Government to lower spectrum fee for telecom auctions

Photo: The Telegraph

NEW DELHI: The NDA government on Tuesday signaled a shift to lower levies on airwaves used by mobile companies with a panel of top officers recommending 3% spectrum usage charge (SUC) for the upcoming auctions, where the Centre can hope to raise up to Rs.5.5 lakh crore if all the radio waves on offer find takers.

A lower SUC can, in the long run, reduce your mobile bill besides ushering in transparency in the determination of revenues declared by mobile operators such as Reliance Jio and Bharti Airtel.

Photo: The Hindu Business Line

TOI was the first to report on the 3% SUC in its edition dated April 4. Currently, the levy ranges between 1% in the 2,300MHz frequency band and 3-8% for other bands. There was a fear that companies holding spectrum in the 2,300MHz frequency will attribute most of their revenues from the lower-duty band, thus paying the government lower charges. Airtel and soon-to-be-launched Reliance Jio Infocomm hold spectrum in this frequency.

The inter-ministerial telecom commission recommended a weighted average formula for the computation of the SUC for mobile operators, which would mean that they will have to pay charges in line with their spectrum holdings across the various bands.

Photo: The Telegraph India

The panel had earlier recommended that SUC be fixed at a flat 4.5% for all the bands, but the move was rejected by the attorney general who said that the 1% charge on the 2,300MHz band cannot be altered now as there is no provision to make the changes. "The weighted average formula will bring in transparency in the system," a senior official said after the telecom commission's meeting.

The government fetches around Rs 7,000 crore from the SUC annually, and the official said that the measure will be "revenue-neutral". "The obligation of a telco towards SUC cannot go down to what it had paid last year, in case the revenues don't decline," the source said.

For Airtel, the SUC charges are expected to come down to 3.74% from the existing 4.9%, while for Reliance Jio, the actual charge is expected at 2.88%, the official said.

The telecom ministry will approach the Union Cabinet on the issue in the next two-three days, while the notice inviting application (NIA) for the spectrum auctions is expected to be announced over the next fortnight, the source said. "If everything goes as planned, the auctions will be held in July."

The sale will see the auction in the highly-efficient 700MHz band for the first time ever where airwaves will be sold across 22 telecom circles. Also on the block will be airwaves in the bands of 800MHz, 900MHz, 1,800MHz, 2,100MHz, 2,300MHz and 2,500MHz.

Courtesy: The Times of India

DO YOU KNOW?

Courtesy: India Today

Real estate developer Unitech Ltd (Rs.4.90) said that it is committed towards delivering its ongoing projects and has mobilized sufficient resources for it, responding to a clarification sought by the Bombay Stock Exchange on news about Unitech's top executives being sent to judicial custody earlier this week.....

"Unitech remains committed toward delivering its ongoing projects and has renewed its efforts to that end. The company has also mobilised sufficient resources to achieve this," the company said to BSE. 

"We are currently delivering over 300 units a month and expect to increase the pace further substantially. During the first 6 months of the current financial year, the company has already delivered 2.43 million sq ft of area and deliveries are on in 47 projects across regions," the company said.

The company has huge land banks and could be monetized to pay off the debts. 

Also, the real estate sector in India, according to the January 2016 sectoral report of the Indian Brand Equity Foundation, is the second largest employer after agriculture and is slated to grow at 30% a year over the next decade. It is considered to be one of the direct offshoots of the growth of corporate environment in the country. 

Moreover, according to a report by Bain & Company, titled "Residential real estate in India: A new paradigm for success", in 2015, the real estate demand in India amounted to 880 million square meters, with the largest proportion of this (85%) going to retail. 

By 2020, this is projected to grow to 1.35 billion square meters, although the mix of demand will change slightly. Residential real estate will continue to see strong growth at around 9% CAGR, commercial will see 7% to 8% growth rates, while retail will see the fastest paced growth at 25%.

According to the Khaleej Times, June 2, 2016: 

A huge growth potential and a string of investor-friendly legislations offer Indian property buyers an ideal opportunity to be part of the country's growth story, real estate experts said at the opening of the biggest Indian realty exhibition in Dubai on Thursday. 

