Franklin ranklin India High Growth Companies Fund
NFO Period: May 31st, 2007 till June 29th, 2007.
Investment Objective: An open-end diversified equity fund that seeks
to achieve capital appreciation through investments in Indian companies/
sectors with high growth rates or potential.
Structure: Open Ended Equity Scheme with high growth focus
Asset Allocation Pattern
Instrument % Of Net Assets
Equity and Equity Related Securities 70 - 100
Debt & Money Market Securities/Instruments/Funds 0 - 30
Benchmark Index: S&P CNX 500
Entry Load: Application Amount less than Rs 5 Crores: 2.25%,
Application Amount of Rs 5 Crores & above: Nil
Exit Load: Application Amount less than Rs. 5 Crores - 0.50% for
redemption within 6 months of allotment. Application Amount of Rs.
5 Crores and above - 1% for redemption within 1 year of allotment)
Minimum Investment: Rs.5000 and in multiples of Re.1
Fund Manager: K.N. Sivasubramanian & Anand Radhakrishnan
Plans & Options: The Scheme offers Growth option and Dividend
option. The Dividend option offers Dividend Payout and Dividend
Reinvestment facilities.
Cheque Favoring: Franklin India High Growth Companies Fund
Highlights: An open ended equity oriented scheme with an objective
to invest predominantly in a diversified portfolio constituting equity
and equity related instruments. The investment style of the fund
manager will be a combination of 'growth' & Blend of top-down and
bottom-up approach of investing.
Reliance Equity Advantage Fund
NFO Period: June 12th, 2007 till July 10th, 2007
Investment Objective: The primary investment objective of the scheme
is to seek to generate capital appreciation & provide long-term growth
opportunities by investing in a portfolio predominantly of equity &
equity related instruments with investments generally in S&P CNX Nifty
stocks. The secondary objective is to generate consistent returns by
investing in debt and money market securities.
Structure: An open-ended diversified equity scheme
Asset Allocation Pattern
Instrument % Of Net Assets
Equity and Equity Related Securities 70 - 100
Debt and Money market securities
(including investments in securitised debt) 0 - 30
Benchmark Index: S&P CNX Nifty
Entry Load: 2.25% for Retail Plan & Nil for Institutional Plan.
Exit Load: Retail Plan: 1% if redeemed/switched on or before 6 months,
0.50% if redeemed/switched between 6 months & before completion
of 1 year, Nil if redeemed/switched after completion of 1 year from
the date of allotment. Institutional Plan: Nil
Minimum Investment: Rs.5,000/- per application, plus in multiples of
Re.1 thereof for Retail Plan & Rs.5 crores per application, plus in
multiples of Re.1 thereof for Institutional Plan.
Fund Manager: Ashwani Kumar
Plans & Options: The Scheme offers Growth option and Dividend
option. The Dividend option offers Dividend Payout and Dividend
Reinvestment facilities.
Cheque Favoring: Reliance Equity Advantage Fund
Monday, July 2, 2007
Mutual Funds..
Mutual Funds Performance..
