Keynote Capitals Industry Monitor


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Keynote Capitals Industry Monitor

  1. 1.         Keynote Capitals Institutional Research - Industry Monitor September 12, 2011Industries covered • Banks • Infrastructure • IT • Media & EntertainmentExecutive SummaryRBI has notified the pending deal of Axis Bank acquiring Enam to be an all-cash dealThe `2,067Cr deal pending since last November jointly announced by Axis Bank and Enam has beennotified by RBI that the proposed has to be an all-cash deal that was initially structured as an all-stocktransaction.Land Acquisition & Rehabilitation Bill has finally been approvedThe much-debated and awaited Land Acquisition & Rehabilitation Bill has finally been approved bythe Cabinet and is ready for presentation at the monsoon session of parliament would be an event towatch out for would be favorable for the companies like DLF, Unitech, HDIL etc which has landholding whereas the companies which are in process of acquiring new land parcel would be impactedonce the bill is passed.IT stocks lead losses on U.S. economy worriesBSE IT index was closed 4950.11 down 0.68% as compared to last week. Investors weredisappointed after a speech by the U.S. Federal Reserve chief lacked details on plans to spureconomic growth after a $447 billion jobs package plan by US President Mr. Barack Obama. Softwarestocks led losses on the main index with Infosys and Tata Consultancy Services dropping 2.1% each,while Wipro fell 1.4%. The United States is the biggest market for India’s $76 billion IT companies.Key highlights of Media & Entertainment industry is Assocham report on film and animationindustryThe main highlights of the Media & Entertainment (M&E) Industry are; according to Assocham, theIndian film industry revenue is expected to grow by 56% to Rs128bn by 2015 from `81.9bn last yearwhile animation industry to reach `43.75bn by 2013, UTV’s shareholders have approved to delist fromIndian bourses, government aiming at self-regulatory mechanism for TV content and Governmentplans to set up panel to prevent media from blowing up issues.Weightages in major indices Sectors Sensex Nifty BSE 500 CNX 500 Banks 24.49% 25.00% 23.84% 22.63% Infrastructure 10.7% 10.62% 7.90% 7.91% Information & Technology 13.8% 11.00% 8.42% 8.40% Media & Entertainment NA NA 0.80% 0.80%
  2. 2.         Banking Industry MonitorBanking Industry and its contribution to Indian equitiesBanking and other Finance firms together have the highest weightage in the Sensex and BSE 500with 24.49% and 23.84% respectively. The major players in BANKEX Indices are the private banksnamely ICICI Bank (28.00%), which is the second largest bank in India with HDFC Bank (23.91%).Other banks include SBI (15.14%), Axis Bank (8.01%) and Kotak Bank (5.05%). The sector’sweightage in CNX Nifty is 25.00% and in CNX 500 is 22.63%.Federal Bank launches “Fed Oriental Pravasi Insurance” scheme for new NRI customersFederal Bank in association with Oriental Insuranc has launched an insurance scheme named “FedOriental Pravasi Insurance for its new NRI customers. The scheme will cover their hospitalizationexpenses by providing cashless treatment facility at more than 3000 hospitals pan India and alsounforeseen eventualities like repatriation, accidents etc. for which the customers have to maintain aminimum balance of `5,000. Overseas treatment in recognized hospitals for an amount up to `75,000p.a. is also offered under the scheme.Medical floater cover for family is available in the event of death or disability of the insured for `10lakh. Economy class airfare for a dependent or bystander in case of accident along with that of thepatient is also available.Axis Banks acquisition of Enams broking & investment banking businesses must be all-cashdeal: RBIThe `2,067Cr deal pending since last November jointly announced by Axis Bank and Enam has beennotified by RBI that the proposed deal has to be an all-cash deal that was structured as an all-stocktransaction. The original structure submitted to the RBI by Axis Bank had proposed it would issuestock to Enams founders while a subsidiary of the bank would take over the businesses. But thecentral bank had turned down the proposal on the grounds the entity that would issue the shares wasdifferent from the one that would own the new businesses. Following this, Axis submitted a newproposal to salvage the deal according to which Axis would issue shares and acquire the businessesfrom Enam and "momentarily" hold the assets before transferring them to a subsidiary that too wasturned down by RBI.The Axis and Enam official declined comment and said that the bank has received an approval fromRBI to carry out an all-cash transaction. Another senior bank official said the board was meeting onSeptember 16 to consider a revised plan, and the revision did not envisage an all-cash deal.South Indian Bank (SIB) launches sale of gold coins and gold barsSIB has launched sale of gold coins and gold bars under the brand name “SIB Pure Gold” available atselected branches in Kerala and Tamil Nadu. SIB Pure Gold consists of 999.9 pure gold coins andgold bars minted at the leading refinery PAMP in Switzerland and is available in 4 gm, 8 gm, 20 gmcoins and 50 gm and 100 gm gold bars.SBI may expand to Pakistan soon as central banks explore banking tiesThe central banks of India and Pakistan are likely to meet in Karachi later this month to explorebanking ties. The two sides had agreed at the commerce secretaries meeting in April this year thatcloser cooperation between their banks was important to give a push to bilateral trade and theprocess of opening branches in each others country needed to be fast-tracked. The two central bankswill give inputs to their respective commerce secretaries, who will discuss the issue at their proposedmeeting in November. Although permission to bank in each others country is likely to boost bilateraltrade, the RBI is expected to tread cautiously as the facility could also be used for terror financing.
