Somehwhere in these pages wwe have caught all the truly deserving and taken extra care to follow all those whose inflections and rises change the fortunes of India and Asia as the flagbearers of our march forward. Consequently despite its $86 mln small quarter(in profit) and a $1.3 billion run rate year in 2011(in revenues), you would find it important to follow and partner the fortunes of India's Infrastructure Development finance Corporation or IDFC with Corp Broking, PE and dedicated infra fiunds giving the firms special digits to grab each and every opportunity for the sub continent and build it into a winner. 

IFC norms have ensured that IDFC need not be a bank like the others we follow but its role is equally critical for the requisite market development in many nascent opportunities and in fact is the required vehicle of choice even when Inddia gets a state sponsored SWF or any other larger fund for Infrastructure specifically. Though not without reason, its close association with construction stocks that are themselves not sure of the immediate future because of more than 50 million sft in commercial and twice that in residential that they carry has troubled IDFC recently. The construction sector's woes apart ( Bangalore itself has 7 million sft in vacant inventory where it usually doesn't have an inch of space left , is a sign of things as they are) there are ports, airport infrastructure, power ( where we are making slow but sure progress ), Energy Infrastructure  and more than $10 bln in PE funds plus more in FDI that is going to get invested in infrastructure this year. This includes the 3i funds and the SBI Macvquarie funds as well, but it also means continuing preferred coverage of the sector a continued effort ( esp by Rel infra) to make equity the preferred means of long term ( 30 year) financing of projects and innumerable SPVs and subsidiaries looking for expertise to review and close investments in innovative models with assured returns and developing regulation. Trust IDFC to never fall for any policy snafus and to be in on the policy making conversation in each case. 

IDFC has disbursed more than $7bln over the last three years till March 2010 and new approvals in 2009-10 itself exceeded that number to $8 bln( all our Re - $ conversions are done at a secular INR 40 to a dollar) Similar growth expected this year has already been delivered in Q1 However in hyper growth cycles year on year comparisons are meaningless and as more details follow the wires, we will update it here

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With HDFC Bank reporting renewed confidence in growth and a global mantra of 30% growth successfully met in a quarter of low expectations when ICICI Bank and SBI report tomorrow and the weekend respectively we would also have the acceleration from a lowered provision, ICICI Bank expected to continue reporting a credit growth of 18-20% and a 50% jump in Net profit to $375 million for the quarter too. 

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Not that PR offices were employed for the spin but RBI has announced the obvious expiry of the 70% PCR. Good call by outgoing chief O P Bhatt as SBI assumed it wil be able to stand up to extra provisioning requests on this count and on the new mortgage products whilst the same are written back. thus the bank is unlikly to get affected too sadly by the INR 500 crore they need for the 2% on the new product equated to sub primes RBI has asked for a counter cyclical buffer out of provisions for 70% coverage till September 10 for the next crisis

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Seems YES Bank has been short on attention because Rabobank is quitting its Yes Bank partnership finally. If you ask me its a long time coming but that just means another new competitor for Yes bank unlike the manufacturing "break ups"/rebadging with BPOs and Hero Honda where there is a considerable loss of people and business to the home team. Here YES Baqnk has always known the investor is piggy backing for a new licence. or no go decision as may be. I do think you should stay invested in YES

Also Rabobank is one of those agri bonds kind of co-op and them and Commerz bank shld be holding a lot of munis klike ING holds trade docs..Say bye bye to love! 

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Where in investors' faith in our Capital markets is likely to suffer no end that 5 Bail pleas rejected a sbreaking news is worth a market breakdown , I would have thought the market should react positively showing strengths of controls and investor forebearance in a 5 Trillion decision of Spectrum, which has been the economy's nbiggest revenue earner

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With 33% in Call options and ROFRs /Puts bought from Essar Vodafone has been in a frenzy to catch a new partner for the spillover from the FDI limit of 74% in the sector. As its ownership in Indian domestic partners was earlier subject to a lot of scrutiny with its India MD and Analjit Singh sharing the load, the company may this time look for a simpler sustainable option of a 20% IPO for the retail public and DII holdings in the company. This will pave the way for the global major ( that reports 66% of its profits from Asia/India) to challenge the hegemony pof Airtel in the area. It also holds a minority shareholding in Airtel in India

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 India's creme de la creme again got a pleasant surprise much per their expectations as YES Bank continued increasing its presence in retail with bigger and better CASA scores now comparable with Indusind (27% CASA) and ING Vysya Bank(with ultra retail focused franchises purchased from Vysya)

The bank scored $84 million in Net interest income, 40% higher than last Q4's $62 million and profits have cruised to $50 million after a equally resounding growth to $35 million last year. The numbers ( NII 349 Crs and NPAT 200 Crs ) are well ahead of expectations and the bank will be key to corporates harnessing the global emerging markets and more important the big Super India - super growth storyline, still intact after recessions and slow growth demons

