Wednesday, March 29, 2017

Today's Call
1. Those who are still holding the shares of Reliance Defense and  Engineering Ltd, can
continue to add on declines. The scrip is entering the F&O segment, which is expected to give it the required bounce.
Reliance Infrastructure estimates Indian defence business opportunities at Rs.15 trillion over a 15-year period and offset export opportunity at Rs.77,000 crore.

Ambani’s entry into the defence business started with its acquisition of Gujarat-based Pipavav Shipyard about two years ago The Pipavav Shipyard has now been renamed Reliance Defence and Engineering Ltd.
In February, Reliance Infrastructure formed a strategic partnership with Dassault Aviation to form a joint venture, Dassault Reliance Aerospace Ltd, to execute offset contracts worth up to Rs.30,000 crore, the firm said. India had signed an agreement with France to buy 36 Rafale fighter jets from Dassault Aviation.
Moreover, as long as it is above Rs.61.65, there should not be much problem for the bulls. The short term targets of Rs.71-72, are still intact.

2. If IVRCL Ltd (Rs.4.95) does not close above Rs.5 today, then exit the counter, as there could be some problem with the company which, perhaps the market knows.

3. Accumulate the shares of Gammon India Ltd (Rs.10.10) as the company is on the path to recovery, as is evident from the last quarter results.

4. Those who are holding the shares of Tata Motors Ltd (Rs.473.80) can continue to add on declines. Many brokerage houses are bullish on the scrip.

5. Rolta India Ltd is giving opportunities for medium to long term investors for big gains. Accumulate at Rs.58.20, for targets of Rs.97-103.

5. Making money from the market on consistent basis, has become very difficult since last 9-10 months, especially after demonetisation; even for experts. Therefore, if you are a new comer, always consult veterans in this game. Whether, you follow their suggestions or not is a different issue, but at least please do take time to hear the voices of experts in complex trades.

Monday, March 27, 2017

Today's Calls
1. Buy Gammon India Ltd at Rs.10.20, T: Rs.12, SL: Rs.8.70. The stock of Gammon Infrastructure is up more than 5% today. The company reported a narrower losses for the December quarter. Mumbai-based Gammon India Ltd posted a standalone loss of Rs.20.53 crore for the three-month period that ended on December 31, 2016, compared with Rs 119.06 crore for the corresponding period a year ago.

2. Those who are holding IVRCL Ltd (Rs.5.05) should continue to add on intra day dips. The infrastructure stocks will now run up.

Saturday, March 25, 2017

IVRCL Ltd: Some Thoughts
CMP: Rs.5.05
Photo: Indian Tollways
The Hyderabad based infrastructure player IVRCL Limited will get Rs.400 crore from the sale of three road projects (Salem Tollways Limited, Kumarapalayam Tollways and Chengapalli Tollways) -- Of this it will receive Rs.315 crore by 31 March and the balance in September 2017, according to some sources.

Though lenders are reluctant to give new loans, last year it was sanctioned a fresh non-fund credit of Rs.1,800 crore in bank guarantees and letter of credit, in addition to a cash credit limit of Rs.200 crore as part of the CDR deal.

The company has an order book of around Rs.18,000 crore.

Apart from monetising the assets, there are six more in line, it has decided to focus on realising the claims amounting to over Rs.6000 crore from various government projects. 

The company wants to utilise the new arbitration law that brings down the time limit for the settlement of a commercial dispute, for this purpose.

At a joint lenders forum meeting for IVRCL, banks had earlier decided to invoke strategic debt restructuring. Around Rs.7,500 crore worth of loans given to IVRCL has been converted into shares by bankers, including State Bank of India and IDBI Ltd, allowing them to own 51%.

SDR allows banks to convert debt into equity and make management changes if the company fails to achieve certain milestones.

Last year the company said: 
“Pursuant to provisions of Companies Act, 2013 and Sebi (Issue of Capital Disclosure Requirement) Regulations, 2009 and implementation of SDR, the company has made an allotment of 6,46,810 equity shares at a price of Rs.8.765 each, to Bank of Nova Scotia".

Those banks that hold a stake in the company are Andhra Bank ICICI Bank, Indian Overseas Bank, IDBI Bank, Canara Bank and Corporation Bank. Now this prove of Rs.8.765 somewhat forms a datum for future price discoveries.

Now that Banks have already taken control of IVRCL Ltd, the Hyderabad-based construction company and have converted loans into equity, it makes sense to find a buyer sooner rather than later.

The infrastructure fund of multi-asset manager IDFC Alternatives has been one of the most active buyers of operational road assets in India, ahead of peer investors including US-based I Squared Capital and Canada’s Brookfield Asset Management.

On the other side, Piramal Enterprises Ltd, controlled by billionaire Ajay Piramal, which said in 2014 that it was looking to buy a number of road assets, is yet to announce a deal.

