CLSA India Pack - Hindalco
vikram ag
Hindalco: Novelis' 4QFY08 results were better than expected with a net profit of US$24 mn (excl derivative gains). In its analyst meet, senior management of Novelis highlighted the core operational improvement that had been achieved in Novelis during the year. However, we believe that reported profits for Novelis could still see sharp swings over FY09-10 and keep our Novelis estimates intact. Hindalco also announced a 1:3 equity rights issue to raise US$1.2 bn to replace part of the Novelis acquisition bridge debt. Factoring in the same, we cut our EPS estimates 11-12% over FY09-10. Maintain BUY on the stock with a revised target price of Rs205 noting 37% upside (adjusted for rights issue) and steadily improving fundamentals in aluminium.
India Morning Headlines
q Taro Pharma has commenced litigation in Isreal against Sun Pharma to prevent the Indian company from blocking the sale of its Irish unit. (ET)
q Hindalco Industries has announced a 1:3 rights offer to raise nearly US$1.16bn to refinance its acquisition of Novelis. (ET)
q DLF will soon get around 5000 acres near Greater Noida at less than market rate under the Taj Expressway Industrial Development Authority's scheme. (ET)
q The government has approved the mining plan for the coal block that Reliance Power plans to use for setting up 4000Mw ultra mega power project at Sasan in Madhya Pradesh. (BS)
q GMR group has joined the long line of suitors to partner ONGC for a refinery and petrochemicals plant in Andhra Pradesh. (BS)
q Tata Motors is reportedly expected to spend GB£700m in research and development for Jaguar Land Rover. (ET)
q US based workforce management solutions major Kronos has signed on domestic IT Satyam as its alliance partner for service delivery and implementation of its solutions. (BL)
q NTPC will add 3000Mw of power for commercial use in the current financial year, a move that would give the PSU an additional revenue of Rs5bn annually. (FE)
q Plans by Multi Screen Media to sell a 32% stake to the BK Modi Group for about US$320-350m have reportedly run into some last mile hurdles. (ET)
q Reliance Infrastructure which has chalked out an ambitious plan to invest Rs280bn in the next three years is looking to at acquisitions in India and abroad, including coal mines in Indonesia. (FE)
q Amtek has entered into a strategic pact with Missouri based American Railcar Industries as part of its foray into railcars; the JV has been signed through Amtek Transportation Division, a subsidiary of Amtek Auto. (ET)
q Leading property developers are pulling out of proposed deals with hospitality majors including Royal Orchid Hotels and Ramada Worldwide as cash flows in the real estate sector are slowing. (BS)
q Essar Shipping Ports and Logistics will invest Rs100bn for the development of shipping, ports and oil field services over the next three years. (BS)
q HDFC Bank has hiked its benchmark prime lending rate by 0.25% to 15.25% effective 18th June. (ToI)
q Steel Authority of India Ltd is taking a renewed interest in implementing its long pending proposal to fund an estimated Rs1.66bn project for redevelopment of BCCL operated mine in Jharkhand. (BL)
q Glenmark Pharmaceuticals has reported that it has received USFDA approval for marketing and distribution of Trandolapril tablets used in the treatment of high blood pressure. (ET)
q Moser Baer plans to raise US$300m for its solar unit. (BL)
q VRL Logistics will invest Rs1.1bn over the next two years on expansion and plans to raise the funds through a pre IPO placement and public issue. (ET)
q Advanta India, a subsidiary of United Phosphorous has reported that it has acquired the sunflower seed business of US based Limagrain for an undisclosed amount. (ToI)
q Securities Appellate Tribunal has upheld the SEBI order against Gammon India and entities relating to diversion of the company money to fund their own rights issue in 2001. (BL)
q NDTV Lumiere the arm of NDTV Imagine plans to foray into home video segment by end of July. (FE)
q The wholesale price inflation shot up to a 13 year high of 11.05% for the week ended 7th June. (ET)
q Despite inflation crossing 11% to a 13 year high, The Centre for Monitoring Indian Economy (CMIE) has said the price index would average around 5.5% during FY09. (ET)
q Inventory build up points to slowdown; the inability of companies to anticipate slowdown in demand has resulted in a huge pile up of inventories in their stores and factories. (BS)
q India has asked oil producing nations not to remain a "passive spectator of speculation" and called for a "price band mechanism" to cool prices. (BS)
q The UPA government was put on the mat for the high inflation with both Left and BJP saying it was a direct result of hiking fuel prices steeply and faulty policies. (ET)
q Reserve Bank of India may need to hike rates, CRR; RBI governor Y V Reddy likely to sacrifice growth to tame inflation. (ET)
q The countries forex reserves dipped by US$4.96bn in the week ended 13th June, the steepest dip in over two and a half years. (ET)