With the Indian property market poised for a vibrant growth phase to reach $102 billion in 10 years, the time is ripe for investors to enter the market, property pundits said on the sidelines of Sumansa Exhibitions' flagship Indian Property Show, which opened in Zabeel Hall 5 of Dubai World Trade Centre.

Besides the bright growth prospects, the implementation of the long-awaited real estate bill is providing investors greater assurance on the safety of their capital while helping them make more informed decisions, said R. Srividya, General Manager, Corporate Sales & Brand Engagement, Sumansa Exhibitions.

Unitech Ltd is a leading real estate developer in India. 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. Unitech continues to build hallmark and luxurious living spaces pan India. 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.

Unitech is continuously making an effort to reduce its debt exposure. The Company is further planning to reduce its debt by 15-20 % in the coming quarters by selling-off some of its non-core land parcel and by monetizing some of its commercial assets. By non-core land parcel, the Company means: the sale of some land for which it has no development plans in the near future.

In India, various factors like rapid urbanization, increase in nuclear families etc. continues to drive the real estate sector. In order to take advantage from the opportunities that the market is offering, Unitech develops properties across wide variety of segments, which extend across:

• Low-rise, mid-rise and high-rise developments
• Suburban as well as city centre developments
• Affordable to luxury housing

The Company has a large diversified land bank which allows it to offer a wide variety of customized and market specific products. Whenever the market conditions improve, Unitech on the back of large and well diversified land bank will be able to develop and increase the speed of new launches and sales. The Company currently has nearly 100 ongoing projects covering to be constructed and delivered in the coming years.

Besides, the Reserve Bank of India (RBI) very recently offered a measure of relief to banks weighed down by bad loans and their stressed corporate clients, seeking to slow the build-up of sticky loans and, at the same time, ease the pressure on company balance sheets.

Reserve Bank of India (RBI) has allowed banks to convert up to half of the bank loans of stressed firms into equity or equity-like instruments. This is a positive for all the companies, who are reeling with debts on the books. 

Meanwhile, the shortage of urban houses stood at 18.8 million units in 2012, and it is expected to grow at a compounded annual growth rate of 6.6% for 10 years till 2022, when it will reach 34.1 million, according to a report by the research and consulting firm RNCOS and cited by the Press Trust of India.

"Rising inventory levels in a country where housing shortage is such a critical issue indicates that the supply that is available is unaffordable to many, according to property consultants. Mumbai has a shortage of more than 2 million homes, but is unable to sell half its inventory pile-up because of unaffordable prices. This means that sales can improve but at the right price. NCR, on the other hand, doesn’t have a price problem but 52% of the housing supply is in uninhabitable areas which doesn’t have adequate infrastructure for people to actually go and live,” said Pankaj Kapoor, managing director, Liases Foras.

The NDA government is trying to do something about reducing the shortage and improving affordability. In June, 2015 the government launched three schemes—the Smart Cities mission, Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and Housing for All mission at an expected cost of around Rs.4 trillion.

The Housing for All scheme aims to provide at least 20 million homes to lower-income earners. These apart, a real estate act that is aimed at primarily protecting consumer is likely to make the land acquisitions difficult, pushing its price. 

Currently, the real estate sector, seems to be in a transition stage, where it is gradually moving away from an investor-driven to an end-user-driven cycle. Interest rates are slowly coming down and affordability will improve.

In such a scenario it would be prudent to invest in the stock of Unitech Ltd (Rs.4.90) and keep holding for a target of over Rs.10, with occasional profit booking. The share of Unitech Ltd, has a face value of Rs.2, Market Cap of Rs.1,284.60 Cr and Book Value of Rs.38.37. This is going to give your multibagger returns in the short term. 

GSM subscriber base rises to 77.41 cr in May 

"The GSM subscriber increased by 0.44 million in May 2016, 0.06% increase from previous month" with maximum subscriber addition of 21.2 lakh coming from telecom major Bharti Airtel....

