SumanSpeaks: The Information Super Highway

DO YOU KNOW? Photo : Dun & Bradstreet The real estate regulatory law seeks to establish the Real Estate Regulatory Authority for regulation and promotion of the sector. It will ensure sale of plot, flats or building or project in an efficient and transparent manner as well as protect the interest of consumers. Though the real estate sector is beset with many perennial problems, like sluggish demand, liquidity crunch, regulatory pressure and customer activism, the big players like DLF Ltd (Rs.167.70), Unitech Ltd (Rs.5.17), Oberoi Realty Ltd (Rs.297.80) etc are adopting bold and innovative strategies to tide over such issues; during the lean season. The effective implementation of innovative initiatives such as Make in India, Start Up India, Housing for All, Smart Cities, Digital India and REITs will have a powerful positive impact on the growth of the real estate sector in the coming months.  Recently, there were media reports that the real estate and constr...

Winning Strokes: Think Different Shrenuj & Co Ltd hit the UC at the late trade in the BSE. According to some  unconfirmed sources, the company having a debt of around Rs.3000 Cr is looking for OTS with the lenders. Forbes India writes on 18 August, 2016: Since before recorded human history, the people of India have had an insatiable appetite for gold, treasuring it not only for its flawless natural beauty and religious significance, but also as a superb store of value.This tradition carries on today, with India’s demand for gold jewelry in 2015 reaching more than 668 tonnes, nearly a third of total global demand and second in size only to China. Demand fluctuates year-to-year depending on several factors, the two most significant being the number of Indian weddings held in the fourth quarter and the amount of crop revenue that’s generated as a result of the summer monsoon season. The wedding season is still three months away, but the June to September monsoon season is cur...

Important Photo : Economic Times (i) Adani Enterprises Ltd could be bought at Rs.75, for a short term target of Rs.81. A healthy rise in its coal mining volumes in the first quarter of current fiscal 2016-17 pushed Adani Enterprises Ltd (AEL)'s standalone net profit up by 155.99%. Moreover, a rise in the price of crude oil is positive for all the energy trading companies. Adani Enterprises is a diversified company. The company is engaged in the business of coal trading, coal mining, renewable energy among others. Less than a year after the coal industry was declared to be in terminal decline, the fossil fuel has staged its steepest price rally in over half a decade, making it one of the hottest major commodities.   Cargo prices for Australian thermal coal from its Newcastle terminal, seen as the Asian benchmark, have soared over 35 percent since mid-June to more than one-year highs of almost $70 a tonne, pushed by surprise increases in Chinese imports. (ii) Shr...

Unitech Ltd: Media Enacted Fiasco CMP: Rs.5.10 Today morning most of the mainstream media came out with this kind of news bulletins: Unitech tells SC it doesn't have money to refund buyers. Court seeks list of buyers who want refund, during next hearing scheduled on Aug 17 - ANI. No money to refund buyers, would have finished project if we had: Unitech in SC, writes the Hindustan Times. Unitech tells the Supreme Court that it doesn’t have funds to pay back the buyers of its two projects in Noida and Gurgaon - - Live Mint. Supreme Court directs Unitech to refund home buyers of Noida project, housing firm expresses inability - - Zee News. Real estate giant Unitech Ltd told the Supreme Court on Friday that it was not in a position to refund money to home buyers who had invested in its projects in Noida and Gurgaon but not got possession of their flats because of delays in construction -- The Times of India.   These kinds of one / two liners, created a havoc in the sha...

Important (i) Speculative call Buy Shrenuj & Co Ltd at Rs.2.50, in the NSE.....The short term target could be Rs.6-7. (ii) Unitech Ltd (Rs.5.15) has over-reacted to a series of negative news; so wait for a couple of days for the things to become normal once again. Meanwhile, home sales in India's top eight cities grew 9% in the quarter to June compared to that a year ago, marking the third straight quarter of expansion and indicating green shoots in a market emerging from a prolonged downturn, according to property research firm Liases Foras.  The growth was led by cities including Ahmedabad, Hyderabad and Kolkata, where Home sales went up 20%. The national capital region, which includes the large markets of Gurgaon and Noida, saw a 12% increase in home sales while Mumbai recorded a modest 2% growth. The scrip should give a good return from the CMP of Rs.5.15 (but then you have to wait). (iii) Reliance Communications Ltd (Rs.48) and Reliance Defence and Engineerin...

Adani Enterprise Ltd: Buy CMP: Rs.75 Adani Ports and SEZ Ltd (Rs.268.90) is moving up, after the African deal. The call on Adami Ports Ltd was given at around Rs.217, the stock has today made a high of Rs.270, to reach my 2nd target.  Now, this effect is soon to spread to other Adani Group companies like Adani Enterprises Ltd (Rs75) and Adani Power Ltd (Rs.26.90). Moreover, the crude oil prices have started to move up in the international markets - - this is going have a positive effect on coal prices. Adani's coal mining volume grew by 122% to 2.1 million metric tonnes (MMT) in Q1FY17.  Ameet Desai, CFO Adani Group and Executive Director of Adani Enterprises said, "We maintained our earnings growth trajectory during this quarter. This is testimony of intrinsic strength of our business portfolio. The government spending on infrastructure and other development projects, well progressing monsoon and pay revisions shall drive an uptick in the investment cycle and...

