India Morning Report: Just a new Cabinet in play, Markets joust at 7200

There is virtually no reason for markets to hold the new 7200 levels on the Nifty or 24200 levels on the Sensex so there is always  chance that 7100 is reached again in the coming 2-3 weeks, but global markets are agog with the news of a new government in India and there are even some stray rumors of FDI being redirected from China to the Indian basket. However as a few that have rerated markets to 8000 levels would appreciate and Nomura does not in rerating of the growth target to 6.5%, the new Modi trade as yet does not encompass any change in fundamentals of the Economy as it awaits the qualification of India strategies with real strategy motifs from the new PM.

The FII sell trade on the index however as we explained already is a likely deepening of their bets on India as they exit naked index bets and return to stock specific bets while exiting cyclicals ( Citi – Pharma, Consumer Staples, Metals) . Goldman Sachs again, a good index revision to 8300 however no retail investors should be encouraged to enter the markets at these levels, those in play already inside whence the index crossed 6700 levels.

Markets as expected, open slightly positive after a rush to Mt. 7200 on Friday and now sustaining the range between 7100-7400 before fundamentals and a real government allow the move out to 7500 and then only one can say what the new peak for the markets shall be and where it will end in 2014 likely above 7700 and 25000 on th Sensex an easy target . Markets reached 25k mid afternoon on Friday. Global markets in the meantime see the FTSE stopped below 7000 as it along with the European plays changes the fundamentals of the Bull trade from European growth at home to Global growth and the bond trade exits. European markets will now rise on the weakness of the Euro having peaked out their slow growth memes at the 1.40 marks on the Euro. The SU markets after a scary ride down all week closed near 16,500 and still retain a bullish meme or too but only if the Bond trade stops doubling down every week, ten year yields still headed south even as retail reports a buoyant quarter this week.

The currency is headed below 58 with another 30 paisa gain at open to 58.50 even as Arun Shoruie gets another chancce at an Economic portfolio. It is a little discouraging ( intellectually) that the voting masses do not appreciate anyone with real qualifications, though one does not yet mind a man of the masses taking reign as he brings promise of long term stability and thus at least hope of turning the regular recovery to 6% into a big decade for India and India inc,

It almost seems superstition ( see our predilection series’ of 2011) for markets to stand on a 9:2 Advance Decline ratio after having lopped of the steep head of the trade on Friday when the markets understandingly rose 5% mid day to above 7500, allowing analysts to comfortably bat for India bull markets even after the great seeming froth in equities ont he back of a 336 seat win for the NDA. Banknifty hit 15k in Friday trades and the bigger better banks including the 2000 vintage Yes Bank too will continue to reap the gains of renewed investor confidence , allowing Yes Bank to trade around 600 levels and ICICI Bank perhaps 1500 levels as HDFC Bank is already at 800. Market earnings should be taken at around 375 for the Nifty and 1400 for the Sensex as the markets have moved on since August last year and India inc continues to perform.

A great bull run will probably stay stopped in its tracks for a couple of months as consumer staples stop rising even as inflation remains high with consumption the oonly growing GDP component. However as growth takes hold, it is desired (as Riddham Desai makes a case for it on CNBC tv18) that the %of GDP attributed to wages decline in favor of % of GDP attributed to Profits. That would also imply that consumption share of GDP that may keep growing will have lesser role to play as real investments finally make the GDP shine for India a sterling part of selling the new Modi model of global business. However , my takeaway remains that it may be difficult to undermine the role of Pharma, Exports and even FMCG/staples/Non durables in future Indian growth and performances from the sector may well continue to lead sentiment into 2016 giving the market consolidation a reason to not change baskets but remain stock specific after having chosen their favorite banks. China in fact continues to bat for a new dispensation that allows deeper domestic consumption markets where Japan has already moved after a first few futile months, and though analysts and funds start chasing China and Japan almost simultaneously with much bigger commitments, India will scor ehigher than its own previous benchmarks on Foreign inflows and markets will continue to lead business here.

India Morning Report: Markets will breathe easier at 6300

Many market commentator see further moves north as highly unlikely and it does seem markets have done a fair bit already including the choppy start to 2014 as buying overwhelmed short trades. However one does not see any of the selected scrips losing much from current price levels. The Ukraine crisis fade had much to do with the afternoon bullishness and fresh buying will be allowed at lower levels in most of yesterday’s increases. Pharma and Infra trades may yet break out again with Pharma yet to take off, Cipla the ‘only’ big positive trade continuing to dominate sectoral picks. IT scrips finally yielded ground with HCL falling a few notches as market spine trades keeping interest in the stock finally seem to have exited the ‘always trying’ bellwether

New affordable housing targets in China as US and China complete their budget exercises point to the realities of the new post crisis economic melee as US Arms spending takes a backseat and China continues to increase its Defence hawkishness and faces increased executive flight risks from the Smog. Australian GDP gave the Asian markets much to cheer pre dating a secular return of investors to Asia even as China is finally deprioritised at some bigger investment houses

At home, one is still foxed by the marginalisation of LK Advani in the BJP as frankly NaMo seems a little banged up for the big job and AAP is well, a one issue pony. ( at best a canard) The fate of General Elections also thus has to be separated from that of the markets as India’s residual growth and any strategic direction will never be delivered by the Legislative arm given the state of our politics. Inspiration may be missing from the Executive or the Bureaucrat/Technocrat nexus but there is still momentum for the populace per se and India remains the best bet in global equities in such confusing times, making do with a much smalller stock of FDI for it knows its limitations. Our advantages in the English language could compare to an additional factor production given the dominance of Services and along with our expertise in more intricate subjects of the business management disciplines , we can well fashion as many competitive advantages any corporation needs to win globally as required Rajnath Singh returning to Public service will be NaMo’s other card but Congress and SP have got no leg to stand on even as the issue of the State’s division holds extreme potential before it also becomes a BJP manifesto dashboard line item.

And Nitish finally replies after 6 days on page 17 (TOI-Blr)

Seeing as NaMo’s other credentials being weak are still the best bet, Nitish finally gatecrashed onto national topics, catching his favorite Paswan in his horns. Meanwhile,  NMDC has corrected more than 17% and apparently has stable lows at 110 levels to allow further accumulation post the new CERC regime in progress with the 2014 guidelines. The Power quartet had a great start yesterday as expected and may strengthen the trend in the Power sector going forward even as cyclicals try to start back for the longer trek to the top uninterrrupted by market momentum taking the index for a roller coaster ride, including the Energy infrastructure stocks and the powerful Consumer staples like Bharti and ITC which arenot going to retreat in the bull scenario while remaining a defensive bulwark

Private Banks remain the most important component of India Bull portfolios with YES Bank leading the charge yesterday and Kotak taking a breather in the secular run. ICICI Bank and HDFC Bank continue to capture market share on and off the bourses from the embattled SBI and BOB pointing to the limits of an upward move in a side like PNB even in this critical move for the bankers, as PNB continues to show good profitability

Nadar is finally offloading HCL stock as his offspring looks to focus on the Education and philanthropy sectors even as both listed and unlisted Tech  and Outsourcing businesses battle the problem of employee commute in a society where broadband connectivity is unlikely to bring any solace or a formalised structure for the telecommuting options. India thus, retains one of the greater habits of managing to jump over bigger social potholes and non lasting technologies. ( in practice i guess with cities = potholes 😉

VIX trades apparently careened over from 15 levels itsel fin Tuesday trading back to mmatching US Vol levels at 14 as the Ukraine issue was wiped off investor tables.

The Great Indian Premier Tennis League Auctions

In other unlisted business, The mega sports franchises era continued untethered with Tennis joining the ranks of other popular sports making a commercial comeback as a four location auction saw  Mumbai grabbing the top three in Nadal, Djokovic and Andy Murray at $2 million each ( less than $2 for Djokovic and Murray)

Ecommerce has enticed Walmart to India too, even as PE players move on to above par valuations after a year of job cuts and enthusiastic middle/senior management recruitment at Management school campuses and Amazon opening its second FC in India in Bangalore

The Dell Foundation makes a return to Indian shores after the Gates Foundation confined itself to outright charity in limited indian programmes. The Dell foundation will be backing a BOP Private equity set up Intellegrow.

ET also headlines India pharmas second attempt to break into higher market shares in US generics in Complex molecules that could well go to the PE companies given the investment required and the uncertainty of time horizons ill suiting listed companies like DRL or Lupin.

Aviation revenue miles are likely picking up in the final month of Fiscal 2014 and Fixed income markets also likely to accelerate demand led price increases bringing down yields as Crude becomes a bear trade and Indian currency moves up on redenomination of the dollar forecasts down for the year in 2014. Policy Day in two weeks is unlikely to be busy for the Reserve Bank of india though the Central Bank may choose to exercise a rate hie whence the yields will come back to 9 levels before investments make a mark in the Indian recovery still flatlined below 5%


India Morning Report: Markets digest a rate hike and the new Maruti equation

India Auto ExpoYou heard it in 2009, Suzuki may go it alone:

The 7th Maruti Suzuki plant in Gujarat adding capacities to its 1.75 mln cars from Gurgaon and Manesar which has already seen union troubles in the North, will actually belong to Suzuki in a new Wholly owned subsidiary and as royalty terms have not changed the new production available from Gujarat in 2015 will improve MSIL’s margins. MSIL already is the dominant component of Suzuki’s global sales. The markets are however punishing Maruti for the loss of faith , the automaker springing the surprise from its ranks mid afternoon yesterday. Today’s morning quotes will be 20% lower and likely fall a further 5% tomorrow though 1200 is improbable. A Suzuki coming into India alone means it may be planning exiting its Maruti investment except for its commitments to successive Indian governments over the years. Maruti trade is being closed within this series as speculators likely get ready for a short trade in the new series after having been farmed in the construction sector. The Gujarat plant will supply only to Maruti production

Biocon is back in Volume breakouts from the switchout in cash

Rate Hike

Markets will likely digest the rate hike given good liquidity, as mentioned in Bank Policy Tuesday yesterday however the 8.5% and lower yields will now wait till end 2014 and at least one quarter of good growth with strong positive investments. The higher rate environment may not translate into higher retail rates and credit expansion may also not be threatened, but was it required? Yields did move separately from Currency markets before policy and thus Policy rate hikes squeezed the exchange rate back to 62.50 levels

Airtel again, Idea bhi

Airtel is definitely back in the mix, changes at the top likely positive even for Manoj Kohli who finally moves to the new businesses invested from the Telecom win for the Mittals over the years. Idea’s ARPU gains despite revenue per minute dying means both Idea and RCOM are also likely to see long trades and Bharti remains the back bone of he market as IT and Pharma break down. Tomorrow would probably be ITC again and the day after that Bharti

Bharti PAT is up 20% on quarter and ARPUs to 195 frm 192 spectrum auctions stamp their market print on Feb 03 and Feb04(post announcements). Africa ARPUs are up 10c to $5.80 or INR 360.