Jun 15, 2016: GSM mobile subscriber base of six telecom operators marginally increased to 77.41 crore in May with net addition of 44 lakh new customers, as per data released by industry body COAI. "The GSM subscriber increased by 0.44 million in May 2016, 0.06 percent increase from previous month" with maximum subscriber addition of 21.2 lakh coming from telecom major Bharti Airtel. 

Vodafone followed Airtel in terms of net subscriber addition with 13.8 lakh new customers. Idea Cellular added 8.6 lakh new customers, Aircel 60,000, Telenor 6.3 lakh and state-run MTNL added 10,000 new customers. The COAI provided September 2015 GSM customer base data of BSNL (7.8 crore), 

Tata Teleservices (4.95 crore), Reliance Communications (8.45 crore) and Quadrant, subsidiary of Videocon Telecom, (29.6 lakh). These companies are not member of COAI and hence the industry body does not report their latest data. After taking in to account these four companies, the total GSM customers base in the country goes above 100.9 crore.

Courtesy: Moneycontrol.com

Today's Recommendations

# Unitech Ltd (Rs.4.80) and Hindustan Construction Company Ltd (Rs.20.50), like many other real estate companies could be benefited by the shortage of homes in major cities, as almost every CEO planning a big infrastructure project which requires large tracks of land, is saying that the land acquisition Bill, passed by Parliament last month, will either make projects unviable or expensive (for large infrastructure or real estate projects) or in other words the Bill is not conducive for investments. This might generate demand for the land and also property pushing the price up. 

Therefore, accumulate the stock Unitech Ltd at the CMP of Rs.4.80, for a price target of Rs.7.5 and HCC Ltd for a price target of Rs.27-29. 

# Lanco Infrastructure Ltd is on a turnaround path. Therefore, we could see upward movement in the scrip in the short term. Buy at Rs.4.95, for a target of Rs.7-8, in the short term. 

# Reliance Telecommunications Ltd  (Rs.47.80), could benefit, as

the NDA government has announced trading and sharing norms for telecom spectrum. Such norms would allow telecom players to transfer their idle spectrum to other service providers who are facing a spectrum crunch, or pool spectrum to bring together their fragmented spectrum holdings, resulting in better spectral efficiency. Buy the stock at the CMP of Rs.47.80 for short term targets of Rs.57-61.

Photo: Business Today

Now according to a report published in Business Today, July 3, Edition, in the telecom sector, the scenario is changing rapidly. Technology - 3G, 4G, WiMAX - is changing fast, and smaller operators are not in a position to invest adequately to upgrade their networks. On the other hand, the strong network holdings and large investments by big telcos have made it difficult for smaller players to survive on their own. As a result, large operators like Bharti Airtel, Vodafone and Idea Cellular are growing their subscriber base at a significant pace, even as most of the smaller ones see their share of the pie shrinking. The impending launch of Reliance Jio's 4G services, expected to be a big draw for consumers, has further queered the pitch for small telecom companies. This will reduce competitions for big players like Reliance Communications Ltd, too. 

Reliance Communications (RCom), is planning a merger with two smaller telcos - Sistema Shyam TeleServices (SSTL) that operates MTS brand, and Aircel. RCom's and MTS's market shares have been dipping for two years whereas Aircel's is showing marginal uptrend in subscriber numbers. If the merger works out, the new entity will have a subscriber base almost on par with the No. 2, Vodafone.

Analysts believe the merger will give a new lease of life to the three operators. "They would have been completely marginalised in the next two to three years," says an analyst. There are other challenges, including the fact that all three entities have significant debt on their books. As on December 31, 2015, RCom had Rs 40,479 crore of debt while Aircel, about Rs,18,000 crore. An analyst points out that Aircel's Rs.3,500-crore deal (for 2,300-MHz spectrum) with Bharti Airtel will help reduce Aircel's debt. The new entity is expected to have debt of around Rs.28,000 crore - with both RCom and Aircel contributing equally - provided RCom successfully reduces its debt by selling tower and optic fibre businesses.

