Bharat Heavy Electricals Ltd

CMP: Rs.139

Photo: The Economic Times

State-run Bharat Heavy Electricals (Bhel) is an integrated power plant equipment manufacturer. It is one of the largest engineering and manufacturing companies in India engaged in the design, engineering, manufacture, construction, testing, commissioning and servicing of a wide range of products and services for core sectors of the economy, viz. power, transmission, industry, railways, renewable energy, oil & gas, water and defence. The Government of India currently holds 63.06% stake in the company as per the shareholding pattern as on 30 June 2016.

Bharat Heavy Electricals (Bhel) last month, successfully commissioned the third unit of the 160 megawatts (MW) Teesta Low Dam Hydro Electric Project (HEP) Stage-IV in West Bengal. The greenfield project located in Darjeeling district of West Bengal, Teesta HEP is being set up by National Hydroelectric Power Corporation (NHPC), on the River Teesta. The fourth and final unit of the project is also in advanced stages of execution. The order for electrical & mechanical (E&M) works for four units of 40 MW each was placed on Bhel by NHPC.

BHEL is presently executing hydro electric projects of around 3,300 MW in the country which are under various stage of implementation. Other projects of NHPC currently under execution by BHEL are the 800 MW Parbati HEP Stage – II and 330 MW Kishanganga HEP. In West Bengal, Bhel is also executing the 120 MW Rammam Stage-III hydro-electric project of NTPC. Significantly, more than 500 hydro generating sets with a cumulative capacity of more than 29,000 MW of various ratings have been contracted on Bhel in India and abroad. Of this, equipment for about 5,700 MW generating capacity has been contracted outside India.

Key Statistics:

(i) Face Value of the shares: Rs.2

(ii) Book Value of the shares: Rs.136.10

(iii) Enterprise Value/Revenue (ttm): 0.94

(iv) Total Debt (mrq): Rs.1.67 billion (Rs.167 Cr)

(v) Total Cash Per Share (mrq): Rs.42.20

(vi) Total Cash (mrq): 103.29 billion (Rs.10329 Cr)

BHEL shares slumped nearly 4% on Tuesday amid speculation that the state-run power equipment manufacturer may lose a major power plant order from state-run utility NTPC. According to Macquarie, NTPC is re-visiting its tender for four power plants of 1000MW capacity each for its Pudimadaka ultra mega power project. The tender was earlier awarded to BHEL. However, what is interesting to note is that the the order accounts for ONLY around 4% of BHEL's total order book, said Macquarie - - therefore, if at all such event takes place, its effect will be minimal.

The R&D department of BHEL-HPVP is currently engaged in indigenous development of four new types of compact heat exchangers for the Mk2 version of the Tejas aircraft. Indian Navy is also planning to order another 40 sets of Tejas heat exchangers in the coming years.

The country’s nuclear power programmes and the revised emission norms for coal-based thermal power plants offered considerable business opportunity for Bharat Heavy Electricals Limited. BHEL Corporation had achieved a record project execution during the previous fiscal despite the slowdown in the power sector and maintained its leadership with 74% market share.

The Welding Research Institute has won Skoch BSE award for technology development and has also won National Safety Award along with Seamless Steel Tube Plant and Fossil Fuel Development Complex. Buy the shares of BHEL at the CMP of Rs.139, for short term targets of Rs.143 - 147. 

Do you know?

Rolta Power Pvt. Ltd. is part of the more-than-three-decades-old Rolta Group business interests in Real estate, investments and IT. Rolta Power is headquartered in Mumbai and is a new entrant in the Rolta Group fully owned by Rolta Pvt. Ltd.

Recently, Rolta Power Pvt. Ltd. and China-based Zhenfa New Energy Science and Technology Co. Ltd. has signed an agreement to build solar parks in India, targeting a capacity of 2 GigaWatt by 2020.

Reliance Defence and Engineering Ltd

CMP: Rs.66.10

Reliance Defence & Engineering formerly Pipavav Defence and Offshore Engineering Company is into building defence warships and is an integrated defence, heavy engineering and offshore oil & gas assets' construction company. Reliance Infrastructure together with its wholly owned subsidiary Reliance Defence Systems ealier completed the acquisition of erstwhile Pipavav Defence. The mandatory open offer to acquire up to 26% shares from the public shareholders of Pipavav Defence was at a price of Rs 66 per share, which is close to the CMP of Rs.66.10.  

The erstwhile, Pipavav Shipyard was the first corporate shipyard to be granted clearance to build warships and other vessels for the Indian Navy, though the initial licence limits this to up to 5 ships per year. 

On March 26, 2015, the Company successfully implemented one of the biggest debt restructurings in India. Pipavav raised additional debt of INR 5,500 crore resulting in total debt line in excess of INR 12,000 crore (about USD 2 billion). The Company has a total enterprise value of USD 2.7 to 2.9 billion (Rs.19461.9 crores).

Pipavav Shipyard is one of the largest and leading shipbuilding company in India, spread over 500 acres (2.0 km2). It has access to over 720 meters of exclusive waterfront.

Key Statistics: 

(i) Face Value of the shares: Rs.10.

