The India Investment Post

Is it just a coincidence that Sanctions continue to score at Rs 440 bln and disbursements at less than INR 180 bln for REC LTD for instance? I think the gap is ever widening andf th e orderbook for infracos has lost relevance, again the peculiar India context making it a matter of corporate governance

Transmission assets count to 45% of the Sanctions a very high number and only one or two activated yet, that pace shld pick up soon though as it is unaffected by the current infra slowdowwn in generation thru land acquisition and coal supply delays?

REC's revenues grew to INR 27 bln or $520mln in the current Q3 again building a 25% topline growth in rupee terms as a rupee lender, it will not face much losses from ECb/FCCB having finely priced QIPs as it reported a INR7.7 bln for the quarter or $ 154 mln

REC grew advances to INR 813 bln or $16.3 bln with Tier I&II Capital of INR 148 bln or $2.8 bln approx

3 month PAT is just $400 mln

Its NIMs are low but consistent at 3% and it has not been plagued by its SEB portfolio's NPAs. REC would have been hedging its loans with SEBs as lease backs or to first lien but the rest is for a full day to the company later. My last quarter's review should have been useful as well as last year's NTPC/other PSE dealmaking coverage

PFC however is likely to be watched for NPAs and PTC facing other implementation troubles with its Hydro elec projects

A lot more of the pizzazz has come back into Indian expert speak as commentators build on the value multiples in the Capital Marrkets. Now that the indices have journeyed into skyscraper Monday - Wednesday, one would wonder why investors bother with an India portfolio at all, as very few got in at 4700 and very few will now get out at 5100 , that the indices if ever will come down for further buying below 4700.

India's premium also means it identifies the data series for inflation as too much scattered data on primary inflation and fuel inflation thus we now have to work with CCEA's monthly week1 release of WPI alone.  

Luckily, the banks and infrastructure companies are back even if you count out the redundancies of 1200 at HSBC, 100 at Citi and a few at BNP. Trade Finance should be good for those considering hiring in their banks. Esp as Trade and Finance growth CAGR is likely too remain in the 20s despite the statistics and the infrastructure pad ups. 

StanC is hiring, Singapore and Dubai could probably open up to Indian hiring soon and the US gets rid of outsourcing bug we might even look at global companies getting more H1Bs for welcome immigration in other professions esp in Financial Services and other Travel/Transportation, Education and Healthcare, where we can compete with other diaspora from China and Mexico / LatAm as well for what is due to immigrants that make America's 47% science jobs and 24% of all jobs. 

The Bank Nifty is pulling out though, If you bought a few puts before Tuesday you would be good for a few millions in the bank too.  And youmay need to book your trades more frequently as it is giving you an opportunity to do that because it mulls new upmoves midway , like probably tomorrow Puts could lose value when Bank Nifty spikes again, before the big move down. 

Post Modern India or whatever else you might want to name it, India has new institutions that you cannot forego now forever, whatever be the origin of the food/ car/ industry/ and non profit effort.

1. Big cars with or without CSE's new 160k duty to penalise their driving on India's new roads, will eventually catch up in value sales with the small cars, esp in rural india with no tenacity in the urban mouse based alto and santro(i10) or Beat. Also, the SUV has to succeed before the hybrid

2. Half a dozen efforts on the UIDAI will not do. And I mean the six different agencies that are publishing biometric ids rather than agree to the NIDAI bill. Similar infighting over the DTC, GST is only likely to make the next governance layer and the next set of reforms much more harder and the government much further from current "nearer ground" / open practices

3. India needs the welfare economy, and welfare institutions that guarantee employment or social favor will have to perform wth the pizza huts in the cities

4. India's urban cuisine will continue to certify more global fast food decor and franchise from McDonalds and Au bon pain to KFC, Pizza hut and even the Cafe Coffee Day despite questionable finance, redoubtable governance and lack of foresight and vision, but based on strict process adherence and global franchise maps which is also a key difference why we are not China or McDonalds' that big market at the beginning. That also means entertainment spends on Malls, food courts and Multiplexes are the fastest growing and probably the largest salary expense head in a few years if we play a good urban housing infrastructure card

5. Indian Sports will continue to struggle without Infrastructure,. The recent influx of money could only create another Cricket institution in IPL and the other sports will continue to find bigger, better sponsors but not endearing institutions. The 2012 London Olympics unfortunately have other important issues forcing India's hand

6. India's Banking will reach the rural billions but not only thru technology and payment platforms. Thus the blueprint for Rural services led by banking and finance has to include more push factors encouraged by planning blueprnts. Why don't we try a $3 bln contribution from the government to a $100 bln global bank that will set up these service centers throughout , esp to make NMZ instruments and projects such as the DMIC a reality and not just policy notes without FDI interest

India's 63rd Republic Day with a mega parade in New Delhi is on. Here's wishing another year of a Great Indian Republic in all its majesty

As usual, in the defensive batch of the last line of Indian markets, the company / midcap disappointed the markets bang in the middle of the bull run to underline its Capital market go to strategy! Her protestations of 28% growth in research services notwithstanding the market too it in disfavor like Axis and continued on even as Airtel and Hindustan Unilever, ITC wait for the bulls to subside.