Experts say that RCom's inability to make sufficient investments in its networks can partly be resolved with its impending tie-up with Reliance Jio, which has already spent Rs 1.5 lakh crore in buying spectrum and building an ecosystem of services around 4G. It is expected to use RCom's spectrum as a fallback network.

Today's Recommendations

1. Unitech Ltd (Rs.4.80) and Hindustan Construction Company Ltd (Rs.20.50), like many other real estate companies could be benefited by the shortage of homes in major cities, as almost every CEO planning a big infrastructure project which requires large tracks of land, is saying that the land acquisition Bill, passed by Parliament last month, will either make projects unviable or expensive for large infrastructure or real estate projects or in other words the Bill is not conducive for investments. This might generate demand for the land and also property pushing the price up. 

Therefore, accumulate the stock Unitech Ltd at the CMP of Rs.4.80, for a price target of Rs.7.5 and HCC Ltd for a price target of Rs.27-29. 

2. Lanco Infrastructure Ltd is on a turnaround path. Therefore, we could see upward movement in the scrip in the short term. Buy at Rs.4.95, for a target of Rs.7-8, in the short term. 

Market Mantra: Lack of Follow-on-buying

You must have seen sudden spurt in the stock prices based on the news on a particular sector. The recent fad is to buy the stocks from the NBFC (or to some extent banks) and infrastructure. But what the market is lacking at this point of time is follow on buying or in other words, any short term rally is getting sold. 

It is primarily because of the lack of clarity, in Government of India's policies as the Prime Narendra Modi hops from one country to another burning India's valuable foreign exchange. Mr.Modi is bent on staying as Prime Minister of India, even if he does not understand the difference in governance between 10 crore population and 120 crore. His next aim is to remove another obstacle in his journey, is to promote, Dr.M M Joshi, as a presidential candidate, just on the even of UP elections; instead of his earlier gamble with Mr. L  K Advani. 

Anyway, since this government has been voted to power, we have to bear its consequences, and work according to the given situations. In such a scenario, I find two more stocks attractive, considering that the current trend is towards, Infrastructure, NBFC and to some extent in the banking counters. However, there are some positive news from the shipping sector too. I have chosen two scrips for you, as given below: 

1. ABG Shipyard Ltd: This is a beaten down shipping counter, which is laden with debts. However, there is some good news. Lenders to ABG Shipyard Ltd is looking at the possibility of putting in place a new management but outside the purview of the SDR. Lenders to ABG include State Bank of India (SBI), Bank of Baroda (BoB), Punjab National Bank (PNB), Central Bank, Dena Bank, Yes Bank and ICICI Bank.. The scrip can be bought at the CMP of Rs.32.70 for a short term target of Rs.39-41. 

2. IDFC Ltd: This is a pure chart based call; pivoted on the optimism on the NBFCs (and some extent on the banking counters). The scrip can be bought at the CMP of Rs.49.50, for a short term target of Rs.53.
3. Hindustan Construction Company Ltd: This is also a company which is into infrastructure. The scrip has today given a break out. Buy at the CMP of Rs.20.50, for short term targets of Rs.27-29-31.

Important: Trend Is Your Friend

Friends, my observation on the current trend in Indian stock market/s, is mainly pivoted on two factors:
(i) Small and Mid cap counters are being bought by the investors/traders (after Mr.Shankar Sharma turned bullish),

(ii) An overall Rally is seen in Infrastructure Stocks (not much on real estate counters). 

Therefore, your focus should be in these spaces, in order to make quick money from the Indian bourses. 

Apart from this you can go full hog on the beaten down telecom counters (Idea Cellular Ltd, Reliance Communications Ltd, etc). 

Let me give you some safe stock ideas, where still you can make some money in the next 10-20 days:  

1. Gammon Infrastructure Projects Ltd: The scrip can move above Rs.10, due to positive development regarding its debt reduction. The share can be bought at the CMP of Rs.5.20. According to me the scrip of Gammon Infrastructure Ltd, is better than Gammon India Ltd (Rs.12).