PERFORMANCE AS ON 31st MAY 2007
Information Risk Adjusted Returns
Scheme Name Launch AUM Expense Minimum Standard Sharpe
Date (Rs. in Cr.) Ratio Invest. (Rs.) Deviation
DEBT - LIQUID
TATA Liquidity Management Fund - G 1-Mar-06 168.35 0.29 10,000 0.00 1.26
DSP ML Liquidity Fund - Regular Plan - G 9-Mar-98 1,114.54 0.45 25,000 0.00 0.60
Reliance Liquidity Fund - G 16-Jun-05 10,031.22 0.40 50,000,000 0.00 0.90
HDFC Cash Mgmt Fund - Savings Plan - G 19-Nov-99 3,976.71* 0.36 100,000 0.00 1.13
Sundaram BNP Paribas Money Fund - G 6-Mar-00 1,690.25 0.60 10,000 0.00 0.66
ICICI Prudential Liquid Plan - G 19-Jun-98 19,620.51 0.90 15,000 0.00 0.75
DEBT - LONG TERM
PRINCIPAL Income Fund - G 25-Oct-00 310.73 1.50 5,000 0.05 0.01
SBI Magnum Income - G 5-Nov-98 70.42 1.51 2,000 0.06 -0.16
DEBT - SHORT TERM
Reliance Short Term Fund - G 17-Dec-02 238.43 0.64 50,000 0.01 0.52
ICICI Prudential STP - G 19-Oct-01 242.14 1.10 5,000 0.01 0.24
DEBT - FLOATERS
HDFC F R I F - STF - G 8-Jan-03 681.55* 0.24 100,000 0.00 1.15
Reliance FRF - G 27-Aug-04 1,379.31 0.55 25,000 0.01 0.76
DSP ML Floating Rate Fund - Regular Plan - G 12-May-03 268.21 0.74 25,000 0.06 -0.06
Templeton Floating Rate Income Fund ST - G 2-Feb-02 790.30* 0.75 5,000 0.00 0.63
MIP (MORE THAN 20%)
ICICI Pru. Income Multiplier Fund - Cum. 27-Feb-04 464.00 2.00 5,000 0.31 0.07
HDFC MIP - LTP - G 8-Dec-03 1,138.92* 1.77 5,000 0.31 0.09
MIP (LESS THAN 20%)
ICICI Prudential MIP - Cumulative 14-Oct-00 581.85 1.94 5,000 0.20 0.05
Reliance MIP - G 29-Dec-03 424.49 1.94 10,000 0.24 0.01
Patel Engineering Ltd. - RESULTS
Results for the quarter ended March’07 were in line with our expectations. Net sales increased by 35.1% to Rs 4910.2 million. EBIDTA for the quarter increased by 49.2% to Rs 608.1 million while EBITDA margins increased YoY by 120 bps to 12.4% majorly on account of change in project mix on a YoY basis. Cost of construction as a percentage of sales declined by 330 bps to 79.3%. However, general & administrative expenses increased by 81.3% to Rs 408.6 million which as a percentage of net sales increased YoY by 210 bps to 8.3%. Other income declined by 30.6% to Rs 23.1 million.
Interest cost for the quarter declined by 9.7% to Rs 92.8 million due to repayment of debt from the IPO proceeds. Depreciation cost was up by 41.3% to Rs 108.1 million. Tax incidence (current+ deffered) increased YoY by 14.7% to Rs 39.7 million, which as a percentage of PBT increased by 300 bps to 13%. This resulted in 53% increase in Profit after tax to Rs 358.2million.
FY07 records healthy growth
FY07 results were in line with our estimation. Net sales for FY07 increased by 30.2% to Rs 13309.7 million while EBITDA margins increased by 60 bps to 13.5%. Interest cost for the period is down by 26% to Rs 193.2 million on account of repayment of debt to the tune of Rs 792.8 million from the IPO proceeds. Depreciation increased by 21.4% to Rs 378 million on increased capex during the period. Tax provisions increased by 119.8% to Rs 144.7 million. PAT for the full year period increased by 51.2% to Rs 1108.7 million.
Order book
The order book of the company as on 31st Mar’07 stands at Rs 50 billion (3.8xFY07 Revenues). Average ticket order size of the company is Rs 2-2.2 bn with an average execution period of about 4 years.The order book of the company grew in excess of Rs 2000 crores (higher than revenues). The company further expects a growth of 40% to 60% in its order book for the next 2 years. The company expects a higher contribution from hydro power projects thereby improving its margins. Going forward, Patel Engineering is moving into Independent Power Producer (IPP) & real estate sectors.
Foray into Independent Power Production
Patel Engineering Ltd. Has entered into an MOU with the Government of Gujarat for 1200 MW Thermal Power Project at Bhavnagar involving a total investment of Rs 50 bn. The project is to be implemented in 3 phases of 400 MW each (400MWx3). The company proposes to take up a strategic partner for Electro Mechanical Works. PEL expects to funds its own equity contribution through internal accruals.
