Union Bank Ltd: Buy

CMP: Rs.123

State-run Union Bank of India came out with a profit of Rs 96.12 crore in March, 2016 quarter, due to higher provisions for bad loans.  

As many as 11 accounts worth Rs.2,520 crore were restructured under the 5/25 scheme, out of which four accounts were in the power sector and three from the steel sector. Both the sectors have started to perform. 

The bank wrote off loans worth Rs.785 crore during the year, while it recovered Rs.2,204 crore from written off accounts, out of which Rs.395 crore were in the Q4FY16, up from Rs.196 crore in the three months to December. 

Loans worth Rs.1,835 crore have gone into SDR during the March quarter, while it sold Rs.177 crore of NPAs to asset reconstruction companies in the quarter. 

Net interest income for the March quarter stood at Rs.2,085 crore, marginally down from Rs.2,122 crore a year ago, and non-interest income also slipped to Rs.997 crore from Rs.1,143 crore.

Share of Casa deposits rose by 310 bps to 32.3% and the bank has set a target of taking this to over 33% in the current fiscal. 

Savings deposit grew 13.4%, while share of high cost deposits declined to 2.1% from 3%. 

Higher Casa helped the bank improve its NIM by 10 bps to 2.32%. Non-interest income for the full year rose to 3.1%. 

Total advances increased 5.7% to Rs.2,77,725 crore, while domestic advances rose 4.3% to Rs.251653 crore. 

The bank has kept a target of 9.3% advances growth in the current fiscal and a deposit growth of 7%. 

The provision coverage slipped to 50.98% from 59.23% in the same period of 2014-15. 

The bank's capital adequacy ratio under Basel III improved to 10.56% from 10.22% in March last year, with the tier I being at 8.14%. 

Moreover, if we look at the daily candle stick chart then we would find that the share of Union Bank of India Ltd is trading above its 21D and 50D EMAs, adding further to the overall bullishness, to the counter. 

Therefore, buy the stock of Union Bank of India Ltd at the CMP of Rs.123, for a short term target of Rs.141. Please keep a SL of Rs.119. 

DO YOU KNOW?

The Open Interest (OI) in the stock of Reliance Communications Ltd (Rs.49.50) has hit a 10-year high as tower biz sale and its merger with Aircel has entered into a decisive phase. 

There are multiple media reports, during the last couple of days, stating that both these deals would be completed between the end of June and July, 2016. 

If this deal is completed then according to an earlier news, about 75% of the company's debt, will be cut, boosting the fundamentals tremendously. Post completion of the said issues, the scrip could cross Rs.120 and even break 52-week high made in January, 2016.

Seeing such bright prospects, it seems the prudent investors have started to take LONG positions in the counter (in BULK). The build-up in the stock futures has resulted in the NSE putting the contracts under ban in derivatives for exceeding the permissible limit of positions in the counter. 

Reliance Communications Ltd's shares have been on the rise since yesterday, up more than 2% intra-day (today), with an increase in OI (a very BULLISH indicator). If this rise in OI continues with a rise in the price of the scrip, then we can look for short term target of Rs.60-61.

The investors are therefore suggested to buy at least 10, 000 (ten thousand) shares of the company and keep holding. This share alone will be able to cushion, a majority of your earlier losses (if any). 

DO YOU KNOW?

Photo: The Business Standard

Many investors/traders, invest on the basis of insider trading, as promoters mostly buy on the hope that the company will do well in future. on the other hand the Retail (small) investors are often advised to be wary of insider selling, as this might indicate the company is not in good financial health. After all, who knows the company better than its own promoter? As stock markets were volatile in Jan-Feb 2016, many promoters bought the shares of their companies. 

Some companies that saw huge insider buying were Adani Power, Aditya Birla Nuvo, Bharti Airtel, Grasim, Kansai Nerolac, KPIT Technologies, Lanco Infratech, MRF and Welspun. 

Insider selling was seen at Infrasoft Technologies, Jaiprakash Associates, Max Financial Services, Pipavav Defence and Offshore Engineering, Unitech and Wockhardt.

However, according to some experts, combined with the insider buying data, one should look at management, price/earning ratio, etc, before investing in a stock.

Moreover, sometimes, insider buying and selling could be merely a vesting of options because the vesting period has come to an end. Sometimes, promoters buy only to reduce their cash balance or increase the free-float earnings per share.

According to Prime Database, announcements have been made for buying back shares worth Rs.2,220 crore in 2016 so far. In FY15, the total value of shares bought back was Rs.650 crore.

The Securities and Exchange Board of India (SEBI) amended the buyback rules in 2013 specifying that the minimum amount that a company is required to buy back should be 50% of the offer size, against the earlier practice of 25%. SEBI also limited the buyback period to six months, from the time the approval has been sought from the board or shareholders, because it found that companies typically did not utiilise the entire period of one year to complete the buy back.

Earlier this year, Just Dial, Borosil Glass, Himalaya Granites, Technocraft Industries, Tips Industries successfully completed buying back shares worth `550 crore from investors. While companies like Dr. Reddy’s, OnMobile Global, Excel Industries and ECE Industries currently have their buyback offers ongoing.

A six month old report showed that some companies, including Eveready Industries, Force Motors and Welspun India, have seen their share price increase multifold one-year after an increase in promoter holdings. 

Similarly, others such as Adani Ports, ABG Shipyard and Cox & Kings have seen an erosion in their stock prices after a dip in their promoter holdings. 