2. Jaiprakash Associates Ltd: This is one of the most undervalued stocks in the infrastructure sector, considering the mammoth-ness of the company and considering the present optimism regarding setting up on an infrastructure fund to take care of the debts of the companies like Jaiprakash Associates Ltd. The circuit limit of the stock has been increased to 20%, today. So, buy this scrip for a target of Rs.17-18 in the next 6-9 months. 

3. Lanco Infratech Ltd: This is one of the beaten down infrastructure counters. It has been recommended earlier also. I still recommend a buy at the CMP of Rs.5.20, for a target of around Rs.9-10, in the next 15-20 days. 

4. Reliance Communications Ltd: Till now the government has stressed more on setting up an infrastructure fund to help the indebted companies in  the infrastructure sector.

However, if like China, India too comes up with an overall mechanism, to help the debt ridden from all the sectors, then Reliance Communications Ltd (Rs.48.20), with a debt of over Rs.39, 000 Crores would be one biggest beneficiaries. 

Buy this share at the CMP of Rs.48-48.20, for a target of Rs.72, in the next 2 months. Along with this you can also buy the stock of Idea Cellular Ltd at around Rs.100. 

Also, you all know that Reliance Communications Ltd (Rs.48.20) will give decent returns, once the deal with MTS and Aircel gets completed; but some of you are still fearful to enter it....why? It is because the so-called analysts, who hop from one TV channel to another, are creating confusions in your minds, isn't it?

If you want to make money, then either you have to do independent research, which is very costly and time consuming or you can depend on someone (or some such chosen investment gurus). Am I right? So, the decision is yours....I can only show the best alternatives, but the choice of picking up your favorable route, depends on you.  

Those who are holding Union Bank Ltd (Rs.123) or Allahabad Bank Ltd (Rs.53.20), can come out of these two counters and go for infrastructure stocks (not real estate per say). 

Moreover, Unitech Ltd (Rs.5.48), basically a real estate counter is near my 2nd target of Rs.6 and hence you can book some profits and enter any of the above mentioned or your choice-able infrastructure counters. 

Also, avoid stocks like IVRCL Ltd (Rs.5.15). Those who have entered McLeod Russel Ltd (Rs.200) can also book profits and wait for dips to enter. 

Gammon Infrastructure Projects Ltd: Bulls On Charge...

CMP: Rs.4.70
P/E: 7.52
Industry P/E: 49.46

Triggers:

The government of India is going ahead with the idea of creating a stressed asset fund, which in the common parlance is called a bad bank; to take care of the bad assets. A bad bank, as is present in China for instance, buys up all bad loans from other banks. This will provide some relief to the companies like Gammon Infrastructure Projects Ltd, who have substantial amounts of debts in the books. 

The company has recently done a strategic deal by sale of fixed assets, which added to the topline in Q4Fy16. It has further cleaned up its balance sheets and so now it is having cash surplus.

Any public-private partnership (PPP) business -- especially for infrastructure development -- is a capital hungry business; which needs large amounts of debt funding. The debt of the company which was initially in the order of Rs.4,500 crore, was reduced by Rs.2,000 crore after selling off six projects. So, now present level it will be approximately Rs 2,500 crore. The company is presently doing debt servicing.

Its asset basket is in order of around Rs.20,000 crore. Once it sells some of the projects it will deplete by another Rs.3,500 crore. The projects under implementation will be two projects which are likely to be completed in two years time - there are some projects; which are on pre-development stage, so that needs to take shape. It still has around two operational projects in road and two operational in port that should give additional size to operate and add more assets as the opportunity comes in to the basket. So, looking forward the asset baskets of Gammon Infrastructure Projects Ltd, should increase.

Last year the Corporate Debt Restructuring Empowered Group-(CDR EG) in its meeting held on November 23, 2015, discussed and noted the invocation of strategic debt restructuring (SDR) in the company by the CDR Lenders, pursuant to Reserve Bank of India (RBI) circular dated June 08, 2015. 