Sell 6100 Puts

If you are finally tired of shorting the market and Ashwini baiting from your camp you may join in too but ahead of expiry, 6100 uts are likely to look tempting and markets will close 6100 with such a huge magnitude of newsflow  getting hope trades shucked off by early market moves last week and shorts on DLF , Unitech and HDIL would likely be the biggest winners of the series. The days trading would likely see a similar mood sneaking into 6200 uts , which however is a function of the other market forces discussed with a 40 point increase in NIFTY being par and leaves tthe markets at 6160 and markets may not want to control further BEAR GREED till todays close whence the 6200 trade still rewards that additional risk

Banks are a big buy

10,600 seems to have done it for the Banknifty and investors are likely to stay glued to ICICI and HDFC Bank on the rise. Axis Bank fell 3% yesterday at the fag end of the correction ( on markets breakdown post Maruti announcements) ICICI Bank reports with India Starbucks (Tata Global) . Starbucks ma also prefer a new 100% investment in India after 25 stores have opened with Tatas.

After ICICI Bank’s clean sweep today, tomorrow will see earnings from Hero sandwiched by Bank of India and SBT and after the Adani and IDFC reports on Friday we close out earnings season with a fairly robust performance, near 20% profit growth still standard fare for the biggies.

Other Results

REC, M&M and Cox & Kings report on the 14th of Feb, ILFS Transpo, Page (and Lovable?) and Finolex Cable on 12th and Bombay Dyeing on the 13th. Lovable is doing well in the trade prioritiising for the New FMCG adds in 2010 IPOs

India Morning Report: Maha gets Power cut regime, will the apolitical vote amass for a functioning government?

I for one can understand a politician like Kejriwal responding to stonewalled government in a way so the Indians know the daily challenges he faces. However, I am a very recent convert , made by tea sellers, esp the ones headlined in Bangalore who saved a lot of lives in a road accident. Then you must understand the vote bank politics of the other religion as well however, and the partisan nature of supporters for apolitical ‘figureheads’ like a Shashi Tharoor. Thus, the market will probably understand now to stay out of the political potpourrie and concentrate on performance, putting paid to an early rally and Goldman Sachs sell side, probably scratching a head or two on their own.

However, the INR 92 B power cut giveaway from the Maha Cong( a new definition for the local polit in Pawar country)  may actually cut the collation of vote from around AAP (Affirmative action politics) and Independents in one fell swoop, a lesson for those disenchanted to get on with their lives more than that other activists presuppose esp in centers like Bangalore, where enough time sheets were safely filled for a full day’s work  when AAP congregated in large numbers. And yes, Delhi Police should belong to Delhi only. May the good lord wish Godspeed to all local politicians without food splurges as a journalistic reprise so the breed of politicians may grow. India’s young definitely need to make a crossover to social streams in serious droves and without compromising athletic and able quantitative careers. India meanwhile will continue in force with the roadmap already laid out and credit conditions having returned to betterhood. So, infracos will e back and I am staying away from the self leveraged promoters though. (Sun & spice, not just coincidentally, was speaking on ET now as I finished this report)

I hope you understand by being a cogent summary of issues, here above is pour moi a non adjunct part of the report and also discourages – flying eagles from supporters who like to do so without reading or visiting the site affirming old affiliations or otherwise and without writing back their opinion on the issues

Indices are holding 6300 in a wonderful response to the results season. ttk results yesterday showed a INR 900 mln drop in just induction cookware after a 6 month flurry of sales of the new technology. In the wake of subsidy additions to 12 cylinders a  year which was expected, the recovery from the slump is questionable but the base effect of the October to March rush will be sloughed off by the end of this fiscal

ET is stuttering a little esp in print in the second phase of its consolidation after the ET Now launch. Sasken’s jump escapes me I having access to only their financials and their getting a new CEO from the ‘neither here nor there industry’ Many technical issues with ET streams and their renowned ad bartering systems may be in play apart from TAM in rendering the weather there on prayer. Is anyone taking advertising companies public, or is the FDI uestion kicked a unique insight?

The PCR has normalised at 1.02 and more availability of F&O data now biting traders, esp with NSE not being the only layer? unlikely. I hope you use an Excel spreadsheet( download the ones with all strategies from the web) Banks seem to have dulled out though trading volumes have returned for three months now and ICICI Bank results are likely to be as  positive surprise as ever, crossing the 30% yearly growth threshold

TCS shorts would have been a very small party, but the scrip should have been likely to keep going down well below the 1200 levels. However the given stippling of the range , with a splat 6300 on offer instead of 6250, most retail traders should just keep out except for the MidCaps which have been on a mad rush and ar not sell on news. Kotak reports today, Biocon tomorrow before HDFC. The FII ceiling is stuck on at 74% in that parable of India Inc however. Federal Bank has received the stake increase approval , FII limit to 74%(udated 11am)

Emami’s restructuring seems to have worked out. One only hope the management can keep the momentum to carry out the strategy to the finish line, the comany increasing Operating Leverage stiffly to post a INR 1.5 B profit from the 1.1 B a year ago. Cement again remains a underperformer with the expected poor results this quarter. I am going to be catching up on Bharti infratel too on Thursday so that is definitely on the Good shortlist(Mine) again. Dabur’s case is more complicated, though FMCG is running much better and I am bullish on the sector. Parting shot surplus: sintex who? what? no.

India Morning Report: Markets horrified by ‘unaffected airs’ slip back to keep rate cut

English: Logo of Bharti
English: Logo of Bharti (Photo credit: Wikipedia)


Markets sit on a big slip as they await the 11 AM announcement of policy rates and the afternoon meet the press with bankers. interestingly this is the closest to near unanimity in market expectations held together by all stakeholders including different institutional and brokerage based analyst teams on research and bank economists and other commentators that the RBI will be giving a 25 bp cut after inflation has fallen in line and the need of a stimulus is par for the course. However, the likelihood of the unlikely event is still finite in that no one expects the Central Bank to ignore the macro weaknesses and so far the prudent fiscal path is not more than a promise either. To cut the longer story there short, the question of the RBI not following through has really made the sentiment jittery(threatening?) ahead of the announcement


Interestingly GMR to take a infraco on point kept its head above water(closed positive) while the Anil companies celebrated the gold rush with the rally peaking above 6000 levels and Bharti’s deal today for 5% equity (new, post issue stake 5%) to be issued to the Qatar fund or other events like results are largely being ignored in the morning session. The session’s preparation for the q-case of the Central Bank not conducively incentivizing the markets thus means that the rally is still on and will not breach 5800-5900 levels on the downside after a sharp derisory devaluation of the PER of the indices today. The optimism on the surveys has however like us in the past led to a forecast skew towards the right with the india positive commentators opting for a 50 bp cut signal from RBI


Regardless of the bank policy announcement however, its outlook will remain cautious till the end of this quarter bu t may include data to prove reasons for becoming bullish from July 2013




India Morning Report September 17, 2012: A New High For Nifty As India’s Reforms Story Rushes Get Canned


The usual climactic rushes surrounding India’s reform measrues have effectively been canned with the coalition stuck Congress able to push thru reforms from UPA2 while keeping the support of the SP, BSP and even Mamata Di.

The usual protests and demonstrations apart, just in retail it’s going to take more than a year before the existing players from Bharti’s EasyDay to Reliance and Future Group reorganise their operations along statewise lines so individual permissions for JVs can decide their partner’s equity in retail

In aviation, there will be no takers for the 49% stakes except for promoters in Jet or new investors in Spicejet while one is praying for air India and Kingfisher.

But, why waste a Monday morning in recrimination ( and last time markets would have crashed on the mere whimsy that the sky is not sunny all the time and it is not raining everyday) hen fibnally everything ont he reform agenda has been finished in time. Well, there is still the case fo a new Divestment target which is unlikely to fructify as PSU CEOs put their foot down but then a Diesel and LPG hike could have made any balanced intelligence see the folly in a downgrade (which as brinksmanship would have it, takes India to junk status)

The markets will hit the path to 6000 today but as outlined above it is likely a messy positics that ill muddy that scenario for indian bourses soon as dollar inflows make markets so steep on the uptick that a deeper fall is inevitable. However, having invested in, none of them ill be planning to leave at this stage, the waiting time being immaterial for the returns expected.


UB SALE to Heineken, and other voyages of the Indian spirit

Wow O la la la leeeey o! My Kingfisher beer is safe thanks to Heineken getting to buy a13% stake in UB from Vijay Mallya’s 23% stake. The other 14% or more stake in the spirits major lies with UB holdings. Vijay Mallya’s personal fortune adds nearly half a billion or INR 25 bln ( $500 mln) at the market price of 545/-

And of course lot of leis from the Hawaii layover ( just la la !)being added to my map but then Heineken had been trying for 5 years now or am I a little tipsy! There is no aloha here in India, desh even in New York or anywhere else except Hawaii! Maybe Vijay Mallya and Lalit Modi can set up a new League there and let it be! Mallya’s KFA is unlikely to survive with anluy 20 planes and now half the operations shut down.

Similarily, another indian experiment lying low, on a series of bad puns, is Tata Motors with Landrover sales obviating sales figures of any Jaguar models or cars back home even though the new Nano is selling nearly 6000 units a month and has a 800cc version in the works

The “sell out” (OUCH!) gives majority control to Heineken and access to 66% of india’s beers and probably more share of its Whiskies and other white & colored liquors capacity W&M stays on the chiopping block in its overseas holdings for a minority stake.

And why did Amazon come by underground sea cable?

Image representing Amazon as depicted in Crunc...
Image via CrunchBase landed in India ahead of its First fulfilment center as its own internal business models are delightfully more complex than the country’s FDI,. sales tax and excise regulations. While packaging centers may get into excise inspector brouhaha with the Supreme Court adjudicating ( Freaky Friday Speculations)  adventurous Amazon executives may also be wary of getting subjected to multi Octroi, Sales tax and local taxes ahead of GST roll out in the country.

