India Inc raised USD 2.78 billion from overseas markets in October this year, up 44 percent from a year ago, according to the Reserve Bank data released today. Domestic firms had raised USD 1.93 billion the overseas market in the same month a year ago. Of the total borrowings during the month, USD 69.43 million was raised through the approval route, while  USD 2.71 billion came through the automatic route. As many as 56 companies raised money from automatic route while 3 firms raised funds via the approval route, the RBI data showed. In the approval route category, Indiabulls Housing Finance Limited raised USD 50 million for sub-lending, Roxul-Rockwool Insulation India Private Ltd USD 11.43 million for general corporate purpose and Cargill India raised USD 8 million for rupee expenditure. Under the automatic route, the major borrowers were  Tata Motors  raising USD 750 million for rupee expenditure and refinancing of earlier ECB and Reliance Jio Infocomm USD 750 million for rupee expenditure. Bharat Mumbai Container Terminals raised USD 494.53 million for port project and Larsen & Toubro borrowed USD 400 million for refinancing of earlier ECB and redemption of FCCBs. Among others,  Aditya Birla Nuvo  raised USD 42 million for refinancing of the earlier ECB; Srei Infrastructure Finance, USD 30 million for sub-lending, and Tata Hitachi Construction Machinery Co USD 39.14 million for general corporate purpose. RELATED NEWS

Ahmedabad-based Astral Poly Technik , a major player in CPVC pipes and fittings industry, today said it has acquired 76 per cent stake in Resinova Chemie Ltd (Resinova) for a deal value of Rs 212.8 crore. Astral Poly Technik has acquired 76 percent stake in Resinova Chemie for a total deal value of Rs 212.8 crore and transaction values Resinova at an enterprise valuation of Rs 289 crore, a company statement said. The company Resinova is into manufacturing and marketing of highly diversified range of adhesives and sealants and sells its products in approximately 50 brands. In August 2014, Astral had completed the acquisition of 80 percent stake in UK-based Seal It Services Ltd (Seal-It) which manufactures and sells a comprehensive range of sealants, adhesives, water proofing, cleaning products. Commenting on the transaction, Astral MD Sandeep Engineer said, "Astral has established itself as a strong participant in the CPVC pipes and fittings sector. In high-growth Indian adhesive market, the Resinova acquisition provides a strong platform which is highly complementary to Astral's strengths." This acquisition will synergise with Astral's existing businesses by deepening and widening its product offerings. Seal-It and Resinova will enable building a robust and valuable adhesive business, he added. Resinova MD Vijay Parikh said the strategic move between two fast growing companies in synergistic sectors has exceptional potential to develop the adhesive market in India. "Combined with Astral's presence in the international market, thrust will be on using technical strength and distribution network of both companies to harness the potential of this business," Parikh added.   Astral Poly Tec stock price On November 21, 2014, Astral Poly Technik closed at Rs 403.10, down Rs 4.05, or 0.99 percent. The 52-week high of the share was Rs 434.70 and the 52-week low was Rs 122.50. The company's trailing 12-month (TTM) EPS was at Rs 8.03 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 50.2. The latest book value of the company is Rs 28.01 per share. At current value, the price-to-book value of the company is 14.39.

 Kotak Mahindra Bank chief Uday Kotak has assured that there will not be "any dramatic" reduction immediately in the number of employees following the merger of ING Vysya Bank.

While ING has around 10,000 employees, Kotak Bank has around 29,000.

"We believe total number of employees will grow over time, but we don't see any dramatic reduction in the net number of people in a hurry," the Executive Vice-Chairman and Managing Director of Kotak Bank Uday Kotak told PTI after he announced the merger deal last evening.

"We have no plans to do any massive rationalisation of branches or capacity. We are committed to growing, this is a merger for growth, not for cutting," he said, answering a specific question on whether KMB will be pruning some jobs.

ING Vysya Bank Deputy Chief Executive Uday Sareen said cost cutting was not the objective of the merger.

"At the heart of this deal is not cost-efficiency; yes it is cost-avoidance as there are synergies post-merger. But this is not one merger which talks about cost cutting and that is an extremely important point which we would like to communicate," Sareen said.

"In any merger, there is a concern among employees...but at the heart of this partnership is our people," Sareen added.

Some analysts have said that KMB may have to prune its expenses. In a service industry like banking, people are a major cost component.

Meanwhile, Kotak said the merged KMB will not look at having a presence internationally.

"We will leverage on our cooperation arrangements, we believe the India opportunity is where we are good at and the core business model is to concentrate on the country's diversified financial services," Kotak said.

India Inc raised $2.78 billion from overseas markets in October this year, up 44 per cent from a year ago, according to the Reserve Bank data released today.

Domestic firms had raised $1.93 billion the overseas market in the same month a year ago.

Of the total borrowings during the month, $69.43 million was raised through the approval route, while $2.71 billion came through the automatic route.

As many as 56 companies raised money from automatic route while 3 firms raised funds via the approval route, the RBI data showed.

In the approval route category, Indiabulls Housing Finance Limited raised $50 million for sub-lending, Roxul-Rockwool Insulation India Private Ltd $11.43 million for general corporate purpose and Cargill India raised $8 million for rupee expenditure.

Under the automatic route, the major borrowers were Tata Motors raising $750 million for rupee expenditure and refinancing of earlier ECB and Reliance Jio Infocomm $750 million for rupee expenditure.

Bharat Mumbai Container Terminals raised $494.53 million for port project and Larsen & Toubro borrowed $400 million for refinancing of earlier ECB and redemption of FCCBs.

