SumanSpeaks: The Information Super Highway

Is Unitech Ltd, a BUY? Please Click on the Photo to Expand After announcing the Q4FY16, result an upbeat MD of Unitech Ltd (Rs.5.43), Sanjay Chandra, said: “Balance expected receipts from (these) ongoing projects combined are sufficient not only to meet the remaining construction expense but to also to service the debt, if any, against these projects. Apart from improving collections, company is also mobilizing funds from banks and financial institutions". From a peak valuation of $11 billion in 2007 (Rs.74,756 Cr), life has come a full circle for Ramesh Chandra, the Unitech founder, with his company reporting losses till Q4FY16 and the market cap plummeting to around Rs 1,420.65.  So, will it be good to buy the shares of  Real Estate behemoth  Unitech Ltd at Rs.5.43, which is available at the price of penny?  In one word, it would be YES, it is because like most of the major builders in India, Unitech Ltd plans to raise funds and at the same ...

JSW Energy reopens talks with Jaypee Group for buying three power assets Jun 24, 2016: Months after initial discussions fell through, Sajjan Jindal-controlled JSW Energyis said to have reopened talks with the Jaypee Group on acquiring three power assets. The two sides are in advanced negotiations for a deal involving two power generation units and a majority stake in a transmission joint venture for an enterprise value of about Rs 5,500 crore, two people aware of the development told ET.  The two utilities are Bina Thermal Power in Madhya Pradesh with an installed capacity of 500 MW and the 400 MW Vishnuprayag Hydro Power in Uttarakhand. Bina can be ramped up further and its capacity trebled. The third asset is a 74 per cent stake in Jaypee Powergrid, a 74:26 joint venture with Power Grid Corporation of India Ltd. All three assets are held by Jaiprakash Power Venture Ltd (JPVL), a majority owned subsidiary of Jaiprakash Associates, and an acquisition agreement could be re...

Get REITs Right Photo : Outlook Money Jun 19, 2016: Ever since the idea of Indian Real Estate Investment Trusts (REITs) emerged, the capital market regulator has been putting in efforts, including the changes proposed in the week gone by, to attract REIT proponents and to make it work. Along with SEBI, it’s time now for state governments and tax authorities to make a cohesive attempt for the same. The process, which started much ahead of SEBI notifying the regulations in 2014, is yet to see any REITs going in for listing. It’s given that any new market or instrument development will undergo its own dynamics. But, all related authorities need to move in tandem to ensure that this works. After starting in the US in 1960, REIT regime is well established now in over 30 countries including Singapore, Australia and Finland. In India, it is still work in progress and investors here may have to wait a bit more to get an opportunity to invest in real estate securities. REIT ...

Reforms making India real estate investments attractive Picture : Unitech Ltd Jun 15, 2016: The real estate sector that suffered much pain in the past two years is moving towards a more rational regime where developers, having learnt from their mistakes, now focus on project execution and delivery. This year is expected to gradually move towards better home sales and see a spurt in launches in some locations. The year will also see the sector moving from an investor-driven to an end-user driven cycle. The recent reforms in the real estate sector have made investments into this sector even more lucrative. The recent passage of the real estate bill wherein the investors can look forward to far higher transparency and ease of doing business with developers, has led to a lot of warming up of NRIs and other FDI money towards Indian real estate. Also, now with the government permitting NRI investments into domestic AIF (Alternate Investment Funds), the availability of foreign cap...

Policy amendments on REITs beneficial Jun 25, 2016: The latest policy announcements made by the government has positioned India as one of the most open economies. The various announcements convey the government’s commitment to reforms and to making India a lucrative investment destination for corporates across the globe. With these structural shifts, apart from generating new employment opportunities, the country is here to witness rapid infrastructure development in the near future. The measures announced by the government regarding FDI as well as Real Estate Investment Trusts (REITs) will facilitate investments into the country. Higher investment volumes are likely to result in greater inflow of foreign investments and encourage domestic players in sectors such as manufacturing with cutting edge technology, civil and defence aviation, food processing and retail, says Anshuman Magazine, chairman and managing director, CBRE, South Asia Pvt Ltd. The growth of these sectors will di...