At least those are the typical silly stuff one avoids by starting a totally desi business in e commerce thence it can be sure of getting what Fabmall and now flipcart are getting in terms of taxes and accounting.

the testing of waters with is however more likely to backfire till it comes with its full range of shipping made available at a safe and reliable Indian customers a re a ticklish lot and though they suspect nothing in government and business is above board they by and large do not expect to partake of that in their daily lives. We did not welcome the Apple stores till the latest iMacs and iPhones (iPods) were available simultaneously and we will not let Amazon get by on ebay like

Amazon founder Jeff Bezos starts his High Orde...
Image via Wikipedia

FDI wise , trying to escape a multi brand regulation framework is going ot be impossible for amazon and waiting for til 100% FDI is allowed would be one option that India phobes have shown favor for but likely that will only lose them more business in the World’s #2 English speaking Consumer market. The loss is all yours as Chindia trundles along. itself came and left back in 1996 and now will feature 12 million products from 14000 brands to keep the portal available, but consumers are likely to wait till Amazon can get a clear decision, esp if it can introduce Prime here, international shipping is a bore and a real swindle on a retail shopper’s budget as Jeff Bezos would understand

FDI momentum for India’s growth

India remains the #4 destination for FDI worldwide way behind China as less than one third the rate of FDI

Armani Exchange
Image via Wikipedia

hitting China. China’s FDI changed characteristic at the start of the crisis to a Services led growth in the Central and Western regions , moving away form the Eastern seaboard and even as wages increased at the rate of 12% per year it stayed in new Services areas and current enterprises in McDonalds,, Starbucks and GM continue to either grow or as in GM’s case battle new 11-22% duties but remian the dominant player in China.

On the other hand, India has turned away many in retail from Ikea to Walmart, keeping those planning JVs in the play for more thna one reason. Yet, Till November the eight months of FY2012 managed a $22 bln inflow

Deutsch: Moët Hennessy Louis Vuitton Logo Engl...
Image via Wikipedia

of FDI, $15 bln having come till July 2011 and data for December and January incl LVMH and Starbucks but excluding Carrefour and Ikea still expected from official sources.

FDI in aviation allowed to Foreign carriers is yet to bvecome a happy event without a ready pipeline of bidders and local sourcing restrictions helped a couple of 100% entry decisions get shelved

English: Simone Singh at Jimmy Choo Bash. Phot...
Image via Wikipedia

FDI averaged $2.8 bln, $1.7 bln, $1.1 bln and $2.5 bln from August onwards and likely stayed below $30 bln for Calendar 2011. China in the meantime crossed $110 bln for 2011 as FDI alone even as new exchanges in Schenzen paralleled Hangseng in size and grew business on the last remianing Indian bastion, the Equities Capital Markets, India’s natural advantage in a well understood global ecosystem lost in China’s sheer opportunity and advanatges of quick execution and operationalisation we somehow never wanted, putting the blame on the democratic process.

English: Logo of Ikea.
Image via Wikipedia

Fortunately, India’s infra sector does not suffer from those bottlemnecks that much, except that the Land acquisition itself has been an issue for many projects and the Power projects in play already beat by non availability of coal and sector specific finance deals

The retail lifestyle champions: Jet Airways saves face , buys new Boeings

Jet’s Q3 losses came at a low INR 1 bln as it saved up from asset sales of INR 1.7 bln and kep itself in operating profits. The jet order for 17 boeings will also help india’s Capital goods indices this month

Jet Airways ordered 737-400s and 500s for its fleet, probably exchanging out older Jet lite planes though it was its fourth straight loss since September /December 2010 conditions worsened in fuel cost overheads, wiping out gains from Jet Konect saving plans and this being their first of many sale and lease backs adopted by the Industry at Indigo and Jet Airways

On sales of INR 3437 Crs in December 2010, the airline flew 13% higher year on year and expects to keep growing sales if hikes are passed by AAAI and if no further costs imposed by DGCA action, the airline will keep posting cash profits

According to mint, CAPA revealed a loss of $30 per passenger in domestic flights in India. Kingfisher and Spicejet may not be able to hold their bottomlines to a sane number as they allow losses to reflect their financial uncertainty, demanding policy action/handouts

Godrej Properties purchase of INR 1.06 bln from the BKC premises and FX gains of INR 1.76 bln also stopped out losses but the airline bucked expectations of INR 3.5 bln in losses

  • Sale and Lease back allows it to keep Debt constant and it cana lso start paying the INR 14 0 bln debt from the SLB proceeds. The 17 aircraft are on options thus guaranteed at a good price.

Amazon gets nearer to India post?

Image representing Amazon as depicted in Crunc...
Image via CrunchBase

After Amazon opened in Spain last year and a rumor of Lipkart getting into the supply business for Amazon hit the circuits last, the talk of their first local fulfilment center show that while the talk of interested shoppers with Amazon was a fact unsubstantiated by country sales break down, the wishes for a local Amazon store may no longer be lost in getting their IT software to recruit here in as It happened one night in 2006

This warehouse is a critical piec eof the Amazon logistics chain promising delivery from US to far flung international destinations in as less as a week and probably includes ready shipping plans that can be tied

Screw Amazon.cominto Amazon Prime sooner than later. If it really turns into an independent India based website with Indian product ranges and a couple of expat managers, it could be that much bigger for Amazon and a bite back for Apple which has horrendously latched on to super premium pricing for its hot iPad and iPhone lines in the country

Looking for a Used Car market in India?

The used car market in India has matured in the last two decades with ready company owned used car operations  from Hyundai, local franschised multi store (warehouse) operators like Classic Cars and even multi brand all purpose car repair chains from Carnation.

Red Lamborghini Gallardo, to be used as an icon.
Image via Wikipedia

The current story in the papers of course is the DNA money story on Diesel car demand landing an unusual bonanza for petrol models, as used car sellers are almost holding mass clearance sales int heir own way for their inventories of petrol models. Diesel models have hostorically enjoyed premiums to ensure basic availability and noww with Diesel car demand growing that premium has shot up enough for that neighbourhood ‘s tore’ to give away petrol cars for cmore losses esp where he owns the inventory. Individual sellers will have to hold on to their crs longer to get the price they want for their favourite ride.

LVMH makes a commitment to India

Sanjay Kapoor’s move from food forays to luxury chain Genesis has worked well from him. After the failed multi brand FDI proposal,  LVMH brands operate under a single brand luxury store model in India while Genesis operates Canali, Just Cavalli, Paul Smith and Jimmy Choo stores. The current round of funding had competition from Reliance and Parcos.

Genesis is already sitting on funding from new to the field L Capital which owns 25.5% of Sanjay Kapoor’s luxury lifestyle investment. L Capital is also a LVMH venture in luxury PE with Arnault of France The new investment will be routed thru Sephora another Moet Hennessey Louis Vuitton subsidiary

Genesis Luxury Fashions will operate the new Sephora stores operating cosmetics under a multi brand portfolio of skin care, fashion, bath care, perfumes and hair care Groupe Arnault is LVMH owner Bernie Arnaulte’s personal vehicle for funding and control over global luxury investments

English: LVMH Building (Berluti, FENDI, Louis ...
Image via Wikipedia

Genesis brands Paul Smith and Jimmy Choo are still likely targets for Bernie Arnault for investments. It licenses Just Cavalli lines globally. Jimmy Choo PE Towerbrook put it up for sale thru Goldman Sachs and Morgan Stanley in early 2011

Sephora’s multi brand selll model is duplicated by another Bernia Arnault operation in DFS which is bdding for a new airport project mall in India India’s Luxury market was estimated at $280 mln and growing at 22% by AT Kearney in 2010

Godrej gets a Temasek vote of confidence

Baytree’s investment into Godrej consumer underlines the long pending second line of investments to be made by the Asian SWF in India and other growing economies of the region.

Godrej is issuing 10% equity or 16.7 mln shares in a preferential allotment to the Baytree arm of Temasek at a good $8.2 price or less than $6.30 if you consider Indian rupeee’s expected levels of INR 65 to the Dollar $$) The equity makes Temasek a 4.9% investor in GCPL, Godrej Consumer. The new Rupee 1.00 par value shares will help the company fund and stablise their acquisitions in hair dye maker Cosmetica in Chile and last year’s acquisition of African hair care firm Darling.

Cosmetica for example cost GCPL a hefty INR 10.8 bln for its $36 mln turnover but will add INR 2 bln in profits

Temasek Holdings
Image via Wikipedia

every year after the acquisition is completed. African Darling is thru one phase of marger integration as per Adi Godrej and likely to complete integration by 2013. GCPL grew revenues at 36% from December 2010 profit growing faster to INR 1.67 bln for the entire company growin g12% volumes in the Indian business

Adi Godrej’s interview in today’s DNA is available here

The company has acquired domestic brands like Genteel and Swastik, haiir color Rapidol and accesories Kiny in South Africa as well as Tura in Nigeria and an insecticide company, Megasari in Indonesia

English: Adi Godrej at WIEF
Image via Wikipedia

The company has made a comeback with its pure soaps in India, growing volumes in soaps at 18% in the latest quarter and Magasari’s innovation will likely be introduced to compete with Good Knight in India. Godrej also likes to talk about its 1-2% R&SD spend and may want to grow the advertising on its brands in line its new mores , probably for its proefessional hair brands in which it has increased spends and M&A purchases.

While Malaysian Khazanah has just changed its charter from a Energy rich SWF to a diversified fund and may be more interested in smaller/monopoly plays in smaller Indo China economies, Temasek continues to farm the big money in China, Singapore and India.

Korea will probably make its own surplus SWF investments but still needs some inward interest from other SWF funds while india’s Top 20 in the Private Sector have been a matter of considerable Interest for Temasek since 1999.

The use of so many subsidiary vehicles for Temasek however incl Cedar , Baytree and directly as well as the bigger sibling in GIC is likely to make governance complex however for the coming generations of investment from Temasek as well.

FDI hungers for India’s growing consumer markets – What are the challenges?

Baytree’s investment into Godrej consumer underlines the long pending second line of investments to be made by the Asian SWF in India and other growing economies of the region.

While Malaysian Khazanah has just changed its charter from a Energy rich SWF to a diversified fund and may be more interested in smaller/monopoly plays in smaller Indo China economies, Temasek continues to farm the big money in China, Singapore and India.

Korea will probably make its own surplus SWF investments but still needs some inward interest from other SWF funds while india’s Top 20 in the Private Sector have been a matter of considerable Interest for Temasek since 1999.

Temasek Holdings
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The use of so many subsidiary vehicles for Temasek however incl Cedar , Baytree and directly as well as the bigger sibling in GIC is likely to make governance complex however for the coming generations of investment from Temasek as well.

