Cognizant's Growth Is Slowing Slightly More Than Expected

When we previewed earnings for Cognizant Techonolgy Solutions (CTSH) we said “one of these days the growth will hit a wall, but probably not this day.” Today the company reported earnings:

Revenue for the first quarter increased to $460.3 million, up 8% from $424.4 million in the fourth quarter of 2006, and up 61% from $285.5 million in the first quarter of 2006. GAAP net income was $75.4 million, or $0.50 per diluted share, compared to $47.2 million, or $0.32 per diluted share, in the first quarter of 2006. GAAP operating margin for the quarter was 18.2%. Excluding stock based compensation expense of $7.4 million, non-GAAP operating margin was 19.8%, in-line with the Company’s targeted 19 to 20% range.

So far, so good as the consensus was expecting $0.48 on $451 million in sales. Likewise, next quarter’s consensus target of $0.51 on $496 million in sales appears to be in the bag. However, Cognizant’s full-year “at leasts” don’t quite make the cut of current estimates.

2007 Outlook - Second Quarter & Full Year Based on current visibility, the Company is now providing the following guidance: — Second quarter 2007 revenue anticipated to be at least $500 million.

– Second quarter 2007 diluted EPS expected to be $0.51 on a GAAP basis, and $0.56 on a non-GAAP basis, which excludes the impact of stock- based compensation expense of $0.05.

– Fiscal 2007 revenue now anticipated to be at least $2.07 billion.

– Fiscal 2007 diluted EPS expected to be at least $2.13 on a GAAP basis, and at least $2.34 on a non-GAAP basis, which excludes the impact of stock-based compensation expense of $0.21.

– Total headcount by end of 2007 expected to be approximately 55,000, reflecting the Company’s plan to increase utilization throughout the remainder of the year.

Let us first say that it is time for Cognizant to toss aside the “non-GAAP” adjustment for options. It sure looks like the estimates are GAAP-based, so why bother?

The company did not disclose net employee additions in the body of the press release, but the company description at the bottom says “Cognizant has more than 43,000 employees.” This compares to “over 40,000” at year-end. While we remain impressed that a company can add even 3,000 employees in three months, the pace is below the 4,500 added in Q4 and below the run rate to match last year’s 14,500 additions. Further, since the company is now larger the 3,000 additions represent a sequential growth rate of 7.5%, or approximately 33% annualized. This is not only below the current growth rate of 61% but also below the consensus 2008 revenue growth rate of 36.3%.

This is important because Cognizant is a consulting firm, and increasing headcount is the primary way such firms can increase future revenues. While 33% annual growth is indeed good, a trailing P/E multiple of 55x probably requires a bit more. With the growth slowing just a bit faster than expected, however, we still don’t believe that “this day” is “the day.”

Mumbai Investor Meet - Nishit Vadhavkar

We had an interesting discussion on stock ideas this Sunday.

The consensus amongst the members was that stock picking has indeed become difficult in current times. The market has now become very stock specific which underscores the need for more interactions amongst members.

Vipul our analyst with Edelwiss met the management of Crisil and was convinced of its long term potential. He also is strongly bullish on Pantaloon Retail.

Sunder Rajan sir was bullish on two off beat scrips Tripex and Sukhjit Starch.

I made a presentation on GE Offshore reccomended by Vijay Sir. We tried to understand the working of the company and the high entry barriers made it a compelling buy at lower levels.

Siddarth continues to remain very bullish on KLG Systel having closely studied the company.

FMPs were considered to be an attractive option offering in excess of 10 pc returns for a short period.

Vipul also provided a list of conference calls numbers where individuals could pose questions to managements.

ICICI banks on $320 bn Government infrastructural investment - Live Mint

ICICI Bank Ltd.’s plan for the biggest share sale by an Indian company may prompt investors to sell its stock on concern it could dilute earnings of the nation’s largest lender by market value.

The bank plans to raise Rs200 billion ($4.9 billion) by selling stock in India and American Depositary Shares in June, Chief Executive K.V. Kamath said on 28 April. Its equity will increase 20%. Mumbai-based ICICI raised Rs80 billion in 2005 to meet demand for loans from companies and consumers in the world’s fastest-growing major economy after China.

`It may dilute the earnings per share in the short run and one could see some short-term negative performance on the stock from the weight of the fresh issuance,’’ said Rajiv Anand, who manages $3 billion at Standard Chartered Mutual Fund in Mumbai and owns shares in ICICI Bank. Still, `it’s a clear indication of the growth that ICICI can see for India.’

Prime Minister Manmohan Singh in October doubled his budgeted spending on roads, airports and ports to $320 billion by 2012 to support growth in an economy that expanded an estimated 9.2 % in the year ended 31 March. The benchmark Sensitive Index gained 65 % in the past two years amid record profits at companies such as Reliance Industries Ltd., India’s biggest.

`Over the next three years, we will likely see a doubling of infrastructure and manufacturing capacity in the country,’’ Kamath said in an interview in Mumbai. `There is an investment pipeline that runs into half a trillion dollars’’ in infrastructure and manufacturing.

