SumanSpeaks: The Information Super Highway

Reliance Communications Ltd: Powered by the Launch of Reliance Jio... CMP: Rs.52.60 The daily candle stick chart of Reliance Communications Ltd looks attractive. The recent buoyancy in the share price movement is primarily pivoted on two major events: 1. The integration of Reliance Communications Ltd with MTS, the merger with Aircel and towers sale would help reduce debt by 75%. A potential three-way merger between Reliance Communications Ltd (RCom) Sistema Shyam Teleservices and Aircel will make the combined entity the second-largest in terms of subscriber base and fourth-largest in terms of revenue, according to a report by the ICRA..  This merger deal will also help RCom, the country's fourth-largest mobile carrier, to expand its GSM services in West Bengal, Bihar and Assam, where it could not win back its 900 Mhz airwaves in the March 2015 auction.  ICRA had also said that the data services had remained a major thrust area for telecom companies as the ...

Reliance Defence and Engineering Ltd: Buy CMP: Rs.67.10 Reliance Defence and Engineering Ltd (RDEL) is engaged in defence, offshore, marine and engineering sectors. The company has two units, one special economic zone (SEZ) unit and another export oriented unit (EOU). The Erstwhile, Pipavav Defence and Offshore Engineering Company Ltd was rechristened as Reliance Defence and Engineering Ltd (RDEL), in March, 2016. RDEL is the first private sector company in India to obtain the licence and contract to build warships. The facility houses the only modular shipbuilding facility with a capacity to build fully fabricated and outfitted blocks Reliance Defence and Engineering Ltd last week signed Sub-Concession Agreement (SCA) with Gujarat Maritime Board and Gujarat Pipavav Port at Gandhinagar, Gujarat. The SCA is for a period of 30 years expiring in June 2046 and the said term of SCA may be further extended. Land Banks of some of the Prominent Indian Builders The SC...

WINNING STROKES: THINK DIFFERENT Unitech Ltd as expected bounced today from Rs.6.93 to close at Rs.7.24 in the BSE. The scrip made an intra-day high of Rs.7.35, but could not sustain that levels. The stock should make new 52-week highs in the coming days. This optimism stems from the fact that there were recent media reports which said: Residential real estate sales rose 8% in the April-June quarter, compared to a 3% decline in January-March, suggesting that the market which has seen sluggish growth over the last 2-3 years, is finally seeing some revival signs. Sales across nine key Indian cities - Mumbai, Pune, Noida, Gurgaon, Bengaluru, Chennai, Hyderabad, Kolkata and Ahmedabad – rose to 55,550 units in first quarter of this fiscal from 51,500 units in fourth quarter of 2015-16, according to a report by real estate portal PropTiger. The revival in sales was primarily driven by an uptick in demand in Bengaluru, Pune and Mumbai, which together accounted for 61% of total sales acr...

Important (i) Accumulate Reliance Communications Ltd (Rs.50.70) in all declines till the middle of next month, when Reliance Jio Ltd is tentative to be launched. Reliance Communications last year tied up with the Silicon Valley-based Jasper to provide Internet of Things (IoT) solutions, starting with the companies belonging to the Indian conglomerate. The tie-up will provide solutions to the upcoming smart cities, making electricity distribution grids smarter for public safety and on the healthcare front. The return on investment through the implementation of IoT solutions, which can be loosely described as a network of inter-connected devices that can be accessed through the Internet, is "HUGE". For instance, with IoT, street lights will automatically go off when they sense no traffic on the roads and consequently save power. Another application could be a smart band that will automatically alert physician when body vitals go to abnormal levels. The deployme...

Karuturi Global Ltd: Buy CMP: Rs.1.63 Land is one of the most pricey things in India. In Africa, it is cheaper. This has prompted many Indian companies and individuals to migrate to African countries for farming. Karuturi Global is one Indian company with huge tracts of land in Ethiopia. However, according to recent and past media reports, their experience has not been good. There is strong local resistance and also lack of a viable market for their produce. The local resistance is mainly because of allegations that Indians are engaged in land grab there. After Narendra Modi's visit, the Indian government might take measures to address this burning issue. This can help build the trust of the Africans and land can be a point where both India and Africa have a common interest. Anyway, the Book Value of the shares of Karuturi Global Ltd is Rs.18.67  and it has an EPS of Rs.1.46. The P/E of the shares of the company is 1.10 against the Industry P/E of 20.91. A decent P/...