The Indian infrastructure sector has an estimated capacity to absorb $1 trillion. India plans to invest almost Rs4 trillion in the next financial year in creating and upgrading infrastructure.

According to a report last year by investment bank Ambit Corporate Finance and the City of London, global pension funds and sovereign wealth funds may invest up to $50 billion in India’s infrastructure sector over the next five years.

Meanwhile, the A$127 billion (Rs6.4 trillion) Australian Government Future Fund is looking to invest in the Indian infrastructure space, including roads, telecommunications and clean energy.

Recently there were media reports that Infrastructure Leasing and Financial Services Ltd (IL&FS) has partnered with global private equity (PE) firm Lone Star to jointly invest in stressed infrastructure projects in India.

Lone Star Funds and IL&FS have collaborated to jointly invest $550 million, which could result in asset purchases of up to $2.5 billion, the companies said in a joint statement.

A interesting point to note is that on November 2008, the Maharashtra (state) PWD, then headed by former minister Chhagan Bhujbal, had proposed to widen the 20 km Sion-Panvel Highway (Mumbai -- Navi Mumbai connectivity) with a new toll naka at Kamothe (Navi Mumbai). In June 2009, a tender notice was issued and the IVRCL-Kakade Infrastructure Pvt Ltd (KIPL) joint venture—Sion-Panvel Tollways Ltd—bagged the contract by offering the lowest viability gap fund of Rs 390 crore. Now KIPL is owned by BJP MP Sanjay Kakade. So, at present IVRCL Ltd (Rs.5.05) has some Narendra Modi (BJP) connections -- both at the centre and in Andhra Pradesh, we have NDA rule.

In mid-February, Finance Minister Arun Jaitley presented his 2017 Union Budget to the Parliament where he outlined his plan for infrastructure and railways.

The funds allow state-owned Indian Railways to modernize its infrastructure and service operations, which includes laying 3,500 kilometers of new tracks in the coming year (2017-18) and feeding 7,000 stations with solar power in the medium term. Jaitley also announced a new Metro Rail Act to streamline existing laws, and allow greater private participation in construction and operation. It is to be remembered that IVRCL Ltd is also a player in the Railway sector.

India's infrastructure development is set to accelerate and meet global benchmarks even if the private sector is not in a hurry to grab the vast investment opportunities that are opening up, top cabinet ministers said at the Economic Times India Infra Summit 2017.

The government has set an ambitious target of laying roads up to 40 km per day in the country. Till February in FY16-17, about 6,500 km of roads construction has been done, seeing a growth from the previous financial year, when just 6,000 km of roads have been laid.

Therefore, we can look forward for the buy out of the stressed assets IVRCL Ltd soon. investors can therefore accumulate the scrip of IVRCL Ltd in dips, for Short term targets of Rs.8-9.

Friday, March 24, 2017

Today's Calls
1. Buy Reliance Defense and Engineering Ltd at Rs.63.70, T: Rs.72-78, SL: Rs.61. The stock
Photo: The Economic Times
has now entered into the F&O segment.

2. Those who still holding the shares of my recommended Suzlon energy Ltd (Rs.19.10), can look for targets of Rs.21-22, in the coming days. This scrip has also entered in the F&O space.

3. Those who have entered JSE Energy Ltd (Rs.62.25) yesterday at around Rs.60.80, can continue to hold with a SL of Rs.59. Recently, there were some positive developments in the company.

4. Buy Hindustan Oil Exploration Ltd at Rs.72.70, T: Rs.78-82, SL: Rs.68.60. The Union Cabinet’s decision on Wednesday to grant extension to production sharing contracts for 10 blocks will benefit Cairn India Ltd (CIL), Oil and Natural Gas Corporation (ONGC), Essar Oil, Focus Energy, Hindustan Oil Exploration Company (HOEC), and Gujarat State Petroleum Corporation Ltd (GSPC).
The contracts for these pre-NELP (New Exploration Licensing Policy) exploratory blocks will be extended for 10 years from the expiry of their contracts. The move, the government said, will help accelerate indigenous production of hydrocarbons from existing blocks and act as a progressive step towards achieving the target of 10 per cent reduction in import of crude oil by 2022.

5. Those who have entered the turnaround infrastructure major, IVRCL Ltd (Rs.5.20), can look for targets of around Rs.7-8, in the coming days.  IVRCL Ltd is now basically (majority stake) owned by a consortium of lenders (Banks), hence accumulated debt is no longer a big problem. However, what seems to be a little bothering is working capital requirements.
Moreover, since the conversion price is around Rs.8.765 (~Rs.9), hence the scrip is likely to move towards this new found datum.