Rivals Tata Steel

ICICI Bank’s proposal rivals that of Tata Steel Ltd., the world’s sixth-largest maker of the metal, which said on 18 April that it will sell $2.4 billion of shares in India and overseas to fund its purchase of Corus Group Plc.

Companies in India borrowed about 28 % more in the year ended 31 March. ICICI Bank’s loans increased 34 % that year, after surging 60 % the previous year. Bank lending in India grew more than an average 35 % in the year ended March 2006, and a year earlier, according to central bank data.

The Reserve Bank of India (RBI) last week told banks to maintain loan growth of about 25 % in the year to 31March.

`Assuming a systemic growth of 25 %, this capital should be good for the next three years,’’ Kamath said. `We have to prepare ourselves for market opportunities and given the economic environment in the country and prospects for the country, we thought it appropriate to raise capital and shore ourselves up for the opportunities going ahead.’

Funding Needs

Indian banks will need atleast Rs500 billion this year to bolster capital as lending expands, India’s banking secretary Vinod Rai said on 19 April in New Delhi. State Bank of India (SBI), the country’s largest lender, which needs Rs100 billion of capital this year, has not made any decision to sell shares.

The 50-year old Mumbai-based ICICI Bank received bids for seven times the stock offered at its 2005 share sale to local and international investors, including 40 overseas funds. Merrill Lynch & Co., Morgan Stanley and Nomura International (Hong Kong) Ltd. arranged the previous sale.

The bank sold shares at 525 rupees apiece in December 2005. The stock, which has risen 4.9 % this year against the benchmark’s 0.9 % increase, dropped 30.4 rupees, or 3.2 %, to 933.65 on the Bombay Stock Exchange on April 27.

China, India

`We believe in India’s growth,’’ Kamath said. `If you look at China in context, the size of their banks and the size they have grown over the last few years, we need to take this kind of a step change to meet the opportunity.’

Industrial & Commercial Bank of China Ltd. boosted the size of the world’s biggest initial public offering to $22 billion after increasing its Shanghai share sale 15 % last year.

`If one looks at it from the perspective of the Chinese banks, and on a global perspective, a $5 billion sale is not very big,’’ said Anand of Standard Chartered Mutual Fund. `It should get taken quite comfortably.’

Anand said he will consider investing in the new ICICI Bank shares depending on their price.

The bank said that the money will also be used to conform to Reserve Bank of India (RBI) regulations that stipulate increased capitalization levels for consumer and other loans.

Mcnally Bharat Engineering

Mehraboon Irani of Darashaw & Company is of the view that Mcnally Bharat Engineering is a very safe bet at present level.

Irani told CNBC-TV18, "McNally Bharat is a company, which is an expert in a way in providing turnkey solutions and has provided over 250 plants on a turnkey basis. It had a very good growth of 41% in the last three years but what we are confident of McNally Bharat doing is we are seeing it achieve exponential growth over the next 4-5 years, a big beneficiary of infrastructure growth."

He further added, "As far as the earnings go we are looking at the company showing an EPS of around 7.2 in the current year 2006-07 and results should be coming sometime in the next week but what is interesting is the orders in hand which is of Rs 1300 crore which should get executed over the next 12-18 months. 2007-08 we are looking at a topline of Rs 775 crore and a bottomline of Rs 49 crore."

"Assuming that there is going to be no further dilution of equity we are looking at an EPS of around Rs 19. Rs 19 even if we consider conservative multiple of just 15 this should be quoting at over and around Rs 325-330. For the present level that provides a great opportunity in the market in which we are seeing a lot of volatility off late, so big beneficiary of what is going to happen to this company in terms of the order execution over the next 12-18 months. McNally Bharat is a very safe bet at the present level with atleast 100% appreciation possible over the next 12-18 months."

Govt says BHEL can’t deliver, to invite global tenders for project

Stating that Bharat Heavy Electricals Limited would not be able to deliver in time, the West Bengal government has decided to invite global tenders for a project to enhance power output by 2012.

Power minister Mrinal Banerjee said the commissioning of the Santaldih Thermal Power Project, slated for March 2007, is already behind schedule because of delay in manufacture of the main plant package by BHEL. He said the government would not like to have a similar experience again.

Banerjee was talking to Newsline during a conference organised by the Indian Electrical and Electronic Equipment Manufacturers’ Association here.

However, BHEL Director (Power) K Ravi Kumar said although the company has an order book bulging with projects, it is still capable of executing projects in time. “The country has adopted an aggressive time frame for capacity addition but there are infrastructure lacunae to match such schedules,” he said.

“At most, delays caused by BHEL extend to three to four months. But lack of proper ports, roads and other infrastructure must also be taken into account for such delays,” he said.
Kumar said BHEL would apply for the project if global tenders are floated.

In 2006-07, BHEL had orders worth Rs 50,000 crore, of which Rs 28,000 crore was the power sector’s share. Out of this, West Bengal government’s orders alone are worth Rs 5,300 crore.

As part of the 10th Five Year Plan, West Bengal was supposed to add 2,670 MW to its output of power from thermal plants. Though the plan ended this March, the state is to start enhancing power generation from around July.