The Brexit Quiver The United Kingdom became the first independent nation to break away from the European Union, a 28-member block, in a referendum held yesterday. The said referendum was conducted on last Thursday, the 23 June, to decide whether the UK should leave or remain in the European Union. Leave won by 52% to 48%, dealing the biggest blow to European efforts at greater unity since the second world war.  There are now fears the vote could set off a chain reaction of further breakaway bids by other EU members battling hostility to Brussels. There are also worries that the outcome could pave the way for the break-up of the UK itself after Scotland raised the prospect of another independence vote.  Fortunately or unfortunately, highlighting the discord, a petition demanding a second EU referendum had gathered more than 550,000 signatures late on Friday. The referendum turnout was 71.8%, with more than 30 million people voting. It was the highest turno...

The dirty secret about the Brexit vote: It's all Sham Either way the U K votes, skeptical Britain will remain as part of Europe LONDON, 21 June, 2016 — The eyes of Europe and the world are fixed this week on Britain and its referendum on whether or not to stay in the European Union. Poll numbers have caused violent swings up and down in financial markets around the world. Trillions of dollars ride on the outcome. Political leaders and financiers say the outcome will be momentous either way. A vote for Brexit could plunge the world into recession and crisis, some warn. It could cause the breakup of the European Union, say others. Or it could mark a heroic return to national independence and freedom for Britain, say still others. But here’s something that everyone in power here knows, but no one is saying in public. The whole thing is a bit of a sham. The referendum result won’t change anything legally by itself. And the consequences will be far less momentous...

Adani Enterprises Ltd: Buy CMP: Rs.77 T: Rs.87 SL: Rs.74 (no need to keep but still giving) Triggers :  Adani Enterprises is in the process of setting up a copper smelter project with a capacity of one million tonnes per annum at an investment of Rs.10,000 crore at Adani Port Special Economic Zone (APSEZ) in Gujarat. The project includes copper smelter, sulphuric acid plant, copper refinery, continuous cast copper wire rod plant, precious metal recovery plant, phosphoric acid plant, aluminium fluoride plant among others. Maharashtra, has lost 500 big and small industrial consumers due to high power tariffs over the past few years. The figures were released in a report submitted by the Maharashtra State Electricity Distribution Company Limited (MahaDiscom) to the Maharashtra Electricity Regulatory Commission (MERC). The report proposes from 19% to 27% increases in power tariff for industrial, residential, farming consumers in the next four years, ending 2019-2020. ...

Axis Bank Ltd: Buy CMP: Rs.517 Triggers :  Axis Bank has increased its stake in Max Life Insurance to 5.99 per cent. Max Financial Services  recently informed the exchanges that it sold 3.99% stake for Rs.76.56 crore to the bank. The deal values the insurance insurance company at around Rs.1,918 crore approximately. Axis Bank Ltd holds the key for the success of the HDFC Life and Max Life merger. With sales through Axis accounting for more than half of Max Life's revenue, the entire valuation is dependent on Axis continuing with the distribution deal.  Recently, HDFC Life and Max Life declared their intention to merge their businesses to create the country's biggest private sector insurer amid 'challenges' which the two companies look to overcome with a three-decade old relationship between Deepak Parekh and Max Group founder Analjit Singh behind them. A challenge before Max would be to get Axis Bank on board which is the corporate agent for Max Life and...

