Nelco Goes With Tata Power

The financial performance of Nelco continues to deteriorate. If its net loss for the first quarter ended 30th June 2008 was at Rs.4.89 crore, t has now gone up in the second quarter ended 30th Sep 2008 to Rs.11.35 crore. This has been like a douche of cold water. From a trailblazing performance and turnaround it reported in Q4FY08, this slipping back into consistent losses disappointed the markets considerably. Yet, its stock price managed to bounce back from the lower levels and is now steady at quoted at Rs.38, indicating that despite the losses, maybe the fact that it comes from the stables of Tata and also that it has a lot of fancy in the market, helped in holding up the share price. And this fancy has been built up on expectations of the restructuring, which is keeping the stock price stable.



For Q2 ended 30/09/08, its net sales rose 49% to Rs 28.59 crore, while QoQ its topline rose 49%. It then went on to report a net loss of Rs 11.35 crore in the current Q2. For Q2FY08, it had reported a net profit of Rs.1.96 crore.



The biggest orders for the company comes from the Ministry of Defence (MoD) and the past trend indicates that the first three quarters of the company are always subdued, the orders from MoD fructifies only in Q4.



The reason why investors have still stuck on to Nelco, despite the losses is due to expectations of a restructuring which would turn around the fortunes of the company. Tata Power is the main promoter of Nelco, it has a 48.64% stake in the company. Tata Power’s Strategic Electronic Division (SED) has an order booking in excess of Rs.200 crore with status of a Prime Contractor with MoD. There has been news doing the rounds for a long time that this SED would be transferred to Nelco as the nature of its business fits in more with Nelco than with Tata Power. Neclo is also on the approved list of MoD. And hence transfer of this SED to Nelco should not pose any problems. Once this restructuring happens, the financial performance of Nelco
would vastly improve.
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Satyam Stock Price Crashed to Rs 60 With Raju Resigns

Satyam Latest News Ramalinga Raju Resigns Satyam Shares Hit Low of 58. Sad part on Indian co-operate governance. Raju of Satyam resigns, shocking India Inc with the biggest fraud in recent times.
With yesterday news about merger with Tech Mahindra Satyam shares went up by 7%.
Satyam Computer Services founder chairman B. Ramalinga Raju resigned from the IT major's board after admitting a fraud to the tune of Rs 5,040 crore in the balance sheet of the company. reports sify
In a notification to the stock exchanges, the Hyderabad-based IT firm said Ramalinga Raju and Managing Director Rama Raju had resigned early Wednesday and that the Securities and Exchanges Board of India (SEBI) had been informed.
"This is an event of horrifying magnitude and has happened for the first time. So I am sure there are many lessons to be learned," C.B. Bhave, chairman of Securities and Exchange Board of India, told television channel CNBC TV 18. satyam, satyam computers, satyam auditors, livemint, satyam chairman resigns
Read on Ramalinga Raju's letter to Board

Satyam stock price Update:
Chairman B. Ramalinga Raju’s admission that Satyam Computer Services Ltd’s Balance Sheet was completely fabricated got the stock
crashing down by 66.5 per cent to Rs 60 from Wednesday’s high of Rs 188.70.

The share hit a low of Rs 58, as details of the extent of fraud perpetrated by the promoters shook the stock market and cast a grim cloud over the corporate practices of companies.
Satyam Was in news with layoff, and today it seems like end of Satyam news stories. Another black day in Indian share market.
This make trouble for IT stocks and big question on India Inc.

Axis Bank One of The Good Banking Stock To Hold

Axis Bank has posted a good performance for the second quarter ended 30th September 2008. The net interest income for Q2 was Rs. 913.47 , a growth of 55% yoy. The Net Profit for the second quarter was Rs. 402.91 crore, up 76.85% yoy. Its Net NPA was at 0.43% of Net Customer Assets. In today’s time maintaining asset quality is very important and on this front, Axis scores high. Its capital adequacy ratio of 12.20% also indicates that its capital is leveraged adequately. The quarterly EPS (diluted) at Rs. 11.07 was 55.04% higher than the EPS of Rs. 7.14 in Q2 of the previous year.