Source: Internet (edited)

Winning Strokes: Think Different

Unitech Ltd's Real Estate Projects in India

State Bank of India Ltd recommend around Rs.167 only few weeks back today touched Rs.210.90 in the BSE, giving handsome returns to the Patient Investors. Today, the scrip of SBI moved up during the late hours, purely due to short covering. I would therefore, suggest all to book some profits in the counter and wait for dips to around Rs.96, to enter again. 

Unitech Ltd today moved to Rs.3.93 in the BSE, and then closed at Rs.3.89. The scrip should give decent returns going forward as the company, is contemplating to raise Rs.500 Cr. Today, the percentage of Deliverable Quantity to Traded Quantity was whooping 51.67%. The investors should accumulate the scrip in BULK and keep holding.

Established in 1971 by a group of technocrats, Unitech Limited is one of India's leading Real Estate player. It started business as a consultancy firm for soil and foundation engineering and has grown to have the most diversified product mix in real estate comprising of world-class commercial complexes, IT/ITes parks, SEZs, integrated residential developments, schools, hotels, malls, golf courses and amusement parks.

So far Unitech has built more than 100 residential projects. Nirvana Country in Gurgaon is an integrated development complete with villas, apartments, offices, retail spaces, schools and clubs. Vista Villas, in Greenwood City, is a vast spread of landscaped meadows with villas of magical Mediterranean flair. These spacious homes on varying plot sizes are designed to be elegant as well as functional and blend perfectly into the green surroundings. Unitech continues to build hallmark and luxurious living spaces pan India. Karma Lakelands, nestled amidst pristine surroundings and breathtaking beauty, is spread over approximately 300 acres of nature. Nirvana Country 2, ensconced in the pristine locales of Sohna Road Gurgaon, is a highly sought after 100 acre integrated township. The Unitech Golf and Country Club, which offers 347 acres of ultra-luxury living with unparalleled views of a signature golf course, just off the expressway in Noida, is one of the upcoming prestigious address.

Unitech has experience in developing and leasing IT/ITes and commercial office spaces in its Grade 'A' complexes in Gurgaon like Cyber Park, Signature Towers, Global Business Parks, Unitech Business Park, Unitech Trade Centre, Millenium Plaza, Unitech Corporate Park, etc. Some recent launches have been Nirvana Courtyards II, Signature Towers II, Uniworld Towers and Infospace in Gurgaon, Bhubaneshwar 1 in Bhubaneshwar etc.

Unitech has also developed world-class malls like Metro Walk in Rohini, The Great India Place in Noida, and Central in Gurgaon have been hugely successful. Currently, 4.5 million sq.ft. of retail space is already under construction in cities like Mumbai, Kolkata, Bengaluru, Hyderabad, Chandigarh, Dehradun, Amritsar, Bhopal, Mysore, Mangalore, Lucknow, Kochi, Trivandrum and Siliguri. Some of the recent launches have been Gardens Galleria in Bengaluru, Noida and Mohali, Great India Place in Bhopal and Dehradun and Downtown in Mohali. 

The scrip of Reliance Communications Ltd (NSE: Rs.48.30) today touched Rs.48.80, in the BSE, intra-day and closed at Rs.48.40. There were some media reports today that Reliance Communications (RCom), the country’s fourth largest telecom operator, which has been looking to create a 50:50 joint venture with Aircel promoted by Maxis Communications, expects to close out the deal by the end of June, 2016. The new entity, a senior executive observed, should kick off operations with revenues of around Rs 25,000 crore. Post the two transactions, RCom’s gross debt burden of Rs 42,651 crore, should be meaningfully lighter; currently, RCom’s debt to ebitda is 5.8 while that of Bharti Airtel is 2.8 times and for Idea Cellular, 3.1 times.Post the two deals, Rcomm will become an enterprise-focussed firm as the mobile business will be transferred to the new JV and tower and optic fibre will be divested.Once its deal with Aircel is concluded, it will have access to spectrum with a validity till 2026-28 and would not need to buy spectrum at the forthcoming auctions. 

The two-way merger between Reliance Communications (RCom) and Aircel is on track, claim sources close to the deal. Since the merger is between two different entities with different technologies even (large part of RCom subscriber base was on CDMA), the merger will take some more time to conclude. By the end of July, Reliance Communications would have migrated its five million CDMA customers to its GSM network, which will also offer 4G services through its partnership with Reliance Jio. The scrip is heading towards Rs.71-72, in the coming days and therefore, do remain invested. The long term target for the scrip is above Rs.100. 

Lanco Infratech Ltd (Rs.4.20), closed near the days high, as its fundamentals have been improving since the last few quarters. The investors should do well to pick the up BULK quantities and keep holding for a target of Rs.9. This is a sure shot counter, so please do not fail to buy. 

Allahabad Bank Ltd (Rs.52.25) today moved above its 100D SMA, after a long time.Today, it moved up with huge volume; however, it needs to close above Rs.53.50, to give bullish breakouts; which can take the scrip near Rs.59-60. 

Join the Paid Services or alternatively you can allow my firm to trade on your behalf on a profit sharing basis; provided you have a minimum portfolio size of Rs.2 lakhs. If your portfolio is more than Rs.50 lakhs, then the profit sharing would be 80:20 between you and my firm. Also, we can go for any such arrangements for mutual benefits; where I will try my level best (using all my experiences) to give you at least 5-10% return each month. Moreover, if you have lost money earlier that can be recovered in this bull run by effective maneuvering (in the share market). Therefore, come and join me to make money from the market - - Make Hay while the Sun Shines...!! 

Lanco Infratech Ltd: Buy

CMP: Rs.4.10

Lanco Infratech Ltd has posted a loss of Rs.200.71 crore for the fourth quarter ended March 31, 2016, against a loss of  Rs.586.29 crore for the corresponding quarter last year.

