Do not have time? Email your ads to ads@yoindian.com. we will post your ads in 2 business days.
Email your articles to articles@yoindian.com. The articles will posted as is. Please consider formating them before emailing to us.
Thursday, August 17, 2006
Tata Motors
Very important news on Tata Motors IPOs. Maybe we can pick it up on dips.
Maybe, the current rise in price has already discounted any possible news of IPO.
We have to find the valuation of this new IPO spinoff and keep an eye on this. What should our target be ?
Tata Motors to float IPOs for 2 arms PARVATHY ULLATIL & M V RAMSURYA TIMES NEWS NETWORK[ FRIDAY, AUGUST 18, 2006 02:24:01 AM]
MUMBAI: Tata Motors, India’s largest commercial vehicle maker, is learnt to be working on an initial public offering (IPO) for two of its group companies -HV Axles and HV Transmissions - as part of a larger corporate restructuring programme and to also tap alternate options of raising resources to part-finance expansion plans.
According to sources, senior company officials have already begun the process by meeting with investment bankers. The IPOs for the two wholly-owned subsidiaries of Tata Motors are likely to be scheduled by the end of the current fiscal year.
It has been learnt that Tata Motors is also considering strategic partners for both the companies and may look at selling part of its stake in HV Axles and HV Transmissions, before the proposed IPO.
The sources indicated that Tata Motors was in talks with major global companies such as Automotive Axles and Arvin Meritor for a strategic alliance.
In a recent interaction with ET on the sidelines of a conference, Tata Motors MD Ravi Kant had said that his company was examining all options “that could enhance the contribution from our subsidiaries.” He declined to elaborate. When contacted, a spokesperson said: “Tata Motors is open to considering options of strategic partners or IPOs for these two subsidiaries to unlock value in these companies. But, the company has not set any time-frame.”
The stake sale is expected to help the company in price discovery and also extend the two companies’ clientele. Both HV Axles and HV Transmissions were spun off Tata Motors’ commercial business unit in ’00. The two companies supply components only to their parent company Tata Motors.
According to analysts, based on FY08 earnings and a price earning multiple of 12, the total value of Tata Motors’ stake in HV Axles and HV Transmissions could be in the region of Rs 773 crore and Rs 453 crore, respectively.
In a recent report, Motilal Oswal Securities said Tata Motors would benefit from the significant value creation in its subsidiaries. “We value its subsidiaries at Rs 181 per share (applied 20% discount to actual valuation). We value the core business at 15.5 times forward earnings,” the brokerage had said after Tata Motors posted its fiscal first quarter results.The sources said that Tata Motors is likely to use the stake sale and IPO funds for its capex plans.
The company is planning an expenditure of Rs 10,000 crore in the next 2-3 years of which Rs 2,000 crore will go toward its expansion, while the remaining Rs 8,000 crore would be allotted for daily operations and development of new products.
The move is likely to be welcomed by the market. “There is an increasing trend among major corporates to explore ways of raising funds to meet their capex plans, especially as interest rates are going up,” said SP Jain, chairman of Mumbai-based brokerage Networth Stockbroking. “Any kind of value unlocking where the market participates, the parent company will automatically benefit.”
The market has already been reacting to a possible IPO news from Tata Motors. Shares of Tata Motors have been rising steadily in the past one month, surging 22% to end at Rs 837 a share on the Bombay Stock Exchange on Thursday. Both the companies have posted improved earnings. HV Axles reported a 57% growth in its revenue in the first quarter of the current fiscal at Rs 42.4 crore, while net profit surged 84% to Rs 14.3 crore. HV Transmission ended the first quarter with a 43% growth in revenue at Rs 37.4 crore, and a 78% increase in its profit at Rs 9.7 crore.
HV Axles and HV Transmissions were formed in March ’00 and they acquired Tata Motors’ heavy axle division and gear box division at Jamshedpur, respectively. HVAL has an equity capital of Rs 45 crore while HVTL was started with an equity capital of Rs 40 crore.
GMR Infrastructure will be listed on the BSE and the NSE on August 21.
The company has fixed the issue price at Rs 210 per share.
The issue, which was subscribed 6.68 times, had opened for subscription on 31 July, 2006 and closed on 4 August, 2006.
According to a release issued by the company today, GMR Infrastructure proposes to use the proceeds from the fresh issue for investment in various infrastructure special purpose vehicles.