  3. 3.         Infrastructure Industry MonitorInfrastructure Industry and its contribution to Indian equitiesInfra includes infra development and Power & power distribution. The total weightage of the sector is7.9% in BSE500 index and CNX500, where L&T alone contributes maximum at 4.06%.Reliance Power’s Sasan UMPP implementation on scheduleThe company has informed that the implementation of Sasan Ultra Mega Power Project (UMPP) is onschedule. The coal production from the mines associated with the Sasan UMPP will be in time tomeet the requirement of the project. Further, the land referred in the report is predominantly non-coalbearing area and is required for stocking over-burden removed from the coal mine area. Also, theissue mentioned in the report is being addressed by the company under the leadership of Ministry ofCoal, Government of India, and the company is confident that it would not impact the project timelinesincluding production of coal. Recently, the company was planning to set up 500 MW solar powerprojects in Rajasthan entailing an investment of `8,000Cr over the next three years. The plannedinvestment was the largest investment in solar projects in India and one of the largest in the world.NCC secures new orders aggregating `629CrThe company has secured 3 orders worth `629Cr, one is from Water Resources Division Raigarh,Chhattisgarh for the construction of Saradih Barrage with vertical lift gates to be completed over aperiod of 24 months and other order which is valued at `159Cr is secured from the Maharashtra StateElectricity Distribution. (MSEDCL), Mumbai for turnkey contracts for single phasing scheme to becompleted over a period of 12 months and last order worth `71Cr from Bharat Cocking Coal,Dhanbad is for removal of OB, extraction and transportation of coal to be completed over a period of20 months.Ramky Infrastructure bags orders worth `1,006 CrThe company has bagged orders worth `1006Cr across buildings, industrial, water and waste water,road and power sectors from various states in India which includes `207Cr order from PuravankaraProjects for construction of civil works for a residential project in Chennai, Tamil Nadu and `109Crorder from Reliance Infrastructure for construction and general civil work for a coal handling plant, andworkshop, roads, drains and boundary for the Sasan ultra mega power project in Madhya Pradesh.While the Puravankara project is to be completed in 21 months, the Reliance Infra project has tenureof 20 months. The contract also includes infrastructure work order for water supply projects inRajasthan worth about `219Cr and a residential project in Maharashtra valued at `74Cr. Thecompany has also received orders from Haryana, Gujarat, Madhya Pradesh, Maharashtra, Karnatakaand Orissa.
  4. 4.         IT Industry MonitorIT Industry and its contribution to Indian equitiesIT sector has weightage of 8.42% in BSE 500 and CNX 500 with major stocks are Infosys, TCS andWipro. The sector is also represented through BSE IT and CNX IT indices. IT sector companies alsoconstitute major portion of Sensex and Nifty with weightages of 13.8% and 11%.Global economic environment is volatile: InfosysInfosys Technologies Executive Co-Chairman Mr. S Gopalakrishnan said Infosys has not seen clientsreducing their budget plan on information technology due to the slowdown in the US and Europe thisyear. He also mentioned that there is volatility in decision making, but the company is continuing withtheir hiring plans.Finacle from the Infosys ltd is implemented by ECMEuropean credit management ltd has strengthened its existing relationship with the Infosys byimplementing Finacle Treasury as their trading platform for credit derivatives and Total return swapsproducts. This development displaces the incumbent technology solution, and has led to theconsolidation of multiple trading platforms onto Finacle Treasury.Wipro won the 2011 Microsoft Country Partner of the Year Award.Wipro was selected from among a global field of top Microsoft partners for demonstrating excellencein innovation and implementation of customer solutions based on Microsoft technology. Mr. AshokTripathy, VP and Business Head, Wipro said "We take immense pride in being awarded the MicrosoftCountry Partner of the Year for India for two consecutive years. This award is a reflection of Wiprosdeep capabilities on Microsoft Technology and our success in delivering innovative and high-valuesolutions to our customers.Educomp received `60.72Cr OrderEducation solutions provider Educomp has received `60.72Cr order from the Chhattisgarhgovernment for implementation of ICT solutions across 582 government high schools and highersecondary institutes. The progamme is expected to benefit 3.25 lakh learners from Class IX to XIIevery year. With the new project, the total number of schools in Edureachs (Educomps ICT division)portfolio is 11154.Slowdown in the decision-making process: Tech Mahindra ltdTech Mahindra is seeing some slowdown in the decision-making process and order placements fromglobal customers due to the continued recession facing its clients in the US and European markets.Some customers are beginning to think on changing their behaviour patterns and slowing down thedecision making process..
