20 August 2012

State Bank of India - conference call transcript-14-Aug-12: Edelweiss


Please find enclosed the transcript of the conference call with State Bank of India held on 14th August, 2012.
Regards,

Edelweiss, ITC - Women, new consumers to puff up volume

As per the latest findings of Global Adult Tobacco Survey (GATS) on tobacco usage in India, smoking is eight times more prevalent among Indian men than women. However, an average Indian female smoker puffs more cigarettes a day (7) than male (6.1). In our view, cigarette companies would be increasingly targeting female consumers as only 3% of women tobacco users smoke cigarettes daily as against 21% male. Indian smokers have a low quit ratio (less than 20%), which is way below countries like UK, US, Brazil and Uruguay (35%). This is reflected in sticky volumes of Cig companies in India even in an adverse year like FY13 (ITC saw 0.5% volume growth YoY in Q1FY13 in spite of an excise hike of ~21% YoY and sharp VAT increases). We believe that high potential from women users and switch from non-Cig to Cig will aid ITC (Cig account for 15% of total tobacco usage) as the duplication is high in these categories which will enhance tobacco users’ upgrade to cigarettes. Maintain ‘BUY’.

Technical Analysis: Cadila, Gujarat Gas, Bank of India, Pidilite, NIIT tech, Lovable Lingerie, : Business Line,


Consumer Goods - Margins make a sharp recovery; sector update: Edelweiss


Highlight a few key trends:
·       Volume surprises positively for non-discretionary: Despite slowdown blues,  13 out of 18 companies posted volume growth in line/better than expectations. Premiumization trend continues with no major signs of downtrading.
·       Rural growth : Remains strong and ahead of urban growth for most companies.
·       Discretionary slowdown is for real: Slowdown in discretionary spending in Q1FY13; categories like paints, foods, liqour and retail formats (like Kaya, Titan, Pantaloon, Shoppers) see a demand slowdown. Personal products, soap & detergents, household products remain unscathed.

National Aluminium Company - Waiting for sunshine; company update; Reduce: Edel


National Aluminium Company (NACL IN, INR 54, Reduce)
Key takeaways from NALCOs Q1FY13 earnings concall are: (a) Q1FY13 production hit due to rains as well as shortage of linkage coal. While loss in alumina production can be made up in the dry season, aluminium volumes to remain subdued till LME prices recover substantially; (b) low LME and high raw material cost impacted margins, partially offset by high premiums and INR depreciation; and (c) FY13 capex guidance maintained at INR23bn. With no positive triggers in the near term and expensive valuation, we maintain REDUCE’.

Investment Focus: Larsen & Toubro – Buy: Business Line,


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Now as the Banks have already started reducing the interest rates, the high interest rates may soon be a thing of past. We have observed that most of the corporate have also reduced the Fixed Deposit Rates but in few FD schemes the rate cut is expected in next few days..

Before the interest rate cut We are pleased to provide you an opportunity to invest in “Aashray Deposit Plus” Fixed Deposit Scheme from Dewan Housing Finance Corporation Ltd (DHFL). This has been rated AA+ by CARE & FAAA by BWR. This indicates high degree of safety and Excellent credit quality. Instruments with this rating are perceived to carry very low credit risk. Please find the other details of the fixed deposit below:

Annual Report Analysis - Ashok Leyland:: Edelweiss,

Ashok Leyland (AL) has w/off direct investment of INR1.5bn in Avia; however, indirect investment of INR1.4bn held through associates is still carried at book value. The company’s cash exposure to associates, loss making JVs and other group companies increased by INR3bn to INR16.5bn (39.1% of FY12 networth). MTM forex losses capitalised stood at INR2.1bn (30.4% of FY12 PBT).

Best wishes for Id, Ramzan. NSE/BSE holiday today

Best wishes for Id, Ramzan. NSE/BSE holiday today

Maruti Suzuki :Manesar plant to resumes production on Aug 21: Nomura research,


Manesar plant to resume production from August 21 under heavy
security cover
In a press conference today, Maruti announced that it will resume
production at its Manesar plant from August 21 under heavy security
cover. With this resumption, the shutdown will have lasted for around 1
month – broadly in-line with what we were building into our numbers. As
per an investigation conducted by the company, they will fire 500 regular
workers who were involved in the misconduct on 18 July. Further, the
company will no longer employ contract workers on the production line;
however, MSIL will keep 20% of the total workforce on short-term
agreements. According to today’s announcement, current contract
workers (1,869 employees) will be given an opportunity to join the
company as regular (ie, permanent/non-contract) workers provided they
meet the company requirements.

RIL has potential to be a $100 bn company :: rediff


Reliance Industries Ltd (RIL) can potentially become a $100 billion company by 2017 from its current market capitalisation (m-cap) of less than $47 billion, Goldman Sachs said in a report on Thursday.
For its m-cap to more than double, RIL needs government nod for nearly doubling of its gas price of $8 per million British thermal unit together with approvals for oil and gas field investments and completion of petrochemical expansions, Goldman said in its report 'Core capex to lift returns, rerate stock; roadmap to $100 billion market cap'.
The roadmap for $100 billion mark includes RIL "restricting overseas inorganic growth to core business segments only and maintaining focus on synergies and returns," it said.
"We believe RIL's medium to long-term growth potential is not being reflected by the market due to its focus on nearer-term concerns over growth, returns and cyclical weakness," Goldman said.
"Current share price is giving little credit to management for refocusing investment in core activities and its potential impact on cash returns, in our view," it added.
Shares of RIL, which has recently been affected by the declining output at its flagship KG-D6 fields where production has dipped less than halved to 29 million standard cubic meters per day, gained 2.04 per cent to close at Rs 815.05 on the BSE.