Last years surge in revenues from the Pfizer deal were not suitably amortised or isolated with other licensing deals probably resulting in the market faultlines cracking the line on the company again

Biocon’s nine-month revenues driven by growth in Branded Formulations, Emerging Markets and Research Services

Revenues at Rs 1,511 Crores; EBITDA at Rs 425 Crores; PAT at Rs 241 Crores

That's $300 mln in Topline, $85 mln EBITDA and $48mln in Profits 

We are not clear if periodic data is available on variability of Licensing Income which flatlined the earnings engine accordng to the management speak again

New research in Psriasis antibody research and INSUpen launch again does not reflect in material positive sales forecasts yet but the company's branded formulations grew 40% on the year in December Optimer is introducing a new CDI/CDAD drug in Europe on new licenses in Dec 2011 thru Asteller Pharma

Profit growth without licensing income at 30% should have been great for the company's prospects but it remains vary of the Capital Markets

The company subscribes to the 22% CAGR view on Indian Pharma in branded drugs to $55 bln by 2020

Apart from its new leadership efforts in Diabetology, it is already the new #3 in immunology and it is backing its Atorvastatin drug in Cardio (grown at 55%) Oncology is the second most strongest suit of the company aith BIOMAb and Ataraxene acceptance

 In comprehensive care and Nephrology, the company seems to be in the specialised drugs segment with niche brands at best

Yes Bank was one of the few to outpace the Rupee without export earnings this quarter, with Banks generally choosing a 20% mark as high growth in the quarter. Yes Bank grew NII to an even $75 mln or INR 42.72 bln, a small request for favors to analysst believing inthe Indiabull story and even the midcap story some might say in this run. Though the growth was inked decades ago by the DNA the bank chose when it was founded out of Rabo Finance, its profitability is no flash in the pan as it has chosen at times in its clients, and at a few times in its expansion like the KPO plans it had to scale back. Non Interest Income is almost one third of the bank's total income at INR 21 bln

The Total Income grew to INR 64 bln even as the low CASA base grew witht he aid of unregulated interest rates at 100% growth in Savings (99.2%) Nine month profit is a consolidated INR 7.05 bln and the profit INR 2.55 bln for the quarter. CASA added 1.6% to the last quarter's ratio

Gross and Net NPAs remain negligible at 0.2% and 0.04% HDFC BAnk is also outside the NPA storm keeping Axis Bank and ICICI Bank hostage to the PSE banks systemidsation driven spike in visible and systemic NPA books

Yes Bank Tier I common is however barely adequate at 9.2% showing management expectations are not too rosy on the increase in credit despite the increase in Advances to INR 359 bln ahead of ING and Indusind with high CASA ratios. YES CASA stands at12.6% The CASA block is $1.2 bln now from $1 bln on last years dolla r fX benchmark (INR 40 at this blog)

Thus ROE is a high 23%. Yes chooses the QIP route to grow Tier I & II Capital which is together 16%+. EPS remains above 7 Loan loss cover 375% and Prov cover of 80% (PCR is now back to 56% reqt at RBI)

Stride sold its Australasian units for a 20X REBITDA with the cash to be used for repaying non-redeeming FCCBs in June 2012 of $250 mln. Topline impact was played down by the management. Americas business in injectibles is profitable and globally injectibles is the focus. The company reports a Jan to December calendar. The total sales on the Indo china/Aussie business were $150 mln and the sale at $300 mln

(ETNow caught the managment speak on the sale)

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.

Jet Airways had a near 50% share at the peak incl Jetlite operations which also reported a INR 25 Crs loss this quarter. Jet share has since dropped to 26.5% with most of the gains for indigo's low cost profitable operation based on consistent sale and lease back  

Banks might pull back on the liquidity window, Apparently RBI was not worried on the missuse of the additional liquidity  in the constrained liquidity conditions. India's CRR is now less than 6% at 5.5% and is likely to stay at the lower rates

FY12 GDP forecast cut to 7%. Inflation target of 7% likely to be met but fuel and imported inflation remains high

NDTL Values are nearer $1.2 Tln or INR 64 lakh crores, releasng 32,000 crores

PMEAC may have bridged MOF expectations to RBI despite a clear mandate to RBI on the subject. We have advocated CRR/SLR cuts to lower levels and many banks have even asked for abolition of CRR to a  lower global Reserve requirements ratio of less than 20% against the now 29.5% incl 24% SLR which has however been denied by the PMEAC , MOF and RBI and banks themselves keep more than the required in Central Baank securities over and aboe the 30%. As and when these securities are actually released, much more can be fed into liquidity which the Centrsal Bank attempts thru NIBD status for these securities with it.