While BHEL has been responsible for supplying the 250 MW main plant package for the Santaldih project, Itochu of Japan has done it for the Bakreswar plant and a Chinese firm for the Sagardihi project.

Although BHEL’s orders for 2006-07 were worth Rs 50,000 crore, orders worth Rs 55,000 crore were still lying pending at the end of the year.

Market Buzz from a newsletter

As the mid caps are in demand informed sources are picking up low priced scrips like:

Shyam Star Gem (BSE: 526365) Rs.36.80 and International Diamond Services (BSE: 530193. Rs.5.94)

Solix Technology (BSE: 501421) Rs.3.88, The volumes are very low but can improve with time.

Marksans Pharma (NSE/BSE: 524404 Rs.66.65) It has fallen from a high of Rs.302 to 100 when it reported 50% less profit for Dec 06.In the recent market fall the shares fell very badly to Rs.58 and now the recovery has begun.

Noble Explochem (BSE: 506991. Rs.13.30). It has closed down its explosive division. It has huge surrounding land which was earlier needed as a protective device as the co was in explosives. Land in Nagpur is very lucrative.

Some thing to think over: Newly listed ICRA clocked a massive 3.07 crore shares together on BSE and NSE, That is almost 11.8 times the total shares offered through the public offer. Global rating agency, Moody’s, is the single-largest shareholder in ICRA. For April-December (9-month) 2007, ICRA reported a net profit of Rs 13.59 crore on revenue of Rs 49.54 crore. The equity capital of the company is Rs 10 crore and the face value per share is Rs 10. Currently the share looks fully valued .IFCI who has a huge stake in ICRA is a better choice’

Multiplex Stocks in News

PYRAMID SAI MIRA THEATERS: (NSE/BSE: 532791 Rs.331.65. Recent high Rs.487):

Target Rs.400. What is the latest Buzz in this counter that is moving it up?

PSTL’s strategy is to distribute digital films simultaneously in a large number of cinema halls. This will bring in maximum revenues for the company. Pyramid Saimira Theatre (PSTL) surged 10% to Rs 331.65, after the company announced RM 10 million investments plans to digitalize about 50 theatre screens in Malaysia. The company also announced that it would be producing its first Tamil film in Malaysia, which will be released internationally

SHREE ASHTAVINAYAKA CINE

(BSE: 532793 Rs.173.85.) As the chart indicates It has come down sharply from Rs. 383 that is the top it reached in Feb 07 to Rs.140 in March 07.The IPO was issued at Rs.160.):

Short term target Rs.250. The company is engaged in production of full-length films and has subsequently entered film distribution, its stronghold being the Mumbai territory, which also includes Gujarat, Western Maharashtra and Northern Karnataka. Territory. It has produced films like Golmal, Bhagam Bhag, Jaane Man, Phir Hera Pheri Etc. The co is about to announce its plans for a new film. Hence accumulation is going on.

Cinemax (NSE/BSE: 532807)
If the craze to chase the multiplexes continues the next best bet will be Cinemax. When the shares got listed it opened around a high of Rs.204. This share was running along with all the new listing which were enjoying huge following. Then came the inquiry into whether there is any rigging. Then came the fall that bought down Cinemax to a low of Rs.104 in March 07

After a long break a bull grip is now building up in Cinemax (NSE/BSE: 532807) It has started recovering from its low of its low of Rs.104 and has been on the move and touched Rs.133.55 on Friday. Current confidence for the operators to have come from the news below:

ICICI Prudential Life Insurance Company has mopped up additional shares of multiplex operator Cinemax India. It acquired 1.94 lakh shares of Cinemax through open market purchases on 28 March 2007. It now holds 14.31 lakh shares in Cinemax which is a 5.11% stake

Review on IFCI

SEVEN TO EIGHT FOREIGN INVESTORS INTERSTED IN TAKING 51% STAKE IN IFCI :( (NSE/BSE: 500106 .Rs.38)

Overseas funds and institutions, as well as domestic entities, are showing heightened buying interest in IFCI so as to come on board as a "strategic investor" in the term-lending institution.

The prospect of acquiring up to 51 per cent stake along with management rights in the company might be an important factor for the surge in interest, said sources privy to the mandate given by IFCI to the Advisor, Ernst & Young.

Last month, IFCI had appointed Ernst &Young to advise it on the induction of a strategic investor in the company. Although the expressions of interest (EoIs) are yet to be invited, six domestic and 7-8 foreign institutions and funds have already sounded out Ernst & Young that they are keen to participate in the EoI and information memorandum process.

To augment its resources, IFCI has, during calendar 2007, sold seven per cent stake in the NSE and eight per cent stake in ICRA in the recent public issue and holding the rest of the shares. With ICRA doing so well in the market IFCI which is one of the major share holders of ICRA will get a big boost to its value What is more exciting is on Friday there were strong rumours that IFCI plans to sell off its TCS holding as well. Consider IFCI a dark horse priced very low.

Pyramid Saimira (from a newletter)

The reason triggered by fears of SEBI looking into the sudden rise in new listings. Finally SEBI could only target Atlanta that fell from Rs.1250 to 268 and once again there are upper circuits for Atlanta.

