Meanwhile RPOWER reported a good rise in net profit on a lowly INR 1390 million in sales,

Current industry focus is around its not being in the top 6 Gas based plats to be completed raising concerns over timelines for the Sasan, Dadri, Tilaiya and Krishnapatnam plants.

UMPPs are being marked for the upcoming production increase from KG D6  Only fresh projects with 4GW new production are considered umpp status. 16 were originally demarcated in a 2005 notification. Four were then awarded after a gap of four years. Now there are 2 in an ongoing 2010 bid.

Alongwith RPOWERs three UMPPs and Tata's Mundhra plant, The Reliancce Power trio at Sasan, Tilaiya and K'patnam were allotted after 4 years of delay and continuing delays focus on the government industry interaction on the subject. The Planning commission only expects a Phase I completion at Sasan and Mundhra during the Eleventh Plan till 2012

PFC is awarding the project titles in Bedabahal(Orissa)  and Sarguja(Chhattisgarh) on the east coast currently and the oiginal deadline seems to have been extended twice. 

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ICICI Bank vs HDFC Bank : Whither from here?

With Corporate revenues down 25% and Net Interest Income down 2% the bank continues to grapple with a changed milieu after the chapter was declared over earlier in 2008. The bank continues to move from quarter to quarter managing lowering down market expectations, shouting down growth as lack of discipline in the ranks is seen as the overall market perception of the bank. Seemingly well poised to recover, the bank yet again promises a miniscule 15% corporate credit growth.

Subsuming bullish expectations midway in the July series, the business of the bank refused to play catch up with the markets and is trying to recover its poise after an embattled 2008 and 2009.  The new control structure at the bank is not a satisfactory answer for the problems at the bank's courtship with nationalism in guise of RBI policy and indisciplined retail outbursts of growth at the expense of operational discipline. 

RBI has also fined it for a nominal amount for violating KYC guidelines in new accounts and existing account updates. While HSBC has quit Investment Banking in India earlier, ICICI Bank is well on its way to either shape up or ship out, probably unable to satisfy larger relationships or bring value to syndicates for such arrangements and the same has to be investigated.

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Master Card polled 10920 people across the Asia pacific, in 24 emerging markets and all hands showed up in favor of saving more and decreasing consumer spending going forward. While Philippines, Australia and Thailand lead in ayes for saving at 74%, 52% and 52% India still has only 24% in favor of lesser discretionary spending while 96% of us Indians are anxious for the uncertain economic conditions.

Indonesia and Philippines showed extreme gender variations on the question too, with Indonesian women vying with Filipino men for saving more for the home and hearth. If one goes by the Master Card spenders, Indians should only be subjected to more informed adverising about electronic goods, shopping on digital stuff being a continuing drain on the purse here. Australians by contrast mostly want to save for traveling abroad.  Also, though the Warc push of the article did not say, we think likely that the age pyramid where 56% Asian youth want to save vs 20% senior citizens is likely inverted in India where more youth have their wallet out to spend on big ticket items than the rest

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As of course we still do not have a client list for our research reports, I just thought I should verify with other brokers on what reports look to end customers and in most cases prospects. Everyone knows that brokers and qualified research desks from Bombay and Delhi target hedge funds investors and others qualified financial institutions directly or thru sub-ledger accounts.  

Broker Research is as always dull and dry and like us it does not partake much else than analyst calls , in  terms of investee company presentations or meets with senior management.

Each research report is a carefully completed data sheet with very little space for opinions on effectiveness and quality of management performance and market discussions, giving us this continued edge in helping decision makers beyond such reports. Though having said that, hese broker reports are an essential part of your repertoire when you can lay your hands on them, esp if you are on a distribution list. Typically, however there are no fixed time frames off these reports for the stock move to start/complete as expected. 

Some brokerages do however need to get back from increasing investment in institutional business and focus on the domestic retail business, that has been at a plateau but fundamentally an under penetrated market with India only having 15 million investors at best overall. Retail business focus lets firms like IIFL and Kotak securities a chance to operate an effective business model without over concentration in proprietary trading, or an a patchwork of Grade B Institutional clients that do pose a measurable investment risk in themselves.  

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Reliance ADAG further cemented its intentions in another round of grandiose plans, backing out f the deal with INOX and announcing its theme park effort with Universal and Disney land. The park comes with a likely tab of INR 7000 crs and features Hollywood hits on NBC as a theme, including the Harry Potter and Spider Man series. The park will not feature any Disneyland attractions. This will be part of Reliance Media World

Universal executives travelled to Mumbai to meet Mr Ambani’s Reliance Big Entertainment and are close to signing an agreement to build a $1.5bn resort based on the films produced by the Hollywood studio arm of NBC, according to people familiar with the negotiations.

