23 March 2012

Metals & Mining: CAG raises a ten-trillion-Rupee question : Kotak Sec PDF link

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http://www.kotaksecurities.com/pdf/indiadaily/indiadaily23032012.pdf


Metals & Mining: CAG raises a ten-trillion-Rupee question
` CAG pegs losses from coal block allocation at Rs10.7 tn - quantum
debatable, concerns valid
` 37 bn tons of coal allocation under scrutiny; cut-off for allocations only after
FY2004
` JSPL - extant earnings not impacted, raises question on option value of fuel
security

Manappuram Finance - conference call transcript :: Edelweiss PDF link

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Dear Sir/Madam,
Please find enclosed the transcript of the conference call with Manappuram Finance, held on 22nd March, 2012.

Regards,

Grey Market Premium: NBCC, MT Educare IPO : 23 March 2012

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Company Name
Offer Price (Rs)
Expected Listing Price Premium



National Buildings Construction Corporation (NBCC)
Rs 90/- to Rs 106/-
(retail 5% discount)
None. Expected to list at IPO price. Retail may expect 5% as they get discount.
MT EDUCARE
Rs.74 to Rs.80
Discount

Post Budget Impact Analysis: 2012-13 :HDFC Sec,

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As expected, the latest Union Budget is neither bold/reformist nor populist. It is a please-all Budget trying to be provide reliefs to all constituencies and be as less controversial
among political parties as possible. The finance minister has chosen the line of least resistance. He has also mentioned at several places about trying for a broad based consensus.
Key issues like subsidy have not been tackled. No attempt has been made to dissuade diesel consumption by way of levying additional excise duty on diesel cars or raising the price
of diesel. This however will have a positive impact on Diesel car manufacturers.
Total subsidy provision has been cut by about 12% while fuel subsidy has been cut by 36%, despite the fact that crude prices continue to rule high and the Government has not
shown any inclination to free fuel pricing or even move towards it. Contrary to expectations, provision for food subsidy has not risen sharply.
As expected, outlay for rural areas has not been raised sharply while that on education, health and sanitation/drinking water and transport been raised decently.
Telecom receipts projected for FY13 include an estimated Rs.40,000 cr + by way of auction of telecom licences and spectrum fees. One hopes that there are no hindrances to
raising this amount and the optimism of the Finance minister is well placed.
Real GDP has been assumed to grow 7.6% while inflation is expected to rise 6.2%. These numbers will be closely watched as recent history shows that on both counts we have
failed to meet targets.
Corporate and income taxes are assumed to grow 13.9% while customs and excise duty collections are assumed to rise 22 and 29% respectively. If growth momentum in India does
not pick up in the next few months, there will be a serious threat to achieving these numbers.
Fiscal deficit has been assumed to be 5.1% for FY13 vs 5.9% in FY12. This target is again a bit aggressive. Government debt is expected to rise to 50.25 lac cr in FY13 from 44.68
lac cr in FY12.
Service tax proposals to raise an extra Rs.19,000 cr – throws up scope of uncertainties, procedural hassles, litigation. Custom and Excise duty hike to raise an extra Rs.27000 cr.
Both will have a regressive impact on inflation and the RBI may have to postpone rate cut by a few more months. Borrowings by the Government will be Rs.4.79 lac crore vs Rs.4.36
lac cr in FY12. This will keep crowding out private sector borrowers and halt fall in interest rates.
The Budget gives a lot of flexibility/approvals to local companies in different sectors to access ECB. Indirectly it recognises the limitation of these sectors to raise money from local
sources.
The Budget has proposed retrospective amendments to overcome effect of adverse judgements. It has also introduced amendments by way of GAAR (General Anti Avoidance
Rule), arms length pricing, transfer pricing for domestic entities. These could create fresh issues for the corporate sector. Foreign companies may not take these amendments kindly
although they cannot afford to ignore Indian market.
While mentioning his targets on divestment, the Finance minister stated about wanting to retain 51% stake. Thereby he gave a socialist touch to the divestment process. Pension
provision has shot up by 12.5% to Rs.63183 cr after remaining flat over two years. This could over years be a problem area.
The Budget has introduced Rajiv Gandhi Equity savings scheme to promote equity culture. If investors are convinced of making money, then it will be of help. However there could
be procedural issues that need to be addressed before the policy is notified. STT has been cut by 20% for delivery transactions but no change has been proposed on non-delivery
transactions. Hence the disadvantage faced the equity stock exchanges vis-à-vis the commodity exchanges has not been removed.
Sectorally,
• Infrastructure - some incremental reliefs have been announced including TDS reduction on ECB.
• Very few reliefs for power equipment manufacturers
• Relief granted to bring down the capital cost for mining projects

• For power industry some measures have been announced including – extension of sunset clause and additional depreciation, coal imports have been allowed at zero
customs duty. However no announcement has come on the much-awaited SEB reforms.
If the RBI starts cutting rates after a couple of months, the impact of the global liquidity by way of QE and LTRO will technically support and push up the Indian markets. The
progress of India is less driven by policies enunciated in the Budget and more by the ground level reforms at the state level, corporate prudence and public aspirations.
The markets have understandably reacted negatively to the Union Budget. They could further drift downwards for the next couple of session’s post, which they would be driven by
the other local and global triggers.

VA Tech WABAG Ltd – BUY: International revenue to accelerate:: IIFL

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Our meeting with VA Tech’s management suggests optimism in
the India industrial segment and indicates strong progress in
some of the overseas markets such as Turkey, Saudi Arabia
and Sri Lanka. The management targets reduction in costs in
its overseas operations by 600bps eventually by increasing
India-based support. This would enable the company to report
modest international margin improvements despite expanding
into more markets, as it has been doing. Our target P/E
multiple of 15x is in line with the increase in peer valuation.
This increases our TP to Rs491. Maintain BUY.

Accumulate Madras Cements:: Initiating coverage: Motilal Oswal

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We recommend to Accumulate Madras Cement Ltd (MCL) with
one year price target of `203 - 7xFY13E EV/Ebitda multiple.
INVESTMENT ARGUMENTS:
􀂄 South India based player enjoying good prices & Ebitda/ton
􀂄 Operational efficiency gives best EBITDA of Rs.1200/ton
􀂄 Free cash flow of Rs.700crs in FY13 as large capex is behind

NBCC IPO: Day2 : 0.23x subscribe.QIB 0.32x, HNI 0.03x; Retail 0.2x

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Total Issue Size12000000
Total Bids Received2784480
Total Bids Received at Cut-off Price668760
No. of times issue is subscribed0.23



NATIONAL BUILDINGS CONSTRUCTION CORPORATION LIMITED
Sr.No.CategoryNo.of shares offered/reservedNo. of shares bid forNo. of times of total meant for the category
1Qualified Institutional Buyers (QIBs)594000018867600.32
1(a)Foreign Institutional Investors (FIIs)0
1(b)Domestic Financial Institutions(Banks/ Financial Institutions(FIs)/ Insurance Companies)1886760
1(c)Mutual Funds0
1(d)Others0
2Non Institutional Investors1782000507600.03
2(a)Corporates0
2(b)Individuals (Other than RIIs)0
2(c)Others50760
3Retail Individual Investors (RIIs)41580008469000.20
3(a)Cut Off668700
3(b)Price Bids178200
4Employee Reservation120000600.00
4(a)Cut Off60
4(b)Price Bids0
Updated as on 23 Mar 2012 at 1700 hrs