As more non staple entertainment products like Hollywood blockbusters have noted india’s liberalised market offers extreme challenges for inflation sensitive products and upsizing/super sizing of SKUs and price realisations there on. In such conditions, Godrej’s new structures are a tentative experiment and an early vote of confidence from Temasek must have been a long standing argument for the country managers and the Godrej management per se.

Neither Dabur nor Godrej are guaranteed any success, Airtel branded soaps and agarbattis may have a better chance even in africa ina few years as Proctor & Gamble with global brand recognition stays in consumer discretionary spends in its predominantly staples portfolio and remaining counted in super premium brands in their value Tide portfolios

English: Logo of Godrej.
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L’Oreal’s Body Shop chains and super premium men’s range have a better chance from the sheer profitability of their ‘slower’ product lines in the luxury market as India’ s penchant for super brands and luxury hotels translates into a supersized lifestyle premium “for those who can afford it” and thus its $1.4 bln JV with Lotus is a much more sizeable investment as Jawad Habib’s and Bounce like salons grow into the mindset of the new salaried executive hungering for a sumptuous weekend fare outside just dining experiences and mall entertainment.

Can’t read these men, Can’t read what us indians want women will probably welcome Oprah’s OWN on indian territory as these second line of FDI investors from global organised consumer industries from retail and media to consumer aviation and luxury automobiles are much better positioned to make real efforts to break into the India n market, their first line having blamed everything fromt he unhygenic Mumbai to government babus yet not really having the policies to blame and having turned around villages with a few dollars of investment .

India Earnings Season: ITC did well again, why not enough?

Somehow ITC’s profit growth to INR 17.01 bln inspired the market to invest in its stable model causing a sell of fnear the usual 210-215 mark even though results growth is on call

FMCG business grew 25% while overall sales grew 14% and Net Profits 22.5% Growth in Agri and Hotels remains weak from management expectations Cigarettes also grew at 25%. Hotels revenue is 5% at 311 crs and profits at a 34% margin at 101 crs (1.01 bln)

Net Sales for the 9 months are at INR 181.71 bln or ($3.6 bln) with FMCG sales at INR39.1 bln or $800 mln up

ITC Welcomgroup Hotels, Palaces and Resorts
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25% and Tobacco/Cigarettes at INR 90.74 bln or $1.80 bln up 15% only. Agri and Paper have grown to INR 60 bln in nine months or $1.2 bln

PBT margins on Capital in hotels is just 6% and Branded FMCG goods in the Foods, Apparel, accessories and stationery have not reached breakeven losing INR2.29 bln in nine months (PBT/Equity(Seg Capital) = -15%) Return on Agri in terms of Capital employed is higher at 30% and that on Paper business is a good 15%, leaving Cigarettes to be the mainstay of the company with a 20% return on Capital.

India Earnings season: Hero Moto corp expected to grow 16% and profits 28%

In the next few hours Bajaj Auto’s 20% growth will be compared to Hero Motocorp having already beaten its own profit expected with a 22% growth expanding margins to 21.3%

Hero had the largest volume gains in the latest quarter bringing market share back to 40% even as erstwhile partner Honda caught up to a formidable #3 with a 200k per month sales

Bajaj Sales still compare at 68% of Hero’s INR 61 bln for the quarter after Hero grew 16.86% y-0-y, Hero’s profits grew 43% Quarterly volumes were the highest at 1.6 mln units in three months with Bajaj trailing at 1 mln

Its Operating profit margins on adjusted basis counted as low as 12.7% while unadjusted basis still compares at 15.7% against 17.6% for Bajaj Auto strictly on business expenses at both companies

Hero’s sales are higher by 14% over September 2011 but its not known if its shares in the higher margin >125 cc has increased from the low 6% last quarter Bajaj sells 18% in the higher CC categories for its profit margins and has also included growing CV (Auto sales) in these data

How to make money in Lifestyle businesses!!

Coracias benghalensis English: An Indian Rolle...
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Both Automobiles and viation industry are strongly hit by the current banking slowdown but more so because of energy and fuel costs as well as staffing costs making profits unlikely for the latter.

Both industries, however , remain the bright spot in India’s fabric of the future, leading growth segments in production and services. The car industry makes money in this unlikely scernario by passing on price hikes , with concurrent big doscounts of upto 10% while airlines wherre discounts ar part and parcel of all ticketing platforms till the d ay of travel, money ois also made in the usual charter/laundry list of udealised safety requirements as the DGCA report.

While Jet’s not running one third of its flights after announcing them because of poor occupancy, Indigo is reusing entire engines and forced to announce “premature engine removals” to keep its aircarft flight worthy. KFA reuses spares from grounded aircraft while it is avoiding paying salaries, both practices likely last

Departing on a test flight
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resorts in a bind they only are responsible for. Spicejet int he meantime is yet to print or operationalise Flight operation manuals and thus does not spend much on quality assurance currently.

I’ll give you a dime, if you find this chaos live during your business/ personal last rush/ economy flight except if you have paid large diiscounts on your ticket (then also, only for certain personalities) It is mostly int he service, f course both industries spending on talent and retention in various ways

English: Logo of IndiGo Airlines.
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India Auto report (Annual Sales – 2011)

India auto sales for 2011 ended at 1.95 mln, neighbour to the same number a year ago instead of growing thru a bad year for sales and unlikely to grow further on a good Jan Fenb March 2011 till the end of the Fiscal according to he Industry watchdog SIAM report (Reuters)

The forecast for the Fiscal 13 ( till march 2013) moves to a 10% growth after a 30% 2010 and a 0-3% 2011

English: The Price Is Right Auto Sales Logo
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Commercial vehicles had a better time, December sales of 72k vehicles making the yearly total of 775k , 11% higher than 2010 and enroute to growing by 20% this year , we’d say look for the millionth bus/truck sold in FY13

Reliance BIG gets to GECs

After BIG Prime, Spark and Love launches with CBS, Reliance Broadcast moves on ito its Hindi GEC Channel Big magic and launches a Punjabi GEC today. March 2012 revenues will see radio revenues at 75% but the contribution will drop to 50% by FY 2013 CBS is invested in regional India plans and a INR 3 Bln revenue seems to be a good target but likely will be scaled down as DTH , the growing segment is still dominated by Tata Sky which carrys Star GECs preferentially.

EEnadu was jumped by Reliance earlier i n 2009 and is now going to be controlled by the TV 18 group

Reliance broadcast will likely achieve a good portion of its FY2013 INR 3 bln revenue projections on its radio franchise strengths and revenues from CBS Prime

Midcap Select: Opto Circuit ( At home with your heart )

Heart during ventricular diastole.
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The electronic patch device produces the report mailed to the hospital from home after 72 hours. market surveys used by Opto circuit use a $500 mln market size as basis.  This mysense heart device was approved last week.

Wayward/Baseless revenue estimates based on optimistic foretelling by the industry as is the wont in the last 10 years of India’s new product introduction in the west apart the company could definitely do with $ 20 mln in extra Dollar revenue with the currency run expected to continue.

Opto does not have any liabilities in Dollars and may convert this dollar revenue to good profits. Its other product business revenue streams were locked last year in Japan

The company is not getting good yields in some invasive device businesses where it needs more investor partners,and wants to list in the next six months with existing PE partners where it can As told to ETNow (inthe brief) the company wants to roll out further devicess for FDA approval in the next  2 years

A surfeit of Launches in 2012

The Indian Auto Expo has Tata JLR ditching Detroit to jump into its Asia home with the Ssangyong  M&M combination readying the Korando launch in the country and the GM reintroducing the Sail as a Chevy brand and the Wuling Vans from its Asia portfolio

Ford rolls out Asia plans from India

Ford has scored a great win with its hybrid Compact SUV in its home markets as the Ford Escape in October and November ( head over to to check out today’s Auto sales announcements in the US ) Its market share in December, likely to cross 15% with more than 171,000 in sales. It has planned to expand Indian capacity with a similar compact SUV here titled the Ford EcoSport ( WSJ India ) 

[[posterous-content:qlasovICwvCmAxIFBHnd]]Ford has planned a second factory in Sanand in Gujarat ( next to the Nano plant) for a cost of $660 mln ( INR 40 bln) and is upgrading its Diesel Engines capacity in Chennai by 33% to 330,000 for another $72 mln, while it has a current capacity of 200,000 petrol units in Figo, Fiesta and its Endeavour SUV specification

The Indian hybrid targets its earlier JV partner in India M&M which has bought a SUV company in Korea and could well face immediate competition from GM which has started doing better than Ford in India as also VW which is almost caught up without support from Suzuki the hybrid SUV is planned for $142 mln at current exchange prices. Ford will likely spend much lesser dollars on this project if it is indeed enacted thru 2012


The Indian Auto Expo

Worldwide Auto sales are expected to go to 77.7 mln units in 2012 with US a just under 20% market share and China a over 20% share of the market. Indian business would be up to a little below 4% of the global market according to our conservative estimates . news of Indian auto industyr global market share rising to no.3 is still starting to do the rounds as sar sales recover from a bad low in Mid 2011.