"GMR Infrastructure has placed 2.89% of the post-issue equity with ICICI Venture for Rs. 250 crore, 1.11% with Citigroup Venture Capital for Rs 99.17 crore, 0.75% with George Soros promoted Quantum Fund for Rs 67.25 crore and 0.30% with Punjab National Bank for Rs 27 crore.
"While Citigroup, Quantum and PNB had picked the stake at Rs 270 per share, ICICI Venture bought shares at Rs 261 per share. Infrastructure Development Finance Corporation (IDFC), which had also invested in the company, will hold 3.55% of the post issue capital," the release added.
Copper Surges as BHP Closes Chile's Escondida, World's Top Mine
Aug. 18 (Bloomberg) -- Copper prices rose after BHP Billiton shut down the world's biggest copper mine and called off talks with a striking labor union after workers blockaded roads to the Escondida site in Chile.
BHP, the world's largest miner, will take legal action against the union over the obstruction, spokeswoman Emma Meade said in an e-mail from the Melbourne-based company. The strike at the mine, which accounted for 8.5 percent of all mined copper worldwide last year, started Aug. 7. Before today's closure, production had fallen by about half.
The interruption to output from Escondida and the escalation of the labor dispute will exacerbate investors' concerns that global supplies of the metal can't meet demand. Copper futures in London touched a record $8,800 a ton in May.
``The union is now playing hard ball,'' said Rob Clifford, an analyst at ABN Amro Holding NV in Melbourne. ``Production at the mine will drop to zero from 40 percent.''
Copper for three-month delivery rose as much as $195, or 2.7 percent, to $7,485, a metric ton on the London Metal Exchange and traded at that level at 6:47 a.m. local time.
Metal for delivery in December jumped 5.3 cents, or 1.6 percent, to $3.368 a pound on the Comex division of the New York Mercantile Exchange at 1:49 p.m. Singapore time in after-hours trade.
The union, the Escondida's Workers' Union No. 1, wants wages increased by 10 percentage points above inflation, which was 3.8 percent annually in July, having reduced an initial demand for a 13 point wage increase. Union leaders have said workers' wages need to reflect the surge in copper prices. BHP has offered a rise of 3 percentage points above inflation.
BHP Billiton owns 57.5 percent of Escondida. Rio Tinto owns 30 percent, while a group led by Mitsubishi Corp. owns 10 percent. The International Finance Corp. owns the rest.
Tech Mahindra is set to be listed at BSE and NSE on August 29
Tech Mahindra is set to be listed at BSE and NSE on August 29
Tech Mahindra IPO was oversubscribed by more than 71 times. The company has fixed price of IPO at Rs 365 per share, at the upper end of the band.
The company, an IT solutions joint venture between Mahindra & Mahindra and British Telecom, is estimated to have raised over Rs 4.5 billion from the issue of 12.7 million equity shares.
Market observers said that the Tech Mahindra listing at the bourses is eagerly awaited as the listing is expected to be at a premium. It could also lead other companies to re-assess their plans to go public.
It consisted of fresh issue of 3,186,480 equity shares and an offer for sale of 9,559,520 equity shares by M&M and UK-based telecom giant British Telecommunications.
Indian stocks ended almost flat as profit sales took indices off highs, after a volatile session on Thursday. The 30-share BSE Sensex closed at 11477.48, up 0.2% or 29.17 points. It had touched an intra-day high of 11379.44 and low 11551.59. The Nifty closed 3353.90, down 0.1% or 2.15 points. Oil retailers ended down, while auto and capital goods were lead gainers. Dr Reddy's was up on value buying and positive outlook, while Tata Motors extended gains on reports Wednesday that it has bought Nissan Motor's South Africa truck assembly unit. Siemens India, up 4.4% at Rs 1,053, Indian Petrochemicals, up 4.2% at Rs 289, Dr Reddy's Laboratories, up 2.4% at Rs 1,489, and Tata Motors, up 2.4% at Rs 837. Reliance Energy was down 3.4% at Rs 462.70, Tata Steel, down 2.6% at Rs 518.65, and Hindalco Industries, down 2.6% at Rs 164.70. Bharati Shipyard, which had surged 4% after it announced Rs 1200 crore order from Reliance Industries, ended marginally up at Rs 324.70. IDFC ended up 2.3% at Rs 58.35, after rising over 3% on a 42-mln-share block deal earlier in the session. Sterling Biotech ended up 0.8% at Rs 113.10 on reports the company is planning to invest Rs 160 crore in a special economic zone in Gujarat. State-controlled Neyveli Lignite gained 3.2% to Rs 61.90 on an announcement it has signed a pact with Gujarat state government to set up a power plant with a total capacity of 1,500 megawatts at a cost of Rs 7500 crore. Hindustan Zinc fell 4% to Rs 577.55 on news it has cut zinc prices by Rs 8,200 a metric ton. Rolta India added 4.1% to Rs 219.55 on news it has formed a joint venture with France-based company Thales SA for developing aerospace technology. Rolta, which will hold a majority 51% stake in the venture, said it is targeting revenue of $500 million from the venture over the next five years. Punj Lloyd shed 0.7% to Rs 732.70 despite news it has secured an order worth Rs 823 crore from Rajasthan Vidyut Utapadan Nigam for construction of a thermal power station.