Turnover for the quarter was Rs.2559.89 crore against Rs.2276.89 crore for the corresponding quarter last year.

The company has managed to bring down its loss to Rs.265.60 crore for the financial year ended March 31, 2016, against a loss of Rs.2036.74 crore for the previous year.

The income for the year was up at  Rs.9762.90 crore against Rs.9542.58 crore for the previous year.

Its EPC order book consisting of power, solar and others stood at Rs.27,079 crore, 80% of which is internal projects.

Lanco is present in EPC, conventional and solar power generation, coal mining and infrastructure and property development.  

The EPC sector and the power sector together contributed to 87% of the gross revenues. EPC and construction sector contributed to 37% of the gross revenue

Power sector contributed to 50 per cent of the gross revenues. The company has a total outstanding receivables of Rs.17,81.6 crore from various state electric utilities as of March 2016. 

Better performance by operational assets helped Lanco Infratech recover from losses in the earlier quarters. 

The Gurgaon-based company had recorded a consolidated profit of Rs.137 crore during the quarter ending December 31, 2015 bringing down its cumulative loss for the first nine months by 95% to Rs.65 crore against Rs.1,412 crore in 2014-15.

The company posted a consolidated net profit of Rs.98.98 crore in the second quarter of the current fiscal after a gap of three years.


In a statement accompanying the results, the group said approved CDR scheme and additional funding to the company and the lenders approvals of the cost overrun proposals for the projects under construction and the effort to bring strategic investors, disposal of assets, would also bring in the additional cash flows into the system.

T Adibabu, Chief Operating Officer, Finance, said, “A number of issues relating to fuel and tariff for power projects have been sorted out, and the funding for ongoing projects is also likely to get better. This will enable the company to run power plants and also help expedite EPC works this year.”

On stake sale talks which the company has been engaged in, Adibabu said, “We are in talks with several potential investors and companies, over the past 24-30 months. The macro economic conditions are just beginning to get better for infra companies. This will enable us to strike couple of deals.”

Once, it has good cash flows and lenders continue to extend their support, it will be able to boost the EPC business as well.

Therefore, buy the shares of Lanco Infratech Ltd at the CMP of Rs.4.10, for targets of Rs.6.5-7.4, in the short term. 

Adani Enterprise Ltd: Buy

CMP: Rs.72
Face Value: Re.1
Book Value: Rs.97.97

Adani Enterprises Limited is an infrastructure company, which is is engaged in coal trading, coal mining, oil and gas exploration, ports, multimodal logistics, power generation and transmission, and gas distribution. Its segments include Trading, Power, Port, Agro and Others. 

It is engaged in resources, logistics, energy and agro businesses. Under the resources business, it obtains coal from mines and trades in them. Under the logistics business, it owns and operates seven ports and terminals, such as Mundra, Dahej, Hazira and Tuna Tekra, Kandla in Gujarat, Dhamra in Orissa, Mormugao in Goa and Visakhapatnam, India. 

Under the energy business, it produces thermal power in India with an installed capacity of around 10,480 megawatts. 

It operates four power projects in Gujarat, Maharashtra, Rajasthan and Karnataka. Under the agro business, the Company offers edible oil. It operates agro business through Adani Wilmar Limited, Adani Agri Logistics Limited and Adani Agri Fresh Limited.

DO YOU KNOW?

In December 2015, RCOM entered into a non-binding and

Photo: The Telegraph

exclusive agreement to sell towers owned by its subsidiary— Reliance Infratel Limited (RITL, unrated)—to two investment companies, Tillman Global Holdings, LLC (unrated) and TPG Asia, Inc (unrated). 

RCom has made a public commitment to use the entire proceeds from the sale for DEBT REDUCTION.

According to Nidhi Dhruv, Moody’s Vice President and Senior Analyst: "RCom has also re-prioritized its strategies again, and now plans to announce the final binding tower sale transaction within two months from the completion of discussions with Aircel". 

This means that, if the dates are to be taken as sacroscanct, then within two months we can expect, a substantial reduction of Reliance Communication Ltd's debts. 

Cumulatively, these transactions, when consummated, could benefit RCom substantially. Hence any tangible benefit to RCom’s financial and credit profile is now likely to happen within the next 6-9 months.

Upon the completion of the share swap transaction with Sistema Shyam Teleservices (SSTL unrated), RCOM will have adequate spectrum. However, should the company participate in the upcoming spectrum auctions, its leverage metrics will be further pressured.

RCom has about $450 million (Rs.30262.50 C) in debt falling due in the quarter ending 30 June 2016, which includes a $350 million ECB facility at Reliance Infratel (unrated), which is guaranteed by RCOM and has a cross-default with other debt. Management is still in the process of renewing this facility with the banks and expects to complete the refinancing ahead of maturity.

Unless there are some unexpected regulatory developments in the Indian telecommunications sector RCom is likely to continue to grow revenues and earnings of its core-Indian operations by increasing the number of subscribers and data revenue without compromising its EBITDA margins. After the same of its tower business it would be more efficient to generate positive free cash flow on a sustained basis and this will improve its liquidity profile significantly or its adjusted debt/EBITDA could fall to 4.0x-4.5x and its adjusted EBITDA margins could come between 30%-35%, in the next 6-9 months. 

RCom is an integrated telecommunications operator in India (Baa3 stable) with a presence across wireless, enterprise, broadband, tower infrastructure and DTH businesses. Through its wholly-owned subsidiary, GCX Limited (B2 stable), the company also provides data connectivity solutions to major telecommunications carriers and large multinational enterprises in the US, Europe, Middle East and Asia Pacific which need multi-national IP-based solutions and connectivity.