In March, 2016, Gammon Infrastructure said it had completed the first tranche of stake sale in nine projects on approval from National Highways Authority of India (NHAI) and lenders. The infrastructure firm had announced to sell stakes in 9 projects valued at Rs.6,750 crore to Brookfield and Core Infra India Fund, a deal that will fetch Rs.563 crore on completion as well as reduce its debt considerably. The transaction, one of the largest asset sales at one go in the Indian infrastructure space, was announced barely days after the government last year allowed the highways developers to divest 100% equity in projects two years after the completion; by making additional funds available for investment in projects.

Conclusion: Looking at the above points and taking into account the daily candle stick chart pattern, it is safe to assume that the scrip of Gammon Infrastructure Projects Ltd, will give good returns in the short term. Therefore, fresh positions can be initiated in the stock, with short term targets of Rs.5.20-6.30 and Rs.9. A reasonable P/E re-rating can even take the stock above Rs.15, in the medium term.

State Bank of India Ltd: Buy

CMP: Rs.201.70

Earnings being weaker on the back of higher slippages (1.5x of Q3) is not news. What made headlines is the watch-list, a mere 2.1% of exposure with 70% LGD (loss given default) over the next 12 months. The Street gives only one chance for redemption (e.g. BOB’s flipflop between Q3 and Q4). And, this is SBIN’s moment. We hope they are being realistic, neither optimistic nor subjective. Retain Buy, no PT change.

Defining moment: The bank (parent) disclosed only 2% potential stress with min-max LGD of 30-70% in next 12 mths. If this plays out, our book value estimates could rise 30-40%. As unbelievable as it may sound and the stock could be significantly buoyant in the near term, we wish to sensitise that a flipflop on this could be very damaging and hope the bank is being realistic. 

If this is evidenced by better asset quality trend over next few quarters, we think the medium term upside could be significant (better NIM, loan growth, lower credit costs, etc.). For now, we have largely ignored the watchlist, baked in slightly higher provisions, flat NIMs & forecast 14-15% RoE by FY19e. We continue to factor 100% LGD for NPA & 50% across other impaired assets, although have baked in the optimism through higher multiples.

Cut estimates: We cut standalone EPS estimates by 30% & 22% in FY17 & FY18, consol EPS by 15.6% & 18%. We forecast FY16-19 EPS CAGR of 37% for the standalone & 40.7% for the consol entity. For the parent bank, we pencil in ~3.1% NIM, 50% expense ratio, credit costs of 157bps, 137bps & 113bps for FY17-19, with 15.3% loan growth CAGR over FY16-19.

Valuation/Risks: SBIN trades at 1.5x consol trailing BV (Mar16) & 6.7x EPS (12m to Mar17e). 

We value it at R280, implying P/B-P/E multiples of 1.6x (Mar17e) & 7.8x (12m to Mar18e). This compares with 10-year average of 1.5x & 9x respectively. 

Risks: Asset quality, loan growth.

Other Considerations

Largest liability franchise and CASA/deposit growth remains strong. Stealing retail market share in recent times, although incremental revenue impact could be a lot weaker given the various discounts.

Asset quality–Watch-list much lower than feared

SBI disclosed Rs 313.5 bn as additional stressed exposures to be monitored after undertaking increased recognition in H2FY16. Out of this watch-list of Rs 313.5 bn, the bank expects slippages to the tune of 70% in a poor scenario, and 30% in an optimistic scenario.

Adding the watch-list (2.1% of gross advances) to the disclosed gross NPA of the bank (6.5%), we get a total stressed assets figure as per the bank’s disclosures of 8.6% of gross advances. The additional 2.1% comprises 0.8% from the standard restructured book, 0.2% from the non-NPA 5/25 and SDR book and 1.1% from the currently standard book.

Based on our classification of stressed assets for the bank, i.e., gross NPA + restructured + non-NPA 5/25 + non-NPA SDR, we get a total stressed assets figure of 10.3% of gross advances.

Based on the bank’s watch-list disclosure, we find that the bank sees stress in 30% (R116.6 bn) of its currently outstanding standard restructured book (R390.6 bn), and 14% (R25.8 bn) in its non-NPA 5/25 and non-NPA SDR book (R181.4 bn).