Daimler is introducing a new series of 17 launches from August-September 2012 to late 2013 with its first Indian built truck going on display tomorrow


Ford rolls out Asia plans from Chennai

Ford has scored a great win with its hybrid Compact SUV in its home markets as the Ford Escape in October and November ( head over to to check out today’s Auto sales announcements in the US ) Its market share in December, likely to cross 15% with more than 171,000 in sales. It has planned to expand Indian capacity with a similar compact SUV here titled the Ford EcoSport ( WSJ India )


Ford has planned a second factory in Sanand in Gujarat ( next to the Nano plant) for a cost of $660 mln ( INR 40 bln) and is upgrading its Diesel Engines capacity in Chennai by 33% to 330,000 for another $72 mln, while it has a current capacity of 200,000 petrol units in Figo, Fiesta and its Endeavour SUV specification

The Indian hybrid targets its earlier JV partner in India M&M which has bought a SUV company in Korea and could well face immediate competition from GM which has started doing better than Ford in India as also VW which is almost caught up without support from Suzuki the hybrid SUV is planned for $142 mln at current exchange prices. Ford will likely spend much lesser dollars on this project if it is indeed enacted thru 2012


The RE60 basis for new Renault Nissan Car

Currently an offering from the 40,000 units a month three wheeler stable of Bajaj Auto, the $3000 vehicle may be presented for public governments to replace three wheeler populations, Production is scalable to 500k units a year from existing 3 wheeler facilities and its Carbon footprint is the ultimate selling option for the company and buying governments/auto drivers at 60g

English: Bajaj auto rickshaws in Adama, Ethiopia.
Image via Wikipedia

The On again off again real deal! – TV18 buys Eenadu

Resource centre in Dhirubhai Ambani Institute ...
Image via Wikipedia

In a true Antilla style pronouncement  in the tradition of all things shadow banking, TV18 has actually agreed to pick up the Reliance EEnadu stake to save the Ambani brother from future losses in the business. The vile secret is that TV18 will issue two concurrent rights offers to finance the $660 mln purchase of Eenadu’s Reliance/JM stakes while the rights offers of $1.05 bln would not address promoter Raghav Bahl’s stake (rather Network18 cross holdings in TV18) bringing it to a round $660 mln for the purchase. Once investors have been satisfied, Reliance will pick up the unsubscribed rights to make TV18 full up on the cash required for the Eenadu stake purchase the TV18 debt is only $300 mln and the cap on ETV channels’ purchase is also $350 mln. TV18 will get Telugu GECs, Regional Language GECs and five regional news channels in Hindi from the ETV stable to 100% ( for the Hindi news channels)

The controversy has seemingly moved on to the structure of the securities on offer as Optionally convertible debt  the option strikes being unknown as the marktt is on heightened watch for clauses allowing misuse of public financial markets and investment Banking structures though not lacking in obfuscation definitely lack the sophistication of being properly dressed up fully as Indian investors ( and Reliance ) look to transparent means to flouting regulations without blowback from the government or SEBI.


India Auto Sales Report (December 2011)

Ford Ikon, visão dianteira
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In the month of December, most car makers enjoyed the reprieve in Exports with domestic sales recovery also showing in the numbers. However while Hyundai increased both domestic and total numbers to 29,500 and 48,950, its exports remained below the 20,000 mark. Maruti struggled with only 78,000 units in domestic sales and 92,000 overall as its limited production of diesel units and the break in wholesale demand was attributed for the continued weakness by the sales team at the company. Its exports of 14,000 units were a dull beat 33% behind Hyundai but up 50% on its own count from 2010.

Image by conhunter via Flickr

The A2 segment bills 42,500 units for Hyundai with moer than 6,500 units in A3 sales. The year’s numbers

Mahindra Group V-C Anand Mahindra
Image via Wikipedia

were a respectable 615,000 for the Koreans in India incl. 242,000 Exports.

The General Motors business increased to more than 9,000 while Ford was happier with 7,500 sales for the month and Nissan counting 50% growth at 1,500 units in December 2011. Mercedes underlined the year’s 7500 sales with a 750 units sold in December.

Honda cars remained stuck at 1000 units instead of the 5000 plus sold last year each month. Tata Motors recovered from last year’s fracas with 29000 units sold. Incl Exports, Car sales are up to more than 220,000 units again incl Mahindra and Mahindra’s 19,000 units and Toyota’s massive 16,000 sales.   Volkswagen reported full year sales of 78,000 from the country with 75,000 small cars in Polo and Vento and 1,688 Jettas ( in 5 months) Ford completed 100,000 units in sales in November

In two wheelers, Bajaj Auto’s 305,000 includes its CV sales of nearly 15%, while Hero grew its large base to 524,000 units for the month and Honda came in at number 3 with a good 191,000 two wheelers sold.


English: Bangalore Taxi
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The RE60, the 1.4 mln Akash Tablets and another LNG unit

The Bajaj auto effort to showcase the 3 wheeler market is an honest and probably remunerative strategy to capture latent non markets for consumer goods and durables in India as most categories have less than 50% attributable to brands and we have npot progressed beyongd the first few gains for brands last heard in the nineties.

In the meantime Datawind is reaping gains of consumers realisign their world ahs changed with more than amillion $35 tablets ordered. Blackberry sold 7000 of its tables it two days after it brough tprices to $200 closer to its international rates and half of its offer price earlier. Datawind is expanding to four mfg plants adding Noida, Kochi and Hyderabad 2 to its one plant in Hyderabad right now.

Meanwhile, the younger Ambani still has traction left in public and power infrastructure play Reliance Power,

Ambani's palace behind the hanging garden's
Image by xnmeme via Flickr

while its other flagship infra and telecom plays are losing investor confidence. East coast gets its first LNG storage plant at Samalkot, near Rpower’s own gas power project. The LNG facility in partnership with shell will cater to 7GW of power generation capacity in the area including GVK power

Zuari has a JV with Mitsubishi in Singapore, the same being used as vehicle to buy both a Fert unit in Peru from Fospac for $46.1 mln. Whatever happened to our post Airtell/ ONGC foray out in Africa and Latam!!!

Almost all from pg5 of today’s ET

Top 5 Private Equity Deals in India – Exits

In exits, the Patni exit came after a 10 year wait for a paltry $1.5 bln valuation ( $1.2 bln at Year end exchange rates) The BPO giant Intelenet also found it difficult to close the deal, finally settling for $600 mln for Blackstone’s exit by selling tio Serco. Serco has thence not ramped operations in India too much either.

Warburg Pincus made some good profits in its sale of 4% of Kotak mahindra for a good price on the exchanges with $245 mln in its kitty. it still holds another 6% but has exited most of its other investments like Vaibhav Gems and even Max India

As the Indian Telecom story merged int ot he global mainstream saga of despair and degrowth, ChrysCap was able to get out of Idea Cellular, its 2.7 percent stake fetching $170 mln

Last in the list, Siemens had to bide its time for its venture to exit BIAL selling 14% of the airport to ROFR holder GVK after a wait of 3 years for Rs 6.14 bln or $120mln.

Siemens Project Ventures, which typically puts in $130 million-$1.3 billion in a project, has invested in 14 international power plant projects, with an overall capacity of more than 8,000 MW, as well as in three telecommunications projects, two medical centres and an airport, with a cumulative project volume of $10 billion.

Top 5 Private Equity Deals in India

The year’s top 5 deals include the Hero Honda sale of Honda stake when GIC and Bain, funded Hero thru an acquisition of 26% in Hero Investments Pvt Limited set up to ensure the promoters could go through with the sale without affecting their prospects forthe future without their erstwhile technical collaborator/ JV partner

They could have paid market prices for their $848 mln investment but the growth prospects of the company. Meanwhile while Patni PE and promotyers waited 10 years to sell out, iGate promoter Phaneesh Murthy was able to get a buy in from Apax Partners for $480 mln to fund his $921 mln acquisition of Patni

India’s infrastructure story continues to offer a lot of midcap players every yera, an anachronism in terms of the size of projects required and other challenges, but PE firms an din this case JP Morgan signed on to a stake in SKIL Infra for $400 mln. The IPO would have been $225 mln

SKIL gets JP Morgan stakes in a shipbuilder in Pipavav and Everonn Education

Apollo Global signed up for $350 mln in Welspun, a majority in the groups Pipe manufacturing company and the rest in Welspun maxsteel, for rolling supplies to Welspun Corp

Renewable Energy also got a headtsart in 2011 deals after the big thrust in Power and 4g in 2010 with Goldman Sachs AM buying $200 mln worth majority ownership in ReNew windpower that plans to build a 1GW Wind farm footprint by 2015

Lesser Deals but good PE Deals and Exits

2011 was as much about making business happen as any other year despite deal business going down by 30% to $460 mln in the year in India and as usual we had a consultant reporting on growth from the India corneer of the world in Investment Banking as global focus shifts to fee adviisory business. India’s share is a less than 8% of the Asia pie which itself yields a 4 1 mln lower than each corresponding deal in the US on average. US leads in investment banking deals this season as well

The largest component of the deal business in India continued to be Private Equity with VCC listing the Top 5 deals and the Top 5 exits in the big ticket deals that went down.

Earning nearly $500 mln from fees may be still much lower for investment bankers to satisfy staffing for growth 5 years out esp as the region’s deal yields depend on Pe which is currently fighting funding and legal wars in their global franchises as regulations circles around to make it tougher for them to ensure profitability on deals following numerous failures in high fashion and early / blocked exits in existing deals.

It was especially happy for the bankers and the PE teams for gettin gthrough these deals in 2011

Bollywood, India too expensive to make money from dreams?

Mission: Impossible
Image via Wikipedia

Indian Media and Entertainment posted a string of positives though listed bullionaires like Eros and PVR continued to struggle to prove their worth on a perceived high cost base, being measured against some unreasonable expectations.

While Ra.One was a blockbuster but fell on being second to Sallu’s antics despite a $17 mln weekend at opening (domestically at $1=50) , The Don 2 and Mission Impossible concurrent successes of this month are being compared on equally tenuous marks despite $3 mln of daily business as Indian entrepreneurs in their bid to fund the global majors have set a high watermark for profiting from the success of this entertainment. 

To a funny bone it might seem its corporatisation is a s much a dud as that of Foreign banks like Stanchart to harness the Indian Capital markets, with IDRs that do not have the rights for investors to enjoy the company’s performance. 

However the string of blockbusters is leaning on 2d and 3d prints as well as FX studios in LA making scenes between MI4 and Don 2 , both unworthy sequels almost seamlessly part of the same shoot. The international runs are farther with 50 mid east prints in 3D for Ra.One that cost SRK’s studio INR1.5 bln to make and at least 4 metros share screenings at INR 1500 a pop in Gold studios ( incl expense on snack time cuisine from Pepsi and Dogs to Tortilla wraps vying with Shawarma rolls and falafel)

Don 2 collected $15 mln in Domestic markets in Week 1 and $10 mln overseas while collections from Tamil and telugu added at least $ 3mln or 12.5% of its Week 1 collections(12/30)

G.One (character)
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Air India’s 787 purchases – Can India get a Aircraft leasing corp now?

1940s-2007 Air India logo
Image via Wikipedia

There is definitely a case for an independent agency to warehouse the leases for big Aircraft carriers and / or facilitate a sale for Boeing and Airbus by taking on a Sale and earning on our books from the Lease to Air India and even private Aircraft. I am probably just shooting from the hip and details can work out to prove or disprove the project.