RCom is the fourth-largest mobile operator in India by number of subscribers, which totaled 109.1 million or approximately 10.7% of the total market share by subscribers (pro forma for Sistema acquisition) as of 31 January 2016 according to the Telecom Regulatory Authority of India (TRAI).

Moreover, its tie up, with Mukesh Ambani's Reliance Jio Ltd is likely to work wonders very soon. 

Meanwhile, Mr.Gurdeep Singh, CEO for Consumer Business  said during a conference call: “Integration of MTS business with RCom is on track. We expect to complete the integration in August. We expect to make announcement with respect to Aircel merger anytime in June. Once we complete the Aircel transaction, we will go for the tower deal. With completion of these deals, we expect RCom’s debt to reduce by 75 per cen". 

RCom and Aircel talks, if successful, would lead to a combined entity holding 19.3 per cent of the total spectrum allocated to the industry — the highest by an entity.

The new entity, which is in the works, would hold spectrum across all allocated bands — 800 MHz, 900 MHz, 1800 MHz, 2100 MHz and 2300 MHz — for 2G, 3G and 4G services.

RCom also expects approval from the government for spectrum liberalisation in four circles — Kerala, Karnataka, Tamil Nadu and Rajasthan — by tomorrow. The company has paid over Rs 1,200 crore for liberalising spectrum in these circles.

DoT has already approved liberalisation of RCom’s CDMA spectrum in 17 out of 22 telecom circles. The company is using liberalised CDMA spectrum to offer 4G service to its customers. 

Earlier,  Mukesh Ambani’s Reliance Jio Infocomm Ltd and Anil Ambani’s Reliance Communications Ltd signed a Rs.12,000-crore deal that lets Reliance Jio use the telecom towers of RCom to launch its fourth-generation (4G) services — a pointer to the growing camaraderie between the brothers.

Reliance Jio — the telecom arm of Reliance Industries — will use up to 45,000 ground and rooftop-based towers of R-Com’s nationwide network for the rollout of its 4G services.

Reliance Jio will pay Rs 12,000 crore over the entire period of the contract.

Though both the companies were tightlipped about the time frame of the contract, sources put it at 15 years, in which case R-Com will get around Rs 800 crore annually.

A press statement issued by both the groups said they would explore the possibility of building new towers as well.

RCom's consolidated net profit in the last quarter of ended March 31, 2016 declined by about 22% at Rs.177 crore from Rs.228 crore a year ago.

However, coming out with profits, even though it is having huge debts (or in tight liquidity conditions), speaks volumes about the resilience of the company. 

The promoters holding in the company stood at 58.85% while Institutions and Non-Institutions held 28.77% and 11.94% respectively.

A Foreign Institutional Investors (FII) have recently bought nearly 1% stake in this ADA Group telecom company, for about Rs.87 crore through open market.

In such a positive environment, I would suggest you to BUY in BULK, the stock of Reliance Communications Ltd (Rs.48.95), like you are doing in case of Unitech Ltd (Rs.3.89) and keep holding for 4-6 months to MORE than DOUBLE your INVESTMENT CAPITAL.

Courtesy: With inputs from Sanjeeb Kumar Sahoo 

Important Updates

1. The investors can take FRESH POSITIONS in Reliance

Communications Ltd after a foreign institutional investors (FII) bought nearly 1% stake in Anil Ambani Group telecom company for about Rs.87 crore through open market. 

On Tuesday, May 31, 2016, Integrated Core Strategies (Asia) Pte had purchased 18.48 million equity shares representing 0.74% of total equity of Reliance Communications at Rs.46.96 per share via bulk deal,  as per NSE data. Target: Rs.57, SL: Rs.47.50.

Moreover, Reliance Communications reportedly said it expects to cut down debt by 75% through merger of MTS, Aircel and sales of mobile towers.

"Integration of MTS business with RCom is on track. We expect to complete the integration in August. We expect to make announcement with respect to Aircel merger anytime in June. Once we complete the Aircel transaction, we will go for the tower deal," RCom CEO for consumer business Gurdeep Singh said during a conference call on Tuesday.

"With completion of these deals, we expect RCom's debt to reduce by 75 per cent."

2. The Investors should accumulate the shares of Unitech Ltd near the support level of Rs.3.90, for a short term target of over Rs.10 and medium target of Rs.25. It is an A-group counter and should give decent returns to the patient investors, going forward. 

3. One should keep holding the shares of Punjab National Bank Ltd (Rs.77.30) and Allahabad Bank Ltd (Rs.51.20), till at least 6 June, 2016, when the FM will be meeting the Bank Heads. 

4. The share of Idea Cellular Ltd can fall upto Rs.101-100, where you can take fresh positions for a  short term target of Rs.110. 

5. Foreign Portfolio Investors (FPIs) bought shares worth a net Rs.521.85 crore yesterday, 2 June 2016, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs.576.86 crore yesterday, 2 June 2016, as per provisional data.

6. Indian Meteorological Department (IMD) retained its previous forecast of good rains for the 2016 southwest monsoon season (June to September). 

Higher rural income may boost demand for consumer goods. FMCG firms derive substantial revenue from rural India. Good rains may also boost demand for tractors, fertilizers and other agri inputs. 

In its second stage forecast issued after trading hours yesterday, 2 June 2016, the IMD said that rainfall over the country as a whole for the 2016 southwest monsoon season is most likely to be above normal. 