Sector Watch
Health Care
Scrip Name
Closing Price
%Change
GlenmarkPhar
340.25
7.59
Lupin
532.50
5.33
Torrent Phar
194.00
3.66
Divis Labora
1,821.25
3.16
Apollo Hspt
434.95
3.06
Information Technology
Scrip Name
Closing Price
%Change
HCLTechnolog
590.05
1.52
Satyam Compu
793.10
0.93
InfosysTechn
1,758.40
0.35
Finan.Techno
1,296.25
0.31
Capital Goods
Scrip Name
Closing Price
%Change
IngersolRand
275.95
9.18
Siemens
1,053.60
4.34
ABB
2,824.00
1.54
BHEL
2,267.65
1.02
AstraMicrowa
177.90
0.82
BSE PSU Index
Scrip Name
Closing Price
%Change
Kochi Refin
145.20
4.46
NeyveliLignt
61.90
3.17
BHEL
2,267.65
1.02
MTNL
155.60
0.97
BPCL
347.25
0.78
Consumer Durables
Scrip Name
Closing Price
%Change
Titan Inds
754.35
1.84
Gitanjali
170.00
0.27
FMCG Index
Scrip Name
Closing Price
%Change
Ruch SoyaInd
254.85
2.97
GodrejConsum
710.00
2.67
Hind Lever
234.90
1.93
Dabur India
141.65
1.43
ITC Ltd
181.25
0.28
International Markets
market watch
Last Close
Change
% change
FTSE
Data not available.
NASDAQ
2,149.54
+34.53
+1.63 %
DOW
11,327.12
+96.86
+0.86 %
NIKKEI
16,020.84
-50.52
-0.31 %
HSI
17,373.05
-77.98
-0.45 %
Asian markets: Asian markets ended lower.
US markets: US indices rallied for the second consecutive session on Wednesday on optimism that the US Federal Reserve may keep interest rates unchanged in the near-term due to benign inflation numbers. The Dow Jones soared 97 points, to 11,327, the Nasdaq composite advanced 35 points, to settle at 2,150.
Broking house, Brics PCG is bullish on MTIL. It has recommended buy rating on the stock with a target price of Rs 407.
Tie-up with Active Solutions, Nepal
"Further to its plans to expand its geographical reach, Micro Technologies has entered into a tie-up with Nepal-based Active Solutions to launch its security products in this country. After test marketing MTIL's range of security products, Active Solutions has begun to introduce Micro HSS, VBB and LMTS to its customers in Nepal."
"MTIL has already received approval from the Transport and Telecom Department of Nepal for the implementation of its products throughout the country. Though the size of the order book is not yet known, we expect good demand from this geography."
Strategy to expand reach paying off
"We believe that the steps taken by MTIL to expand its reach are very positive. The company recently formed an association with Girvan Institute of Technology, USA to take its security products to the North American market. MTIL already has good demand from the Middle East and some European countries. An expanded geographic presence would further augment its order book."
Valuation
"At the current price of Rs 187, the stock is trading at 7.3x and 4.7x its FY07E and FY08E earnings of Rs 25.7 and Rs 39.7 respectively. We believe that the current valuations of the company are undemanding and should improve as it registers growth in the coming quarters. We recommend a Buy with a target price of Rs 407."