The Bank has reported a Trading Income of Rs. 36.16 crore in Q2, a decline of 42%yoy. The share of Trading Income to Operating Revenue decreased to 2% in Q2 as compared to 6% in the Q2 of the preceding year. The profitability of the Bank is therefore strongly underpinned by sustained core earnings of Net Interest Income and Fees.

The Bank has a wide presence through its 729 Branches & Extension Counters across 442 cities and towns across India. It has an ATM network of 3,082 ATMs, making it the third largest in the country.

Axis Bank has probably reported one of the highest growth rates in the sector, and it is yet to catch enough investor fancy enjoyed by its peers – HDFC Bank and ICICI Bank. The stock was up yesterday over 3% at Rs.559. Banking stocks are expected to do well in the next fiscal and best to accumulate as every dip.
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Tech Mahindra gained 9.6 percent to 311 rupees, the most since Oct. 28. Tech Mahindra has proposed the merger with Satyam, the Economic Times reported today.

BHEL Best PSU stock to Buy Now

BHEL Best PSU stock to Buy Now, The effect of the slowdown cannot be seen in this PSU capital goods company. Infact it seems to be business as usual, with orders burgeoning as has always been the trend.

For the first half ended 30th September 2008, BHEL posted a 31% rise in net sales on a YoY. The value of production (net of excise duty) has also improved by 34.07%. Other operating income was at Rs.599 crore which included one time interest income of Rs.267 crore on IT refund of earlier years. PAT was at Rs.1000.20 crore as against Rs.976.60 crore (Rs.847.60 crore excluding interest on IT refund) in Q2FY08.

Orders worth Rs.14,350 crore were received during the current Q2 and order outstanding currently is at about Rs.1,04,000 crore. So the company continues to have the issues of a huge backlog and unless the expanded facility or new facility does come up soon, this burgeoning issue of order backlog will continue to dog the company.

Wage revision is also a big issue, infact the biggest bane of PSUs. For BHEL, the provision for wage revision was reassessed in the current year at Rs.1907 crore for the period from 01.01.07 to 31.03.09. Amount already provided upto 31.03.08 was Rs.594 crore. Balance Rs.1313 crore is being provided in the year 08-09. In the first 2 quarters of 08-09, Rs.547 crore has been provided. This wage revision is about 5% of the market share of the turnover and will continue to remain so for the next 2- 3 years, denting the margins.

The stock has recovered strongly from the low of Rs.984. Stay invested and if it goes below Rs1000, pick up the stock again
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RELIANCE COMMUNICATION Paves way for others in FCCB buy back

RELIANCE COMMUNICATION Paves way for others in FCCB buy back
Reliance Communications (RCom) stock surged more than 8% yesterday on news that it will buyback FCCBs at a discount of 52.5% for $25 million, becoming the first Indian company to do so after RBI relaxed the norms. R-Com had issued zero-coupon FCCBs in February 2007, to raise USD 1 billion. The premature buy back does not just reduce the liability, but this would mean that the Rcom after buying back these FCCBs, would now go for new FCCBs at today’s rates, thus keeping its capex plans intact and at the same time, adjusting liabilities to current rates.

RCom is the number two operator in the market of more than 320 million mobile users. And hence its growth is watched with a lot of interest and the pressure of growth and the slowdown seems to have crept in during Q2FY09. This quarter has reported the slowest profit growth rate ever.

For the second quarter ended 30th September 2008, revenue growth was to the tune of 23.3% at Rs. 5,645 crore from Rs. 4,579 crore in Q2FY08. While the company’s broadband business grew by 37.8 per cent, its wireless grew by 16.5% and global practices by 28.6%.

EBITDA was at Rs. 2,302 crore, up 17.3% on a YoY. EBITDA margin was at 40.8%, with strong contributions across all businesses - Wireless, Global and Enterprise. It ended the quarter with a net profit of Rs. 1,531 crore, up higher by 17.3%.