Quantitatively, monsoon season rainfall for the country as a whole is likely to be 106% of the long period average (LPA) with a model error of plus/minus 4%. In its first stage forecast issued on 12 April 2016, the IMD had forecast rainfall to be 106% of the LPA with a model error of plus/minus 5%.

Unitech Ltd: Buy

CMP: Rs.3.94

Face Value: Rs.2

Book Value: Rs.36.60

Market Cap: Rs.1,030.82 Cr

Medium Term Target: Rs.25

Long Term Target: Rs.36

Photo: Business Insider

Introduction: Established in 1971, Unitech Ltd is amongst India’s leading business groups, with an outstanding track record in large-scale, integrated, Real-Estate Development and Infrastructure Development in India.

The real-estate development journey for Unitech Ltd, since it started working on its first real estate project- South City, spread over 300 acres in Gurgaon, has been truly remarkable. Today, Unitech’s land reserves are spread across all major hubs of economic activity in the country and the Company focuses on large, mixed-use developments. The Company’s diverse portfolio includes residential, commercial, special economic zones (SEZs), IT Parks, industrial & logistic parks, hospitality, retail and entertainment projects. The Company’s infrastructure related businesses include General construction, Design, manufacturing, erection & commissioning of transmission towers, Facility & property management services and township management services.

Be it firms like SOM, Callison and HOK in real estate– Unitech has a history of successful partnerships with leading global organizations. Its blue-chip customer portfolio in real estate includes clients like Fidelity, Google, HSBC, Sun Life, Marriott, Reebok, IBM, RBS, Ernst & Young, Bank of America and LG.

Shareholding Pattern: The promoters  hold 26.77%, while the general public holds 73.23%. In the general category, the Foreign Portfolio Investors, hold 13.06% while Financial Institutions/Banks and Insurance Companies, hold 0.95% and 0.88%, respectively. 

Triggers: 

(i) The Book Value of the shares of the company is Rs.36.60, while the CMP is only Rs.3.94. This difference is too high to be sustained. Soon the market is expected to take the share price to some rational levels. 

(ii) At the current market price of Rs.3.94 the market cap of the company is only Rs.1,030.82 Cr, which is less than the total income of the company in FY16, i.e. Rs.1,328.21 Cr. Now if we consider its nearest competitor, DLF Ltd, then we find that it has a market cap of Rs.23,857.68 Cr, while its FY16 turnover was only Rs.3,572.59 Cr, which means its market cap is around 6.68 times FY16 turnover. Now if we apply this rule to Unitech Ltd, then the stock price with suitable discounting, should be trading above Rs.10. 

(iii) 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 receipts from these ongoing projects combined are sufficient not only to sufficient to meet the remaining construction expenses but also to service the debt, if any, against these projects. 

(iv) 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.

(v) Let us roll back and see what the broad issues were over the last few years for the Real Estate sector. To begin with, the sub-prime crisis led global economic meltdown in 2008 and its aftermath squeezed liquidity from the system and real estate demand largely shifted from investors to final property users. This was followed by a phase where the Government of India and the Reserve Bank of India (RBI) focussed solely on managing inflation and adopted a tight monetary policy that drove domestic interest rates to very high levels affecting financing costs of developers and end-user demand, as EMIs also increased substantially. Also, the extant policy framework virtually put a freeze on the capital flows to the real estate sector. Finally, in the period between 2011 and 2014, the Indian economy witnessed a major slowdown and the investor and consumer confidence hit major lows. In this economic uncertainty many real estate companies, held back on critical long term investment decisions like buying a house.

Today, the good news is that there are several positive external developments. To begin with, there has been a revival in economic growth. The GDP growth which slumped in FY2013, increased first to 6.6% in FY2014 and then to 7.2% in FY2015 and now to 7.9% (~6MFY17).

This has helped stimulate investor confidence in the economy. In another significant development, with inflation under control the RBI has eased monetary policy a bit  and now the interest rate is on the downward trajectory.  The Government of India has also indicated a proactive reform agenda to stimulate growth. This included positive announcements on infrastructure spending, manufacturing and focus on greater skill development and job creation. While much of this is still at a policy level, one expects it to trickle, within the next few quarters. All these is expected to have a positive impact on the shares of real estate companies across India. 

(v) Broadly speaking, the macro-economic outlook for India is for economic strengthening through higher infrastructure spending, increased fiscal devolution to the states, and continued reform to financial and monetary policy. The government underscored its intention to move steadily to tackle politically difficult structural issues that have stalled investment and limited economic performance in recent years. All these measures is likely to translate into positives for the real estate sector in the near future.

(vi) Unitech Ltd, one of the largest developers in the country by market value, is planning to raise Rs.1,300-1,400 crore in a bid to speed up construction of its existing projects and overcome a delivery backlog and liquidity crunch. It plans to raise the money by selling land and stakes in projects or even from a single-large transaction.

(vii) Unitech Ltd has also fully exited the wireless business and met all its liabilities and obligations to the tune of Rs.1,093.74 crore related to that business. Its prime focus now remains on executing projects and delivering them. Accordingly, cash generated, both operating as well as non-operating, is being utilized first to execute existing projects. Over the last couple of years, after it exited the telecom business and reached a settlement with its partner Telenor ASA in 2012, Unitech has been focusing on the real estate business.

(viii) Unitech Ltd has so much historically acquired land at relatively reasonable values that if it manages to raise the capital to undertake construction, it should be enough for the company’s turnaround. The promoters also have a background of executing large projects in the past. While Unitech has a large residential portfolio, it may also take advantage of the booming commercial office space business even in a market like NCR - - large companies continue to take up space and build offices, and Unitech has land with approvals...

