Nik's Diary
Indian markets opened in the green
tracking positive trade in the major Asian Indices like Nikkei, Hangseng and
Shanghai which are higher by 0.4% to 0.6%. SGX Nifty too is currently trading
higher by ~0.3%. US markets which opened marginally lower during the opening
trade, ended the day higher after shrugging off some disappointing news from
overseas, including weaker than expected readings on Chinese industrial
production and retail sales. Lack of major U.S. economic news kept some traders
on the sidelines, enabling the upmove in the markets. However, European markets
were mixed on Monday with poor economic data from China and downgrade of
Italian credit by Fitch resulted in decline of some of the markets. Meanwhile
India’s Key benchmark indices fell marginally on Monday snapping the four-day
gaining streak. The EXIM data released on Monday indicated that the country’s
trade deficit had reduced in February, which is a positive for the economy. The
markets would keenly observe the economic data to be released pertaining to IIP
and Inflation expected to be released during the week.
REPCO HOME FINANCE IPO
Ajcon Global has
come out with its report on Repco Home Finance (RHFL) IPO. According to the
research firm, the company is valued at 2.36x - Book Value /share at upper
end of the price band. One can subscribe to this issue, says Ajcon
Global. RHFL is promoted by The Repatriates Cooperative Finance and
Development Bank Ltd. (Repco Bank Ltd.), a Government of India owned
enterprise, in April 2000. The Company is regulated by the National Housing
Board. RHFL is engaged primarily in the business of financing i) the
construction and/or purchase of residential and commercial properties including
repairs and renovations (Individual Home Loans); and ii) loans against properties.
RHFL focuses on the largely under-penetrated customer segment, both salaried
and self employed, which has helped the Company grow profitability. As of
December 31, 2012, the Company had 73 branches and 19 satellite centres located
in Tamil Nadu, Karnataka, Andhra Pradesh, Kerala, Maharashtra, Odisha, West
Bengal, Gujarat and the Union Territory of Puducherry. Further, as of December
31, 2012, 77 of its branches and centres were located in tier 2 cities and tier
3 cities, and at the peripheries of tier 1 cities. The company is faced with a
deteriorating trend in its profitability and its asset quality indicators over
the last two-three financial years. RHFL’s profitability indicator nevertheless
continues to remain healthy (ROE: 22.3% in fiscal 2012) vis-Ã -vis industry
standards and it currently has a comfortable capitalization profile (gearing
8.3 times in March, 2012). The Company’s gross NPA and net NPA as at September
30, 2012 stood at 2.12% and 1.6% respectively. The robustness of the risk management
systems is demonstrated by the fact that the total amount of loans written off
since inception till September 30, 2012 was only Rs. 3.7 crores (0.08% of its
total disbursements of Rs. 4,313 crores for the same period. At the upper
band of the issue price, RHFL is valued at 2.36x Book Value /share at upper end
of the price band which we believe is in line with the industry. With due
consideration to factors like a) low cost operations and strong profitability
with robust margins, b) favorable housing finance sector outlook, c)
established presence in South India (strong brand name), especially in Tier II
and Tier III cities, for over a decade focusing on niche customer segment, d)
strong asset quality (low NPAs) with robust risk management systems, we recommend
investors to "SUBSCRIBE" the issue, says Ajcon Global research
report. Source: Moneycontrol
Trade
deficit cools down to USD14bn in February 2013 as exports pick up
Exports rose 4.2
per cent to $26.25 billion in February, compared with $25.2 billion in February
2012. This is a consecutive month’s rise in exports, according to data released
by the Ministry of Commerce and Industry today. This financial year, only
three months recorded a rise in exports — April 2012 (3.23 per cent), January
(0.82 per cent) and February (4.23 per cent). In February, imports grew
just 2.65 per cent to $41.18 billion, compared with $40.12 billion in February
2012. The trade deficit declined to $14.92 billion, compared with $20 billion
in January. The relatively slow growth in imports increases the likelihood of
India’s current account deficit narrowing. “Europe is performing better
now. The decline has been arrested. Sectors which have large weightage,
especially engineering and refined oil, have started performing better. There
is also a marginal improvement in textiles exports,” Commerce Secretary S R Rao
told reporters, adding the rice, oil meals, chemicals and pharmaceuticals
segments had also fared well. Rao said it was expected the government
would announce the annual supplement to the Foreign Trade Policy by the end of
this month. “We are actively involved in consultations with chambers, export
promotion councils, various departments and state governments and are trying to
arrive at a package of incentives that would be announced soon.” On March
22, Anand Sharma, minister of commerce and industry, would convene a meeting of
the Board of Trade. Cumulative exports during the April-February period