Unitech Ltd: Buy CMP: Rs.6.20 The Goods and Services Tax (GST), cleared by the Rajya Sabha, is a comprehensive indirect tax reform, which will be implemented throughout India and has broad implications on all sectors; including the real estate. The implementation of GST can bring transparency in the construction and real estate industry, as per some property consultants. Thus, GST is likely to bring about a major change in real estate sector at certain layers, but it all depends on the nature of transaction and rate of tax.  The GST bill would benefit the real estate sector by creating a uniform tax structure. This would lead to better tax compliance by the builders and developers. Under GST regime, realtors see lesser tax burden on raw materials such as cement and steel. This will result in lower construction costs for developers. The stakeholders are hoping for a positive impact of GST with no high fixed percentage tax which could boost the real estate market. ...

Important 1. Buy Adani Enterprise Ltd at Rs.76.50, for a short term target of Rs.81. If Adani Port and Sez Ltd (Rs.231) is a beneficiary of GST, then  its effects should also come to Adani Enterprise Ltd (Rs.76.50). The scrip seems to have formed a bottom.  2. Those who are holding Reliance Communications Ltd (Rs.50.35), can continue to hold the same with a SL of Rs.46. The company should gain from the launch of Reliance Jio, but the problem is that there is no fresh news regarding its merger with Aircel, which is actually spooking the shareholders.  3. The share of Reliance Infrastructure Ltd (Rs.593) have made Rs.596.25, intra-day. As long as Rs.572, is not broken on the downside, the traders can continue to hold the shares with a short term target of Rs.605.  4. Reliance Defence and Engineering Ltd should should gain due to lower logistic costs and lower cost of building materials like Steel and Cement, due to GST effect. One should add th...

Idea Cellular Ltd: Buy CMP: Rs.103.50 Target: Rs.111 SL: Rs.99 One of the major drawbacks of the GST regime could be the direct spike in the service tax rate from 14% to 20-25%.  Being a regressive taxation system that India follows, the burn of increased tax rates will directly be faced by the end consumers unless the credit is passed on to the next in the business chain.  Now given the importance of communication services in our lives, they could easily qualify as "Necesary Services". Thus it is expected that the government of India will consider allotting telecom services under the lower rates category and in turn, charged a reduced GST rate reserved only for Necessity Goods. Moreover,  Deutsche Bank has given a buy on  July 4, 2016 on Idea Cellular, with a target price of Rs.137.  The report says:  Idea expects the data market to be driven by subscriber growth rather than ARPU (average revenue per user), similar to the trajectory of ...

Suzlon Energy Ltd: Buy CMP: Rs.17.15 Introduction :  The Suzlon Group is one of the leading renewable energy solutions providers in the world with an international presence across 19 countries. The company has recently forayed into the solar space. Suzlon Ltd remains involved with the engineering, procurement and construction (EPC) work Triggers : (i) Suzlon Energy Ltd's consolidated net loss narrowed down to Rs.270.55 crore for the quarter ended March 31, on higher sales and lower expenses. The company had posted a consolidated net loss after share in minority interest of Rs.1,212.06 crore in the year-ago period. For the entire 2015-16 fiscal, the company posted a net profit of Rs.482.59 crore, against a net loss of Rs.9,157.69 crore in the previous financial year. Its FY16 revenue moved up by 69 per cent to Rs 8,259 crore. The company's annual sales volume was of 1,131 MW, had Y-o-Y growth of 149% and its FY16 order book stood at 1,243 MW valued at Rs.7,98...

JSW Energy Ltd: Buy CMP: Rs.81 Recently Jaiprakash Power Ventures announced to sell 500 megawatt thermal power plant in central India to JSW Energy Ltd for Rs.27 bln ($401.8 mln) including debt. The analysts at Ambit Capital expect the deal to be value-accretive for JSW's shareholders, if it fructifies. Analysts say JSW Energy may put its plans to buy Monnet Ispat And Energy Ltd's 1,050 MW power plant on the back burner given rise in leverage - - which is again positive development for the share holders. Meanwhile,  JSW Energy Ltd got fair trade regulator CCI's approval to acquire 1,000 MW power plant in Chhattisgarh from Jindal Steel and Power Ltd (JSPL). Under the deal announced in May, the Sajjan Jindal-led firm was to purchase the power plant in Raigarh for Rs 6,500 crore with certain conditions. The enterprise value of the deal is Rs.4,000 crore plus net current assets and "which will be increased to Rs.6,500 crore plus net current assets, if certain...

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

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

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

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

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

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

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