The details of the Project are as follows:
The company is also looking for IPP projects in the Hydro Power segment. Patel Engineering’s foray into IPP’s would result in its going up the value chain thereby increasing the shareholders’ value in the long term.
A wholly owned subsidiary to be formed for Real Estate Business
• The company plans to form wholly owned subsidiary Patel Realities India Ltd. (PRIL) for its real estate ventures.
• The company has a total land bank of 507 acres spread across Mumbai (92 acres), Bangalore (32 acres), Chennai (29 acres) & Hyderabad (354 acres) which it plans to monitise. This would result in significant increase in shareholders’ value. The land bank has been acquired since the 1950’s &
thus the cost of land acquisition is insignificant. At the current market prices we have estimated the land bank at Rs 151 per share.
• The company plans to develop commercial complex, residential complex, IT parks, Corporate Offices, Malls etc. The first phase of development would cover Mumbai (750000 sq.ft of commercial development) & Bangalore (3-5 mn sq ft for development of IT Park & residential complex). First phase is expected to commence in FY08 & revenues there from are expected in FY09-FY10. The second phase would cover Hyderabad & Chennai.
• The company does not intend to raise funds for its real estate subsidiary going forward which according to us is positive for the stock.
Tax at MAT Rate
PEL has continued to provide tax rate at the MAT levels as it claims to be a developer & has filed litigation for the reversal of the order. Total Outflow from FY2000-FY2007 would entail to Rs 270 million. However, taking a conservative estimate we have provided for a cash outflow of Rs 270 million in FY08 & also provided for taxation levels at 33% for future years.
Business Outlook
Increased thrust on infrastructure development especially on transportation, irrigation, water projects and power with Patel Engineering’s impressive track record of executing hydro and irrigation projects gives it a competitive advantage. Further, the company plans to increase the share of hydro projects in its order book and also enter the power generation space and real estate business. We estimate a 28% CAGR increase in net revenues between FY07-09E to Rs 21755.3 million and an increase in EBITDA margins by 50 bps in FY08 & FY09 to 14%. We estimate a PAT of Rs 1224.7 million in FY08E & Rs 1536.4 million in FY09E translating into an EPS of Rs 20.5 & Rs 25.7 respectively.
Valuation
At the current price of Rs 406, the stock quotes at P/E of 20x FY08E and 16xFY09E. We believe the stock to be a good long-term investment in the construction space. We value the business of the company on Sum of the parts method. Looking at the robust business model of the company and good growth prospects in the construction sector we have our target price to Rs. 513 on SOTP method. At current market price of Rs. 406 the PEL stock is trading at a PE multiple of 20x & 16x on FY08E & FY09E earnings. We recommend a BUY with an increased target price at Rs. 513
POST-MARKET ANALYSIS - JUL 02nd 2007
MARKET ENDS WITH MARGINAL GAINS
The market which was firm till mid-afternoon trade, pared gains towards the later part of the trading session as some selling emerged at higher level. Sensex, in fact, slipped into the red at one point of time in late trade, before settling with small gains. The market rose for the third straight day today. Auto, capital goods, and healthcare shares saw buying interest, while cement and IT shares witnessed selling.
Asian markets which were subdued earlier during the day, recovered later.
The BSE 30-share Sensex rose 13.75 points to 14,664.25, an all time closing high. The barometer index opened higher at 14,685.16 and surged to strike a record high of 14,745.75 at 11:23 IST. It slipped to a low of 14,638.88 at 15:12 IST. It oscillated in a range of 108 points for the day.
Prior to this, the Sensex had struck a record high of 14,723.88 on 9 February 2007.
The Sensex had surged 146 points on Friday, 29 June 2007, boosted by latest data showing fall in inflation to a 14-month low.
The S&P CNX Nifty ended the day marginally in the red, declining 4.55 points to 4,313.75. The Nifty July futures settled at 4302.30, a discount of 11.45 points as compared to spot closing.