The Indian park would be similar to the ones Universal has in Florida and Singapore, but with an Indian “masala” twist, to attract India’s fast-growing young, energetic and consumer-oriented middle classes.

“Harry Potter, Jurassic Park and Spider-Man will blend with classic Indian movie [blockbusters],” said a person close to the Indian group. “It will be something never seen in India.”

Reliance has received preliminary government approval to go ahead with Universal to create what is expected to be a 500-acre entertainment resort, which could host about 50,000 visitors a day, said a senior official.

 

Similar Parks in Bangalore and Delhi however currently do 50000 visitors a month with revenues of up to INR 500-1500 per head. 

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The market is abuzz, and the promoters were holding on to their 70% share or 42 crore equity shares for a Rs 140 price. Inox has a significantly higher enterprise value and the valuation of INR 740 Crores or INR7400 million is much better pricing the company's screen and customer goodwill assets.

Despite a high Gross margin 42% at reliance Media Works, the Enterprise value of the company of 14 times ts Gross Profit compares badly with Inox's likely 23 times its higher gross profit.

After the War with Fame, Reliance Media Works need the arsenal of screens to underline its large footprint to prepare for the retail lifestyle juggernaut and an EBIT margin of 7.5% (fourstocks.com) 

The current enterprise value of Inox is a Cool INR 102 per share and the price of Rs 120 per share is already being deined by both parties true to worries of over  valuation plaguing the multiplex deals from Fame to earlier deal for Adlabs itself from whence ADAG created the largest share of footprint for BIG partner company REliance Media Works, BIG TV franchise belongs to Reliance Media World

INOX carries a premium in the industry for its significant traction in customer footproint from better location, great franchisee support in food malls and value pricing models and flexibility adopted by the firm at various end points when producer disputes and recession's impact on footfalls plague the industry during the course of each year

With the acquisition Reliance Media Works can go on to realise its enterprise value of the company (value of its assets thus Equity + Debt + any working capital advances add to the value of the firm for the cash it generates. Reliance Media Works has now been trading at 4% higher since the news broke as it tries to cross the rubicon and generate net positive margins ofrom its current March 2010 value of -5.9%

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The August edition of the report should carry more details as the Planning commission website has already updated with Capacities and promises to update quarterly on the international and sublime rate of 65% of completion rate on Infrastructure projects from China and Brazil to India itself. HDIL in the mean time is finally getting the hang of the 6 million sft and the TDRs for the Mumbai Airport and other commercial real estate has also been released in June. Power Infrastructure in the country has yet to move on from the 86000MW available in 2007 but it seems more and more likely that with modernization projects falling by the wayside in performance reporting not much will be added immediately from already installed plants and that more private plants will now start dotting the landscape as Merchant power availability and selling on the grid becomes more likely. India may not talk smart grid but it is well on course to adding 10GW this year, 7000MW according to the Planning Commission..More later, as markets remain dull and activity is restricted to personally targeting me :D 

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Land acquisition snafus, Retail FDI delays and the exit of Foreign Partner

DLF partner and Dubai World company limitless inc, left Indian shores yesterday, finally selling its 50 percent share in Bidadi knowledge City on the State Highway 17 between Bangalore and Mysore.

The plans for the 9178 acre city with shopping vistas and residential co location for corporates looking to exit the congested Bangalore urban zone were shelved after HDK laid claim to most of the property and DLF could not get land acquisition underway thru Government or private effort.

Business expansion in Bidadi and Bangalore has revived thence and Bangalore real estate is still offering a lot of value to incoming businesses as witnessed in MoUs signed in the Global Investor Meet. Bangalore still leads in new room capacity from the 50000 rooms to be added in India in the next 3 years with a couple of new 5 star properties planned apart from ITC and Nitesh ( the second is yet to open)

Also price realisation in luxury hotels in Bangalore has also improved the most nationally though the resulting gaps in real estate inventory are taking a toll on the banks partnering real estate in the city.