We'll keep adding as details come out

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IDBI Bank profits beat expectations by 20% which were itself 35% y-o-y to score $120million in quarterly profits even as India struggles with a near double digit inflation and statistics that continue to study almost an entirely different nation. In other industries also start ups continue to face slow growth bnegatiove retention problems as the Infy rerating has engulfed even public markets. However that the same is just a smoke cloud we drive through is amply obvious by such results as IDBI and PFC today and YES Bank tomorrow. Continue buying the India story and whiel you are at it, do not let go of china either as the stories of growth pains and rising rates/bank reserves seem to make undue impression on "flexible" investment monies. The bull stroy is intact and those who survive this phase will get super dividends fromthese global super performers led by ICICI BAnk, HDFC Bank and even SBI. 

Don't forget the revolution

An NII of $275 million for the "slow jan March quarter" means happier tidings ahead as India hangs on to a minimum 30% uptick in Non IT , good corp governance businesses..q-o-q growth will likely be led by the banks which will grownearly 10% every quarter even with the base effect and all things political. Also the EM rotation giving more cash to India is unlikely to flip so soon till Q3 2011-12Also the Corporate law confusions and other half reforms ensure individual attention to all large deals by investors regulators and fund managers alike, showing a particular streength in investing thru the PE / Private Fund managers route

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GMR Infra (Power) Update

Stanc old lane and ballas to invest in Jacob gmr airports

Power cap to go 5 fold from 835mw

India's 11^th down to 52GW ending in 2012 after 12 in 2010-11 and even 17+ in 2011-12

Intergen sold for 1.1 billion plus earned 75 m in dividends said to have bought 300 m equity additionally since 2005 and all debt of 1 is paid

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New PE continues to trickle into 2011 in India. Since Jan almost $3 bln of PE funds have come with a lot of new promoter institutions going for PE funds . However a look at bank credit commentary shows infrastructure and construction lending tapering off and also making it unlikely that 15-30 year funding for infrastructure will be lent an easy hand at the equity markets. On the other hand, the $26 bln outgo in Emerging Market Equities in Q1 2011 has been replaced by $10 bln i n inflows in just the last 3 weeks oin ETFs and almost $3 bln in India portfolio flows invested thence

While a lot of new funds are looking to cement deals for their parked funds in infrastructure and retail lifestyle expansion plays India gets particular attention in both inward investment and outgoing M&A in Pharma and Healthcare. Both markets in drugs and in health insurance are underserved inside the country and the talent and local promoters' cash makes it easy for outward expansion in Korea, Africa or othernook s and crannies which allow that particular deal size and business benefit that Indian promoted diaspora can bring. Banks are unlikely to suffer NIM reactions from increasing deposits but Corporate lending and fee based lines are likely to get added emphasis here as well. Sectorally, Heatlthcare and Big Pharma flows (Vaccination, Generics, thru Joint marketing with Sun, Biocon) have to use this small window in the initial phases of the next bull run to announce and cultivate larger deals. Whether PE and SWF cash will be able to do the required due diligence is however suspect as this sector is nefariously overpriced in corporate advisory deals etc.

Updates from VCCircle home page show a smattering of PE activity to be proud of:

1. After $100 million in Tikona digital and the debate on WIMAX vs "that other" winning Tech, GS Capital surfaced in Axis Bank, Max Insurance and now Muthoot deals
2. Camlin in the retail lifestyle/education segments makers of scholastic instrument boxes for shool going kids and color markers etc seem to be in the right corner for maximising the premium on their purchase
3. Everstone joins SBI and IDFC in tying up billion plus in indiadeals (Pan India restaurants, Percept, Centrum,Regen, Nashik Vintners) and given the MD ticket to its Real estate and leasing guys
4. Ex Chrys Cap lead Ashish dhawan has followed his heart into Lakshmi foods, while WBCP promoters who exited the sold goods and restarted are looking a t listed ops according to media reports
5. Meanwhile the Sardaars at SRL have also handed over their personal stakes to Fortis, free in pocket and spirit for the next deal

Muthoot Finance has raised about Rs 130 crore from 11 cornerstone investors and is currently raising around Rs 275 crores or $70 million in an IPO

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Gross NPAs are down to 1.05% and the CAR up to 16.2% pointing to a double digit Tier I capital ratio ( details after press conference later) Thus Aditya Puri's bellwether bank is walking away with all the prizes out of the gate this season growing credit 24% year on year to $621 million. Profits have crossed the $1 billion mark for the year scoring $277 million and more compared to a staid $218 mln in the last quarter of last year and that was a good 1/3 higher over the previous year. This in itself gives you a picture of a galloping economy in the face of inflation and growth compared to someone scared of inflation in the developed west.

The stockholders of the bank would be also very pleased with a likely unlocking of 30-50% of the banks value through a 5 for 1 stock split bringing the listing down to nearly $12 from the $60 levels currently once the record date is observed in the next few weeks.