The total turnover on BSE amounted to Rs 4,303 crore compared to Friday (29 June 2007)'s Rs 4,855.07 crore. Turnover on NSE's futures & options (F&O) segment stood at Rs 34061.14 crore compared with Friday (29 June 2007)'s Rs 35,463.65 crore.
The market breadth was strong on BSE with 1,490 shares advancing as compared to 1,163 shares that declined. 64 remained unchanged.
The BSE Small-Cap Index rose 0.68% to 7,783.26. It struck an all time high of 7,819.30. The BSE Midcap Index gained 0.99% to 6,591.35. It scaled an all time high of 6,615.65. 6,615.65
Among the Sensex pack, 17 advanced while the rest declined.
Car major Maruti Udyog surged 4.29% to Rs 774.40, on 2.26 lakh shares, after it said on Monday, 2 July 2007, it had sold 59,917 vehicles in June 2007, up 24% from 48,425 vehicles sold in June 2006. Maruti Udyog sold 56,000 units in the domestic market, up 25.5% from 44,626 units in June 2006. It exported 3,917 units in June, up 3% from 3,799 units last year.
Tata Motors (up 2.20% to Rs 684.50), Hero Honda Motors (up 0.05% to Rs 689.20), Mahindra and Mahindra (up 1.82% to Rs 736) rose from the auto pack. The BSE Auto Index settled 0.99% higher at 4,791.06.
Bajaj Auto rose 0.10% to Rs 2,131. The company said on Sunday, 1 July 2007, said its sales in June 2007 fell 12% to 1,87,624 units, from 2,13,918 units in June 2006. The company said it will launch a new motorbike in September 2007, with an initial sales target of 50,000 units a month by January 2008.
Pharma shares advanced on renewed buying. Ranbaxy Laboratories (up 3.10% to Rs 365.95), Cipla (up 0.74% to Rs 210) and Dr Reddy’s (up 0.74% to Rs 660.80), edged higher. The BSE Healthcare Index was up 1.15% at 3,849.59. It was the top gainer among the sectoral indices on BSE
Shares from the capital goods space advanced on fresh buying. L&T (up 2.23% to Rs 2,245), Punj Lloyd (up 8.47% to Rs 278.65), Areva T&D (up 5.25% to Rs 1589) and Crompton Greaves (up 4.56% to Rs 264.75) advanced. However, Bhel slipped 0.41% to Rs 1,532 after striking an intra-day high of Rs 1582.70. L&T firmed up on reports that the government may select the engineering and construction firm as an additional supplier of equipment for power projects. The BSE Capital Goods index struck an all-time high of 12,586.12. It finished 1.06% higher to 12,429.15.
Cement stocks saw profit booking after two straight days of rally. Ambuja Cements shed 1.97% to Rs 122.10, on 5.54 lakh shares. It was the top loser from the Sensex pack. Grasim slipped 0.57% to Rs 2,622.90.
However, ACC gained 0.14% to Rs 935.10 after it reported 9.67% growth in cement despatches to 1.70 million tonnes in June 2007 from 1.55 million tonnes in June 2006.
IT stocks saw some unwinding as the Indian rupee opened at its highest level in over three weeks on Monday, 2 July 2007. Wipro (down 1.25% to Rs 512), Satyam Computers (down 0.21% to Rs 466), and TCS (down 1.07% to Rs 1136.90), edged lower.
However, Infosys Technologies was up 0.57% to Rs 1940.10, buoyed by rumors that the Indian IT major is mulling a bid to buy Europe’s largest IT services giant, Capgemini. Both Infosys Technologies and Capgemini have denied the takeover rumours which had first hit the market after trading hours on Thursday, 28 June 2007. Infosys Technologies will announce its first quarter June 2007 results on 11 July 2007. The BSE IT Index lost 0.07% to 4,867.27.
The Indian was at 40.645/655 per dollar in early trade, slightly off its opening of 40.60, its strongest start since 6 June 2007. The rupee rose as traders built positions in the local unit on positive cues from high-yielding Asian currencies, and expectations of foreign investment flows.