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Land acquisition snafus, Retail FDI delays and the exit of Foreign Partner

DLF partner and Dubai World company limitless inc, left Indian shores yesterday, finally selling its 50 percent share in Bidadi knowledge City on the State Highway 17 between Bangalore and Mysore. The plans for the 9178 acre city with shopping vistas and residential co location for corporates looking to exit the congested Bangalore urban zone were shelved after HDK laid claim to most of the property and DLF could not get land acquisition underway thru Government or private effort. Business expansion in Bidadi and Bangalore has revived thence and Bangalore real estate is still offering a lot of value to incoming businesses as witnessed in MoUs signed in the Global Investor Meet. Bangalore still leads in new room capacity from the 50000 rooms to be added in India in the next 3 years with a couple of new 5 star properties planned apart from ITC and Nitesh ( the second is yet to open) Also price realisation in luxury hotels in Bangalore has also improved the most nationally though the resulting gaps in real estate inventory are taking a toll on the banks partnering real estate in the city.

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Singapore Parkway Holdings, earlier commented here for going for a song three months ago, are now again an important subject matter for the Indian markets, especoally veteran dealmakers and Godhwani's favorites, Malvinder and Shivingder Singh.

Fortis Healthcare, ready to make a new offer for equity for a little over $500 million actually S$ 850 million, is now in play at that price you have on the soup you love most when you are not eating an indian lunch in the Central Business District in Singapore. Fortis has actually thence decided in true blooded business man manner that they have shpown with perspicuity in the last 2 years, selling their 23% to Khazana at $3.95 making a tidy profuit for their fledgling concern, though now it is much a case of sour grapes as they have been unable to get a deal without stretching their pockets from the Ranbaxy deal. Nevertheless, a reat decision for Fortis Healthcare, and a renewed focus on the group in 2-3 months

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YES managed to bring pretty good results to the table improving growth in Advances to even 42% over last year June. Net profits are a `1.56bn with a 56% growth and while NIMs at bigger competitor Kotak have fallen to 5.7%. YES Bank management prides itself on a greater than 20% ROE, where the March 2010 fiscal closed at 23%. This quarter advances have shot a 76% growth from `1.57bn to `2.62bn which is still a small $56 bn. Transaction Banking and CASA ratios have more or less maintained March quarter growth of 62.8% growth in deposits, 77% growth in CASA ( 10% in March 2010) Tier I Capital has become a concern for the bank according to us already down to 9% in March while Net Interest Margin continues to have scope for growth. We might come back after the conference at 1600 hrs when more details are available. `1.56bn `1.56bn `1.56bn

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YES Bank is probably the only one after HDFC Bank and Axis that still has the secular growth number in sight and crossed with ease. Kotak was stuck with PAT growth of 27% to $69 million, showcasing the kind of size Goldman Sachs was playing with in the unbridled Indian market. Again size does matter. Net UInterest Income has been capped at $147 million now in this June 2010 result. Similar numbers are expected from its Mutual funds, securities and even insurance businesses. Kotak Wealth Management would be some great assets to pick up instead of hankering after "mid cap" bank stocks unless Axis Bank is mistakenly being counted as a mid-cap proposition. 

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The first one is about Positive Control, showing us that we have more to spend on the digital mnedia, spending just 5% against 14% worldwide which itself is less than half the money it deserves at a final stable state ( and Accenture Insights and Mckinsey knowledge Institute do agree as well, if it matters ) of 30% of global consumer spend on advertising. For the Worlds Top 10 FMCG and Non Durable Consumer Goods brands that would probably translate into $300 million digital spend for a $1 bn year ( J&J, Nestle, P&G, Coke)  Out of this $300 million probbably $100 million for the India leg, once hey have all agreed to divvy up the net by geography for the related brand spend. Thgat is $100 million for digital medium alone another $120 million for big brother China, when now P&G';s mega hygiene factors launch itself was a total of $500 million over 12 months in India today.

Marketing spends in  India will undoubtedly grow as one of the last refuge of brands after the dull showing in US domestic markets consumption related ad spending and a total white labelling of Europe. Thence, the second question of the step motherly treatment meted to world sport like Soccer in India and presumably in the US too, but then we at hotshots are ekkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkkk

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Bank results season by themselves seems to be a great positive for the Indian dream. With HDFC Bank maintaining Tier I capital of 12.3% and NPLs of 0.3% , their inevitable comparisons to J P Morgan with much the same stats may no longer be tenable for the management to showcase as J P Morgan faces a challenging prognosis from dropping revenues in June 2010. 

