The India Investment Post

China

Even as FDI growth in China continued to grow Services at 15% and manufacturing at less than 5% , its inland provinces will soon get to be the majority FDI destination with the Eastern seaboard share falling below 50% this year.

This year despite teh statistics from the E&Y report the erstwhile no. 4 sector with 33 infra FDI projects is likely to become a major recipient of FDI in value terms thru dedicated Infra Funds incl the ADB-HSBC - IIFCL one 

India no. 4 FDI Destination : E&Y

In India however, 146 Tech projects outbid the no. 2 industry in rEtail and consumer as the single biggest contributor to FDI. For some strange reason India's middle class/ consumer for the E&Y team stays stuck at the 2001 figure of 250 million even as it discuesses the Top 5 FDI destinations as those favored by Indian IT 

The top five FDI destinations in India are Bangalore, Mumbai, Chennai, New Delhi and Pune. They attract 43 per cent of the investment projects, 34 per cent of the jobs created and 26 per cent of the value of FDI in India.(BS report)

Auto and Healthcare were also pointed out as key destinations in the E&Y survey released by india head Rajeev Memani

The survey also points that private equity (PE) in India has significantly evolved over the last decade. It mentions that 2,000 Indian companies were funded by PE in the last five years and $50 billion was invested from 2007 to 2011. "Despite the ups and downs over the past decade, PE has emerged as a very important investor in India Inc and with the long term India growth story still intact, PE funds continue to look eagerly at investing in India, " says the report.

PTC India ( Power Trading Corp) had meagre sale s of INR 13.35 bln this quarter from 17.7 bln last December while prfts were almost notional at INR 0.095 bln compared to a 0.38 bln score in the year ago quarter

IDBI grew NPAs to 2.9% gross a 20% increase over the last quarter  as it scored a 10% downtick in profits to INR 4.54 bln froma year ago. NII was also lower by more than 10% at INR 10.6 bln 

Though the deficit was almost respectible at $12 bln, Imports rose to more than $40 bln to take the 9 month score to $350 bln for FY2012. Thus the Exports would be more than $27 bln for the month a hefty 20% rise on November's $22.3 bln and again above the required $25 bln per month mark to reach $300 bln in Exports by March 2012. The revenue deficit is likely to end above $150 bln by a few billion dollars. 

December trade would have included higher Oil purchase component, the deficit for November being $ 8bln. 

ICICI Bank NIMs continue to languish at 2.7% but are likely to improve with focus on retail Restructured assets have grown by INR 5 bln and more will be signed in the current quarter

ICICI Bank Deposits are now INR 2.7 Tln and only 101% of advances against the expected 125% or the ideal 130% As a proportion of the $ 95 bln balance sheet they are tracking and only 65% are retail deposits That means the NIMs are overoptimised and s and when ext borrowings are added to leverage the balance sheet it might erode further from 2.7% Based on subsidiary incomes and its NII and other fee income it has been growing well however.

PNB grew Gross NPAs , with Net NPAs rising from 0.84% to 1.12% losing momentum with NII growing 10% and NIMs down a fraction to 3.84%

ICICI Bank however grew NII to INR 27.1 bln and Profits to INR 17 bln in the December Quarter. The profits were 20% higher from December 2010. ICICI Bank NII grew at 17% and Net Npas fell to 0.3% , provisions a further smaller 3.6 bln The compoany's loan book is now at INR 2.31 tln or $46.3 bln

The bank's 18 international operations still make 50% of the book and mortgages only 35%. Retail deposits are only 65% of the deposits and the loan book will grow at 18% incl the March quarter for FY2012

September's Profits were a bigger INR 19.92 bln. September provisions were INR 3.2 bln CAR remains above 18% and 13% (Tier I by Basel 1.5 calc) as per RBI directives for 8% CAR reqts. September NII was INR 25 bln and the current is a 8% QOQ growth

The bank plans to cement its growht with recovery in retail growth and the clampdown on corporate lending effectively continues. CRE is less than 4% of the Company's loan book. The bank's $100 bln balance sheet is the second largest int he country behind public sector SBI

It has grown free income basis in Transaction banking fees and remittance fee income while M&A fee also languishes in current market. Life insurance premium has grown by a healthy margin again

Starbucks went ahead with its earlier planned 50:50 JV vehicle with Tata Global Beverages to open the chain in India. The first store come sup in August 2012. The global coffee chain is apparently not confident about replicating its 1000 store China success in India without a local Partner. Tata Global has knowledge from running an earlier upmaret coffee chain with Baristas it sold back to/as Lavazza later.

With the 50:50 JV option the investment of INR $4.83 bln or $100mln bypasses the local sourcing clauses which led Ikea to change plans about entering the lucrative India market earlier this month. Luxury retail with LVMHa and global automakers like Audi BMW apart from Volkswagen and Ford continue to pursue their India investment interests having grown a definitive share of market in Luxury and small car ranges.

Cafe Coffee Day would be eager for the competition as also Dominos franchise owner Jubilanft Foods which is rolling out the Dunkin' Donuts franchise stores this year as well. McDonalds and Yum Foods/ Pizza Hut&KFC continue to strike daily success even as Dominos increases per store per person spend to INR 500 in 2011 or $25 in Mac PPP terms. Both Yum foods (from Pepsi) and Dominos roll into smaller towns in 2012 to keep growth growing at above 50% rates in a market where 30% annual revenue and profit growth is considered outstanding / mark of a successful business model

Even though Ramesh Sobti's Indusind bank may be a bit early with its new market positioning on the Direct connect platform, its ad campaign "Kabaddi ki kya zaroorat hai" is likely to impress a few prospective customers and even industry thought leaders with a direct call to your Relationship Banker replacing all the mobile, internet and telecalling customer service modes that are so flailing around in terms of delivering any value to the banks' service blueprints.

The two foreign brokerages working on the mandate to sell Temasek's 3.5% or $600 mln stake for INR 30 bln, have to find buyers acceptable to ICICI Banka nd meeting Temasek's terms for the sale. Otherwise Temasek could have used block/bulk deals on the exchange itself to transfer the stake by now to multiple buyers or apparently Temasek is not in a hurry to sell for India's second  line of investments have drawn up a virtual blank for the Sovereign fund esp int he banking sector as new banks are far away. 

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.