Zuari Industries - Fertiliser business demerged; company update; Buy:: Edelweiss, PDF link

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Zuari Industries (ZUAR IN, INR 186, Buy)

Zuari Industries (Zuari) has demerged its agri-related businesses into Zuari Holdings (ZHL). The company will continue to hold 30% in ZHL and the balance will be distributed to existing Zuari share holders in 1:1 ratio, with April 10, 2012, as the record date. Post demerger, we arrive at a target price of INR466/share for ZHL, based on 8x FY13E P/E. On the other hand, we arrive at SOTP value of INR238/share for Zuari, even after assuming 60% holding company discount for the investment book, assuming 50% holding company discount for the 30% stake of Zuari in ZHL and assigning 4x P/E for core earnings on FY13E basis.  Maintain ‘BUY’ on Zuari.

Demerger separates agri businesses from unrelated ones

With the demerger, ZHL holds Zuari’s agri related businesses while the other entities (with business interests in furniture, EPC, investments & financial services, oil tanking and real estate) will continue to remain in Zuari (along with 30% stake in ZHL). Zuari management has guided for ZHL listing over the next 3-6 months.

Deep value despite 60% discounting of investment book

Post the demerger, even after assuming 60% holding company discount for the investment book (comprising Chambal Fertilisers, Nagarjuna Fertilisers, Texmaco, Texmaco Rail and Engineering), a 50% holding company discount for the 30% stake of Zuari in the demerged fertiliser business (ZHL) and 4x P/E for the core earnings on FY13E basis, we arrive at SOTP valuation of INR238/share.

Outlook and valuations: Deep value; maintain ‘BUY’

Zuari management guides that most of the company’s debt will be moved to ZHL’s balance sheet as it pertains to the buyer’s credit on account of the fertiliser business. On the other hand, the investment book will be retained in Zuari. While we await the breakup of profit and loss statement as well as balance sheet for new entities, we continue to present financials for erstwhile Zuari. We believe this demerger will enable rerating for the fertiliser business and we value ZHL at INR466/share, based on 8x P/E on FY13E basis. On the other hand, we value Zuari at INR238/share based on SOTP. We maintain ‘BUY’.

Zuari Industries - Fertiliser business demerged; company update; Buy

Regards,

10/4/12: FII trading activity on BSE and NSE on Capital Market Segment

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FII trading activity on BSE and NSE on Capital Market Segment

FII trading activity on BSE and NSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sale Value	Net Value
FII	10/4/12	1,864.42	2,193.09	-328.67
Disclaimer: FII trading data across BSE and NSE collated on the basis of trades executed today by FIIs on BSE and NSE. This trade data is provisional and subject to change, inter-alia, on account of custodial confirmation process, modifications etc

10/4/12: DII trading activity on BSE and NSE on Capital Market Segment.

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DII trading activity on BSE and NSE on Capital Market Segment.

DII trading activity on BSE and NSE on Capital Market Segment(In Rs.Crores) Category Date Buy Value Sale Value Net Value DII 10/4/12 790.40 980.58 -190.18

DII trading data across BSE and NSE collated on the basis of trades executed today by Banks, DFIs,Insurance and MFs on BSE and NSE. This trade data is provisional and subject to change, inter-alia, on account of custodial confirmation process, modifications etc.

10/4/12: Categories Turnover (BSE) (Rs. crore) Clients NRI Proprietary Trade Data

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Categories Turnover (BSE)

(Rs. crore)
	Clients			NRI			Proprietary
Trade Date	Buy	Sales	Net	Buy	Sales	Net	Buy	Sales	Net
10/4/12	1,483.80	1,428.12	55.68	0.47	0.56	-0.09	579.51	575.17	4.34
9/4/12	1,245.29	1,165.53	79.76	0.27	0.30	-0.02	393.22	448.93	-55.71
4/4/12	1,464.90	1,514.92	-50.02	1.22	0.34	0.88	447.13	448.03	-0.90
Apr , 12	6,932.01	6,868.35	63.67	9.91	1.91	7.99	2,434.81	2,459.65	-24.83
Since 1/1/12	125,805.81	127,594.51	-1,788.70	86.01	84.08	1.93	44,911.78	43,699.15	1,212.63