A new entrant on the bourses, Pyramid Saimira Theatre (PSTL)'s scrip had tumbled in February 2007, after a solid surge in the stock post listing in January 2007. From Rs 355.45 on 22 February 2007, PSTL's stock had tumbled to Rs 219.85, by 8 March 2007. The setback in the stock was on general market concerns of Securities & Exchange Board of India (Sebi) action on more stocks after the market regulator clamped down on alleged price manipulation in newly-listed firm construction firm Atlanta on 22 February 2007. PSTL too had witnessed a solid surge post listing. The stock had debuted at Rs 158.20 on BSE on 5 January 2007 (closing price on BSE on that day) compared to the IPO price of Rs 100. A solid surge in the stock was witnessed shortly after, when it advanced to Rs 464.50, by 7 February 2007, from Rs 190.15 on 19 January 2007. PSTL had later cooled off from that peak to Rs 355.45, by 22 February 2007.

PSTL said on Thursday (29 March 2007) it had joined hands with Baderwals Infraprojects, to build 200 malls in four years. Pyramid Saimira would hold 49% in ther joint venture, Baderwals Pyramid Development, and will invest about Rs 250 crore in the next two years on the project, estimated to cost Rs 12000 crore.

The joint venture will include 100 larger format malls covering 3,00,000 sq ft each and budget hotels. By 2010, Pyramid Saimira hopes to have malls in 300 locations across India through such partnerships.

PSTL is the largest theatre chain in India, with over 1.75 lakh seats in Tamil Nadu, Andhra Pradesh and Karnataka.. PSTL's objective is to have a presence in all categories of theaters. That includes malls, multiplexes, Cineplex’s and standalones across the country in Tier I, II and III locations.

PSTL’s strategy is to distribute digital films simultaneously in a large number of cinema halls. This will bring in maximum revenues for the company.

PTSL reported a net profit of Rs 5.15 crore in the December 2006 quarter on total income of Rs 46.05 crore. For April-December 2006, the company reported a net profit of Rs 10.04 crore on revenues of Rs 98.58 crore.
Source: BSE - Pyramid Saimira Theatre Ltd has informed BSE that an Extra Ordinary General Meeting (EGM) of the members of the Company will be held on April 19, 2007, inter alia, to transact the following:

1. The Company has signed major expansion deals for development of international theatre chains, malls, multiplexes in India, promotion of content funds and also to fund organic and in-organic expansion in the film exhibition and distribution business. To fund the above, the Company is proposing the issuance of foreign currency convertible bonds. The Extra-Ordinary General Meeting is to seek the approval of the members of the Company under Section 81 (1) A of the Companies Act to place the said FCCB for an aggregate subscription amount not exceeding US $ 150,000,000 (150 Million US $ ).

2. The Company has become an equity shareholder in M/s. Pyramid Saimira — Theatre Chain Malaysia, Sdn. Bhd., M/s. Mallplex Pvt Ltd., Baderwals Pyramid Development Pvt Ltd. Further the Company is promoting Pyramid Saimira Productions Ltd., Pyramid Saimira Content Fund Management Co. Pvt Ltd. The shareholders permission under Section 372 (A) is being sought for investment / managing loans / providing guarantee to the aforesaid Companies. 3. To seek the members permission, to enhance borrowing limit of the Board from Rs 500 crores to Rs 1500 crores. Date: 2007-03-29

Source: BSE - Pyramid Saimira Theatre Ltd has informed BSE that the Company and Baderwals Infraprojects Pvt Ltd to form a SPV for construction of 200 Malls-cum-Multiplexes in 4 years time with an approximate Project Cost of Rs 12000 Crores. Baderwals to operate 51% in the SPV Baderwals Pyramid Development Pvt Ltd and the Company to hold 49%. The project is to develop 200 State of art integrated Leisure and Shopping destination, primarily across Northern part of India. The Project will consist of 1. Multiplexes. 2. Budget Hotels (Estimated demand - supply gap of 50000 rooms exists in India). 3. Mall. 4. Hyper Market. Baderwals is one of the major Land Bank and integrated Real Estate Group in India. Date: 2007-03-30

Few more stocks from a Newsletter...

Bayer CropScience Ltd: Current rate: 223. It has declined from a high of Rs. 338

Industry: Pesticides / Agrochemicals - Multinational BSE Code: 506285

Net Profit of Bayer CropScience rose 161.85% to Rs 19.77 crore in the quarter ended December 2006 as against Rs 7.55 crore during the previous quarter ended December 2005. Net sales rose 12.14% to Rs 240.53 crore in the quarter ended December 2006 as against Rs 214.50 crore during the quarter ended December 2005.

For the full year, net profit rose 53.03% to Rs 56.85 crore for the year ended December 2006 as against Rs 37.15 in the year ended December 2005.Net Sales rose 14.22% to Rs 775.74 crore for the year ended December 2006 as against Rs 679.18 crore in the year ended December 2005.