Thursday, March 23, 2017

Today's Calls
1. Buy JSW Energy Ltd at Rs.60.90, T: Rs.66-72, SL; Rs.59. JSW Energy, part of the Sajjan
Jindal-led JSW Group, is believed to be in the race for buying out the thermal power assets of Monnet Power and Jindal India Thermal Power Ltd (JITPL) in Odisha. Monnet Power’s 1,050 Mw coal-based power plant near Angul was in advanced stage of commissioning.  Monnet Power’s parent company, Monnet Ispat & Energy had won the Mandakini coal block in Odisha in competitive bidding, it surrendered the block later on grounds of economic unviability. Monnet Power had accumulated debt in excess of Rs 5,000 crore. 

2. Those who are holding the shares of Tata Motors Ltd (Rs.469.50), can continue to hold the same with a SL: Rs.459. The stock is on an uptrend, and is likely to move above Rs.470, in a short time.

3. Buy IVRCL Ltd at Rs.5.15, T: Rs.7, SL: Rs.4.60.
There were earlier media reports that Essel Infraprojects Ltd is in advanced talks to buy a controlling stake in Hindustan Dorr-Oliver (HDO), a publicly traded unit of infra developer IVRCL Ltd.
Meanwhile, the lenders to IVCRL had decided in December last year to convert their debt in the company to equity under the strategic debt restructuring (SDR) mechanism. On 24 February, IVRCL told stock exchanges that State Bank of India, on behalf of the lenders, has informed the company that lenders have approved the SDR conversion package. Lenders converted part of the firm’s debt into equity at a price of Rs8.765 per share. After the conversion, the lenders collectively hold 51% or more of the total share capital of the company. Infrastructure major IVRCL reported narrowing of its net loss to Rs.249.27 crore for the third quarter ended December 2016. The company had registered a net loss of Rs.345.47 crore in the same period a year ago.
However, net income from operations during the quarter also declined to Rs.397.88 crore as against Rs.501.46 crore in the year-ago period.
Total expenditure fell to Rs.479.88 crore during October-December 2016 as against Rs.700.49 crore in the previous financial year.

4. Those who have entered Panacea Biotech Ltd at Rs.155, can book some profits at Rs.161 and wait for dips to enter.

Wednesday, March 22, 2017

Today's Calls
1. The Nifty (spot) is expected to get support at 9010 - 9030 ranges, which is just arms length
from the current value of Nifty 9,053.45 which is now down 68.05 points or 0.75%. The traders are suggested to cover all your shorts.

2. Fresh positions (or averaging) can be initiated in Rolta India Ltd at Rs.58.80-58.90, for immediately targets of Rs.61.20-61.50.

3. Those who are holding the shares of Panacea Biotech Ltd (Rs.155), should add in every decline for immediate targets of Rs.167-170. The stock is likely to touch Rs.220-250, in the medium term.

4. Those who are holding the shares of RCom (Rs.37.50), should look for targets of Rs.42-47, as RJio has come up with Paid Service, drawing curtains to the Free Services.

Tuesday, March 21, 2017

Today's Calls
1. Buy Panacea Biotech Ltd at Rs.155-156, T: Rs.170, SL: Rs.152.   Renowned cardiologist Dr
.Devi Shetty founded multi-speciality hospital chain Narayana Hrudayalaya is on the prowl to bolster its footprint in the domestic healthcare services market. ET NOW learns from multiple sources privy to ongoing discussions that the Bangalore, Karnataka headquartered firm is in advanced talks to buy out Delhi based drugmaker Panacea Biotec's multi super-speciality hospital located in Gurgaon, Harayana. 
On the other hand, Narayana Hrudalaya confirmed that the company has been in discussions with Panacea Biotec for Gurgaon Hospital since October 2015.
Giving the chronological order of the events, the company said in December 2016, it had signed a non-binding MoU with the counter party and in March this year, due diligence is under progress. The company  in January this year, got the US Food and Drug Administration’s (FDA) approval for Rizatripan Bonzoate tablet, which is used to treat symptoms due to migraine.

The company also entered a long term agreement with UNICEF for suplying Pentavalent vaccine.

2. Those who have entered UCO Bank should keep a strict SL of Rs.35.50 and keep holding. The banking sector is in mess, with Narendra Modi's government till date giving only lip service. That stock did not move much even lafter the announcement of infusion of capital raises further concerns regarding its health/asset quality. If you are not comfortable then exit at Rs.35.90-30, with no profit or with minimum loss near the recommended prices.

3. Those who are holding Tata Motors Ltd can continue to hold with a SL of Rs.466. Most of the brokerage houses are positive on the scrip. However, too much optimism make a stock over but owned, which is also not good.

4. The scrip of BHEL (Rs.169.40) was recommended in this blog around Rs.105-1 107 the scrip made a 52-week high today at Rs.172.10 in the NSE. The investors are suggested to book complete profits and wait on the sidelines, for entry at dips. When I recommended the stock many of the research houses and brokerages were extremely bearish, some were giving targets as low as Rs.70.