JSW Energy Ltd: Buy CMP: Rs.81.50 JSW Energy Ltd’s net profit for the March, 2016 quarter remained almost flat at Rs.305 crore against Rs 325 crore during the corresponding quarter of the previous year. The results were a little timid due to higher interest and depreciation expense incurred after the acquisition of hydro assets in Himachal Pradesh. The total income from operations rose by 22% to Rs.2,681 crore, against Rs.2,190 crore, driven largely by increased generation from the thermal plants and was supplemented by additional generation from the hydro plants.  JSW energy is an India based private power generation company. The company’s business segment includes power generation, power trading, power transmission, mining and equipment manufacturing.  Recently there were media reports that, the company is shortlisted to supply electricity to a Karnataka utility through a power purchase agreement (PPA). However, in a filing to BSE, the firm clarified that t...

JSW Energy Ltd: Buy CMP: Rs.81.50 JSW Energy Ltd’s net profit for the March, 2016 quarter remained almost flat at Rs.305 crore against Rs 325 crore during the corresponding quarter of the previous year. The results were a little timid due to higher interest and depreciation expense incurred after the acquisition of hydro assets in Himachal Pradesh. The total income from operations rose by 22% to Rs.2,681 crore, against Rs.2,190 crore, driven largely by increased generation from the thermal plants and was supplemented by additional generation from the hydro plants.  JSW energy is an India based private power generation company. The company’s business segment includes power generation, power trading, power transmission, mining and equipment manufacturing.  Recently there were media reports that, the company is shortlisted to supply electricity to a Karnataka utility through a power purchase agreement (PPA). However, in a filing to BSE, the firm clarified that t...

DO YOU KNOW? 1. Merger talks between Reliance Communications (R-Com) and Photo : Slide Share Aircel will be extended by a couple of weeks, as both parties are thrashing out the final contours of the deal with their bankers, reported Business Standard. On 22 May, both had decided to extend exclusive merger talks with each other by a month, a deadline that will expire on Wednesday. Lenders are putting their weight behind the merger and the State Bank of India is leading this consortium of lenders. Read more . On 8 June, Mint had reported that Reliance Communications Ltd (R-Com) and Aircel Ltd are likely to complete their merger by the end of June. The merged entity, which will be India’s third-largest telecom firm by subscribers, will save about Rs.2,500 crore a year  through synergies between the two operations. The combined entity is expected to have Ebitda (earnings before interest, tax, depreciation and amortization) of Rs.5,000-6,000 crore in the next financial year wi...

The RBI Shakes the Corporate Tree to Make it Debt Free Photo : The Economic Times Mergers and acquisitions are one of the sexiest things in business world, but it has a soft underbelly which is always fraught with risks. After years of furious expansions including leveraged buyouts of cheap foreign assets, India Inc is now not only slowing down but is also in a debt spiral; displaying leveraged balance sheets which showed a quantum surge in threat - ratio, in their own books and businesses.   A whole catalogue of reasons played havoc with corporate blueprints: Business and commodity cycle downturn, prolonged up cycle in interest rates, export markets drying up, expansion plans derailed due to environmental and forest clearances, consumption slowdown, judicial activism, witch hunt by the 5Cs — CVC, CAG, CBI, CIC and courts, policy paralysis et al. Very recently, India Ratings said in a report that almost half of the top 500 corporate borrowers in the country will...

Scheme for Sustainable Structuring of Stressed Assets Photo : Buzz Very Recently, the RBI has allowed lenders to carve out the "unsustainable" portion of their loans to troubled corporates and convert them into equity. The new restructuring scheme will help public sector banks in cleaning up large chunks of their bad loans, which amount to Rs 4.76 lakh crore. The extent of loans which cannot be supported by cash flows are termed unsustainable. This move will also aid the companies, which are reeling with large debts.  What separates this scheme from earlier steps is that instead of leaving it to banks, an overseeing committee of eminent persons will be constituted by the Indian Banks Association in consultation with the RBI to identify loans eligible for restructuring. Banks will be able to upgrade bad loans through this exercise. But they may have to take a haircut as the market value of the stressed company may be less than the value of debt that is converted. ...