However, such an agency will make an income stream permanent, serve the national cause with the right budget in the right hole and find an income stream for eithe r Banks / or State companies as a aircraft leasing corporation

Currently 27 aircraft ( Dreamliners albeit not the 8 series) are on oder with Airlines/international agencies using the Sale and Leaseback option for Air India with the carrier paying the rentals. It is definitely convenient for Air india and serves the cause of modernising the fleet. According to DNA, even as the government stands ground , still waiting to approve the deal, 11 aircraft are scheduled into Air India’s roster next year for 4500 hours each from Delhi / Mumbai..For at least one return sector per day ( flying 12-13  hours per day)

A hurrah for the Food Security Bill

The stats are available for a change. 75% rural families and 50% urban coverage subject to a priority

Grains, the largest food group in many nutriti...
Image via Wikipedia

coverage of 46% rural poor ( 2001 census) and 24% urban poor that will be updated as the government hopes to a lower number.

Apparently cost of subsidies already a INR650 bln will be only INR 770 bln ( an additional $3 bln compared to a trade deficit of near $110 bln) after 2011 census data is updated.

The Food Security Act promises just 7 kg of grain but at a give away price of 3, 2, 1 per kg for Rice, wheat and coarse cereal, per person instead of a current PDS cost of 35kgs of grain, and sugar at higher prices, at 25-30% discount to the market(probably 2006 prices, i believe) .

There are no food grain shortages in the country per se but the BPL card system already in currency would need enhancements to ensure priority families are reached first and spillovers are managed in a targeted fashion for maximum impact without creating new loopholes for siphoning of this giveaway grain for local market distribution.

FDI failures

Ikea ContestThe government has lost the advantage it created for itself in retail , but with the market trading at value levels,

Walmart India associates arrive in Northwest A...
Image by Walmart Stores via Flickr

it might get one more opportunity with foreign investors in the near term, a minor window of opportunity in which it has to push the home field advantage with DTC, GST, Companyies Bill, and many more waiting to be fully executed weither federally or in law.

FDI in aviation, in retail and in Cable as identified are now critical to be cleared in quick time and the political pressures will anyway cost the ruling team some franchise share nationally. 100% single brand FDI by itself has Ikea and other takers esp with Reebok’s village plans and high end retailers cutting India out in favor of China sooner as China snows on luxury retailAs with the “golden chidiya” proposition of India a couple of centuries earlier, just that instead of plunder wwe can parcel the rights and sell toi the highest bidders now to get crucial capital flowing.

We have missed significant opportunities inInsurance FDI, new banks ( that need to watch for regulation changes till 2015) and infrastructure and retail where China has out smarted us and now runs a bigger and faster balance sheet

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India Auto report (Sales – November 2011)

English: DTC Buses in Delhi, India
Image via Wikipedia

Maruti’s numbers have trickled in at 36,000 vehicles more than October. The 92k in sales were yet 18-5% down from the festive season report of last year.  The mood is sombre as markets find solace in car makers coming back with good numbers but it is obvious that  that’s not enough for India to power forward.

Hyundai’s India sales grew nearly 30% with over 22,000 exports and 35,000 units sold domestically. Domestic sales are up 10% At Maruti the sixth yearly sales decrease in November also showed change in preferences as diesel grew 22% and petrol(gasoline) models demand dropped 14%(WSJ)

Ford and GM seem to be stuck near the 10000 and 8500  cars a month number but this is Ford’s first year with 100k sales in the nation. BMW, Mercedes and Audi have been selling nearly 200 units a month getting deeper into India’s moneyed hinterland and export towns. VW Jetta and Passat also sold 499 units in the festive month

Hyundai’s Eon and older steed i10 both sell nearly the same as Ford and GM in a month with 7,500 units each. Its A3 sedans also sold 8,223 units (Verna and Accent)

Tata Motors did grow Nano sales 10 times over dismal 2010 figures to 6500 for November. It sold only 1000 Fiat units in total sales of nearly 29k domestically

M&M sales of 44,000 units included 17,500 units in passenger vehicles (and SUVs) Its new XUV500 is expected to brighten its chances further with its ventures in Korea stabilising and helping it leverage technology and lever its home grown stability in the global market and in india rebranding it from a home again Tata , desi variety spaghetti

Toyota has grown into a tough spot staying comfortably ahead of Ford and GM with sales of 14k cars for the month, trebling from last year November on launch of Etios and Liva during the period

Newcomers VW and Nissan grew astronomically too on a low base to 6,750 and 2,680 units respectively with new models and support for diesel giving them a distinct advantage in the Indian brands of Ford GM, Suzuki and Korean Hyundai. honda has reduced production for the month drastically as Thai floods disrupt parts production for its global auto plants

October sales in 4 wheelers were a paltry 138k units and 185 k including Utility vehicles. November seemingly has gone to 220k units with good growth at Toyota, VW and M&M

Two wheelers had a brilliant month and India reverted to reporting car and 2 wheeler sales together since October. Bajaj grew nearly 30% at 394,000 units for the month and Hero Moto corp had a more than 5% sequential growth at a high 537k units Its erstwhile partner, that still sells its trusted line of motor scooters, jumped to 200k units in sales in November into the 3rd spot

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Happy Thursdays! November buzzes everyone

English: A 2008 Maruti Suzuki Swift Dzire VXi.
Image via Wikipedia

November buzzes everyone, December is too cold

Sun comes out in the East, but the East is all sold!

All the talk of potential markets in retail and consumption, engendering domestic demand ( in China) and even the imminent collapse of Europe ( not just not happening, in danger of engendering imprudent fiscal expenditure by imprudent politicians, just back from the brink) everything’s come to a nought

US is also going to a nought score but after a $52 bln weekend in Non auto sales and another $36 bln in Auto sales for the month of November, it is rather to get on to a nought in all 2011 inventories by January 2012

India is headed to another ground zero right now, even as China starts betting on expansion without getting a jump in domestic demand. One wonders if stock market investors are correct in deriding Divestment thru buybacks and cross holdings mooted by the government arms, One further wonders if india’s aviation industry will ever get to use bankruptcy protection as a strategy as KFA finds another hole to plug, and one wonders if the yields falling to 8.75% being the end of the move in Fixed Income, if the rupee will ever come back to below 50 on the bat

India’s fiscal problems have batted on a high inflation wicket, with 9.39% in CPI in October and a 8% food inflation for the third week running for November 19, Pranab advertising a fall in the price of Onions by 40% and October Export growth and deficit stunted and expanded by OIL and rupee gyrations Non Food inflation is dead in the water ( includes fibers and oil seeds) at 2.5% but Fuel is still 15.5% and Primary Articles a 7.74% lower but by no means a low number

There are a lot of other statistics including M&M’s jump in November sale sto nearly 41k vehicles incl almost 18k passenger vehicles and Maruti’s falling behind the 100k in Sales despite there being no strike at its Haryana plants and they will all come in due course.

At Happy Thursdays suffice it to say that November was good to pass on for the results showing for any government or corporate but there have been good signs for growth, with Europe solved along expected lines, banks at an all time low globally and the Nifty 4950 a good time to go short on everything, always a better feeling once you decline to wait 10 years for the pay cheque.

China’s landing will not be hard at all, watch for the detailed analysis on, Airlines will not fade away   with US American Air taking a 18 month vacation to recuperate with new pricing and new supplier and cost agreements a good example of the new strategies discovered in this new millennium, the other – central bank pay cheques for every citizen.

October Auto Sales (India 2011)

India’s festival time auto sales were expected to take October 4 wheeler sales to 170,000 after consecutive months below the 150k mark Maruti’s market share has dipped to below 40% and October has seen only 55600 Marutis

In the meantime Ford has improved its share by 31% in the first 10 months and VW, Toyota are also

Maruti Suzuki A Star

growing at the expense of Maruti by an even higher percentage on a smaller base Ford has improved sales from 77k till Oct 2010 to 102k for the same 10 month period in 2011

Latest reports

Maruti     : 55,595 (51k domestic)
Hyundai : 33,000 (excl. exports)
TataMo  : 24,000 (Nano 3696 up 26%)
Ford       : 11,000?
GM        : 10,200 (static , just caught up with Ford volumes in the last 6 months)
VW, Toyota: High growth on 3k-5k base may catch up with GM sooner than you think

It looks like October tunrned out a good month for personal consumption spend and durables (unsecured  loans) as Autos stayed below 150k sales.

2 wheelers have been growing at 20% y-o-y while Car sales are down at least 15% year on year and are not expected to improve soon

Hero reported another 512k and Bajaj another 320k having worked out its kinks in the UP factory

Maruti’s dealer surveys show that canceling customers have been walking into Toyota Liva and VW dealerships who brought out new models after June

To Munsiyari on a Maruti, Uttarakhand.
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India’s Grand Design? or just a Maha – myth

Brasília - O presidente da Rússia, Dmitri Medv...
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There’s a brilliant analysis by  Gayatri Nayak, in the Economic Times today. Brilliant because that is something in plain data and in plain sight what every Corporate indian and even every Indian citizen otherwise or any other species observing India on the World stage wonders. We are the I in BRIC like the I in Team, we are the I in interest rates when the world is reducing them with alacrity to avoid a depression. Our oil still costs a $110 a barrel, 2 of the BRIC nations almost get it virtually free from their own energy resources, the third and the first citizen in every economic miracle now is China.  even if everything in the Local Infrastructure run for China collapses, the 25% LGFV default will just reduce its growth to 0 when it is going through its slowest phase in manufacturing. nary a hope of a recession. And there the similarity with India ends, but with others it has much more in terms of dependence on commodities, energy, and hot money flow magnitudes that just do not compare with the rupee trading at its lowest.

Read the ET article here:

The foremost problem is the speed at which the prices are rising — from assets to commodities to manufacturing to services. This could deal a long-term blow to businesses, making them unviable. Prices have been gaining more than 8% for more than a year now. The main reason for the fall in profitability at companies is rising input prices and not finance charges as it is made out to be.

“India is less integrated with the global economy” was the argument then. While it may still be true when compared with many Asian emerging economies, this advantage has narrowed down over the years. While the overseas debt has gone up to $306 billion at the end of March 2011 from $221 billion at the end of March 2008, the cushion of foreign exchange reserves went down to $305 billion from $310 billion over the same period.

As far as decoupling is concerned, the bottom is the same for everyone but thence everyone of the global economies from the G7 to the G20 to even Mongolia would have decoupled on the way up . The great contrast in each competitive resource advantage and each strategy in Brazil, China, USA and Europe will determine very different trajectories of growth seen and supported in the Financial markets.