(ix) As a vision of ushering India into a new era of urbanization induced growth, the NDA government has proposed to build 100 smart cities in India. The list of 98 cities has already been declared out of which 33 urban cities, have been successfully chosen over two rounds, that will start receiving govt. seed funding.  The govt. has so far allocated around Rs.48,000 crores as seed funding. Rest of the funding will be raised from private sector, municipal level tax & revenue collection & various foreign equity funds that are interested in investing -Betting on the economic potential of India. If successfully implemented, the mammoth project won't just enhance the standards of living in Indian cities but would be great boost to the real estate industry & urban infrastructure.

(x) The Real Estate Act and the constitution of the real estate regulator is a step in the right direction. The new norms state that a new project can only come into the market once it has all the necessary approvals in place. While, most of the large players like DLF Ltd, Oberoi Realty Ltd, Unitech Ltd, have more or less followed this practice, there are many other firms, especially smaller ones, who market projects without all the permissions in place and their trade-off against these big players, is obviously the price-tag. They sell houses cheaper than the big real estate firms, and not much could be done about that because that is the way the market worked. However, with the new norms and the real estate regulator in place, projects that don’t have all permissions simply won’t be able to enter the market; that is a great thing because it will create a level playing field for companies. Now consumers can only buy something legitimate with all approvals in place; and of course, they will have to pay a premium for that.  This will reduce the flow of new projects into the market and the resultant supply, as not only will new projects need approvals from the government, they will also need approvals from the new regulator. It will take some time for the new regulatory framework and infrastructure to be set up and, consequently, there will be a huge drop on the supply side. 

Even the remaining supply will be at a higher cost because companies have to service the cost of debt while they wait for permissions to come in and start selling a project. In the process Real Estate Projects could end up becoming more expensive. These regulations exist in developed markets like the UK and Singapore. But the cost of money in these markets is cheap when compared to India where cost of capital is very high. So clearly, a lot of real estate supply is going to be sucked out and the remaining supply is also going to come at a higher cost. In effect, prices could go up anywhere between 30 and 50 percent, especially with the cost of capital during the construction phase compounding and weeding out of low cost real estate players. 

Conclusion: It has been seen from the chart the scrip looks to have bottomed out around Rs.3.90. The formation of a doji pattern after a white candle, gives more ammunition to the bulls. 

In such circumstances, and considering the above points, the investors can start accumulating the stock of Unitech Ltd at the CMP of Rs.3.94, for a medium target of Rs.25 and Long Term (12-18 months) target of Rs.36. 

Adani Ports and Special Economic Zone Ltd: Buy

CMP: Rs.202.20

Triggers: 

(i) There has been a revival of the domestic output of coal coal which will help the port companies. The company is into expansion of capacities in their second terminal and is also getting into a transshipment mode it will build capabilities to get into transshipment which is a huge revenue spinner. Currently, all the business goes to Dubai and to Singapore. If Adani becomes capable for transshipment of cargo, it will be big boost the company's fundamentals.

(ii) Now, the latest quarterly results of Adani Ports and SEZ has seen a dramatic rise in the SEZ income, than earlier. This SEZ income is expected to get further boost due to the initiatives of the NDA government. 

As a vision of ushering India into a new era of urbanization induced growth, the NDA Government has already proposed to build 100 smart cities in India. Through the deployment of wide scale technologies & innovations, the project will involve integrated townships, infrastructure upgradation, transparent e-governance & better utilities. The smart cities will also encompass business clusters & Special Economic Zones (SEZ) to stimulate investment & employment opportunities. 

(ii) Meanwhile, the NDA government is considering several measures, such as offering incentives for small exporters and package to revive SEZs, to help reverse the trend of a prolonged contraction in merchandize exports since December, 2014. 

India’s Economic Growth Picks Up Pace, Accelerating to 7.6%

Expansion in service industries continued to drive annual growth

Photo: The Economic Times

NEW DELHI—Brisk consumer spending propelled growth in India’s economy to 7.6% in the year that ended March 31, the fastest pace in at least four years despite indications that some areas of Asia’s third-largest economy are still struggling.

The latest yearly growth reading matched the forecast issued by the Central Statistical Office in February. Year-over-year output growth in the January-through-March period was 7.9%, a significant step up from the 7.2% expansion recorded in the previous quarter.

Strong expansion in service industries like trade, finance and real estate—longtime pillars of India’s rise—continued to drive annual growth. But manufacturing also grew 9.3%, a sharp increase over the 5.5% recorded in the previous financial year. Farm output expanded by 1.2%, having contracted 0.2% the year before.

India’s recent performance has put the country atop the growth ladder among big countries, including China. But uncertainty has dogged India’s triumphant numbers since early last year, when government statisticians modified the way they estimate gross domestic product. The revised statistics were at odds with ground-level signs of weakness, sending India-watchers looking for alternative gauges of the economy’s health.

“Because it’s been a year now, people have found their way around” the new figures, said Pranjul Bhandari, HSBC’s chief India economist. “But largely, nobody seems fully comfortable with the number.”

With anxieties running deep about prospects in other large economies, however, executives, investors and international agencies still see India as standing apart. Foreigners poured $40 billion into the country as direct investment in the latest fiscal year, a 29% increase over the year before.

And indeed, there are some signs of late—from corporate earnings to cargo traffic and cement demand—that the country’s economy is humming along nicely, if not as spectacularly as its GDP figures suggest.

The government has forecast ample monsoon rains this summer, which would lift farm output and spending in the countryside after two dry years. A coming pay rise for government workers is also expected to bolster sales of everything from motorcycles to residential property.