(ii) The Book Value of the shares: Rs.27.50

(iii) 50-Day Moving Average: Rs.64.93

(iv) 200-Day Moving Average: Rs. 64.27

(v) Market Cap: Rs.4,855.28 at the CMP of Rs.66.10

(vi) Industry P/E: 34.37

(vii) 52 Week High/ Low: Rs.72.85/ Rs.54.30

(viii) Industry P/E: 34.37, indicating the high growth of the sector. 

Buy the shares of the Reliance Defence and Engineering Ltd at the CMP of Rs.66.10, for a short term target of Rs.72-75.

Some Encouraging Points Concerning the NDA government

(i) Foreign direct investment during October 2014 and May this year grew 46 per cent to USD 61.58 billion after the launch of Make in India programme. To further boost investment environment and bring in foreign capital, the NDA government is taking various measures like opening up FDI in many sectors, carrying out FDI related reforms and improving ease of doing business.

(ii) Sectors that attracted maximum FDI include services, trading, automobile and power. 

(iii) The NDA government has approved as many as 259 proposals for setting up of special economic zones relating to IT/ITeS and electronic hardware sector in many parts of the country. During the last four years and the current financial year (up to July 15), the Board of Approval, under the ministry, gave more time to as many as 139 developers of SEZs, including the IT/ITeS sector, to complete their projects. 

(iv) Some of the biggest global investors such as Morgan Stanley, Macquarie and Ivanhoe Cambridge (an arm of Canada's CDPQ) are re-entering Indian real estate after a long gap. These three investors are looking to forge joint ventures worth Rs.4,000 crore. These investors, along with others such as Goldman Sachs, Citigroup, Merrill Lynch, Credit Suisse, Lehman Brothers and Deutsche Bank, had either exited Indian real estate or became dormant after the global financial crisis of 2008, as they sought to clean their balance sheets and concentrate on home markets.

Adani Enterprises Ltd

CMP: Rs.75.50

The Adani Group has grown to become a global integrated infrastructure player with businesses in key industry verticals - resources, logistics and energy. The integrated model is well adapted to the infrastructure challenges of the emerging economies.

The company said that its coal business, ports and power businesses continue to scale up steadily. Further, improved utilization of operational capacity has resulted in robust overall performance.

Key Statistics: 
Face Value of the shares: Re.1
Book Value of the shares: Rs.121.98
Enterprise Value (22-Aug-2016): Rs.269.37 billion (Rs.26,937 Cr) as against a market cap of only Rs.8309.07 Cr
P/E: 8.11 against the industry P/E of 18.96
EPS: Rs.9.32
Dividend: 40%
52-week low/high: Rs.58.45/Rs.101.90

Adani Enterprises Ltd, the flagship company of Adani group, reported a flat consolidated net profit of Rs.363.71 crore for the quarter ended June 30, 2016.

The company had posted a consolidated net profit after taxes, minority interest and share of profit of joint ventures and associates of Rs.363.57 crore in the year-ago period.

Net sales in April-June quarter were also almost flat at Rs 8,884.74 crore as against Rs 8,828.81 crore in corresponding period of FY16. The total expenses during the quarter was at Rs 8,468.68 crore, over Rs 8,393.11 crore in the year-ago period.

"Adani Enterprises continue to focus on the sectors of national interest through presence in critical and often under penetrated spaces. The investment climate in the country is building up and the intent of Government to pursue economic reforms is clearly visible. We remain committed to our investment plans in Renewables and domestic Mining sectors as they align with national priorities," Adani Group Chairman Gautam Adani said. Ameet Desai, CFO Adani Group and Executive Director, 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 energy demand leading to our improved performance, Desai said.

"In Q1FY17, Coal Mining volume grew by 122 percent to 2.1 MMT (Million Metric Tonnes) and in Q1FY17, City Gas Distribution volume is 97 MMSCM," the statement said. Adani group is one of India's leading business houses with revenue of over USD 10 billion.

Adani Enterprises Ltd, recently incorporated a subsidiary, Korba Clean Coal Pvt Ltd for carrying on the business of coal washing. 

There were also news reports that the Queensland Federal Court said there were no grounds for a judicial review of the decision to grant the mining lease to the MNC.

Buy the shares of the company at Rs.75.50 for a short term target of Rs.83-85. The stock is above its 150D SMA. If it is able to clear the resistance around Rs.79-80, then we can look for ward for targets of Rs.87-91.

Moreover, at present the major indices are going to remain flat, but action will be seen in the beaten down counters. Therefore, don't look at the indices for your buy and sell decision. 

Adani Enterprises Ltd

CMP: Rs.75.50

The Adani Group has grown to become a global integrated infrastructure player with businesses in key industry verticals - resources, logistics and energy. The integrated model is well adapted to the infrastructure challenges of the emerging economies.

The company said that its coal business, ports and power businesses continue to scale up steadily. Further, improved utilization of operational capacity has resulted in robust overall performance.

Key Statistics: 
Face Value of the shares: Re.1
Book Value of the shares: Rs.121.98
Enterprise Value (22-Aug-2016): Rs.269.37 billion (Rs.26,937 Cr) as against a market cap of only Rs.8309.07 Cr
P/E: 8.11 against the industry P/E of 18.96
EPS: Rs.9.32
Dividend: 40%
52-week low/high: Rs.58.45/Rs.101.90

Adani Enterprises Ltd, the flagship company of Adani group, reported a flat consolidated net profit of Rs.363.71 crore for the quarter ended June 30, 2016.

