(i) Rotla India Ltd seems to have formed a temporary bottom around Rs.63. Its consolidated net profit has grown 64.4 per cent to Rs 59.21 crore for the quarter ended March 31, 2016. The company had posted a net profit of Rs 36.01 crore in the same quarter last year. 

However, Rolta's total income from operations dipped to Rs.846.04 crore in the reported quarter as against Rs 946.14 crore in the year-ago period. 

The stock is slowly moving up after the company gave progress report on the future defence project. Rolta India Ltd had informed the stock exchanges that it has done significant expenses “on a very prestigious and time-bound defence project”, which required considerable ongoing investment. Rolta management is diligently working on addressing the overall situation in a comprehensive manner in consultation with its bankers and strategic advisers. The aim is to arrive at an acceptable solution in the interest of all stakeholders and the Company will be informing all stakeholders at the earliest possible opportunity and is committed to finding a viable resolution. Moreover, since Rolta India Ltd derives most of its operations from the domestic operations, hence it will not get affected much due to Brexit (if any). 

Last month, the company announced that it has won seven year, multi-million pound contract from UK Power Networks to manage and update their spatially-enabled network asset information. UK Power Networks is a major utility company that delivers electricity to London, the South East and the East of England.

The company last year announced that it had won Smart City and 3D Mapping with city modelling projects in the West Asia, for a combined value of around US $ 15 million.

Last year, the exclusive consortium of Bharat Electronics Limited (BEL) and Rolta India Limited were selected as a development agency for a more than Rs 50,000 crore Battlefield Management System (BMS) project by the Defence Ministry.


The BMS project, categorised as a "Make" programme under the Defence Procurement Procedure (DPP), will be one of the largest solutions to be indigenously manufactured for the the country's defence, BEL, a Navaratna PSU, said.

Therefore, Buy Rolta Ltd at Rs.63.50, T: Rs.71, SL: Rs.61.40 (strict). There is not much downside in the counter. 

(ii) Unitech Ltd (Rs.6.25), should be added on intra-day declines. The stock is on an uptrend and soon we will see it touch Rs.12-13. The scrip recently came to the news more due to wrong reasons, though its fundamentals are improving. The Real Estate sector is also expected to see a turnaround in 2016-17. 

(iii) Today there was a block deal on the the stock of Jaiprakash Associates Ltd (Rs.7.83) at Rs.7.80. Yesterday. there was high delivery based buying (41.40%). The company is hiring a consultant to for a quick turnaround. Also, the company would be a major beneficiary of the RBI's new directive on stressed assets. At present there is not much negative news in the counter. One should accumulate, on intra-day dips.

(iv) Lanco Infratech Ltd (Rs.4.70) is one of the companies, who could also get benefited from the RBI's latest move regarding stressed assets. Besides this, the company itself is taking a lot of measures to streamline its debts. You should buy the scrip for a short term target of Rs.9.5-10. This scrip would make new 52-week high soon.

(v) The stock of Adani Power Ltd (Rs.30.50) is also on an uptrend in tune with my earlier recommended Adani Enterprise Ltd (Rs.83). Hold the scrip for a target of Rs.33-34, in the short term.   

(vi) Vedanta Ltd (Rs.127) has almost doubled from my recommended price of Rs.64.40. The stock is on an uptrend and one can hold the scrip with a SL of Rs.121. 

(vii) Union Bank Ltd (Rs.129), today made an intra-day high of Rs.129.50, and hit my 2nd target. One can book partial profits and hold the rest with a SL of Rs.127, for a target of Rs.131-132.