In November 08’, the company added 1.77 million new mobile phone subscribers, taking its total user base to 59.57 million.

The slowing down of profit growth rate was attributed to falling average revenue per user (ARPU), which fell by 3.9% to Rs.271 crore from Rs.282 crore in Q2FY08. The average minutes of use a customer (on a per month basis) was almost flat at 423 against 424 in Q2FY08.

FY09 is the peak of the company’s capex plans, it has spent Rs.4,773 crore during the quarter and these are being funded through long term borrowings and forex bonds. Interest costs would be an area of concern in the coming months. thanks

TANLA SOLUTIONS Good IT Stock To bet On

Tanla Solutions, calling itself a telecom infrastructure solutions providing company, Tanla has done pretty well for itself for the second quarter ended 30th September 2008. The acquisition of a telecom services company in the UK, a software development company in India, and the recent purchase of Openbit, a Finnish mobile payments company has helped fuel this growth.

For Q2FY09, the company recorded consolidated total revenue of Rs.212.41 crore against Rs.168.86 crore in the last sequential quarter, a rise of 90.63%. Overseas revenues were close to 96%, and India was 3.4% whereas other income was 0.6%. Of the total income, products contributed 10.23%, aggregation 70%, professional services 9.23%, while mobile payments contributed around 10.56%. The growth drivers were operations in international markets like UK and other European countries, and Tanla saw sequential network aggregation revenue going up from Rs.125.23 crore to Rs.147.77 crore, an increase of 18%. EBITDA margins stood at 45.66% for the quarter on a consolidated basis. Net profits have jumped 92.83% to Rs. 70.54 crore as compared with the same period last year.

The entire focus of the company currently is on emerging technologies globally and consequent launch in India. It is the first Indian company to offer 3G products and the applications to one of the mobile operators, MTNL, and also for the biggest operator in Sri Lanka called Dialog. Once 3G starts in India, Tanla’s services would include video alert service, video SMS service, video dial service, video blogs and also video conferencing services.
Along with domestic expansions, the company is also keeping its feet firmly on the global markets and has entered new markets like Spain, South Africa, Finland, Sri Lanka, and Germany.

Telecom is one sector which to a large extent has been affected by the global financial crisis and the slowdown in the Indian economy. Tanla is well poised to take advantage and hence makes a good investment even in these troubled times.
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BHARAT FORGE Future looks Brighter

The stock is near at its low of Rs.78 and the reason for this is not far. India’s largest auto component manufacturer is sure to feel the pinch of the slowdown in the auto sector- in India and globally. When auto companies have cut down production, surely there is no way in which Bharat Forge could have remained unaffected.

The company stated that it is planning to cut down production, mainly in Europe where it earns a major chunk of its revenue, as demand has gone down. It also plans to hasten its diversification into high growth areas, including infrastructure and power, to overcome the cyclical nature of auto business. Bharat Forge has three plants in Germany and one each in Sweden, Scotland and the US. It also has two plants in China.

This apart, Bharat Forge’s primary customers in India include Tata Motors, Mahindra & Mahindra, Maruti Suzuki, Ashok Leyland, Bajaj Auto among others. And with all of them cutting production, the going looks tough for Bharat Forge too.

Financially, the company has been showing strains but its more the MTM forex loss which has hastened the fall in the margins. For the second quarter ended 30th September 2008, its total revenue increased 28% but after that the costs have taken its toll. EBIDTA was down on a YoY from 18.2% to 15.2%. Then the company posted a mammoth forex loss of Rs.87.50 crore and this pushed down the PAT, which for the quarter was down at a meager Rs.4.10 crore from Rs.79.10 crore in Q2FY08.

Currently 80% of its revenue comes from the auto sector and taking lessons from this slowdown, it has decided to turn this mix from 80% to 60% by 2012 and to a meager 25% by 2015. The company recently signed a joint venture agreement with power system manufacturer Alstom to make supercritical power equipment. But till then, atleast in the coming few months, FY09 and first half of FY10 looks grim. Thanks