Shares are cum dividend of Rs.2.70

Taneja Aerospace: (BSE: 522222 Rs.174.70): On 7 February 2007, Taneja Aerospace & Aviation planned to form a joint venture with Sabena Technics, Belgium for maintenance, repair and overhaul services. On the expectation of this news the shares flew sky high to Rs.294 and in the current market turmoil came down to as low as Rs.160 and now again trying to regain the lost level. Another reason why the share flew high was in December 2006, the company issued 2350,000 equity shares to Merrill Lynch Capital Markets S.A, on a preferential basis @ Rs.155 per share. After the allotment, the share of Merrill Lynch has moved up to 9.43% in the company. The company had also resolved to raise $20 million at an EGM held in November 2006.

What is latest: Taneja Aerospace & Aviation has signed a memorandum of understanding (MOU) with Bharat Earth Movers (BEML) at Aero India 2007.

The pact was signed, with a motive of exploring the aeronautical opportunities in the defence and civilian sectors and the domestic market.

Taneja Aerospace and Aviation (TAAL): it was incorporated in Jul.'88 and received the licence to manufacture gliders in 1990. It is India's only manufacturer of six- to eleven-seater civilian aircraft, in the private sector.

The company has technical collaborations with Partenavia Construzioni Aeronautiche, Italy, to manufacture the P68 Observer, and with National Aerospace Laboratory to manufacture light twin-seater trainer aircraft.

The company reported a rise of 27.9% in net profit at Rs 2.75 crore in the December 2006 quarter. Net sales in the same quarter declined 3.5% to Rs 6.83 crore over the year ago period.

Few Stock Reviews from a Newsletter....

IFCI (NSE/BSE: 500106 Rs.35.10) A Dark Horse about to unlock the hidden values

After many years of being in the red, term lending institution IFCI is on the verge of announcing a major turnaround with a profit of around Rs 1,000 crore for financial year 2006-07. At the current price of rs.35 it has immense potentiality for higher than any imaginable appreciation.

The management has already been roped the Consultant firm Ernst & Young to find a strategic partner for the company, a process that would take at least two months time, official sources said. Several global financial majors like Citigroup and Barclays have expressed interest. The stake is likely to go to a company which can help IFCI to scale greater heights.

Till December 2006, IFCI had a net profit of Rs 229 crore. In the January-March quarter of 2007, the company raked in Rs 800 crore from a seven per cent stake sale in the National Stock Exchange and about Rs 30 crore by divesting its entire stake in ICRA. About Rs 200 crore of non performing assets are also understood to have been recovered in the last quarter of 2006-07. The market expectation is the profit will be more than Rs 1,000 crore in 2006-07.

IFCI had made a loss of Rs 74 crore in 2005-06 and Rs 324 crore in 2004-05. According to the data available on the Bombay Stock Exchange, IFCI has been losing money since 2000-01. The company's accumulated losses stood at Rs 4,600 crore till March 31, 2006. Out of that the company has made recoveries of Rs 1,000 crore in 2006-07. The company has made loan and other recoveries of about 1100 crore in 2006-07. The aggregate recovery of Rs 2,100 crore is higher than the target of Rs 2,000 crore set for 2006-07.

The accumulated losses will be wiped out very soon as the company has hidden unlocked values in its investments, which can generate Rs 6,000 crore cash anytime. The company has immediate realizable investment of Rs 2,000 crore

The sudden realization that IFCI is turning black has led to a 135 per cent increase in the share price - to Rs 33 as on March 30 from Rs 14 as on January 8, 2007.

IFCI is in the process of selling Malavika Steel Plant, estimated to fetch close to Rs 600 crore. The 750 acres of land of the Malavika Steel at Sultanpur (UP) can fetch it around Rs 800 crore at the lower end and Rs 2000 crore at the higher end.

Similarly, the company is in the process of selling the land, building, plant and machinery of Hitech Electro Thermics & Hydro Power Ltd. All these will materialize in the early part of 2007-08. IFCI is also understood to have very attractive real estates, which is worth Rs 1,000 crore.

ATLANTA: (BSE; 532759 Rs.268) Due to SEBI inquiry into some malpractices the shares of this co has fallen from a high of Rs.1450 to the current levels. With FII buying the shares it hit the 5% upper circuit today after remaining in the lower circuit for more than two weeks. The worst seems to be over and price is attractive.

Neo Sack Ltd (BSE: 523820. Rs.15.09) has informed BSE that a meeting of the Board of Directors of the Company will be held on April 09, 2007 to consider the following: 1. Forfeiture of shares 2. Future expansion plans. When the markets closed on Thursday there were orders to buy 3.80 lakh shares but there were no sellers .Share may move up in the coming days.

Speculative counters become hot again: WI Ship yard (BSE: 531217 Rs.6.69) If you buy around current levels exit around Rs, 9.50.

Reliance Comm adds 1.2 mn subscribes in Mar`07

Reliance Communications added over 1.2 million wireless subscribers in the month of March 2007. The company also maintained its position as India`s second largest wireless operator with a re-verified wireless subscriber base of over 28 million as on Mar. 31 2007.

As on Mar. 31, 2007, Reliance Communications completed re-verification of 85% of its entire wireless subscriber base, in accordance with the industry-wide requirement from the Department of Telecommunications (DoT).

Reliance Communications` ARPU (average revenue per user) is expected to increase 12% as a result of the re-verification exercise, making it one of the top 3 players in India in terms of ARPU, said the company.