Disclaimer: DII and FII turnover is consolidated information of BSE and NSE. BSE data is compiled on the basis of marking of 'client type' while executing orders on BOLT-TWS in equity segment. NSE Data has been compiled on the basis of trading codes entered by the trading members at the time of order entry and corresponding client category classification provided by the trading members as part of unique client code details upload. NRI - Non Resident Indians FII - Foreign Institutional Investors DII -Domestic Institutional Investors (Includes Bank, DFIs, Insurance, New Pension Scheme and MF).

Cement - Q4FY12 Result Preview : Centrum

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Q4FY12 Result Preview

Cement

Pricing strong but margins under pressure

We expect aggregate sales volumes of our cement universe to grow 8.5% YoY (and 15.8% QoQ) to 33.2mt driven by strong cement demand across the country due to busy construction activities in the quarter. Average cement realization is expected to improve 10.8% YoY (and 1.2% QoQ) to Rs4,027/tonne led by sharp price hikes during Q1 and Q2 of FY12E. Though volume and realization are expected to increase, rising costs would lead to a marginal 4bps contraction in average EBITDA margin of our universe. Industry despatches during the quarter is expected to increase 8.3% YoY to 63.1mt.  Though the manufacturers are able to pass on the rising costs to consumers, we are not expecting margin expansion in the near future due to rising costs for players. Slowdown in housing and real estate construction activities along with economic slowdown which has kept capex cycle of industries under pressure remain a concern for sustainable demand growth. We believe that large-cap cement companies (ACC, Ambuja and Ultra Tech) are trading at a premium to their historical valuations and maintain Sell on these stocks. We have a Hold rating on Grasim Industries and Shree Cement. We prefer mid-caps and have a Buy on Orient Paper, India Cements and JK Cement due to attractive valuations.

Derivatives Report -10.04.2012 -Angel Broking - PDF link

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Derivatives Report

Technical Report -10.04.2012 -Angel Broking - PDF link

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Technical Report

Market Summary -10.04.2012 -Angel Broking - PDF link

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Market Summary

Market Outlook -10.04.2012 -Angel Broking - PDF link

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Market Outlook

April 10: Stocks in News ::Edelweiss

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Stocks in News

iGate to pay INR 520 per share to delist Patni Computer. (ET)

Hasty BEML drew CAG fire over ‘sale’ of Tatra Trucks. (ET)

Coal India to invest INR 750 bn to raise output in five years. (ET)

Coal India board may pass FSA on April 16. (ET)

RIL taking major steps to raise KG-D6 gas output. (ET)

Bajaj Elec merges global arm’s business with itself. (ET)

Bajaj Hind revises merger plan, excludes aviation arm. (ET)

Marico to sell 4.56% for INR 5 bn. (ET)

Govt to decide on Banks’ recapitalization by June-end. (ET)

ITC hikes cigarette prices. (DNA)

IGL gets INR 10-bn hit from regulator; Gas board orders cuts in rates, charges for CNG & PNG to Delhi consumers. (BS)

ONGC-Teri JV bags USD 1-billion Kuwait oil spill clean-up job. (BS)

Fidelity investors: Exit and reinvest elsewhere

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Investors in Fidelity schemes should look for an exit in the 30-day no-load window that will be available to them. Returns of L&T Mutual Fund have been nothing to be confident about

L&T Mutual Fund (MF) recently came into the Indian fund industry, having been setup through the acquisition of DBS Cholamandalam Mutual Fund in 2010. Chola was a running a poor management and investors entering the L&T Mutual Fund fold have not done any better. With the acquisition of Fidelity Mutual Fund, one of the better performing fund houses, L&T MF has become the 13th largest fund house up from 24, out of a total of 43 fund houses currently present. But the sad news for investors in the schemes of Fidelity MF is that the sale to L&T MF does not include the fund management team. Fidelity’s fund management team would be there until L&T MF builds its team to manage the newly acquired assets.