Dividend is up by 33% and Other Income incl Fee income is also up 25% from 250 million to 315 million for  a single quarter. 

NIMs are strong at 4.2% and markets might find the wait worth it when they open tomorrow 

Midcap Indusind bank happy with 75% growth

In earlier results the new team at Indusind was happy to announce profits to $68 million from less than 40 million in the March 2010 quarter. Indusind however is depending on the $100 million credit card portfolio it has purchased from Deutsche Bank to fuel growth and a small base does produce large jumps in CIB fee income

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The State Bank of India has created around $5 bln in new mortgages since it introduced the low initial EMI scheme where the first year rate is a 2% less than the EMI rate fixed for the borrower. Given that RBI has asked it to make the 2% extra provisions even thought he credit rating of these loans is not delinquent, faced with the threat of a ratings downgrade fromthe Central Bank ( done as mattter of policy and national security and not released for transactions), the Bank will lose about $100 million in quarter's profits. However indian Banks are riding the nation's growth story well esp SBI, ICICI Bank and HDFC Bank as you can see in HDFC Bank results above

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Indian export signature industry in the Capital Markets composed of tech bellwethers Infy, Wipro and our remaining export houses in textiles and flora ( if any) leave us with precious little but to look on with an impending feeling of panic in the stomach when the rupee appreciates. We did walk you through the first round of such permanent rerating of our currency since the 2008 crisis when the rupee came back fronm steady 46 levels to steady 45, and now it is looking to climb to 43 (Stan Chart) and then beyond 40 (getting younger) Well one nice way to look at it is that export earnings are not impacted by our new higher levels of inflation and interest rates. Stuff to keep you busy while we work out why we spun out at the top of the market after such a great record keeping you all busy!

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The Sun Pharma arrangement with Merck (MSD incl the Schering Plough companies) is of course another Marketing share deal along Merck's arrangements with Piramal and a research unit (Orchid Chemicals) out of India but the $1 bln Indian made Pharma company (in quarterly revenues $250mln) is likely to get a very good price among the last deals in the Pharma sector before FDI policy is changed to avoid giving away the Developing country property rights in the are that make the India story and PPP stories of wealth viable and give foreign investors hope. 

Infosys and its $250mln war chest continues to come up croppers as Europe remains a minefield of protectionism and no future business prospects even without the crisis in the peripherals. The tech sector further needs support in the face of the likely further 20-30% rise in the rupee over 2-3 years

Merck has 2-3 international deals with Ariad and Inspire in a similar vein as the Sun Pharma deal. Warburg Pincus had 28% it sold in the inspire deal. The future looks rosy for PE investments in healthcare in India competition fron Glaxo and even the otherwise strong brand of J&J continues to be a thorn in big pharma players bid to grow in the emerging markets and india franchises with Merck and Pfizer falling prey to their won development budgets (latter) and mispricing ambitions (both)

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With $30 billion in 2010, there have been a couple of months for takeout from the FIIs getting investors in a corner in India. However equities are looking up again as Portfolio FII investments already crossed $1.7 billion in 8 days in April while even Calendar 2011 is positive despite the scrable to book out profits in the first few days spilling over from holiday season 2010. 

FDI is also likely to be stronger given the sector specific policy bent and automakers venturing in daily. China continues to score a robust 9.4 % of GDP and $100 billion in FDI/FII investment in 2010 and even though that may not be challenged, India's weightage is growing in favour in equities and FDI and we might even compoete with China's $100 billion take as the world re-awakens to Emerging markets vis-a-vis Developed markets and the Dollar continues down, the Euro struggles despite $300 billion in annual FDI and M&A dealbooks start looking anemic across sectors, India/Asia and even the USA. 

Summertime folks! ante up..

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With the new takeover code pushing the limits when open offer is triggered, a certain promoter also managed to use MCA constructs to relatively easily mock the SEBI decisions in India, and that is an eye opener for me where I though India's reforms have never broken the back of common sense apart from running roughshod over generations of MBAs making a career in Finance with a set pace of reform set int he early 90s and hopelessly inadequate of late after the promise f speedier consistent delivery. While none of GST, DTC and even the new Companies Act are in place , bits and pieces keep coming through in hope of consensus and stretching the credibility of reform and the structural fabric of the governance superstructure. What Arvind Remedies did was very simple, it increased its stake by 23% with a preferential allotment. The impact is however a mockery of corporate law as the company got past the requirement to make an open offer with a ruling from SAT overturning the SEBI requirement to comply with the Saubstantial Acquisition of Shares and Takeovers Act and make an open offer. However this disregard for SEBI being fought in Supreme Court by the rgulator did happen in the period when new regulation and laws were taking a different direction giving promoters more headroom. Cairn is awaiting another such approval while Piramal healthcare shareholders could utter nary a sigh as Ajay Piramal walked away with the sash

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