Market News - 05 Aug [LATEST NEWS]

Tata Steel enters into pact with Riversdale

Tata Steel Ltd and Riversdale Mining Ltd, a company listed in Australian Stock Exchange announced on Saturday that they have entered into a Memorandum of Understanding, whereby Tata Steel will become a strategic investor in Riversdale's Mozam bique Coal Project by acquiring a 35% stake in it for a sum of A$100 million.

The Mozambique Coal Project includes the coal tenements of premium hard coking coal in Benga and Tete, located in the Tete province in Mozambique, which are fully owned by Riversdale through its subsidiary. The Benga and Tete tenements together cover an area of 24,960 hectares. The Riversdale management expects that the potential mineralisation of the area will be substantially high.

Riversdale is presently conducting a scoping study which is likely to be completed in August 2007. The Definitive Agreements are likely to be finalised and executed by November 30 2007.

The hard coking coal derived from this project will be supplied to the Corus facilities in the UK and Europe and also to the Company's enhanced requirement in India in the future.

Mr. B Muthuraman, Managing Director, Tata Steel said, "The Memorandum of Understanding with Riversdale is in the Tata Steel's strategy of progressing towards raw material security for its global business. This partnership gives Tata Steel an opportunity to jointly explore part of a large coal basin which could prove to be a potential source to meet part of the raw material requirement and enhance the long term competitiveness of the global operations.

Mr. Michael O'Keeffe, the CEO and Chairman of Riversdale said, "The MoU with Tata Steel is a decisive corporate event for Riversdale and is a definitive recognition of the Moatize Coal Basin as a significant new source of supply of hard coking coal produ cts for the global steel industry

Apollo plans to set up hospitals in Mumbai, Chennai

Apollo Hospitals on Saturday said that it has chalked out a Rs 710-crore expansion plan to set up hospitals in Mumbai, besides a full-fledged orthopaedic hospital in Chennai soon.

"We have tied-up with Western Hospitals in Mumbai and will set up Centres of Excellence at various places. Each hospital will have 250-300 beds each,'' Apollo Hospitals Managing Director Preetha Reddy told reporters here. She said about Rs 600 crore has been allocated for the expansion in Mumbai and the process of finalising and acquiring land in Navi Mumbai, Thane, South Mumbai and Nasik has started. The orthopaedic hospital in North Chennai would have 200 beds at an investment of about Rs 110 crore, Ms Reddy said.

The consultancy division of Apollo would soon foray into Khazakhstan and Turkey, with details of the tie-up for the latter almost finalised. The company would soon start work on construction of their hospitals in Ahmedabad, Vishakapatnam and Bhubaneshwa r. "We expect our turnover to reach Rs 1,200 by the end of this year. We want to touch the 10,000-bed mark by 2010. Currently, we have about 8,000 beds, both through tie-ups and our own,'' the MD said.

Sanjivani launches new drug for Bird Flu

Pharmaceutical firm Sanjivani Paranteral said it has developed a new product for the treatment of contagious viral diseases, such as Bird Flu.

Apart from Bird flu the company's new product - Sancidal - can also be used in the treatment of other viruses such as Lassa Fever, HIV Virus, Hepatitis B and Yellow Fever, Sanjivani informed the Bombay Stock Exchange.

The product has a global market of $3 billion. It has been commercially launched in the domestic market and the company is in talks with various international players to launch the drug globally, it said

ItzCash targeting to double turnover this fiscal

Essel group company ItzCash Card Ltd said it is targeting to more than double its turnover to Rs 1,200 crore this fiscal.

"This year we had a revenue turnover of Rs 600 crore and we expect to double it by next year," Mr Shekher Shrivastava, Vice-President (Marketing), ItzCash said.

The company will be investing around Rs 12 crore this fiscal into its business, he said. Presently, there were one-lakh outlets of ItzCash and this was being proposed to be increased to 10-lakh outlets by 2010, Mr Shrivastava said.

There are 3,000 dedicated franchisees presently, which would be increased to 5,000 by FY-08, he added.

"ItzCash is a multi-purpose pre-paid card, easy to acquire and use at no additional cost. There are new payment options for transactions viz., Internet, SMS and telephone. It is used for transactions with affiliated merchants," he said.

"The only service tax to be paid by the customers is for railway tickets, around 1.5 per cent," he said. The company has tied-up with around 3,000 Web site merchants, he added.