JSW Energy Ltd: Buy CMP: Rs.79.50 JSW Energy  Ltd came out with decent set of numbers for the Q1FY17, with with the profit rising 28.6% sequentially to Rs.366.5 crore on lower revenue growth. After adjusting numbers due to new accounting standards, profit in Q4FY16 stood at Rs 285 crore against Rs 305.43 crore (before the adjustment).  Revenue during the quarter fell marginally by 6.9% to Rs.2,450 crore compared with Rs.2,630.7 crore in preceding period. Operating profit (EBITDA - earnings before interest, tax, depreciation and amortisation) increased 3.7% quarter-on-quarter to Rs.1,117 crore and margin expanded by a whooping 470 basis points to 45.6% in Q1FY17. The company has highest net power generation of 6,648 million units in Q1FY17 against 4,480 million units in same period last fiscal, primarily due to generation from hydro power plants acquired during FY16 and improved performance of Ratnagiri plant (Maharashtra).  It was partly offset by shut...

DO YOU KNOW? Photo : Business Standard The three-way merger between Reliance Communications (RCom), Aircel and MTS (brand of Sistema Shyam) is on course to create a formidable company, with best-in-class spectrum and reasonably strong financials. Both RCom and Aircel are working on lowering their debt, which they have agreed to cap in the new entity at Rs.20,000 crore. Sistema Shyam has agreed to settle its liabilities ahead of the merger with RCom. After the sale of its tower and fibre assets, RCom's debt is expected to come down to ~Rs.10,000 crore, which will be transferred to the merged entity. Aircel, too, is planning to bring down its debt to Rs.10,000 crore from the present Rs.26,000 crore. Sistema Shyam is also expected to pay off its Rs.4,153 crore debt ahead of the merger.  Moreover, Investment Bankers said at Rs.20,000 crore, the debt to EBIDTA (earnings before interest, taxes, depreciation and amortisation) ratio of the new company would be 2.5 becau...

Only 15 out of India’s top 50 conglomerates today were part of the same list in the pre-reform year of 1990. Photo : Indian Express

Reforms: Narendra Modi govt moves swiftly from GST, kerosene to disinvestment July 21, 2016: Given the finance ministry’s inability to meet its disinvestment targets for the past few years, it is natural to be sceptical about this year’s R56,500 crore target—of this, R20,500 crore is for strategic divestment—being met. What could be different this time around, though, is that the government seems to be taking action on different reform fronts as well—the textiles packages is one such, there has been a lot more progress on direct cash transfers, and the latest is the 25 paise monthly hike that has been allowed in kerosene prices. As part of this process, the government has, in a sense, converted part of the NITI Aayog into the previous government’s Disinvestment Commission whose job was to make recommendations on what to do with various PSUs. NITI Aayog is looking at a combination of outright closure, revival schemes, strategic sales in one go and lowering the government equit...

Adani Enterprise Ltd: On Solid Ground Powered by the Mozambique Deal CMP: Rs.82.95 Target: Rs.88-99 Last year, Adani Enterprises Ltd, the flagship company of the Adani Group, de-merged its power, ports and electricity transmission businesses into separate companies, making the holding structure clearer for investors. Adani Enterprises shareholders will benefit from the merger of Adani Mining Pvt Ltd. Adani Enterprises has a net debt of Rs.19,298 crore, representing 1.3 times the book value of shareholders equity. The group is part way into a new $5-10 billion solar investment programme. Ameet Desai, executive director and chief financial officer of Adani Enterprises, said the company's long-term debt was about Rs.8,300 crore and net of cash this figure went down to Rs.6,280 crore. The balance Rs.12,000 crore was working capital and the net long-term debt to equity ratio was 0.5%, he said. The company earlier said it is ramping up coal production and is well placed ...

Loot of Indian Telecom Companies by the Narendra Modi government continues.... The Cabinet had recently cleared a mega-spectrum auction plan for seven bands, including that of 700 MHz. However, analysts had expressed concern over the high base price for the premium 700 MHz. A company interested in buying spectrum in 700 Mhz band will need to shell out a minimum of Rs.57,425 crore for a block of 5 Mhz on pan-India basis. This band alone has the potential to fetch bids worth over Rs.4 lakh crore.  Aggressive bidding for 700 MHz band will hurt the financials of telecom companies which are already reeling under very high level of debt. From where such large sums of money will come? Has the Narendra Modi government ever thought of it, before placing astronomical rates for spectrum? Now what will happen is that after sometime, the telecos will definitely start raising the tariff rates; hurting the common man. What to say ....!!  Idea management told analysts that it does...