Specific to Q4, there was a sharp spurt in slippages (R303.5 bn, implying a slippage ratio of 9.33%), mainly driven by recognition of stressed accounts from the asset quality review of other banks. R10.4 bn slipped from the SME, agri and personal segment, while R92 bn was the result of the residual AQR impact for the bank from its own list of accounts. 

The remaining R200 bn slippage was on account of the bank classifying large and mid-corporate accounts which were on the AQR lists of other banks as NPA. Out of the total slippages, R77 bn came from the previously restructured book, while R59.3 bn and R73.5 bn was from the SDR and 5/25 book respectively. The total 5/25 and SDR cases amount to R190 bn and R110 bn respectively, out of which R63.5 bn and R160 bn respectively have already been recognised as NPA.

—Jefferies

Reliance Infrastructure Ltd: Buy

CMP: Rs.532

The Stock of Reliance Infrastructure Ltd (Rs.532) is trading above its 21D, 100D, 150D, 200D SMA. Recently, a brokerage house and a Bombay based business publication has given a buy on the scrip with the targets of Rs.580-582.

Meanwhile, Reliance Infrastructure Ltd reported a 43.7% rise in fourth quarter consolidated net profit helped by lower expenses and a one time gain in its EPC (engineering, procurement and construction) business.

The company has shortlisted two international bidders for monetization of its 11 operational roads assets, said Lalit Jalan, who took over Reliance Infrastructure from 1 January as acting chief executive after heading the company in prior stints for over seven years.

The Anil Ambani Group-led company’s consolidated net profit rose to Rs.659.85 crore for the three months ended March from Rs.459.11 crore in the year-ago period.

Total income from operations remained almost flat at Rs.4,469.28 crore from Rs.4,596.09 crore a year earlier; hurt by a decline in its largest power business. Power business net sales fell 11.7% to Rs.2,748.14 crore due to lower pricing while those in the EPC and contracts business rose 8.4% to Rs.907.44 crore.

Net sales in Infrastructure and cement business rose 31.8% and 35%, respectively.

What is interesting is that total expenditure during the quarter fell 14.5% to Rs.3,520.97 crore.

On a standalone basis, Reliance Infrastructure’s net profit rose 62% to Rs.728.95 crore during the quarter while total income from operations fell by 0.7% to Rs.2,781.47 crore.

The company is in negotiations with global pension funds and investment companies, including the Canada-based Brookfield Asset Management Inc. and CPP Investment Board (formerly the Canada Pension Plan Investment Board) to sell its portfolio of 11 toll-based road assets, the online financial portal Mint reported on 15 February.

In February, the company said agreed to sell its cement assets to Birla Corp. Ltd for Rs.4,800 crore as part of the its efforts to pare debt and expand its new defence manufacturing business.

As on 31 March, Reliance Infrastructure’s consolidated debt stood at Rs.25,000 crore.

Therefore, Buy the share at the CMP of Rs.532, for short term targets of Rs.580-592. Keep a SL of Rs.497, for any short term trade; though the chance of breaking this level, is very very less.

Investors Needed

I am looking for investors, who is ready to park at least Rs.4-5

crores in various projects, which are listed below: 

1. I am looking for investors of a Bollywood Commercial Film, which is 80% complete and the distributors have verbally agreed to pay around Rs.2-2.5 Cr, upon release. The fund needed is only Rs.30-40 lakhs. The release could be done in two months on getting the funds. The director of the film  is personally to me and his daughter is working with a reputed Film and Television production house. 

Also, I am looking for fresh funds, of around Rs.80-90 lakhs for a feature film, which has a wonderful story to tell; apart from the usual commercial kicks. Its songs have the Lyrics and Music from well known Bollywood celebrities (from the Lyrics and Music Fields). I would be the Executive Producer and one of the Directors, and hence you need not worry about transparency. Expected Gains: 100% within 3-4 months. 