  5. 5.         Media & Entertainment Industry MonitorIndustry and its contribution to Indian equitiesMajor listed Media & Entertainment companies included in BSE 500 and CNX 500 indices are ZeeEntertainment Enterprises, Dish TV India, Sun TV Network, Jagran Prakashan and UTV SoftwareCommunications, while the sectors weight age is 0.80% in both the indices.Assocham: Film industry revenue may touch `128bn by 2015According to Assocham, the Indian film industry revenue is expected to grow by 56% to `128bn by2015 from `81.9bn last year due to increasing digitalisation of the sector. Digitalisation of filmdistribution and value-added services like movies on demand are set to open up new revenuestreams and business models. The box office collections nearly contribute about 80% to the total filmrevenues. Backed with 12,000 theatre screens, 400 production houses and a huge viewership, Indiahas worlds largest film industry in terms of number of films produced and ticket size.Animation industry to reach `43.75bn by 2013According to another study conducted by Assocham with Deloitte, the Indian animation industry isexpected to touch `43.75bn by 2013 from `23.25bn in 2010. The rising number of TV channels,greater accessibility to internet, proliferation of mobile devices that leads to popularity of video andgaming content are set to offer a huge potential for animation and character licensing.UTV’s shareholders have approved to delist from Indian boursesThe shareholders of UTV Software Communications have approved the proposal to delist thecompanys shares from both the exchanges, Bombay Stock Exchange and the National StockExchange. In July this year, Walt Disney had offered to buy out stakes held by public shareholdersand promoters of UTV in a deal valued around `20bn. Post delisting, Walt Disney will also acquire80.53 lakh equity shares representing 19.82% of the current paid up equity share capital from UTVsother promoters.UTVs board of directors has already approved the delisting offer and acquiring shares from public ata price not exceeding `1,000 per equity share.Government aiming at self-regulatory mechanism for TV contentThe government is planning to initiate the process of amending Cable and Television Networks Act of1995 to define the modalities for self-regulatory mechanism for television content. The government isconsulting with all associations of broadcasters and producers on the issue for a consensus.Government plans to set up panel to prevent media from blowing up issuesThe government is planning to set-up a committee to look into the issue of exaggerations in mediareports and playing up of certain events and suggest ways of dealing with the menace without curbingpress freedom. In the Government view, there have been some instances in the recent past, wheremedia reports have created hype over certain events, resulting in undue pressure on the governmentand people being misled by the report about the real picture.
  6. 6.          KEYNOTE CAPITALS LTD. Member Stock Exchange, Mumbai (INB 010930556) National Stock Exchange of India Ltd. (INB 230930539) Over the Counter Exchange of India Ltd. (INB 200930535) Central Depository Services Ltd. (IN-DP-CDSL-152-2001) 4th Floor, Balmer Lawrie Building, 5, J. N. Heredia Marg, Ballard Estate, Mumbai 400 001. INDIA Tel. : 9122-2269 4322 / 24 / 25 • www.keynoteindia.netDISCLAIMER• This report has been prepared and issued by Keynote Capitals Limited, based solely on public information and sources believed to be reliable.• Neither the information nor any opinion expressed herein, constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities and also for the purpose of trading activities.• Keynote Capitals Limited makes no guarantee, representation or warranty, express or implied and accepts no responsibility or liability as to the accuracy or completeness or correctness of the information in this report.• Keynote Capitals and its affiliates and their respective officers, directors and employees may hold positions in any securities mentioned in this Report (or in any related investment) and may from time to time add to or dispose of any securities or investments.• Keynote Capitals may also have proprietary trading positions in securities covered in this report or in related instruments.• An affiliate of Keynote Capitals Limited may also perform or seek to perform broking, investment banking and other banking services for the company under coverage.• If ‘Buy’, ‘Sell’, or ‘Hold’ recommendation is made in this Report, such recommendation or view or opinion expressed on investments in this Report is not intended to constitute investment advice and should not be intended or treated as a substitute for necessary review or validation or any professional advice. The views expressed in this Report are those of the analyst which are subject to change and do not represent to be an authority on the subject. Keynote Capitals may or may not subscribe to any and/ or all the views expressed herein.• The opinions presented herein are liable to change without any notice.• Though due care has been taken in the preparation of this report, Keynote Capitals limited or any of its directors, officers or employees shall be in any way be responsible for any loss arising from the use thereof.• Investors are advised to apply their judgment before acting on the contents of this report.• This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Keynote Capitals Limited.