The company had posted a consolidated net profit after taxes, minority interest and share of profit of joint ventures and associates of Rs.363.57 crore in the year-ago period.

Net sales in April-June quarter were also almost flat at Rs 8,884.74 crore as against Rs 8,828.81 crore in corresponding period of FY16. The total expenses during the quarter was at Rs 8,468.68 crore, over Rs 8,393.11 crore in the year-ago period.

"Adani Enterprises continue to focus on the sectors of national interest through presence in critical and often under penetrated spaces. The investment climate in the country is building up and the intent of Government to pursue economic reforms is clearly visible. We remain committed to our investment plans in Renewables and domestic Mining sectors as they align with national priorities," Adani Group Chairman Gautam Adani said. Ameet Desai, CFO Adani Group and Executive Director, 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 energy demand leading to our improved performance, Desai said.

"In Q1FY17, Coal Mining volume grew by 122 percent to 2.1 MMT (Million Metric Tonnes) and in Q1FY17, City Gas Distribution volume is 97 MMSCM," the statement said. Adani group is one of India's leading business houses with revenue of over USD 10 billion.

Buy the shares of the company at Rs.75.50 for a short term target of Rs.83-85. The stock is above its 150D SMA. If it is able to clear the resistance around Rs.79-80, then we can look for ward for targets of Rs.87-91.

Moreover, at present the major indices are going to remain flat, but action will be seen in the beaten down counters. Therefore, don't look at the indices for your buy and sell decision. 

Shrenuj & Co Ltd

CMP: Rs.2.17 (BSE)

Photo: India Today

Shrenuj & Company Ltd manufactures and markets high quality polished diamonds and diamond jewellery products. The company in June, 2016 said that as a part of strategy, it has undertaken an exercise to rationalise its manpower across all levels. As a result, some of employees have started tendering their resignations, it said. Shrenuj said it is putting its every effort to retain the best talent in the organisation. Alternative strategies are being considered to overcome the current challenges, the company said.

Shrenuj & Company reported net loss of Rs.38.32 crore in Q4 March 2016, compared with net profit of Rs.2.50 crore in Q4 March 2015. Net sales declined 62.9% to Rs.304.16 crore in Q4 March 2016 over Q4 March 2015. 

Some key statistics: 

(i) The Book Value of the shares of the company is Rs.47.38

(ii) The dividend yield per share at the CMP of Rs.2.17 is 9.22%.

(iii) Face value per share is Rs 2. 

(iv) 52-week Change or by how much the scrip fell: -96.32% (considering the 52-week low in NSE, of Rs.2.10)

(v) 50-Day Moving Average: Rs.3.15

(vi) 200-Day Moving Average: Rs.6.41

(vii) Float: 79.41 million

(ix) The Enterprise Value of Shrenuj & Co as of 20-Aug-2016 is Rs.34.79 billion (Rs.3479 Cr). This is against a market cap of only Rs.41.86 Cr.

(x) The small-cap company has equity capital of Rs 38.58 crore. 

There is some good news for the cash-strapped diamond industry in Surat and Mumbai. The midstream diamond and jewellery manufacturers are set to gain access to more than a billion dollars in loans from a New York-based lender.

The Excelsior Capital Ventures, founded by an Indian will start engaging with borrowers to pump in at least $1.5 billion by 2019. 

The target for the shares of Shrenuj & Co Ltd (BSE: Rs.2.17; NSE: Rs.2.25) in the medium term is Rs.15-17. However, if the diamond market improves or NDA government takes more pro-active measures, prices of Rs.22-27 cannot be ruled out.

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 construction sector in India is likely to be the third largest globally by 2030, contributing over 15% to Indian GDP and emerging as the largest employer in India providing employment opportunities to over 75 million people.

A background paper by KPMG in India and the National Real Estate Development Council (NAREDCO) highlights that India's urban population is forecast to increase by about 40% from 420 million in 2015 to over 580 million by 2030. The government has launched several large programmes (such as Smart Cities, Housing for All, AMRUT, HRIDAY etc.) along with policy support (Real Estate Act, REITs, GST etc.) to accommodate such a vast population. According to the paper, nearly 110 million houses would be required by 2022 alone in urban as well as rural India to provide housing to all citizens. This includes the current shortage of over 60 million houses, out of which around 20 million exist in urban areas. As per the paper, there are a number of solid infrastructure projects in the pipeline. These include 432 projects worth Rs 6.5 trillion for roads, more than 400 projects worth Rs 6 trillion in railways, 70 projects worth Rs 670 billion for the development of airports and 75 projects worth Rs 551 billion for ports.

Most analysts believe that Real Estate (Regulation & Development) Act, 2016, will ensure transparency, complete disclosures and clarity to buyers of real estate products. This is expected to weed out smaller, me-too players of the sector, bringing down the competition. 

Moreover, the rental business is expected to continue strengthening in prime cities; for quality office spaces, group housing residential complexes and IT/SEZs. In this context it is pertinent to mention here that DLF Ltd, Unitech Ltd, Oberoi Realty Ltd, Ahluwalia Contracts Ltd (Rs.301.65), etc are coming  up with some world-class housing as well as innovative and technologically advanced urban infrastructure; in future.

Reliance Securities has given a Buy Call on Ahluwalia Contracts (India) Ltd. with a target price of Rs.345. Time period given by the analyst is Medium Term.