Index heavyweight Reliance Industries slipped 0.83% to Rs 1,686.20, on 6.07 lakh shares. It had hit a high of Rs 1709.80.
Reliance Energy (REL) gained 1.94% to Rs 626. REL’s wholly owned subsidiary Rosa Power Supply, on 26 June 2007, tied up long-term loans of around Rs 2,000 crore for the first stage of its 600 meg watt (MW) power project.
Hindalco Industries slipped 0.81% to Rs 158.85 on entering into a joint venture agreement with Mahanadi Coal (MCL), a subsidiary of Coal India, and with Neyveli Lignite Corporation (NLC) for coal mining. The joint venture company (JV) is expected to be formed in the next 3-6 months and the company will have 15% shareholding, with MCL holding 70% and NLC holding 15%.
Other metal stocks, Tata Steel (down 0.61% to Rs 593.55) and Sail (down 2.24% to Rs 128.30), also slipped. The BSE Metal index was down 0.42% to 10,560.32, and was the top loser among the sectoral indices on BSE.
IFCI galloped 7.87% to Rs 60.30 on high volume of 2.03 crore shares, after scheduling a board meet on 6 July 2007 to consider inviting bids for inducting a strategic investor in the firm. The company made the announcement after market hours on Friday, 29 June 2007. IFCI said it would also take on record its audited financial results for the quarter ended June 2007 on the same day.
Welspun Gujarat Stahl Rohren surged 7.19% to Rs 237.85 on announcing plan to build a manufacturing facility in the US.
Corporation Bank rose 1.79% to Rs 330.20 after it sold 0.26% stake in NSE for $6.625 million to Citigroup Strategic Holdings Mauritius. The company made the announcement during trading hours today, 2 July 2007.
Pratibha Industries rose 5% to Rs 242.60 on securing two contracts from Indore Municipal Corporation for two water supply schemes. The total value of the contracts is Rs 97.78 crore. The project is to be executed in 12 to 18 months.
Kernex Microsystems India was locked at the 5% lower limit at Rs 244.90 on BSE even as its board of directors approved issue of one bonus share for every 10 shares held in the company after trading hours on Friday 29 June 2007. The company's net profit rose 58.2% to Rs 0.87 crore in Q4 March 2007 as against Rs 0.55 crore in Q4 March 2006. Sales declined 50.4% to Rs 5.42 crore in Q4 March 2007 compared to Rs 10.93 crore in Q4 March 2006.
Spentex Industries rose 4.83% to Rs 40.15 on acquiring Schoeller Litvinov k.s. in Czech Republic. The company made this announcement before market hours on Monday, 2 July 2007. The acquisition of Schoeller was made for $25 million. The transaction will enhance the topline of the company by about euro 55 million and add another euro 6 million per year in cash flows.
GMR Infrastructure rose 2.29% to Rs 765 after the company said its board approved splitting each share of face value Rs 10 each into five shares of Rs 2 each. The company made the announcement on Saturday, 30 June 2007. GMR reported net profit of Rs 12.37 crore upon sales of Rs 22.75 crore in Q4 March 2007. Net profit plunged 91.89% to Rs 2.88 crore in the year ended March 2007 as against Rs 35.55 crore in FY 2006. Net sales declined 41.9% to Rs 33.39 crore in FY 2007 (Rs 57.44 crore).
Gujarat Alkalies & Chemicals jumped 6% to Rs 153 after signing an initial agreement with DowEurope GmbH for a long-term strategic business relationship for chlorinated organics.
Market Forecast for 02.07.07
Tomorrow, market will open flat or positive attached with volatility and mixed bias and remain long above 4312 with SL 4295 for a tgt of 4335-4352. If it breaks and sustain below 4300 keep short with SL 4315 for tgt 4287-4270. Be careful with the positions. it's still not safe to take fresh longs at higher levels now. Traders, trade intraday and mint money............
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