At stake is the order of magnitude of investment and infrastructure which others have harnessed earlier than India. But while the others may be volatile in responding to global stresses, India just becomes a sub standard risk to carry without the heat of a growth running up that order of magnitude. Others have much more command and control mechanisms as witnessed in Turkey and China, to ensure transmission of policy do’s and don’ts. If we do, it stays confined to one single Corporate group or region The regional imbalances are much greater in China and Russia, even Brazil and the smaller economies are exclusively better risks for the global investor because they are entirely dependent on that investment and deliver  a bang for the buck like Coal in indonesia and iron ore in Mongolia, but smehow that focus continues to deliver a faster sustainable growth while our discussion of imbalances makes evryone a victim in the end?

We could very easily be at the same stage as China if we had better transmission of policy cash and of policy mechanism to channel the growth. We may still be doing much more for our poor than China which has apparently been focussed on just the coastal “districts” ( urban conglomerates) that were already trading with Hongkong and the rest orf the world. But what we miss is the global demand or investor interest which cannot be just delivered to those shouting from the rooftops or those taking to the streets by fast and by suicides.

An administered rate of exchange with 10 rupees to the Dollar can bring it though. It will bring into focus our strategic decisions and investment in growth to a direct returns comparision with global investments. It is also the rate at which PPP trades for India to the Dollar. And it is probably the singular reason  why no one bothers to hear us on the table or give us preference or deference in trade.

Probably why we are so happy at rupee depreciation so we can get more value for our immediate quarter from IT exports when export growth in cotton, tea and even coffee and oil could mean so much more to us. In non It exports we will still remain satisfied with 2 – 3 million tonnes of Rice, wheat, Onion and some other crops but we remain the top 4 producers of those and falling behind every year.

Probably our priorities for infrastructure investment also need that push to file up behind the Exports doing the best and easily sustainable as in agri-commodities and gems and Jewelry

but that is the cliched argument no one has acitoned for the last 60 years. never.

Gross domestic product growth in the advanced ...
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Happy Thursdays! The India June Reports on inflation and expectations

HSBC global locations
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with the Friday tray of goodies gone..diesel and LPG are upgraded to almost profitable for OMCs. India inc is on a roll waiting for the fuel inflation to build up in the July treports. Stock market volumes across India, US, China and elsewhere have been down by 10-30% ( in the US NYSE now trades 17 bln shares a day) . However, the commodity prices going down have helped the cause of investors vis a vis inflation hawks and the market is showing a lot of skin and a fresh round of global FII recommendations for the next half of the year in India

Last year around the same time, we had taken up increases in the price of petrol and the cascading effect on inflation was pretty tough scare for India Inc. This time Diesel is even more directly linked to input prices thru freight but everyone would be happy if the RBI kept raising rates allowing a sneak vision of even a 20000 target for Sensex. But I would not be fooled with food inflation still 7.7%, fuels still 13% (before the impact of 5-10% hikes on Friday) and inflation still 9% for India Inc (week ended June 18, 2011)

Also, it was great listening to Wilbur Ross on the differences between European and American Banks , the critical being that Our credit deposit ratios never exceed 75-80% unlike Europeans which thrive on 120-160% Credit Deposit ratios but Cost Income ratios are intact at less than 60% ( Of course that does not include global survivors like HSBC and StanC)

The Bombay Stock Exchange, in Mumbai, is Asia'...
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HSBC Credit Cards up for sale in India too

First 4 digits of a credit card
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HSBC credit cards franchises in India are seemingly up for sale. Indus ind had just grabbed the Deutsche Bank franchise in India for $50 mln.

Citicards have attrited from 5.8 million customers in 2008 to 3.5 million customers. Indian banks like ICICI Bank and HDFC Bank are holdng at 2.5 million cards each right now. The credit cards market witnssed a lot of aggressive marketing tactics since 2000 onwards (when ICICI BAnk made an entry) as Credit hungry metropoltan customers were few and far inbetween. The indian franchises maintained a regulatory and marketing strategy that was distinctly split from its global franchise yet with reliance on usurius interest rates prescribed for rollovers, and high delinquent rates, keeping the business profitable was not enough.

HSBC had also clamped down its Personal Lending business for a long time since 2008 as sales practices in unsecured loans included distributer collusion and missing underwriting goals wilfully. The practices are yet condoned by the Indian duo though they have been consolidating on lower numbers in this business since 2008

HSBC strategy might well agree with the latest studies placing India as 16 out of top 20 emerging markets. The bank has found regulators in China and India tough to ply and not enough rich customers. Stnchart also faces challenges after two resilient years in 2009 and 2010

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Citi starts flying again

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With its book crossing INR 1 Trillion in 2011, (having stayed asround there since 2006) Citi has restarted the expected growth from Indian Markets scoring an increase of well over 78%. The Bank scored an uptick of 65% to INR 1454 Crs ($363.5 mln) with 35% and 33% increases in Corporate assets and SME assets/ NPLs seem to be getting back in ccontrol for the remaining Citi operaions at 1.2%.

The no.1 Hi Fidelity Nation – The retail lifestyle stupefaction

Mumbai By Day

Or as old hand Harsh Bijoor is quoted in today’s warhorse ET edition – Loudspeaker Nation. ( Pardon the rushing gushing metaphors, I have just decided to give in to the crowd for a week or so )

As media readership surveys go, however, ET is a goner, so is Times of India..the Mints and Bloomberg UTV guys are doing a real good ramp up and after the marathi debacle, th eTOI language debacle is also a certainity. Hindi Dainik Bhaskar is also pulling up past NBT..

After the postscript: This post per se just agrees that India is a very loud place, not just in busy street markets but everywhere incl outside hospitals and schools. And we remain the most spiritual with old style loudspeakers replaced by other products now that rock the latest hindi blockbusters dhinchak! Ready’s songs itself are a case in point, leave alone ET’s scoop on Godrej Fridges with FM radio and LCD sets from Onida and Samsung with 1000W PMPO Audio output.

If our conversations alone rise to 60 dB in equilibrium, the music on the radio has to be louder..But in all that lies another secret of our lifestyle deliverance in motion throughout urban india. newer suburbs are as costly or costlier than big city corners for the seclusion and the implied exclusivity. A local grocer, a cafe and a pizza delivery team is all  required to bring a neighborhood into big business and exclusive condos dot the urban india landscape for the same, getting congested all too often too early but hen today’s road planning in urban conglomerations is much better. Also in loudspeaker Nation itself we must laud the work of HDIL and other affordable housing proponents working near MIAL and probably soon in other cities as their work will also go a long way to using the vistas outside a city to dispel this need to be loud and shake it..

Samsung Logo
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Tracks being laid for the bangalore metro
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Penalising Rural consumers.. | The retail lifestyle migration

india kerala boat people

the latest inflation reports suggest urban inflation (CPI)  has cooled out at 105, while rural inflation is hot and roaring like a hungry lion at 109 from 108 in April. Show you that our desire to reach the rural consumer that took off well with small change satchets of shampoo, biscuits and toothpaste has reached another phase. At hand is the reality that small change in Indian currency has already lost value. I for one would not even bother anymore with one and two rupee coins, Just 5s, 10s and 20s. So I find it very reasonable that most consumer plays / consumption companies from HUL and ITC to P&G and Godrej are finding it difficult to roll out more small satchets of 2 and 3 rupees, even 5.

I would infact suggest to the brand consultants to use the chance to cost their services to these satchets as well as they are not preliminary offers of any sort for trials as they were when launched a decade or more back. As the mainstay of rural consumers, they can now easily be priced at Rs 10 and 20 with some supplies for Rs 5 priced satchets of items that need to be consumed in smaller quantities

It would be radical, yes, but the expected loss in sales is not likely to happen much. Now that banking and insurance is also sold down  inrural areas in these denominations and ‘entertainment’ like tobacco and cigarettes can also not be priced lower, the offtake would infact continue to increase, easily first in value terms but also in volume terms. The extra margins if any need to be reinvested in the rural logistics chains that is driving all of us crazy. even Retail FDI is now a realty sooner than later because of the same blindsiding of supply chain efficiencies by some of the largest global distribution networks at HUL and ITC for one and it’s time they got out of their 80s mode and walked into the ‘new’ millenium with heads held high

Predilections: PSUs represent the mass of the resource economy


The redesign of the sensex is still due but two important changes are taking place in the 30 share Bombay Stock Exchange Sensitive index. The PSU Coal India and not infra major IDFC entering the indices for its larger market capitalisation and consistent trade volumes. IDFC thus has more PSU ‘proxies’ for those believeing the infrastructure major and its impact and the infra financing plays get totally written off the index as Reliance Infra has to lose its position in the indices with 15 year projects not making a viable case for public equity investment. LNT as a public bellwether remains in the prominent Indian index

The banks re well represented in the sensex and the healthcare sector now has two stars in Cipla and Sun Pharma. The Autos remain represented by old favorites Bajaj Auto and maruti, Tata Motors leaning more on its International profits. Dr Reddy is already outside the index with its profits under pressure of late and no results from its innovation mantra

I wonder why you think ONGC and Coal India respresent India’s markets. Perhaps the Public Indices or FDI specific indices be indeed differently abled, differently designed with MSCI and other cooperation

The Retail Consumption level off – Bajaj Auto Results

Rahul Bajaj, Chairman, Bajaj Auto and Member o...
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Motorcycle Sales at the Giant grew 37% for the year and the company holds $1.05 bln in Cash after growing sales for 8 consecutive quarters

Bajaj Auto stuck to its guidance and brokerage expectations scoring $1 bln and getting 20% growth. Exceptional profits of $181 mln grew its profit to $500 mln thus it has aintained volumes and not a dent to  margins despite tough inflationary conditions. the one time numbers added to the bottomline from sales tax deferrals even as DEPB benefits were withdrawn and failed to affect the bottomline Last year Q4 profits were $132 mln

Don’t buy your Mitts and retail holders yet!

MSCI Index added our favorite Mundra Port along with Dabur.  In Nov 2010 5 stocks have been added from the India story in Global indices incl PSB Canara Bank, new banking licence aspirant LIC Hsg Finance and Indusind Bank. Others were Cement majot Ultratech and Pharma mid cap Lupin. The other stocks were added to Small Cap indices and the India indices are now being updated with Shriram Transport Finance, Jubilant Foodworks, Mundra and Dabur

Anyway. with Emerging markets set for a rebound and India replete with buying opportunities, action is likely to return today itself into the world’s best capitalised and most accesssible markets in Mumbai.

We await results from Bajaj Auto (expect $1 billion sales per quarter to maintain) and ITC today. Dabur has in the meantime tomtommed its planns to diversify geographically adding units in Africa

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A Whimper for the results season! Ewww So Awkward!