The fund management of Fidelity MF has been much better than that of L&T MF. As seen in the performance compared to the benchmark, the returns of L&T funds have fallen short of the benchmark on a number of occasions, whereas the funds of Fidelity have outperformed their respective benchmarks on all the occasions for the one-year, two-year, three-year and five-year periods ending 31 March 2012. The investors of Fidelity wouldn’t want the L&T fund management team handling their investments seeing this performance of the fund house. Investors who are worried about their investments and those who are doubtful of the fund management team of L&T should look for an exit in the 30-day window given to them where they will be charged no load for exit.

Venugopal Manghat recently joined as vice president & co head - equity investments at L&T Mutual Fund. He was earlier the head of equities at Tata Asset Management. He was the fund manager of Tata Pure Equity and Tata Equity Opportunities—two equity funds of Tata MF which have done well in the past. He took over managing L&T Growth fund from Pankaj Gupta last month. Would he be able to turn around the performance of L&T equity schemes? One would just have to wait and watch. At the same time Shobheta Manglik has joined as assistant vice president & fund manager-fixed income. She has been jointly managing the few of the debt-oriented funds and has an experience of over 10 years. Pankaj Gupta with an experience of over 10 years has been managing three of the equity funds since September 2010 and Anant Deep Katare, who has over nine years of related experience, has been managing L&T Hedged Equity fund and L&T Midcap Fund since October 2007. L&T Mutual Fund would have probably done well had Sanjay Sinha, who came in from SBI Mutual Fund, stuck around. But he joined in September 2008 and quit in August 2011.

Compare this to the current fund management of Fidelity. All the equity diversified funds of Fidelity are co-managed. Anirudh Gopalakrishnan, who has a work experience of over 10 years, is the common fund manager for all the four schemes and has been managing these funds for foreign securities investments since October 2010. He, along with Sandeep Kothari, who has an experience of 17 years, manages Fidelity Equity Fund and Fidelity India Growth Fund and along with Nitin Bajaj, who has an experience of 12 years, manages Fidelity India Special Situations Fund and Fidelity India Value fund. Fidelity does have a more experienced team but unfortunately they would not be managing the schemes once L&T Mutual Fund acquires them.

FII & DII trading activity across NSE and BSE 10-04-2012

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Category	Buy	Sell	Net
	Value	Value	Value
FII	1864.42	2193.09	-328.67
DII	790.4	980.58	-190.18

 

 

-- 

How to invest profitably in global markets

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Wealth managers often recommend international funds and stocks for diversification.

However, most investors have been unwilling to take that risk. Now, things are beginning to change.

"Facebook's initial public offer created quite a buzz and there were many enquiries from high net worth individuals," says a wealth manager.

One of his HNI clients, who invested Rs 1 crore (Rs 10 million) in the US, has made huge profits by investing in a single stock, Apple Inc, in the past year.

10 April: Edelweiss Technical Reflection (ETR) ::Edelweiss

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Edelweiss Technical Reflection (ETR)

Following the long holiday last week the Indices began on a nervous note with a large gap down opening for Nifty. The index traded lower throughout the day and ended near the lowest point with a loss of 1.66% at 5231. The drop however was on low volumes and an adverse A/D ratio of 1:2. Even the volatility spiked with the India VIX climbing 5.2% indicating increasing risk in the markets. The supports of 5300 and 5260 have been breached lower thus and momentum oscillators too have rolled bearish/neutal from bullish setups suggesting downside risk ahead for the indices. Nifty has retraced 61.8% of two week rally off the low of 5136 to 5378 at 5228, and upon further weakness lower, it is likely to dive down to the 200 DMA at 5146 and possible test the lower boundary of a ‘falling wedge’ pattern in formation at 5115. On the upside, rallies are expected to face stiff resistance at 5285/5300. Overall, the market seems to have got into consolidation mode once again with a range of 5100 to 5300 on low volumes.