Reliance Communications is an integrated telecommunications service provider. It has an aggregate of over 30 million customers across its wireless, wireline, broadband, and national and international long distance businesses.

The shares of the company closed at Rs 397.45, down Rs 0.35, or 0.09%. The total volume of shares traded at the BSE was 1,545,469. (Thursday)

NTPC: Targetting 22,000 MW in 11th Plan

NTPC is enthusiastic about its growth plans, having added 1,915 MW In FY07, and expecting to add another 3,160 MW In FY08. The power company has already commissioned 5,000 MW for the 10th Plan, and envisages 22,000 MW in the 11th Plan, since it sees a 4000 MW shortfall in the same.

It hopes to boost margins by improving operating efficiencies. It also intends to bid for upcoming Ultra Mega Power Projects (UMPPs) in April and June, and is relooking its costing and financing strategies for the same. It is open to alliances with other companies for such bids.

NTPC hopes to foray into capital goods with its 12th plan.

Buy Gammon India: Motilal Oswal

Broking house, Motilal Oswal is bullish on Gammon India and has maintained buy rating on the stock.

Motilal Oswal report on Gammon India:

Book to bill ratio at 3.5x FY07E revenues:

As at Dec 2006, Gammon India’s order backlog stood at Rs75b (up from Rs60.7b as of Dec 2005), which corresponds to 3.5x FY07E revenues. Order book composition stands as: Transport engineering (Roads & Bridges) 35%, Hydro & irrigation 35% and others 30%.

Infrastructure development, real estate can unlock value:

GIPL currently has a portfolio of 11 infrastructure development projects, across segments like roads, ports, hydro power, biomass power and SEZs. GIPL has also submitted financial bids for another 4 projects totalling Rs13.5b, and is pre-qualified for submitting financial bids for 11 projects totalling Rs138b. Several of these financial bids are expected to be opened during 1QFY08, indicating that the news flow will continue to be encouraging. Realty development is also emerging as a key focus area, though at nascent stages currently. and the company intends to enhance its role as project developer. As we understand, the company already has certain land banks in metros, which can be monetized. More details on this would be available over the next few months.

Increased contribution from subsidiaries:

Consolidated profits during FY06 stood at Rs1,446m, vs standalone profits of Rs1,043m, resulting in a net contribution of Rs403m from subsidiaries and associate companies. The management stated that 1) Associated Transrail has order backlog of Rs8.5b as at Dec 06 and FY07 expected revenue is Rs4.5b (up 80% YoY) 2) Gammon Billimoria has order book of Rs5b+, and we expect 25-30% YoY growth rate during FY07.

Recommend Buy:

We expect Gammon to report net profit of Rs914m (up 9.6%) in FY07, Rs1.3b in FY08 (up 43.9%) and Rs1.8b (up 38.5% YoY) in FY09. At the CMP of Rs299, the stock trades at reported PER of 28.4x FY07, 19.7x FY08E and 14.2x FY09E. We value Gammon's 82.5% stake in Gammon Infrastructure at Rs9.9b (Rs114/share), 50.9% stake in Gammon and Billimoria at Rs2.1b (Rs24/share), 28.9% stake in Associated Transrail at Rs1.4b (Rs16/share) and stake in Sadbhav engineering at Rs4/sh. Adjusting for the value of BOT and Investments, the stock trades at PER of 13.4x FY07, 9.3x FY08E and 6.7x FY09E. We maintain Buy.

Disclaimer : These are the views of the broking house. We do not take any responsibility for any loss incurred due to any buy decision based on the above reports.

Consistent growth in next few years: Mather & Platt Pumps

Ravindra Bhatia, Managing Director of Mather and Platt Pumps says that he sees a considerable and consistent growth coming in the next few years. He adds that only few manufacturers around the globe can match the product line that Mather & Platt has. He hopes that they will be seeing consistent growth in the years to come - both in the domestic as well as the export markets.

Excerpts from CNBC - TV18’s exclusive interview with Ravindra Bhatia:

Q: Is that correct - 13% is what institutions hold at the moment?

A: Yes, more or less.

Q: How much can FIIs go up to?

A: As far as we are concerned the promoter company holds roughly about 62% and balance is with the public and financial institutions and that keeps changing.

Q: What is the permitted amount? Is it 24% or do you have a Board approval to take FII holding to a larger stake or is it 24%?

A: Very frankly I don’t see any limit on that in the sense that the balance that is not held by the promoters is with the public and the financial institutions.

Q: Your company became WILO company after your Indian promoters sold their stake in 2004, how has that changed your market?

A: With WILO coming in our earlier promoters were into diverse fields but now it is exclusively a pump company. We are part of a pump group so that has brought in customers confidence into our company.WILO is financially very strong and that again gives lot of confidence specially to the infrastructure projects where we are dealing with larger customers. We also have WILO subsidiaries in 42 countries who will be going around selling our products so that has changed quite a bit for us.

Q: What is your order book like at the moment?

A: In rupee terms it should be somewhere in the range of Rs 100 crore plus.

Q: Could you take us through the kind of expansion you have seen on the export side of your turnover because that has ramped up considerably in CY06. What is the kind of growth target that you are keeping for the export side of the business?