NSE building at BKC, Mumbai
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How my daughter would have reacted to them market story being played out..

The trading stories really lack maturity here in the NSE minefields of INR 1 Trillion — two trillion on a good day — with most value plays (Mid Caps) strapped on to 4 investors and 1 broker playing an amusement park ride and nothing so intelligent or scary as a roller coaster.

The results season just showcased how easy it is for Indian companies to grow double digits quarter to quarter but it is just not getting the bang for the buck as we look on to someone to start rolling fresh cash into the markets.

DIIs buying of course to reduce the impact cost stick on to this purchase cycle and are ending up with value picks where most of the leads coined by india bulls have gone kaput led by “rate sensitives” > Where SBI’s deposit rates and cost of funding was as low as 6% in 2009, its raising deposits by 75 bps to 225 bps along with lending rates as thankfully however been noted a s a great positive, but why they are waiting on ICICI Bank despite the big results or HDFC and HDFC Bank.

The erstwhile Mid Cap, Axis Bank has of course pegged on to a new size as the Big 4 locally and plans to grow slowly, an example of a stock market darling that got her ambition and served the investors well. But many more are waiting none fof them likely unresearched . The drawbacks are there nonetheless but not the ones recognised in the marketplace.

For example, without due liberalisation, most sectors now have leading stocks with larger sales and growth numbers, not listed on the Indian markets, we have the Emerging market ETFs supplying regular funds to India keeping India at a lowly7-8% weightage and the India ETFs getting into pretty laconic and clubby investment cycles some where probably because of the small number controlling larger sums. None of the drawbacks is so contrary than our predilection for the worst grade of investors/traders., like Morgan Stanley leading press and networks into a decided trend.

MS has a long history of catching the BIG LOSER pretty quick and in lthat it is almost a 99.3% consistent leading indicator on picking the wrong trend or a trend dying out. I am so tired and confused.

Morgan Stanley's office on Times Square
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India Earnings Season: Institutionalising housing infrastructure (HDFC results)

HDFC again underlines India’s NBFC structure / Institutional structures for finance & Credit companies across Infrastructure and Housing.

Additionally it emphasises that India’s disappointment riddled 2011 still means a more than 20% in sales year on year and 12 % profit QOQ. HDFC manages a 30% increase in Sales and 23% increase in profits for the quarter. Sales are up to $947 million for the quarter and Profits are an important 25% margin at $285.5mln (Net Profits after tax) with Net NPAs at NIL

Provisions have been maintained as mandated by NHB

Defaults are more likely if interest rate hikes continue into 2012 howwever fresh lending maybe under pressure immediately after the 50 bps hike

HDFC maintained spreads at 2.3% and including tail income from securitised/sold assets it upped NIMs to 4.57%

Construction companies had a great FY11, Sobha Developers for example intends to build an inventory of 11 million sft up ahead and is currently carrying only 130k inventory in fully built units and of the 2.7 mln sft under construction, less than 30% inventory is unsold.

Sobha was one of the unleveraged players having reduced debt to $350 mln at March 2010 Profits were more even than last time going to $11 mln for the Quarter at an ave realisation of INR4500 psft or $112.0 while for the year profits rose to $45mln at an average realisation of $100 psft (INR4000)

Meanwhile, Healthcare – Pharma major Ranbaxy PAT dropped from 20% or $240 mln last March to less than 15% to $75 million this quarter while sales were also lower at an expected $535mln clip

The retail lifestyle level off: Unilever results disappoint

Hindustan Unilever
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Hindustan Unilever continued to invest in Advertising and promotion at $156 mln , 12.7% of $1226 mln Q4 sales in India a good 3 times the global rival P&G and unlikely to grow in more than low single digits despite such huge brand investments. In fact competitor ITC is doing much better having started from nothing in Foods and Personal care just years ago  with its current crop of brands already having two $1 billion candidates among half a dozen such brands

HUL profits are down to $143 mln as input costs continue increasing and the company is unable to pass them off to the consumer, rewriting SKU weights and packaging to create innovative margins and coping well with a stable market share in its food (where it does not really have a string brand except Ashirwad Atta) and slightly less in personal care businesses

The disinterest in India is hard to miss | Advantage Research

topographic map of India
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Though one may dare say that it was clear as early as late 2009 when the Bull run had already started but Quality FIIs had not planned anything for India, India has long-lived with the notion that though it might grow, not many investors are ready to let it stand up to them as its monetary mechanics don’t match big bully China but still are not as pliable as rent driven Mexico or squeaky clean Chile and in Asia, the Nams and the Bangladeshs. We ran through two great Sensex upticks fueled by a smattering of FDI cream and mostly Domestic investment good for at least 20% of GDP into the stock markets. We are also not great candidates for hot money but still the last quick bull strapping of the markets happened in March on $1 billion and three days of reactions got it down to worse with the same amount lost.

Now in one day of trading we have chalked up another $500 million and talks of support at the more comfortable 5500-5600 levels. Though short interest might want a stable target of even 5300 and noises have been heard baying for more, it is not in the nature of the Indian markets to respond to that extent as Central Bank policies, protection and liberalisation mean only micro-trend formation and are unable to either destroy any value motive in the current valuations or grow into a bigger superpower, though even now to that there is a studied upward bias in India’s fortunes and even stripped of hope one is staring at multiple upward re-ratings and higher weights for much neglected India.

Till that comes, none of us are losing sleep over it, resulting in keeping us busy on the treadmill running the status quo without much traction, repeating micro-cycles and even bigger trends since that day in September 2008 when the world turned on its head and cemented the plan to let growth lead in a very few years. that also does not mean there has been any reduction in the ranks of EM haters and that Democrat or Republican US policy continues to favor more tribal neighbours like Pakistan and continue to disfavor higher value relationships with India in Defence with a non NATO, non militant national government with an independent state policy.  with all its nice sounding tinges that is the same list of limitations in the reforms statute and the growth conscripts since the nineties almost 25 years back when we started a journey fueled by investment and reform pain.

A wow Healthcare surprise | Advantage Results season

Ranbaxy Laboratories
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Cadila beat a lot of MNC competition with reports stamping their approval on PAT growth 50% yoy for the quarter boosted by on time forex profits of $45million and a revenue tick of $275 million almost twice the size of a GSK Pharma quarter of $150 million revenues, Cadilla scoring $30 million in profits at 10% NPAT and GSK Pharma at almost 10% with a $1.5 mln NPAT. The Pharma lot look surefooted and steady even as the Phase I winners wave by with pressures on Volumes, FDA disapprovals and new Excise regulations esp at Ranbaxy and Dr Reddy. The sector and its allied winners in Biotechnology are increasingly getting good vibes for taking revenues to the next level of $10 bln each from the current park of $1 – $ 4billion for the year just a tad ahead of the auto ancilliary specialists with $200 mln revenues etc. Emerging Markets should now steam roll some bigger numbers from this sector and we’re hoping!

:Original raster version: :Image:Food and Drug...
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The retail consumption level off – Sugar is sweeter in quotas, Shampoos cheaper as in China

A Lux soap.
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Unilever has made shampoos 22% cheaper, unit realisations by all retail lifestyle champions more realistic today with the rupee stronger and Sugar like all commodities will only rise higher. While derivative food and Fuel user industries will continue to face pressure in inputt costs, higher price realisations, exports and even supply side reform policy plans post Lokpal and Maha assembly polls will likely come to the fore apart from a nice and sweet 2011 for food producers thanks to the inflation, margins will be easily passed on to the consumer. Sadly though, one feels branded foods and even at commoditised consumption levels, there is an acute shortage of food producing facilities in this continent.

The consumption/SME manufacturing hub : India’s Auto ancilliaries units

Volkswagen e-up! concept car as shown on the I...
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India Auto industry maturity continues to rise albeit in smaller units like Jamna Auto and Pricol. While Pricol signed a Jv supplying parts to Maruti – Volkswagen ( output VW small car ), Jamna auto drove a 472% rise in Q4 sales to finish the year with $11 million in profits($4 in Q4)  and $202 million in sales

Subros somehow got zilch for all its expansions after a near total dominance of the Car A/c units . Jay Bharat Maruiti was also a great product company/unit to discover, now getting out from the Maruti only fold and doing well

What ails India’s Private Sector Insurance?

I know what sets me off against the winner of the bank wars 

Though HDFC Bank remains a perennial favorite of India bulls because of its efficiencies and hold over a high interest rate captive market for credit products, tit never ceased to amaze me that the LIC of the group, Standard life could not really stand up after being the most capitalised company in the sector. Of course with impending IPO norms and Reliance having beaten them to 5th rank when the crisis began, we do hope to look at some detailed Financial statements from these “new industry barons” soon, as a lot has been hidden inside the carpets by everyone with IRDA needing to be active in policing the instituions budding into a smaller pie every year. Now the public LIc and the private LICs divide the market 67:33 and this number would be even more in favor of LIC of India ( which had a INR 4 Trillion book this year or thereabouts and by assets already is 9 times the private players ) if the single insurance product not been sold heavily esp in Q1. Amazingly after Premiums of $1.3 bln the HDFC Standard Life team delivers a sixth rank and a $19 mln loss for the year following a negative $450million loss in FY09, and $69mln in FY10. what a shame!

Recovery has been slow and steady but we would continue to be hypercritical of any business that cannot want to publish a complete set of Financial statements Very frankly their size is not enough as an industry to believe that their hyper growth in the 1st 10 years will actually amount ot anything from here..Also without Unit products they have all stopped making any effective sales growth in this “industry” Indian Telcos are far more profitable whence Telcos historically wthe world over survive on high prices of hardware paid and lost volume churns ( which also they share with the LIC industry)

Life Insurance Corporation of India
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The retail consumption level off – Hero reports lower Q4

Hero Honda Passion
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Profits year on year are down 16% and the auto number s for March have definitely scared observers as well. The profit deceleration is hihger than expected ( misses Bloomberg poll estimates by 2% ) Sales growth numbers are respectable yoy like for others as Bajaj Auto and Maurti, Hyundai ( even yoy pretty bad)

India just does not have the profile to switch to SME players in this age and till the dollar gets to levels of below Rs 40 to a Dollar, the Trillion Ruipee EV companies are likely to be good enough for PE or individual global portfoliso. Index ETFs are anyway 75% of the FDI with $1 bln per month likely to continue. disposable incomes allowed food and fuel inflation without concerns yet, but going forward the larger imported inflation and the transmission to manufacturing and the retail demand curves ( durables, autos, services) have been the immediate market concerns that need facts to displace the pessimism

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