With improvement in the economic scenario in FY16, the construction sector is seeing huge investments from GoI and private players. Overall, the domestic real estate/construction industry is poised to grow exponentially, backed by massive infrastructure building programmes initiated by GoI. Increased GoI focus on infrastructural development such as construction of roads and bridges and power projects is a major growth driver for this industry. In addition, mounting demand from increase in population will drive the need for increased capacity in housing, transport and utilities sectors.

The analysts feel that the real impact of latest FDI liberalisation measures on foreign investments in Indian real estate will be reflected over a period of time.  100% FDI under automatic route in completed projects for operation and management of townships, malls/shopping complexes and business centres is a significant step taken by the Government. Also, Quick implementation of the Real Estate Regulatory Bill (RERA) will support the realty market to attract FDI. Sources say, that the Government of India is considering a reduced lock-in-period applicable for FDI investments from 3 years currently to 1-2 years to further enhance investor interests. 

Unitech Ltd is passing through a bad phase due to wrong approach towards certain crucial matters, since the time they decided to venture into an unrelated business segment, wireless. Besides, this their employment of two lawyers having Congress (INC) Background, is also foolhardy. Not only that, the arguments of the two reputed layers, having strong political connections was pedestrian (as was reported in the media) during the last two Supreme Court hearings. The company needs to employ layers, who are close to the ruling dispensation and at same time not too costly - - because this will add up to the legal expenses of the company depleting shareholders' wealth. Also, their habit of going to court at the fall of a hat is not proper, when issues such as consumer activism is concerned. 

Having said, this I am expecting the share price of Unitech Ltd (Rs.5.17) to touch Rs.9-10, within the next 60 days, as the construction work commences, post monsoon and festival season kicks in from next month....

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 currently in full swing.

During an average monsoon season, the Indian subcontinent can receive close to 80 percent of its total annual precipitation. Most reports so far this year indicate surplus rainfall, with 12 inches being dumped nationwide last month alone, the fifth best month since the 1990s. This should come as welcome relief to Indian farmers, whose incomes have been squeezed by two long years of drought. It’s also good news for gold consumption. 

Moreover, if the WPI and CPI are rising, then this gives further ammunition for the gold bulls to be optimistic.  The manufacturers and diamond dealers in India's diamond industry are hoping business picks up from September, as the festive season kicks in. They are also placing added importance on holiday season this year, as the industry is expected to ramp up marketing for diamond jewellery. Shrenuj & Co Ltd is in the Jewelry business -- cutting and polishing of diamonds; trading in gold and platinum jewelry. Moreover, there were media reports some months back that Shrenuj & Co Ltd has taken a decision to “rationalize” its workforce after annual revenue slumped 34% and the company swung to a loss. The medium term target comes around Rs.15-17. Therefore, keep holding the shares as a series of UCs starts. 

The shares of Reliance Communications Ltd (Rs.50.20) is not going anywhere since the last few months, due to uncertainly prevailing regarding merger issue. There were reports in a section of the press that the potential merger of one of India’s 4th biggest telecom operators Reliance Communications (RCom) and Sistema Shyam TeleServices (SSTL) owned by Russian diversified holding AFK Sistema may be stalled with the transaction terms deteriorating, documents released by AFK revealed. In such a condition, I would suggest (.......for the Paid Members and for those who are trading through my associate brokerage house only).......

Reliance Defence and Engineering Ltd rose to Rs.67.40 intra-day before closing at Rs.66.65 in the BSE. The candle stick chart pattern and moving average crossover, indicates, that the stock could touch Rs.71-72, in the short term and in the medium term Rs.84-91. The company is scheduled to have AGM on  August 20, 2016. Turning profitable, Reliance Defence and Engineering today posted a net profit of Rs.102.4 crore for the quarter ended on March 31, 2016, largely on account of increase in deferred tax credit. The company had reported a net loss of Rs.158.28 crore in the same quarter of 2014-15. 

Those who are holding Manappuram Finance Ltd (Rs.87.40) since 27-28 levels are suggesting to book complete profits and then again wait for the dips to enter. Also, through who have almost tripled their wealth, by investing in the shares of Vedanta Ltd (Rs.179.05) can continue to hold the scrip with a SL of Rs.172.

Those who are holding Adani Enterprises Ltd (Rs.77.05) can continue to add the scrip on declines. The next targets are Rs.81-82.

The real estate giant Unitech Ltd (Rs.5.17) is expected to show better fundamentals post monsoon. The share price of the company is trading dirt cheap at the CMP, considering the intrinsic worth. The scrip should be added on all declines. The real estate and construction sector in India is expected to be the third largest globally by 2030, contributing over 15% to Indian GDP and emerging as the largest employer in India providing employment opportunities to over 75 million people.A recent background paper by KPMG in India and the National Real Estate Development Council (NAREDCO) provides an overview of the key programmes launched by the central government in the recent past to address the key challenges in urbanisation and the real estate sector, and throws light on the policy reforms undertaken by government to address these concerns.

Join either my Premium Services or my brokerage firm, to make up for all the losses, you made in the markets. Those who are having a portfolio size of only Rs.1-2 lakhs (especial offer till Deepawali/Kali Pooja) will get my Premium Service, free of charge, till they trade through my recommended brokerage house.  You are already trading through a brokerage house, then what is the harm to shift to my associate broker, if you are really my well-wisher? Your actions should define you, rather than sweet words. 