Winning Strokes: Think Different Today JSW Energy Ltd gave good returns to the investors on intra-day basis. The stock touched Rs.84.20 in the BSE before closing near Rs.84, up 3.32%. The company is coming up with Q1FY17 results on 21st July, 2016.  Adani Enterpises Ltd which is likely to get benefited due to the recent treaty with the Mozambique government today rose to Rs.83.60, intra-day before closing at Rs.82.80 in the BSE. The stock which has started to move up after consolidating around Rs.80-81, ranges should see its next target of Rs.91, very soon. I feel it would not be an exaggeration to mention here that Adani Group bought land in the African Continent some year back with the primary objective of growing pulses and oilseeds to meet the increasing demand - supply deficit in India. Though the efforts received lot of set backs earlier, but it seems with the patronage of the NDA government, this time, their project might see the light at the end of the tunnel. T...

Syncom Formulations (India) Ltd: Buy CMP: Rs.2.46 Syncom Formulations (India) is engaged in the business of pharmaceutical formulations. It manufactures range of products in various dosage forms and markets them in various countries. The company purchased a property situated in Mumbai worth Rs.11.00 crore on March 15, 2016.  When most of the Pharma Companies today are moving  up, there is chance that this battered down counter should also show some upward movements. 

JSW Energy Ltd: Buy CMP: Rs.80.35 A meeting of the Board of Directors of JSW Energy Ltd will be held on July 21, 2016, interalia, to consider the Unaudited Standalone & Consolidated Financial results of the Company for the quarter ended June 30, 2016. Recently, there were media reports that, JSW Energy Ltd has got fair trade regulator CCI's approval to acquire 1,000 MW power plant in Chhattisgarh from Jindal SteelBSE -0.62 % and Power Ltd (JSPL). Meanwhile, ICICI Securities has come out with its first quarter (April-June) earnings estimates for the Power and coal sector. The brokerage house expects JSW Energy   to report a 33.1% growth quarter-on-quarter (up of 46.5% year-on-year) in net profit at Rs.406.4 crore.  Sales are expected to decrease marginally by 3.1% Q-o-Q (up 23.3% Y-o-Y) to Rs.2598.7 crore, according to ICICI Securities. Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to rise by 5.0% Q-o-Q (up 46.2% Y-o-Y)...

Lanco Infratech Ltd: Buy CMP: Rs.5 Photo : The Economic Times Lanco Infratech Ltd's Kondapalli expansion, the gas-based plant, which was being developed in a phased manner, is located near Vijayawada in Andhra Pradesh. The company. informed in January, 2016, that its subsidiary, Lanco Kondapalli Power Ltd, has successfully declared the Commercial Operations Date (COD) for its expansion capacity of 371 MW (Phase III B Project) with effect from January 9. It is at present operating at ~30% PLF, because of gas allocation under present gas pooling mechanism. Besides, the company said its Amarkantak Unit 2 (300 mw) restarted power supply to Chhattisgarh from April 17, 2016.  Its EPC order book consisting of power, solar and others stood at Rs.27,079 crore, 80% of which is internal projects. Lanco Infratech Ltd, is present in EPC, conventional and solar power generation, coal mining and infrastructure and property development   The EPC sector and the power se...

DO YOU KNOW? The Shares of debt ridden companies should continue to do well as the new scheme proposed by the RBI will ease debt repayment period and ease the capital structure. The RBI lifeline states that debt can be classified into ‘sustainable’ and ‘unsustainable’ parts. The former will be serviced by existing cash flows, while the unsustainable debt will be converted into equity or convertible debt. Accounts that are worth more than Rs.500 crore would be eligible for the new scheme. Photo : Business Standard Also, the rates at which the Gautam Adani-promoted Adani Group bagged land from the Narendra Modi-led Gujarat government for its port and special economic zone (SEZ) project — between Re 1 and Rs 32 per square metre — were much lower than other companies that set up units in the state. Concessional pricing apart, the group did not face land acquisition hurdles, as the state allotted non-agricultural government land for Adani Port and Special Economic Zone (APSEZ)...