Barring the marginal gain in the Healthcare index (+0.32%), all other sectoral indices ended the day in the red. The biggest loser of the day were Metals (-3.44%), Cap Goods (-3.16%) and Power (-2.49%) indices. The broader markets too witnessed a negative trend with the Mid-cap index falling 1.35% and the Small-cap index losing 0.65%.

 Bullish Setups: ADE, RIL, LT, RBXY

Bearish Setups: BHEL, ACC, MSIL, GAIL

Regards,

BSE, Bulk deals, 10/4/2012

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Deal Date	Scrip Code	Company	Client Name	Deal Type *	Quantity	Price **
10/4/2012	502330	AP Paper	KBS PROPERTIES PRIVATE LIMITED	B	300000	217.87
10/4/2012	502330	AP Paper	EVANS FRASER AND COMPANY (INDIA) LIMITED	S	300000	217.87
10/4/2012	530187	Atharv Enter	POOJA BIPPIN JAJU	S	30600	40.95
10/4/2012	512149	Avance Tech	VORA FINANCIAL SERVICES PRIVATE LIMITED	B	3500000	0.27
10/4/2012	512149	Avance Tech	VORA FINANCIAL SERVICES PRIVATE LIMITED	S	4000070	0.27
10/4/2012	531194	Brahmaputra Infra	ANIL KEJRIWAL	B	50000	48.43
10/4/2012	531194	Brahmaputra Infra	BRAHMAPUTRA INFRASTRUCTURE LIMITED	S	86110	48.44

India, China set for slow growth rates due to global slowdown (ET)

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India and China are set for more slower growth due to the current global slowdown, the Deputy Chairman of Planning Commission of India, Montek Singh Ahluwalia, has said.

"Given the world economic outlook for the next three to five years, it's not surprising that China and India will grow more slowly," Ahluwalia, who attended the Boao Forum for Asia in China last week told 'China Daily' in an interview published today.

NSE, Bulk deals, 10-Apr-2012

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Date	Symbol	Security Name	Client Name	Buy / Sell	Quantity Traded	Trade Price / Wght. Avg. Price	Remarks
10-Apr-2012	IGL	Indraprastha Gas Limited	AB FINANCIAL SERVICES	BUY	11,64,608	231.12	-
10-Apr-2012	IGL	Indraprastha Gas Limited	AB FINANCIAL SERVICES	SELL	11,60,608	231.26	-
10-Apr-2012	IGL	Indraprastha Gas Limited	C D INTEGRATED SERVICES LTD.	BUY	10,32,269	234.06	-
10-Apr-2012	IGL	Indraprastha Gas Limited	C D INTEGRATED SERVICES LTD.	SELL	10,32,269	234.56	-
10-Apr-2012	IGL	Indraprastha Gas Limited	CROSSEAS CAPITAL SERVICES PVT. LTD.	BUY	21,57,182	232.78	-
10-Apr-2012	IGL	Indraprastha Gas Limited	CROSSEAS CAPITAL SERVICES PVT. LTD.	SELL	21,55,262	231.29	-
10-Apr-2012	IGL	Indraprastha Gas Limited	GENUINE STOCK BROKERS PVT LTD	BUY	26,42,806	234.83	-
10-Apr-2012	IGL	Indraprastha Gas Limited	GENUINE STOCK BROKERS PVT LTD	SELL	26,42,806	234.96	-
10-Apr-2012	IGL	Indraprastha Gas Limited	MARWADI SHARES AND FINANCE LIMITED	BUY	7,14,509	224.19	-
10-Apr-2012	IGL	Indraprastha Gas Limited	MARWADI SHARES AND FINANCE LIMITED	SELL	6,66,509	221.26	-
10-Apr-2012	IGL	Indraprastha Gas Limited	PACE STOCK BROKING SERVICES PRIVATE LIMITED	BUY	8,37,421	230.83	-
10-Apr-2012	IGL	Indraprastha Gas Limited	PACE STOCK BROKING SERVICES PRIVATE LIMITED	SELL	7,93,421	231.84	-
10-Apr-2012	INVENTURE	Inventure Gro & Sec Ltd	NITIN BABAJI PALANDE	BUY	1,59,585	291.45	-
10-Apr-2012	INVENTURE	Inventure Gro & Sec Ltd	NITIN BABAJI PALANDE	SELL	1,59,585	293.01	-
10-Apr-2012	JYOTISTRUC	Jyoti Structures Ltd	RELIANCE LIFE INSURANCE CO LTD	BUY	12,12,730	43.00	-
10-Apr-2012	KFA	Kingfisher Airlines Ltd.	TRANSGLOBAL SECURITIES LTD.	BUY	68,53,316	17.55	-
10-Apr-2012	KFA	Kingfisher Airlines Ltd.	TRANSGLOBAL SECURITIES LTD.	SELL	69,16,370	17.63	-
10-Apr-2012	PFOCUS	Prime Focus Limited	NARESH MAHENDRANATH MALHOTRA	SELL	17,12,500	48.02	-
10-Apr-2012	TECHNOFAB	Technofab Eng Ltd	KARUNA ABHIJIT RAJAN	SELL	1,55,000	152.00	-
10-Apr-2012	TECHNOFAB	Technofab Eng Ltd	MOGRA INVESTMENTS PVT. LTD.	BUY	1,40,000	152.00	-