A: That should be growing at the rate of roughly 35-40% every year for the next few years to come.

Q: At this point in time is there a defined outlay that you have laid out in terms of expansion plans? Do you require any funds and is there any expansion plan that you require to fund?

A: We have expansion plans and the funds are required for that but given the financial strength of WILO that is not the issue at all. It will be coming from the parent company itself.

Q: So you are not going to be looking at any time in the near future of placing a stake or looking at any kind of placement with an FII. Have you been approached by any FII considering the holding in your company is quite significant?

A: All the options are open. We will be considering every option but no such offer has been made by any FII to us.

Q: A quick take on how you see exports to domestic sales growing in the next two years?

A: Our products go to infrastructure. We see a considerable and consistent growth coming in the next few years. Easy figure could be in the range of 35-40% and this will be uniform in domestic as well as export markets because the product line that Mather and Platt has very few manufacturers around the globe have that. We will be seeing consistent growth in the years to come both in domestic as well as in export markets.

Sterlite Optical Technology gets order from Power Grid

Pune-based Sterlite Optical Technologies Ltd., India's leading global provider of Power Transmission Conductors, Optical Fibers and Telecommunication Cables announced that it has been chosen by Power Grid Corporation of India (PGCIL) for manufacture and supply of ACSR Lapwing Power Transmission Conductors for India's first 500kV HVDC lines suited for transmission of over 2500MW power. These conductors would be installed in the +/-500 kV HVDC Ballia - Bhiwadi Transmission Line. The contracts, valued at approximately Rs 1.8 Billion, were received during Q3 2006-07. Deliveries are scheduled over the next 21 months.

Says Mr Pravin Agarwal - Director, Sterlite Optical Technologies Ltd, "We are honored to partner with PGCIL in its landmark project in India. With over a decade of experience with the varying requirements of customers in global markets in the Power Sector, Sterlite is uniquely positioned to be a significant contributor to India's vision of Power for All by Year 2012"

The Government of India's Transmission Perspective Plan focuses on the creation of a 'National Grid' in a phased manner by adding over 60,000 km of Transmission Network by 2012. Such an integrated grid shall evacuate additional 1, 00,000 MW by the year 2012 and carry 60% of the power generated in the country. The existing inter-regional power transfer capacity is 9,000 MW, which is to be further enhanced to 30,000 MW by 2012 through creation of "Transmission Super Highways". For creation of such a grid, an investment of Rs. 710 Billion is envisaged.

Sterlite is a significant contributor to India's power sector through indigenous manufacture of a complete range of power transmission conductors at Extra High Voltages (400kV - 800kV), High Voltages (66kV - 220kV) and power distribution conductors (11kV- 33kV) Sterlite currently supplies about 23% of India's total demand for power transmission & distribution conductors. Sterlite Optical Technologies acquired the Power Transmission Business from Sterlite Industries (India) Ltd in August 2006

Sourced From: Pink & White Consulting (Public Relations)

Shree Precoated to merge Anik Development with itself

Shree Precoated Steel is planning to amalgamate Anik Development Corporation with itself. The board had earlier approved investing 15% in Jolly Brothers and in Ajmera Water 'n' Amusement Park.

“We are closing the year with steel business at Rs 1500 crores and real estate business at 300 crore. For FY08 the estimation for real estate business is at Rs 1100 crore whereas steel is at 2000 crore," says Rajnikant Ajmera, Managing Director of Shree Precoated steel.

Anik Development has venture called Bhakti Park situated at Wadala, which has approx 25 lakh sq feet of saleable FSI. The whole project will be completed in next three years.

"We are mostly into residential buildings where we buy and develop lands," he adds.

Elecon Engineering to supply gear boxes to Aircraft Carrier

Elecon Engineering Co.Ltd,Gujarat has recently bagged a prestigious contract for supplying the main propulsion gearboxes for India's first indigenous aircraft carrier. India is one of the few countries in the world to have developed the capability for building an aircraft carrier and it is equally a proud achievement for Elecon to be part of this landmark project. This is the company's second major endeavor in sophisticated marine gears technology after successful delivery of gearboxes for Navy's new stealth warships under construction at Mazagon Docks Ltd.

The marine gearboxes for the aircraft carrier would be one of the largest and most complex to be installed on the ships and would need precision manufacturing technology to achieve stringent quality and reliability standards laid down for marine applications. In keeping with its credo to be in the forefront of technology, Elecon has entered into a technical collaboration with Renk AG. They are acknowledged for its wide experience in design, manufacture and testing of high-quality special gears for marine propulsion.

The Company's thrust on continued modernization and upgradation of its manufacturing facilities and appropriate tie-ups has ensured that it is always a step ahead in technology.

Satyam wins $ 200 M deal with Applied Material

Satyam Computer Services Ltd. has signed a five-year contract worth $ 200 mn with Applied Materials, Inc., a global leader in Nanomanufacturing Technology to the electronics industry. Satyam will provide application development, maintenance, and support (ADMS) plus business transformation core technology services to Applied Materials through a managed services delivery model.