So far, though, factory production has been anemic—the official indicator of industrial volumes barely grew in March. Exports have been falling for more than a year. Companies still aren’t investing strongly in new facilities, equipment and other building blocks of growth.

“The turnaround is going to be gradual—a little more protracted than people expected,” said Rajeev Malik, an economist at Hong Kong-based brokerage CLSA. Private investment is “going to be the last piece that falls into place,” he said, “simply because so many things have to be sorted out before that happens.”

Prime Minister Narendra Modi, whose administration completed its second year in May, defended his stewardship of the economy in an interview with The Wall Street Journal last week. Budget and current-account deficits have been curtailed, he said. Restrictions on foreign investment have been loosened.

“In two years, we have done a lot to position India to thrive in the changing world,” Mr. Modi said.

Yet some economists fear that one key aspect of the environment that has boosted Indians’ purchasing power and appetite for investment may be poised to turn.

Inflation in India has been tamed gradually over the past two years. But some analysts and central-bank officials now say they are bracing for a comeback. Soaring food prices caused overall consumer inflation to jump to 5.4% in April, even as companies report that they don’t feel confident enough about demand to raise product prices.

This disconnect suggests inflation hasn’t been the byproduct of a surging economy. Efforts to untangle structural factors that cause prices in India to be sticky—such as the country’s heavily controlled agricultural market—have progressed slowly.

On inflation, “there’s been too much chest-thumping by government,” said Mr. Malik, the CLSA economist. Although the Reserve Bank of India is now formally tasked with keeping price-growth stable, he said, “how successful it is, is in the hands of the government.”

Meanwhile, oil prices appear to be on the rise. The U.S. Federal Reserve is contemplating an interest-rate increase, which could hurt India’s currency and raise the cost of imports.

“I call this the ‘summer of suspense,’” said Ms. Bhandari, the HSBC economist. “There are so many things happening together that it’s very hard to take a full call on inflation.”

—Anant Vijay Kala contributed to this article.

Write to Raymond Zhong at raymond.zhong@wsj.com

Courtesy: The Wall Street Journal

Unitech Ltd: Buy

CMP: Rs.3.90

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.

In the last quarter, the company made certain organisational changes to give sharper management focus to individual projects. These changes should result in further accelerating the delivery by resolving project specific issues in a focused manner according to Mr.Chandra. 

The organisational changes have been made as Unitech Ltd was facing consumer complaints and protest in some of its projects due to delay in completion of projects. 

On operational front, Unitech achieved a sales bookings of Rs.832 crore in the first nine months of this fiscal and completed 3.03 million sq ft of area in the 1st nine months of FY16. 

Unitech 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.

Therefore, buy as much as you can at the CMP of Rs.3.90-3.95 (and in all dips), for a target of Rs.5.40 (keep holding don't do intra-day). 

The commentary from the management this time, is very strong and hence it is expected to cross Rs.10, within the next 6 months of time frame, doubling your money. So, this is a must buy stock, in your portfolio. 

Unitech Ltd: Buy

CMP: Rs.3.90

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.

Unitech 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.

Therefore, buy the share at the CMP of Rs.3.90-3.95, for a target of Rs.5.40. The scrip is expected to cross Rs.10, within the next 6 months, doubling your money. So, you should have this stock in your portfolio. 

How Media-Operator Unholy Nexus is active in the Indian Markets.....!!

Yes, these days the business channels and print media is playing a big role in giving a casino type movement to the Indian Stock Markets. There cannot be a 2nd opinion that Indian Markets are immature. Taking advantage of this loophole, the operators have become very active, to churn out "Money" from the Indian Markets. 

Now, it is also a well known fact that most Indian investors want to earn money without much hard work and that too on their own or alone (they do not want to take the help of Paid Experts); even if their Rs.1.30 crore becomes Rs.1.30 lakhs in one year. 

Anyway, these people, buy or sell whatever their "Gurus" behind the Television cameras shoot them. These so called experts have no accountability. In a day, they recommend 100s of stocks leaving most traders bewildered and confused, as to which one to buy, as the recommended counters, rhyme with the 1980s super-hit Bollywood number: "Jeele Le Jeele Le, Aayo Aayo Jeele Le"; vacillating savagely, between the bounds.... 

Most of these recommended stocks never reach their targets, even after high publicity by the media anchors and so-called experts. The media channels also do not bother to show at the end of a month, how many of these recommendations actually generated profits for the investors, in the period mentioned. But then our regulators like SEBI or the stock exchanges, look at the other side, while this "Holy-Shit", goes on, day in and out. 

Few days back the State Bank of India Ltd came out with Pathetic Q4FY16 results. Seeing the results, I exited from the counter with no loss no gain.....but then miracle happened suddenly: stock started to move up after a buy recommendation from Ashwini Gujral, came popping out from a TV-channel. However, its violent upward movement started when one market-man named, S P Tulsiyan surprisingly commented that the results are excellent and even recommended a BUY on SBI. 

It is pertinent to mention here that the same gentleman (Tulsiyan) commented only a couple of weeks back, after the results of Punjab National Bank, that he would never touch the PSBs in the couple of quarters. It is not known why this person suddenly started giving buy calls in Public Sector Banks  - - may be the same OPERATOR--ANALYST - MEDIA-NEXUS is in play....

Then there are rating agencies and research houses, which upgrades or downgrades a stock based on their whims and their nexus with Operators. 