Moreover, those who have applied for the demat/trading account in my associate brokerage house/s, kindly give me a couple of days to streamline the operations. Meanwhile, those investors, whose accounts have become active are requested to deposit the amount for trading in the company's account, so that we can start from next week. 

Those who are NOT registered with me, kindly DON'T send me any mail or call me in future, as I am too BUSY to keep replying to FREE MEMBERS, through e-mails or mobile, for eternity. This affects my service to the Premium Members.....since my 1st priority is to serve them...The point is that, there cannot be a one-sided traffic - - the gestures should be reciprocal. 

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) Shrenuj & Co Ltd (Rs..208) could be accumulated only by high risk taking investors. The stock could give stupendous returns over a period. “In its apparent over-enthusiasm, ICICI Bank Limited approached the DRT-III [debt recovery tribunal] in India and sought an ‘ex-parte’ order for attaching all the inventories in India and placing restrictions on the international movement of the promoters,” Shreyas Doshi, chairman of Shrenuj, said. “This order was sought on frivolous grounds, far from the factual situation.” He stressed the bank’s action will not impact the company’s current operations but it does jeopardize the rights of the other 18 banks who form the lending consortium in India. “The company is in the process of seeking a legal opinion to challenge this ex-parte decision of DRT-III and take remedial measures,” Doshi said. The news followed Shrenuj’s decision to “rationalize” its workforce after annual revenue slumped 34 percent and the company swung to a loss. Shrenuj & Co Ltd is in the Jewelry business -- cutting and polishing of diamonds; trading in gold and platinum jewelry. 

(iii) This is August month and hence we could expect some positive news from the management of Reliance Communications Ltd (Rs.50.20). Stay put.

(iv) Reliance Defence and Engineers Ltd (Pipavav Defence) is slowly towards Rs.67. Once this mark is crossed we can look for targets of Rs.73. 

(v) Idea Cellular Ltd can be accumulated at Rs.94, with a SL of Rs.92, for a short term target of Rs.97. The telecom stocks will do well in future, as the number of major players gets reduced and indian mobile density increases. 

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 share price, the moment the market opened today after a long holiday - - one time hitting the Lower Circuits at Rs.4.92, in the BSE. However, continuous follow up buying by prudent - long - term - investors, lifted the share price a bit during the day,  eventually closing at Rs.5.11, down 16.91% in the BSE. The point to be noted here that, the percentage of Deliverable Quantity to Traded Quantity was whooping at 64.88%;

The company came out with a superb clarification which almost nullified all the above claims, soothing the ruffled hearts of the battered investors. It said: 

Unitech's Counsels statement before Honourable Supreme Court has been misquoted and is not correct. His contention was that the money received from customers has already been invested in land cost and building structures constructed at project site, and therefore, it is not feasible to refund money to the customers.

In fact, in the larger interest, the refund amounts being claimed by the customers can be better utilized for construction and completion of pending projects. The journalists has not appreciated this difference in the argument.

Due to declining real estate prices, some customers are seeking refund of money with interest even if property is ready for possession.

In this case also, the customers had agreed before the Honourable Consumers Forum to take possession of property with 12% interest for delayed period, but now seeking refund of their money with interest before Honourable Supreme Court.

Now, you tell me who will be responsible for such mis-reporting (or should we say motivated reporting?), which led to the destruction of shareholders' wealth in matter of few hours? The Regulators should take note of the same and warn such media houses, which presents simple news in fabricated forms. 

Anyway, if tomorrow (17 August, 2016) , the two-judge bench gives an adverse judgement against the company, I feel Unitech Ltd might go for higher Supreme Court benches (Special Leave petition or SLP); as the current demand from the consumers (buyers) seems to unjustified, in view of the fact that the customers had earlier agreed before the Honourable Consumers Forum to take possession of property with 12% interest for delayed period. 

Unitech Ltd has 300 million (30 crore) sq.ft of land, spread out across India. Now, we can easily find out the valuation of the land parcels if we only take around Rs.2000 per sq.ft. Its debt is around Rs.7200 Cr, which is nothing as compared to its assets. 

I am therefore, expecting the share price of Unitech Ltd (Rs.5.11) to again head towards Rs.7-9, in the August-October rally - - stay put.  

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 Engineering Ltd (Rs.63.30), should be accumulated for the long term. There is no need to place Stop Losses in these two A-grade scrip.

(iv) Karuturi Global Ltd has broken an important support at Rs.1.50. If it breaks Rs.1.40, then exit the counter.

(v) Adani Ports and SEZ Ltd (Rs.272.50) reached all my short term targets today. So book at least some profits in the counter.

(vi) Gitanjali Gems Ltd (Rs.46) is up even today. It seems the stock would continue to make new 52-week highs in the coming days. Stay invested.

(vi) The scrip of Syncom Formulations Ltd (Rs.2.51) has broken a major support. Hence exit the counter and enter again when it closes above Rs.2.60. 

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 energy demand leading to our improved performance.”

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 per cent, as per its BSE filing. However, the flagship company of the over $10 billion conglomerate Adani Group registered an eight per cent decline in its standalone total income for the quarter.