fell 4.03 per cent to $265.94 billion from $277.12 billion in the year-ago
period. If the $300-billion export target for this financial year is to be met,
exports in March have to stand at more than $34 billion. Even if the
$300-billion target is met, exports would still be lower than the commerce
department’s target of $360 billion. It would also be lower than $305-billion
exports recorded in 2011-12. For the April-February period, imports rose 0.25
per cent to $448.04 billion, against $446.94 billion in the corresponding
period of 2011-12, data showed. As a result, the trade deficit for the
April-February period stood at $182.09 billion, against $169.81 billion in the
corresponding period of 2011-12. In the last financial year, the trade deficit
had reached a record high of $185 billion. Ajay Sahai, director general of
the Federation of Indian Export Organisations, said this year, the trade
deficit might stand at $190-195 billion. The high trade deficit is leading
to a rise in the government’s current account deficit (CAD). In the first six
months of this financial year, CAD stood at 4.6 per cent of the gross domestic
product, against four per cent in the corresponding period of the previous
financial year. In February, oil imports stood at $15.15 billion, 15.45
per cent higher than in February 2012. Oil imports during April-February stood
at $155.57 billion, 11.92 per cent higher than in the year-ago period. Non-oil
imports stood at $26.03 billion in February. This was 3.57 per cent lower than
the $26.99-billion non-oil imports in February 2012. Non-oil imports in
April-February stood at $292.46 billion, 5.03 per cent lower than in the
year-ago period. Director General of Foreign Trade Anup K Pujari said
currently, India had trade imbalance with 83 countries, while it was
trade-surplus with 152 countries. “We are eagerly awaiting the
announcement of the Foreign Trade Policy, where important issues such as SEZs
(special economic zones), fiscal incentives, reducing the cost of credit, as
well as transaction costs, would help Indian exporters become more
competitive,” said Sanjay Budhia, chairman of the Confederation of Indian
Industry’s National Committee on Exports and Imports. Apparel Export
Promotion Council chairman A Sakthivel said growth in exports for two
consecutive months indicated a gradual recovery in the economy. Source:
BusinessStandard
CDMA
auction over: Sistema bids for eight circles
Sistema Shyam
TeleServices (SSTL), which was the lone bidder in the 2G spectrum auction for
CDMA services, won spectrum in the 800 MHz band in eight circles for R3,639
crore on Monday. However, no money would flow into the government’s coffer
immediately as the company has been allowed to adjust R1,626 crore it paid as
entry licence fee bundled with start-up spectrum of 2.5 MHz for 21 circles in
January 2008. According to the terms of deferred payment, Sistema needed
to pay 25% of the final bid amount within 10 days, which gets adjusted against
the licence fee it paid in 2008. This would be followed by a payment moratorium
until March 2016. “The government has confirmed that SSTL can offset its
licence fee of R1,626 crore that it had paid earlier against its current bid.
After March 2016, the balance amount of R2,013 crore will be paid in 10 equal
annual instalments,” the company said in a statement. The company, which
provides telecom services under the MTS brand, had lost 21 2G spectrum licences
in February 2012, when the Supreme Court cancelled 122 licences allotted during
the tenure of the former telecom minister A Raja. The circles won by SSTL India
include Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh
(West) and West Bengal. “With the Rajasthan circle also a part of MTS
India’s footprint, we would be able to service 40% of country’s population,
address over 60% of data business potential, safeguard 75% of our current
revenues and significantly optimise our losses,” Vsevolod Rozanov,
president & CEO, SSTL, said. The Indian unit of the Russian
conglomerate Sistema had applied for spectrum in 11 circles but bid for only
eight. It will stop operations in the three circles of Mumbai, Maharashtra and
Eastern Uttar Pradesh where it did not bid. This will affect 15% of its 2,850
employees or about 420 staff, apart from impacting 1.5 million
subscribers. “Full efforts are being made to absorb the maximum number of
employees in other circles. In addition, care is being taken to place some of
the employees in other companies,” the company said. After the poor
response in November, when there were no bids for airwaves in the 800 MHz band,
the government cut the base price of spectrum by 50% to make it easier for
Sistema to bid and procure spectrum as the government needed to accommodate the
Russian government’s request that the company’s investment in India be
protected. Two other new entrants in 2008, Norway’s Telenor and India’s
Videocon, whose licences too were cancelled last year in February, had bid in
the November auctions and managed to re-enter the market. Sistema had not
participated in the November auctions. The March 11 auctions were slated
for 1,800 and 900 MHz spectrum bands but no bidders came forward and so it had
to be scrapped. Source:
FinancialExpress
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