Indraprastha Gas - PNGRB order strikes hard; :: Edelweiss, PDF link

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Indraprastha Gas (IGL IN, INR 347, Under Review)

Today, PNGRB released a tariff order for Indraprastha Gas (IGL), which pegged the regulated tariff for network and compression at INR3.53/scm against IGL’s demand of INR8.95/scm. We see PNGRB’s order as extremely negative for IGL. While we remain unclear on IGL’s actions, FY13E PAT is at risk by as much as 41% and target price by ~15% due to the same. In addition, IGL also faces risk of sustained lower earnings and value in case it is forced to refund the excess charges (retrospectively since Apr-2008) to consumers retrospectively. We are placing the stock UNDER REVIEW but see an immediate correction in the stock price.

Two schemes to choose from ::Business Line

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PSU banks may be asked to shut down loss-making branches

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The government may ask public sector banks to either relocate or shut down loss-making branches as part of rationalisation process.

"This is a part of an ongoing dialogue not only banks but insurance companies. If there are loss-making branches then we need to re-look at it why they are there.

"If that needs working out a business strategy, may be relocating it, may be scaling down of staff all the needs to be looked at," Financial Services Secretary D K Mittal said, when asked if the government has asked banks to submit report on loss-making branches.

"Ultimately branches have been to be set up to earn. If they (loss-making branches) have been there for sometime say 12 months, then I think there is case to re-look at it," he said on the sidelines of Confederation of Indian Industry event in New Delhi
There are about 87,000 branches of public sector banks across the country.

Rising interest rate and slowdown in economy has impacted the repayment capacity of borrowers, especially small and medium enterprises leading to rise in NPA of banks.

The non-performing assets of banks have risen to Rs 1.27 lakh crore (Rs 1.27 trillion) till December 2011.

Of this public sector banks' gross bad debt jumped over 51 per cent to a whopping Rs 1.03 lakh crore (Rs 1.03 trillion) in 2011.

The gross NPAs of public sector banks has increased from Rs 68,597.09 crore (Rs 685.97 billion) at December 2010 end, to Rs 103,891.27 crore (Rs 1,038.91 billion) as on December 2011.

Let your home solve your cash problems ::Business Line

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Reverse mortgage loans enable senior citizens to receive regular cash flows from their residential property — even while they continue to live in their house.

These days many senior citizens are faced with a difficult situation.

On the one hand, the value of the house they own and live in has appreciated significantly but they are not inclined to sell it. On the other, they do not have adequate income to meet daily expenses, and do not want to be financially dependent on children or relatives.