“We expect this model to provide us with a very cost-effective solution for managing IT and business infrastructure processes and activities, as well as measurable service level and quality enhancements," said Ron Kifer, Group VP & CIO of Applied Materials.

B. Ramalinga Raju, Satyam’s founder and chairman commented, “We expect the Managed Services approach to become commonplace, and to serve as a model for numerous future engagements with other customers.”

Satyam has created a dedicated development center for Applied Materials. The facility will be part of Satyam’s Electronic City campus at Bangalore.

It has provided ADMS and Engineering Services to Applied Materials for more than five years prior to this announcement.

Director and Senior Vice President at Satyam, TR Anand states that the company expects revenues from applied materials to start from the next quarter. The company also sees see a ramp-up in contract from the next quarter.

One sector that has been ravaged on Wednesday has been technology, which is down across the board; in fact the IT index is down 3.5%, while Satyam has lost 3.5%. But they have bagged a big order, because of which, the stock has rebounded a little bit in the afternoon.

Excerpts from CNBC - TV18’s exclusive interview with TR Anand:

Q: What are the details of this order from Applied Materials? Over what period would you be clocking USD 200 million?

A: The details are as below. We have signed a managed services deal for 200 million to be executed over five years with Applied materials; therefore we would roughly be executing about USD 40 million per year. The managed services deal includes application development and maintenance services for them, as a sole provider across the globe, along with applications assistance in their business transformation.

Q: By which quarter do you start seeing revenues from them? Is it going to be an equal contribution every quarter for this project or is it a ramp up sort?

A: We have already begun the transition process; so we should be seeing revenues starting from Q1 of the next fiscal, which starts in April. We should be seeing this ramp-up fairly rapidly in Q1 so you would see a steady state from Q2 onwards.

Q: What kind of upside potential could be there? Is it a finite locked in USD 200 million contract or depending on the execution could there be some potential upside or increase in the order size from the company?

A: The current managed services deal is for a fixed price over five years. Now what will happen is that we will execute what is known in the scope of work today, obviously business conditions, etc, could change a lot in this industry, especially over five years the high technology industry could provide us other opportunities as well, but I don’t think we could comment and quantify at this point of time.

Q: Watching Satyam what do you see happening with the rupee? How much has it been gaining?

A: I am not really the qualified person at Satyam. The question is best answered by my CFO and others; so I would not want to comment on the rupee and its impact on Satyam.

Q: What kind of bill rates or average margin picture does this deal come with? Would it be comparable with the other bill rates that you operate on with some of your larger clients?

A: The best part of this is that it is a managed services deal; so it is not based on any bill rates. We do not bill the customer base on the kind of people that we deploy or the amount of hours per day or per month that we work; it is based on the work understanding, quantifying the work, delivering it; it doesn’t matter where it is delivered from. I can choose to decide on the onsite offshore ratio, the location from where I deliver it. All that matters is I execute as per the agreements and improve upon them. Therefore, it gives us a good opportunity to be able to optimize delivery; I definitely see that this is going to be fairly exciting for us. Specifically, this is not going to be any different from the margin percentages that we are seeing today. I wouldn’t see any downside on it.

Biyani's Future Group enters Cash and Carry Business

THE country’s largest retailer Kishore Biyani is now looking at a presence in the cash-and-carry (wholesale) business to take on Reliance and Wal-Mart on all fronts, The venture, to be called KB’s Wholesale, will be rolled out early next month. Analysts close to Mr Biyani’s Future Group say it’s not without reason that India’s largest retailer has taken the decision. Competition is hotting up with Reliance Retail and Bharti-Wal-Mart putting up their own backend ventures, something that will make their front-end retail ventures competitive on the price front.

At present, Pantaloon Retail sources from multiple vendors. Experts say if Mr Biyani continues with his current sourcing model, he would lose out on the price war in the long run. When contacted by ET, Mr Biyani confirmed plans of entering the cash-&-carry business. He said, “we are looking at about 15 wholesale stores in 18 months.” The first KB’s Wholesale store will come up in Burdwan in West Bengal and the second in Mathura, sometime next month.

Retailers such as Reliance and Bharti have ambitious plans in the hypermarket and hard discount formats, and are likely to roll out dedicated cash-and-carry operations (wholesale stores that would supply to their retail stores) for catering to front-end retail. In fact, Bharti has already signed up with the world’s largest retailer, Wal-Mart, for cash-and-carry business. Though Bharti chairman Sunil Mittal maintains that cash-and-carry would be an entirely separate business from retail, sources say both would be linked. “Wal-Mart cash & carry will obviously sell at a preferential rate to Bharti’s retail business than to say a Pantaloon,” said a source in the retail consultancy business.

In the coming times, cash & carry is likely to see a lot of action, with many international retailers, including Carrefour, Tesco and K-Mart firming up plans in this direction. It’s particularly seen as an interesting business for the global retail community as FDI is not allowed in retail. According to Euromonitor, a London-based market intelligence firm, “when the restrictions on retail in India are lifted, international retailers will be in prime position to easily convert their cash-and-carry stores into highly profitable supermarkets and hypermarkets.”

At present, the Indian cash-and-carry business is dominated by two global players, the German chain Metro and South Africa’s Shoprite.