Large Scale Capital Infusion: Cure for PSU Banks (PSBs)....
Photo: UCO Bank
The banking sector, which is laden with bad loans, plays a critical role in carrying out the government's development agenda but unfortunately hereto precious little has being done to revive this space.

A recent study found that the gross “non-performing assets” of state banks rose 56% in 2016, and 135% in the last two years. They now account for 11% of all state bank loans.

These are hardly reassuring figures. Yet the Narendra Modi's government—which, after all, owns these banks and thus dominates the Indian financial sector— seens relatively unconcerned. In the most recent budget, the government set aside barely $1.5 billion to recapitalize the banks.

You must have read that off late there were some capital infusion in 10 banks by the government of India. The name of the banks and the amount of capital to be infused by the government are:

Allahabad Bank (Rs.418 cr), Andhra Bank (Rs.1,100 cr), Bank of India (Rs.1,500 cr), Bank of Maharashtra (Rs.300 cr), Central Bank of India (Rs.100 cr), Dena Bank (Rs.600 cr), IDBI Bank (Rs.1,900 cr), Indian Overseas Bank (Rs.1,100 cr), UCO Bank (Rs.1,150 cr), and United Bank of India (Rs.418 cr).

However, Large-scale capital infusion in individual banks, consolidation or culling or even creation of a bad bank is the need of the hour.

Or else as the negative effects of demonetisation slowly tapers down and investment demand picks up in a big way, corporate borrowers will be scrambling for credit, but the banking system will be  find hard put to support India’s growth; leading to borrowings through ECB routes or FCCBs or through PE capital or Equity.

Moreover, while India government’s demonetization exercise which forced citizens to return old high-value notes in November-December period, might have had many side effects, however it the helped banks to grow deposits. 

Also, as a percentage of total loan assets, roughly one-third of all loans of United Bank of India (33.07%) and IOB (32.63%) are stressed. For IDBI Bank, this ratio is 27.76% and Uco, 21.71%. Thus the position of UCO Bank (Rs.36) is the best among the four indebted banks.

Besides, most analysts say that the government will be able to stick to the target of a fiscal deficit of 3.5% of gross domestic product, or GDP, in the current fiscal year that ends in March and aim for at least 3.3% fiscal deficit for 2018. It is noted that successive governments have been diligently lowering the fiscal deficit for several years since 2012 when the deficit touched 5.9% of GDP.

Many of the government-owned banks that have around 70% share of banking assets are laden with bad loans and need capital to stay afloat. 

But till date most part of these declarations remained in paper only. The government of the day therefore should do this task on a priority basis, before the things are too late and damage becomes irreversible. If this governmentu is as bold and courageous as it likes to claim, that should be its topmost agenda.

However, inspite  of all these negatives, the banks stocks are on a steady rise since the last few months -- may be market knows something which we do not know. Now that the BJP has improved its position further, we could see a spurt in the Bank Stocks in the near term, as banks are a proxy to any economy.

Monday, March 20, 2017

Today's Calls
1. Buy UCO Bank Ltd at Rs.35.80, T: Rs.42, SL: Rs.35.50. The stock has formed a double
bottom on EOD charts and should move up. The name of the banks and the amount of capital to be infused by the government are:
Allahabad Bank (Rs.418 cr), Andhra Bank (Rs.1,100 cr), Bank of India (Rs.1,500 cr), Bank of Maharashtra (Rs.300 cr), Central Bank of India (Rs.100 cr), Dena Bank (Rs.600 cr), IDBI Bank (Rs.1,900 cr), Indian Overseas Bank (Rs.1,100 cr), UCO Bank (Rs.1,150 cr), and United Bank of India (Rs.418 cr).
Most analysts say that the NDA government will be able to stick to the target of a fiscal deficit of 3.5% of gross domestic product, or GDP, in the current fiscal year that ends in March and aim for at least 3.3% fiscal deficit for 2018. India's successive governments have been diligently lowering the fiscal deficit for seven years since 2012 when the deficit touched 5.9% of GDP. While India government’s demonetization exercise which forced citizens to return old high-value notes in November-December period, might have had many side effects, it the helped banks to grow deposits. Meanwhile, my earlier recommended Dena Bank Ltd (38.70) is up 4.59% today.

2. Those who are holding Tata Motors Ltd (Rs.472), should exit at intra-day highs, and enter banking or IT sectors. The long term holders, can keep a SL of Rs.466.

3. Those who have entered Rolta India Ltd, should give at least 6-9 months to the scrip, to generate some decent returns. This scrip may not perform in the immediate short term.

4. Nifty is now trading at 9,123.60 down 36.45 points or 0.40%. But I feel, a strong government with around two third majority in Uttar Pradesh is positive for the stock market. I am expecting the Nifty to close in the Green today. Let us see....