The company posted a standalone net profit of Rs 196.91 crore for the quarter ended June 30, 2016 as compared to Rs 76.92 crore for the quarter ended June 30, 2015. However, total standalone income of the company decreased to Rs 2,371.55 crore for the quarter ended June 30, 2016 from Rs 2,577.97 crore for the quarter ended June 30, 2015.

On the consolidated basis, AEL saw an almost muted growth of 0.03 per cent in its net profit after taxes, minority interest and share of profit of associates for Q1 of FY17 at Rs 363.71 crore. As against this, the company had seen a consolidated net profit of Rs 363.57 crore for the corresponding period last year. Consolidated total income too grew marginally by 0.38 per cent, up from Rs 9144.25 crore for the quarter ended June 30, 2015 to Rs 9179.85 crore in the said quarter this year.


The first quarter of FY17 saw AEL extracting and supplying washed coal of 2.13 million metric tonnes (MMT) to RRVUNL, up from 0.96 MMT in Q1 of FY'16, a rise of 122 per cent. At Parsa Kente coal block in Mine Development and Operations (MDO) business, the company is ramping up its extractive capacity. On the other hand, in terms of overseas mining, AEL extracted 1.22 MMT of coal in Q1 FY17 while it expects to extract about 5.5 MMT of coal in the current fiscal year.

According to Gautam Adani, Chairman Adani Group, the group company remains committed to its investment plans in renewables and domestic mining sectors. "Adani Enterprises continue to focus on the sectors of national interest through presence in critical and often under penetrated spaces. The investment climate in the country is building up and the intent of government to pursue economic reforms is clearly visible," Adani said.

Going forward, the company is hoping for improved performance on the back of an uptick in investment cycle and energy demand, said Ameet Desaid, chief financial officer, Adani Group and executive director, AEL. "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 energy demand leading to our improved performance," he said.

The company registered city gas distribution volume of 97 mmscm in the first quarter of the current fiscal.

Meanwhile, under its renewable business, the company has a constructed solar power generation capacity of 648 Mw in Tamil Nadu, while it has also forayed into wind power with the commissioning of a 12 Mw project in Madhya Pradesh. Moreover, an additional pipeline of 1468 Mw of wind and solar power projects are under various stages of implementation across the country.

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.

One thing is now almost certain: if the GST Act is implemented in the present form, it would increase the cost of real estate; which means those properties, which have already been constructed could see a positive domino effect on their prices - - helping companies like Unitech Ltd.

However, having said this, it is pertinent to mention here that the direct impact of GST on real estate will depend on whether the final GST rate is more or less than the taxes paid currently. Also, the roll out of the GST will take some more time and it is expected that the NDA governments will take due care of of any problem arising out of its implementation in the initial period; probably till one year. 

Buy Unitech Ltd at Rs.6.20, for a short term target of Rs.7.20. The Q1FY17, results of the company would be along the expected lines and the implementation of the GST (whether in its present form or a modified version) is a future event, so not much worry. 

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 the scrip on all declines for a short term target of Rs.73.

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 the voice market. There is space for Reliance Jio without affecting the revenue shares of the incumbents if sector growth remains at the current level of 8-9%. Idea expects significant availability of spectrum in the 1800Mhz band in the medium term and intends to buy spectrum largely on a ‘just-in-time’ basis.

Now I feel the rally will be more broad based, as the passage of the GST bill, is almost certain in this monsoon session. Or in other words, the rally in the large caps, will be accompanied by SHARP RALLIES in the SMALL and MID CAP space. 

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.7,989 crore. The Consolidated Net Debt (excluding FCCB) during FY16 was at Rs.8,452 crore, down from Rs 14,570 crores in FY'15.

Tulsi R Tanti, Chairman and Managing Director, Suzlon, said, "We are back to profit, our commissioning increased by more than 100% and we are confident of maintaining the growth with strong focus on execution. The Indian market is expected to increase by 30% in FY17, and Suzlon will continue to outpace the industry."

"Globally, the demand for renewables is growing with a record 64 GW installation and an investment of USD 329 billion during calendar year 2015. The demand for clean, sustainable and affordable power will continue especially in emerging markets," Tanti said.

(ii) Suzlon has its research and development centres in Germany, Denmark, the Netherlands and India and has recently opened a Blade Science Center in Vejle in Denmark. The Pune-headquartered group has installations of around 15.5 giga watt (GW) spread across 17 countries, of which India accounts for the lion’s share of about 9.5 GW.

(iii) Renewable sector, currently a beneficiary of several indirect tax exemptions, may be a big loser if goods and service tax (GST) is implemented since the bill proposes to revoke most of these exemptions, according to Bridge to India. Bridge to India, a renewable analyst house, feels if GST is implemented, input cost or tariff will rise by anything between 12-20% in the sector and this would wipe out the pricing gains of the past two years. Costs would rise because at present there is no import duty or indirect tax is applicable on solar modules but under the new regime, GST of 17-20% would be payable thus increasing costs.

However, the Ministry of New and Renewable Energy (MNRE) is in dialogue with the Department of Revenue to ensure that renewable power equipment is exempted from GST. MNRE is believed to be pushing for a waiver from GST arguing that a sudden increase in cost would lead to disruption in the sector and delay implementation of policy targets.

Bridge to India is of the opinion that the solar sector has a strong case for an exemption. The government has put strong focus on the sector to achieve a diversified set of policy goals including energy access, energy security and climate change mitigation.