Few months back, an US based research house gave a sell rating on Rolta India Ltd just on the basis of some accounting practices. At once the market swallowed the news and selling started heavily in the counter, even though the company clarified time and again, the reasons for such accounting practices. Most of the traders, I believed sold the scrip, without understanding the heads and tails of that report. 

The media has become so much heavy, that the traders/investors, never care to think, what they are doing is correct or incorrect. Why they will think, when they get ready made movements in the scrips depending upon the intensity of the advertisements by the media..? Now, this has become the easiest way of earning money--come in front of Television and advertise the counters. 

Today, also Rolta India Ltd came out with excellent results.  Its consolidated net profit has grew by 64.4%  to Rs.59.21 crore for the quarter ended March 31, 2016. 

Meanwhile, Global rating agency Standard & Poor's today lowered its long-term corporate credit rating on Rolta India Ltd to 'CCC-' from 'B+' for missing on interest payment on unsecured notes. It seems the bears were ready for the news. The stock got sold off from the opening bell or from 9.15 am. This selling could not  be reversed even through the CMD of the company came and confidently said, that the said money would be paid within the grace period and one of the office bearers of this rating agency, Mr.Ashutosh Sharma, said, "We do not have any information on the company’s current liquidity position, which seems to have unexpectedly deteriorated (look at the word "Seems"--means no clarity, only speculative bet). We believe the company has a credible plan to meet its debt obligations over the next six to 12 months”. 

But still then stock could not recover, during the whole day, and closed at the days low. 

It seems these rating agencies have tied up with a big BEAR CARTELS, or else why on these kinds of speculative news, the downgrades are done and the stock reacts immediately....? Will SEBI care to investigate the motives of these rating agencies and research houses...? 

Now, let us come to Mcleod Russel Ltd. The company came out with not so bad consolidated numbers and even gave a strong guidance, stating the reasons why they would wish to see to and improved performance in FY17. But then unfortunately, most in the media presented the standalone results, which does not mean much, in case of a global company. 

The question is: Why was standalone results are presented when it is customary to give importance to the consolidated results for global companies, unless there is something fishy out there?

Not only that, at once sell recommendations started pouring from these so-called experts in sundry Television Channels, with targets varying from Rs.170-173. I do not know the reasons for sudden bearish outlook, inspite of the company giving positive guidance, and Meleod Russel Ltd, being the largest tea company in the world. 

It shows how MEDIA-OPERATOR-NEXUS is active in DALAL STREET and Narendra Modi government has no power to bring an end to this issue. 

During his 2-year tenure, Narendra Modi government's FM, has done precious little to revive the Indian capital markets. But if one argues on this, Modi--tards will behave with you so roughly and abuse you in every forum, that next day, you would not feel to write again on the topic.... 

It is true, that those who voted Narendra Modi, to get a good governance are now probably banging their heads on the walls; for the terrible mistake they have committed. Inspite of a reputed global media house, listing the achivements of Narendra Modi government, the Indian Stock Markets, are not ready to buy that statistics. 

The Maruti Van driver from Mira Road (Bombay--MMR), Mr. Muhammad Mustaquain Sheikh probably gave the essence of the current situation, when he said, "People are now slowly understanding, how they got swayed by the high voltage propaganda of Narendra Modi and voted for him. Sir, you all voted for him, and now what is use of crying over the spilt milk. Everything revolves around Capital Markets, if that is not made strong, then nothing will work".  

Yes, Mr.Sheikh, if not the first line, your last line is absolutely correct; I have never seen such a knowledgeable, driver in my life....may God help earn money from the markets once again.  

It remains to be seen, when the TV analysts will stop recommending individual stocks to the gullible investors and if this government is able to bring an end to this clandestine Media-Analyst-Operator-Nexus. This market is suitable for those who are a part of this "Clandestine Axis". 

Rolta India Ltd: Result Update

Rolta India Ltd has come up with a decent set of numbers for Q4FY16, with its Consolidated profit Zooming by 26% to Rs.59 crore on QoQ basis, mainly due to lower depreciation and amortization expenses.

However, its consolidated net sales in Q4FY16, dipped marginally by only 13.7% at Rs.846 crore The information technology company had net sales of Rs.981 crore in December 2015 quarter.

The depreciation and amortization expenses declined 89% to Rs 19 crore in March quarter from Rs170 crore in December quarter.

However, the share nosedived by more than 7%, as the rating agencies S&P Global Rating and Fitch Ratings cut the company's credit score.

S&P Global Ratings on Monday lowered its long-term corporate credit rating on Rolta India to 'CCC-' from 'B+'. At the same time, the credit rating firm lowered its long-term issue rating on the senior unsecured notes that Rolta Americas and Rolta issued to 'CCC-' from 'B+'. Rolta guarantees the notes.

On Friday, Fitch Ratings too had downgraded Rolta India's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) and senior unsecured class rating to 'CC' from 'B'.

Meanwhile, Rolta India Ltd's CMD, Mr.K K Singh said that the company is confident of making a USD 6.9-million payment on overseas notes before the grace period deadline of June 15, 2016. 

He was talking to CNBC-TV18 after S&P and Fitch downgraded the firm's credit rating following a default on its 10.75% 2018 unsecured currency notes. Singh said an increase in the company's receivables period, from average 120-125 days to almost 185-190 days led to a cash crunch. But he maintained that the company was transitioning into an IP-led solutions business and is looking to rope in a strategic partner for large projects like defence, something that would help revive margins and return to comfortable leverage levels. He also clarified that the recent exit of two senior-level management personnel had no connection to the business performance. 

Therefore, the investors are suggested to buy the scrip of Rolta India Ltd (Rs.72.20) at the CMP and hold on, for some decent returns over a period.