2. Investors are needed for government sponsored Television Serials and Telefilms. The fund needed is Rs.50-60 lakhs, on the basis of works obtained from various government agencies. Since, they are obtained through competitive bidding, from government of India, hence the investors' money is secured. 

3. I have few scrips from the A-group and B-group, which could give you stupendous returns on BUY and HOLD basis, for 1-2 years. I am looking for HNI investors, who can park  at least Rs.1-2 crores or may be more in these scrips. 

The returns after one year, would not attract any Capital Gains Tax and at the same, since they are thoroughly researched, the risk would be limited. The profit would be shared in the ratio of 50:50 basis. 

Also, those who want to maximize their returns from the upcoming bull market, can take the help of me, to trade on their behalf. The profit would be shared in the ratio of 75:25% between you and me. Minimum Portfolio size should be Rs.2 lakhs. 

4. I am looking for investors, for some Real Estate Projects in Assam, Kolkata and Bombay. 

By the way, a land parcel of 100 acres, ideal for setting up resorts, Tea Gardens (with solar projects) and Horticulture Projects, is out for sale at Rs.2 Crore (negotiable), in South Assam. The said land is only 30 minutes drive from a newly constructed Broad Gauge Railway Station; from where long distant trains for Delhi, Kolkata, Bombay, etc, are scheduled. 

If you are interested then kindly mail me at: sumanm2007s@gmail.com / suman2005s@rediffmail.com. 

By the way, I have lost my Tab (mobile) and hence I am cut off from Whatsapp - - the inconvenience caused is regretted. 

Residential real estate now a buyer’s market

The residential real estate market, which had witnessed a slump in project launches in 2015, showed a visible comeback in the first quarter.

June 11, 2016: For the last 3-4 years, residential real estate market has seen sluggish demand, which has caused the unsold inventory levels to go up in some of the key Indian geographies. Supply/demand mismatch in terms of price and configurations has been the main reason for the rise in inventory levels.

From developers’ point of view, this has eventually resulted in:

* Correction of prices in many markets to improve sales velocity of unsold products

* Increased project launches with the right configurations to cater to existing demand.

Interestingly, 2016 had started on a sunny note. The residential real estate market, which had witnessed a slump in project launches in 2015, showed a visible comeback in the first quarter. There was a six-fold increase in launches of the affordable housing projects, as developers predicted greater demand in this highly price-sensitive segment.

One way or the other, factors have now transpired to make residential real estate a buyer’s market that gives buyers the upper hand. They have a lot of options to choose from, with the added benefit of flexible rates and attractive payment plans.

Gains of a buyer’s market

Real estate prices usually drop as inventory increases — but even if they don’t, negotiation power goes up. Some realtors refuse to understand the realities of a slow market and will not accept any offers less than what they feel they should get. If a buyer feels that he is not getting the best possible deal, he should be confident enough to walk away and look at the next option on the list. 

Remember that in a buyers’ market, it is the buyer who has the power. It pays to be aware of about one’s bargaining power. 

If the home has been in the market for several weeks or months, has perhaps already undergone some price reductions and is still unsold, it strongly suggests that the seller is hoping to sell it as soon as possible. In such a situation, it makes sense to ask the seller for add-ons such additional furniture or fixtures, apart from a heavy discount on the listed price.

Avoiding confusion

Another inevitable result of heavy housing inventory on the market is that prospective buyers are confused about which options to focus on. This ‘problem of plenty’ can be resolved by looking only at select projects by reputed developers — it is surprising how quickly the range can narrow down if one eliminates anonymous smaller players from the field of vision.

Guidelines for buyers

* In the case of under-construction projects, buyers should only consider those which are likely to be completed in next 12-18 months.

*  Again, going with developers who have a healthy track record of delivery will mitigate the risks related to timely delivery.

* It is also essential to undertake good diligence in terms of the project’s market response and inventory sold, which will ensure that project is delivered.

* One should look only at established housing corridors where social and physical infrastructure are in place.

The writer is CEO – Operations & International Director, JLL India.

Courtesy: Indian Express

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...!!