The services offered and current merchants are for shopping, prepaid cards, travel, utility bills payments, mobile services, donations, insurance, matrimonials, entertainment, education, books and periodicals, gaming and others, he said

Madhucon Projects board recommends 30% dividend

Madhucon Projects Ltd has informed the BSE that the board at its meeting held on July 30 has recommended 30% dividend for the year 2006-2007 to the shareholders for consideration and approval

Texmaco to consider merger on Aug 14

Texmaco Ltd has informed the BSE that a meeting of the board of directors of the company will be held on August 14 to consider and approve the ratio of merger in respect of merger of three companies - Neora Hydro Ltd., Shree Export House Ltd., an d Evershine Merchants Pvt Ltd - with itself.

VERY SORT-TERM CASH & FUT CALLS [FOR 6TH AUG]

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Market Forecast for 03.08.07

Market reacted to the good global cues yesterday and since the dow closed in positive today, indian markets to follow suit. Market may take some rest in the coming days with positive bias with less voilatility if the global cues are positive. Use dips to buy fresh longs preferably at lower levels.

Today, market may open flat or positive with less volatility and remain long only above 4360 with SL 4345 for a tgt of 4395-4430. If it remains below 4355 keep short with SL 4370 for tgt 4320-4285. Trade Intraday only....

Buy Ceat; Target Rs.216 : Sharekhan

Get the daily Market Review & Tips: Best call - Forbes.com: Business News

Best call

Research firm Sharekhan has maintained buy recommendation on Ceat with revised target price of Rs 216. At the current levels, the stock is trading at 8.4x its FY2009E earnings and at an EV/EBIDTA of 3.9x.



Result highlights

Ceat's Q1FY2008 results were in line with our expectations. The net sales have risen by 7.8% to Rs 536.4 crore, mainly driven by strong realisation growth due to price hikes and product mix changes. In line with the industry slowdown, the original equipment manufacturer (OEM ) sales declined by 11% year on year (yoy), but the effect of the same was mitigated because of strong growth in the replacement and the export markets.

The operating margins expanded 550 basis points to 9.2% during the quarter as a result of lower raw material cost, price hikes, improved product mix and other efficiencies. As a result, the operating profits grew by 166.3% to Rs 49.4 crore.

Adjusting for the impact of tax provisioning on the extraordinary gain, we estimate that the quarterly profits have grown to Rs 20.4 crore against Rs 0.2 crore same quarter last year. The quarter's results contain extraordinary items relating to refund from excise and income tax and reversal of export benefits granted in earlier years. Profit after tax (PAT) after extraordinary items have grown to Rs 30.4 crore.

Last few quarters have been pretty exciting for Ceat, as it has effected a smart turnaroud during the period and now its margins are comparable with the best in the industry. We expect this strong growth to continue, particularly driven by the replacement and the exports segment. We also expect the company to maintain its margins at these levels going forward. On the basis of strong performances by Ceat, we are raising our earnings estimate for Ceat by 6% to Rs16.9 for FY2008 and are introducing our FY2009 estimates of Rs 21.1.

The slowdown in the OEM segment is expected to continue for another couple of quarters. To counter the same, the company has already put in place strategies to concentrate more on the exports and the replacement markets.

The land sale is expected to be finalised by the third quarter of the current fiscal, while the demerger process is expected to be completed by the end of this fiscal.

At the current market price of Rs 177, the stock is trading at 8.4x its FY2009E earnings and at an enterprise value (EV)/earnings before interest depreciation and amortisation (EBIDTA) of 3.9x. We maintain our Buy recommendation on the stock with a revised price target of Rs 216.

Realisation growth fuels top line

The net sales of the company for the quarter grew by a 7.8% largely on account of realisation gains, while the growth in tonnage terms remained flat. The realisation growth was on the back of price hikes effected in the last one year and product mix changes.

Valuations and view

Considering the strong growth opportunities for the company (particularly in the in the specialty tyre segment), the smart turnaround and the improving productivity, we maintain our positive outlook on the company. The company is also raising its capacity in the off the road (OTR) segment to 45 tonnes a day from 25 tonnes a day by November 2007. The company has also announced to demerge the company into two.one to look the core business and the other, the investment portfolio. For every 100 shares held, the shareholder would get 75 shares of the core company and 25 shares of the new investment company. We believe the move is a positive one, and would lead to greater value unlocking for the shareholders. The de-merger is expected to be implemented during the current financial year. We continue to value the company on sum-of-parts basis. On the basis of strong performances rendered by Ceat in the recent times, we are raising our earnings estimate for Ceat by 6% to Rs16.9 for FY2008 and are introducing our FY2009 estimates of Rs 21.1. At the current levels, the stock is trading at 8.4x its FY2009E earnings and at an EV/EBIDTA of 3.9x. We believe the valuations are very attractive and maintain our Buy recommendation with a revised price target of Rs 216.