(iv) On July 26, 2016, the World Bank forecasted that Brent and WTI will average $43 per barrel in 2016, up from the previous estimates of $41 per barrel for the same period. Crude oil prices will trade higher due to crude oil supply outages and higher crude oil demand in 2Q16. Crude Oil prices is directly proportional to the Wind Energy.

(v) Hong Kong based CLP Group (formerly China Light & Power),the largest overseas investor in power in India, has forayed into the Indian solar energy market by acquiring 49% stake in Suzlon Energy 100 mw project in Telangana (enterprise value at around Rs.760 crore.) the two companies said in a joint statement, couple of months back.

While the two companies will develop the project at Veltoor in Telangana in a joint venture, under special purpose vehicle namely SE Solar, CLP India will have the option to acquire the balance 51% stake later.

This news has already given a big boost to the domestic solar power industry, underscoring global interest even in secondary market brownfield or even greenfield growth opportunities. An estimated 10,000 MW of solar and wind projects are believed to be on the block, seeking equity investments to the tune of Rs 20,000 crore, according to sector experts.

The project already has power-purchase agreements signed at Rs.5 and 59 paise per unit -- a significant advantage, considering tariff costs in renewable energy have been going southwards in the last few months. Experts say such deals are just the beginning and more will follow, as consolidation in the renewable energy space gathers steam.

But Investors have been rather nonchalant about Suzlon Energy Ltd’s announcement that it has divested 49% stake in a venture for Rs.73.5 crore. According to Pawan Parakh, an analyst at HDFC Securities Ltd, the sale amount indicates a project cost of Rs.750 crore, implying a per MW value of Rs.7.5 crore, a premium to the estimated cost of Rs.6 crore per MW.

It is Suzlon’s first project in the solar energy space. The transaction can set a benchmark for the rest of the solar power projects the firm won and plans to dispose of after execution. The entry into solar by Suzlon is partly to convince the market that it is spreading the risks.

(vi) Nomura maintains a buy rating on Suzlon Energy with a 12-month target price of Rs.24. The global brokerage firm remains positive on the stock especially from a long-term perspective.

(vii) Suzlon Energy has very recently acquired five small solar companies for an undisclosed sum to implement various renewable energy projects across the country.

(viii) Tushar Pendharkar, head of research at Right Investment Advisory Services, says Suzlon is on the right path. "In my view, company is on track and could get the maximum benefit out of the government’s ambitious plans for renewable energy. There is still enough room for business growth and we believe that the demand for wind turbines is still at a very nascent stage in India,” said Pendharkar.

“For diversification, the company has also entered into solar EPC (engineering, procurement and construction), which I believe could be a good move, considering the government is focusing more on solar rather than wind.”

(viii) According to a report published by the Morgan Stanley analysts, the industrial manufacturing is likely experience a positive impact due to the implementation of the GST. In this context, the shares of Suzlon Energy Ltd' looks attractive.

Conclusion: Analysts expect the recovery in service revenue and further reduction in interest costs to drive Suzlon back into profit in the current fiscal year. Struggling to repay Rs.9,500 crore of loans, Suzlon was given a two-year moratorium on principal and interest payments and additional working capital as part of a debt recast in 2013. The company is using its engineering and project execution skills to duplicate its wind energy business model, where it developed projects and took over all execution risks and then sold stakes to investors.

Therefore, buy the shares of Suzlon Energy Ltd at Rs.17.15, for a target of Rs.21, with a SL of Rs.14. If GST gets passed, with a surprise positive incentives from the GOI, the stock could even touch Rs.24 in the short term.

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 pre-arranged conditions regarding fuel security and power off take are satisfied", JSW Energy had said in May.

JSW Energy Ltd is engaged in the business of power generation, power trading and transmission, and mining and equipment manufacturing. 

Therefore, buy the shares of JSW Energy Ltd at Rs.81, for short term targets of Rs.92-95. Please keep a SL of Rs.76, for any short term trade. 

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 number of data subscribers and the average data usage per subscriber per month is growing rapidly, which it feels has triggered a string of spectrum trading deals in recent weeks, including back-to-back 4G spectrum acquisitions by Bharti Airtel from Videocon Telecom and Aircel. 

RCOM and Maxis Communications Berhad (MCB) and Sindya Securities and Investments Private Limited (Sindya), the shareholders of Aircel Limited ("Aircel"), expect to sign binding definitive documentation and announce the proposed transaction for the combination of the Indian wireless business of RCOM and Aircel very shortly. RCom will demerge its wireless business and merge it with the existing unlisted Aircel, with promoters of both sides owning 50% each in the new entity. 

RCom and Aircel will each transfer Rs.14,000 crore of their debt into it. RCom has a gross debt of Rs.42,651 crore while it is Rs.23,436 crore for Aircel. Russia's Sistema will hold 10% in the listed RCom as per a parallel ongoing process but the Russian company, which operates under the MTS brand in India, won't have any board representation in the new entity. 

The RCom-Aircel deal would create an entity with revenue of about Rs.25,000 crore annually, earnings before interest, taxes, depreciation and amortisation of about Rs.6,000-Rs6,500 crore and an Ebitda margin of 25%, with cash flows of around Rs.3,000 crore a year to start with. 