Back to Deepak Parekh's legacy, however, Aditya Puri's HDFC Bank surprised the market with an expansion in Net interest Margin of 4.32% despite increased effective tax rate of 32% ( against 29% last quarter). Maintaining a growth trajectory from Q-o-Q com parisons has been shown to be effectively possible by both Axis Bank and HDFC Bank . HDFC Bank continues in the 30% secular growth trjectory defined by Indian companies in the last decade for Year on year comparison remaining one of the few large markets where large quarter on quarter growth figures are even expected especially in the first few quarters after a slow year. Scaling those expectations has been a tough task and the no. 2 and the new no. 3 Axis Bank leave a big challenge on the table for the erstwhile nimble ICICI Bank to surpass on its way to a recovered 2011

However the SBI PNB wars for PSU supremacy and the HDFC Bank and AXIS BANK encroachment on the numero uno in the private sector may well define 2011 and 2012 for Indian Banking. Of course more attention is now showered on the new investment candidates in the infrastructure sector like IDFC and Rural Elec Corporation or even the Power Trading Corporation

HDFC Bank's Operating income run rate of $750 million must have created a definite plan in the Bank for a $1 billion year for the bank especially after having succeeded in keeping the  kingdom's keys with sustainable high net margins and a great Cost to Income ratio of 47.7% bringing with it more news of award winning performance from India's Banking and Finance stars globally.

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T3 was big news with Jet Awys alone managing 11,90,000 passengers in June. T3 alone adds 34 million at Delhi Airport and Jet airways will be a big beneficiary. Jet has been delivering significant double digit cost savings in any quarter it can breathe and with a 17% margin leads a troubled sunrise sector to 'greener pastures'

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The first 2011 results for Axis Bank under its new management direction, seem to be a vote of confidence with the bank scoring INR 1500 Crs or $330 million in Net Interest Income and almost 50% or $162mn in Net Profits, beating the highest estimates proferred, with no significant contribution from Proprietary Trading. I-Sec is expected to run aground, true to form with growth slowing to 14% more to come..Non performing assets are still 0.35% and that is quite good.

LIC Hsg also reported a 60% rise in PAT to $45 mn in the quarter, rooting for becoming a member of the biggies club with the rate. 

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'Ubuntu' much like its bigger cousin Vuvuzela, is an African import from the recently concluded Soccer fest. And before we get on to discussing the deeper meanings of life (and soccer), kudos to DNA India for some great world cup content, esp as TOI decided to act tired and reported the important midnight games a day late. Crest keeps pulling some stellar super premium research content on Saturdays though.

The ubuntu or the 'aspirational' interconnect has been with our younger siblings or Gen Y since Madagascar in 2006/7 but Disney could not have half achieved what the Soccer Cup did, overtaking the tools and the platforms from network TV to Radio and the 'social' Facebook and Twitter. 

But before Ubuntu becomes an obscure Linux world again, we must all keep the dream alive, not just for Rio in 2014, but here and now in Delhi for the CWG fest. Dhoni has a great kick off as the highest paid Sports icon, for a three year contract $5million more than the master blaster, apparently on Safari.  There are local manifestations of Ubuntu as well, with a lot of Africa making it as themes after the cup, giving Slumdog advertisers a new 'field of vision'. 

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In an oft repeated saga in India, HSBC walked away with $2.5 billion of crown jewels, paying $95mn for the net assets in premium. HSBC has not yet got any licences from RBI for the new branches added to its portfolio.  Though the bank had a not so significant presence in India, its goodwill is positive and it has some great retail accounts in this country of 130000 owners of INR 50 million and more in assets.

HSBC and Stanchart had been negotiating for RBS assets in Asia but India had come unstuck because of RBI restrictions. Also, Stan Chart never wanted any of the China assets.

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$2.5 bn in Market Cap, 37 Institutional holders with 8.3% stake and a new 10 mmscmd gas supply agreement will easily merge into the new Reliance Power/ Reliance energy behemoth and get to the business of creating assets and revenues..

REUTERS INSIGHT Reliance Power Limited (RPower) is part of the Reliance Anil Dhirubhai Ambani Group. RPower is engaged in the development, construction and operation of power generation projects with a combined planned capacity of 33,480 megawatts. The Company is developing 3,960 megawatts Tilaiya Ultra Mega Power Project located in the State of Jharkhand. RPower is developing 16 large and medium sized power projects with a combined planned installed capacity of 33,480 megawatts. The Companies subsidiaries include Sasan Power Limited, Rosa Power Supply Company Limited, Maharashtra Energy Generation Limited, Vidarbha Industries Power Limited, Tato Hydro Power Private Limited and Siyom Hydro Power Private Limited. In May 2010, the Company acquired three power plants with a total capacity of 433 megawatts from Reliance Infrastructure Ltd.

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