RCom-Aircel-MTS combined will hold around 19% of the total spectrum in the country across of the 4G bands of 800 Mhz and 1800 Mhz and 3G bands of 2100 Mhz and 900 Mhz. It will have around a 180 million subscribers. This compares with nearly 175 million for Idea, over 252 million for market leader Bharti Airtel and nearly 198 million for Vodafone India, as per sector regulator data at April end. 

The new entity will be rebranded and remain unlisted initially. Promoters of both companies will have equal board representation. 

(ii) Earlier in January this year, RCom announced entering into strategic partnership with RJIL covering 4G Lte services. Reliance Jio and RCom signed a multi-circle airwaves sharing and trading pacts in the 850 Mhz band to jointly offer 4G services across India.

A merger with MTS and a spectrum sharing/trading deal with Reliance Jio will allow RCom to be aggressive in offering fourth-generation technology (4G) services. The company has already migrated a large portion of its subscribers from its CDMA base to 4G, with the rest likely to follow over the next couple of months.

Reliance Communications (RCom) earlier said that the Department of Telecommunications (DoT) has taken on record 800 megahertz (MHz) spectrum sharing in 7 circles of RCom and 2 circles of Reliance Telecom (RTL), a wholly-owned subsidiary with Reliance Jio Infocomm (RJIL). 

The spectrum arrangements between RJIL and RCOM will result in network synergies, enhanced network capacity and will optimise spectrum utilisation and capex efficiencies. Both operators anticipate considerable savings in operating costs and future investment in networks. RCom's customers will benefit from access to RJIL's nationwide 4G LTE network under the reciprocal sharing and ICR agreements. 

Thus, Reliance Communications Ltd is fast emerging as the biggest beneficiary of the approval of spectrum sharing guidelines, though Vodafone and Bharti Airtel — which obtained 3G spectrum earlier — could also benefit big time.

According to a report in the Economic Times, Reliance Jio and Reliance Communications will take advantage of the new rules to pool their spectrum in the highly penetrative 800 MHz band for a joint 4G play. The combined network will be jointly owned and operated by both companies.

The main advantage for RCom in all this is that since Reliance Jio has already set up a network or is in the process of setting up a 4G network, RCom does not have to set one up itself. Instead, it can just share its spectrum with Jio, and Jio can include the spectrum in its network.

Including an extra carrier (spectrum) will not require Jio to double its towers or base stations. As a result, RCom practically gets a free 4G network thanks to this arrangement.

This will save RCom thousands of crores in network deployment costs. Jio is estimated to be spending around Rs.1 (one) lakh crore to set up a network of around 75,000-80,000 4G towers, out of which most of the money is for the physical infrastructure.

However, this is not the only opportunity for RCom in 4G space. Once the MTS deal goes through (or even without it), RCom can have a combined 4G network using MTS’ spectrum in another nine circles – taking its total coverage to 19 circles.

These nine circles are Delhi, Gujarat, Karnataka, Kerala, Kolkata, Rajasthan, Tamil Nadu, UP West and West Bengal.

Once that is done, RCom-MTS would easily be the player with the most extensive 800 MHz 4G network in India. In comparison, the coverage of Reliance Jio in the 800 band would be restricted to the less lucrative markets mentioned in the beginning of this article.

The advantage for RCom is that the deals with Reliance Jio and MTS can also be done even without a merger with MTS with the help of intra-circle roaming arrangements and spectrum sharing. However, spectrum sharing would require RCom and MTS to have their spectrum in a contiguous block.

The tentative date of launch of Reliance Jio Infocom Ltd's service is 15th August, 2016. The share price should reach Rs.60, by the time Reliance Jio actually launches its operations. Therefore, the investors are suggested to keep holding the stock of Reliance Communications Ltd (BSE: Rs.52.55; NSE: Rs.52.60) for another 20-30 days, to get some superb appreciation in their investments Ltd. 

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 SCA inter alia grants sub-concession, right and authority to Reliance Defence and Engineering to build, operate and manage Defence / Commercial Shipyard Activities on the terms and conditions mentioned therein.

Earlier there were media reports that Reliance Defence and Engineering Ltd had received the Reserve Bank of India’s (RBI) approval to exit the corporate debt restructuring (CDR) package.

Anil Ambani-led Reliance Infrastructure Ltd, acquired nearly 35% in Pipavav Defence and Offshore Engineering Co, which has been renamed as Reliance Defence and Engineering. The company’s debt to the tune of Rs.6,000 crore will be refinanced with maturity of 20 years while interest cost on the debt would be reduced to 11%, according to the report.

Please Click on the Photo to Expand

The exit from CDR is expected to lead to greater financial flexibility and business opportunities for Pipavav Defence, enabling the company to contribute to the security of the country and pursue the Make in India and Skill India programmes in an even more significant manner, Reliance Infrastructure said in November, 2015.

The stock seems to be on an uptrend. Buy the shares of the company at the CMP of Rs.67.10, for a short term target of Rs.78. 

Moreover, those who are holding the shares of Syncom Formulations Ltd (Rs.3.17), from below Rs.2.50 (where it was recommended) and have short term view can book some profits and enter RDEL and/or Unitech Ltd (Rs.7.10). In case of Unitech Ltd, buy in the CASH segment only (not in Futures) for a target of Rs.12-plus in the short term.