Among others, Aditya Birla Nuvo raised $42 million for refinancing of the earlier ECB; Srei Infrastructure Finance, $30 million for sub-lending, and Tata Hitachi Construction Machinery Co $39.14 million for general corporate purpose.

The government's move to e-auction most of the 214 coal mines cancelled by the Supreme Court will boost investor confidence due to transparency in the process and reduce fuel availability risks, India Ratings said today.

The entire process of e-auctioning through a nominated authority, who may engage experts to recommend re-allotment, is likely to provide the much-needed transparency to the coal allocation process, said Salil Garg, Director, India Ratings.

Transparency and robustness of the auction process, which will have to stand legal and judicial review, will be key to build investor confidence and ensure a steady flow of investment in the power sector over the long-run, he said.

As per the Supreme Court order, the existing allottees will still need to pay an additional levy of Rs 295 per tonne by December 31 for the coal they mined till September 24, 2014 (day when allocations were cancelled by SC).

They are also supposed to pay, by June 2015, the additional levy for the coal mined between September 2014 and March 2015, irrespective of their success in bidding process.

According to India Ratings report, e-auctions will reduce the fuel availability risks for companies. The eligibility criteria, linked to the preparedness status of the end-use plants (80% of investment made for schedule II mines and 60% in schedule III mines), accords priority to operational and near-completion end-users for bidding.

Operational mines fall under schedule II and near-operational ones under schedule III.

"Thus, their fuel availability risk is likely to reduce significantly. The provision of a cap on bidding for multiple coal blocks is likely to ensure healthy competition, prevent monopoly and guarantee the allocation of mines to maximum number of interested end-use plants," Garg said.

According to the draft norms, details regarding e-auctioning of 74 coal blocks will be finalised by December 22.

Auction of coal blocks is likely to be held in the second week of February, while letter of accord/vesting order is to be issued to bid winners by March 16.

The government's move to e-auction most of the 214 coal mines cancelled by the Supreme Court will boost investor confidence due to transparency in the process and reduce fuel availability risks, India Ratings said today.

The entire process of e-auctioning through a nominated authority, who may engage experts to recommend re-allotment, is likely to provide the much-needed transparency to the coal allocation process, said Salil Garg, Director, India Ratings.

Transparency and robustness of the auction process, which will have to stand legal and judicial review, will be key to build investor confidence and ensure a steady flow of investment in the power sector over the long-run, he said.

As per the Supreme Court order, the existing allottees will still need to pay an additional levy of Rs 295 per tonne by December 31 for the coal they mined till September 24, 2014 (day when allocations were cancelled by SC).

They are also supposed to pay, by June 2015, the additional levy for the coal mined between September 2014 and March 2015, irrespective of their success in bidding process.

According to India Ratings report, e-auctions will reduce the fuel availability risks for companies. The eligibility criteria, linked to the preparedness status of the end-use plants (80% of investment made for schedule II mines and 60% in schedule III mines), accords priority to operational and near-completion end-users for bidding.

Operational mines fall under schedule II and near-operational ones under schedule III.

"Thus, their fuel availability risk is likely to reduce significantly. The provision of a cap on bidding for multiple coal blocks is likely to ensure healthy competition, prevent monopoly and guarantee the allocation of mines to maximum number of interested end-use plants," Garg said.

According to the draft norms, details regarding e-auctioning of 74 coal blocks will be finalised by December 22.

Auction of coal blocks is likely to be held in the second week of February, while letter of accord/vesting order is to be issued to bid winners by March 16.

Indian markets traded with strong gains, with the Nifty recording a fresh all-time high but closing marginally short of the 8,500 mark it has never scaled. At close, the Sensex rose 0.95 percent, or 267 points, points to 28,334 while the Nifty jumped 0.9 percent, or 75 points, to 8,477. Banks led the charge all day with Kotak Mahindra Bank rising 3.67 percent to hit a record high after it announced a USD 2.5 billion worth all-share merger deal with ING Vysya that would make it India’s fourth largest private bank behind ICICI, HDFC and Axis. ICICI (up 2.53 percent) too hit fresh lifetime highs. Brokerages were largely positive on the Kotak-ING deal with many saying that while it may immediately pressure some of Kotak’s metrics such as return on equity, it would help it in the long term by boosting its presence in the South where ING is focused, as well as by incorporating its SME lending book. How ferocious was the bank rally today can be judged by the fact that the top four gainers in the Nifty and the top eight gainers in the futures space were all banks. The much-watched Bank Nifty sector index jumped 2.33 percent to end at a record closing of 18,056 for the first time. Among other sector gainers were autos, capital goods and banks, rising between 0.3 percent and 0.8 percent while pharma had a dull day despite Cipla rising 1.9 percent on a positive brokerage call. IT shares too traded lower with Infosys leading the losses with a 1.9 percent decline. The IT outsourcer was recently hit by an overbilling scandal in which a top executive from its BPO unit was found involved. Power shares climbed marginally – Power Grid was up 0.3 percent while NTPC gained 0.1 percent – after the government announced a Rs 33,000 crore infusion into a scheme aimed at splitting electricity feeders for agriculture and to strengthen transmission and distribution in the country. In news-driven stocks, Yes Bank was up 4.1 percent after the central bank allowed fresh FII buying in the counter, JM Financial was up 1 percent after announcing an infusion in its realty subsidiary and appointing former Citi chief Vikram Pandit to its board and Financial Technologies, which gained 2.5 percent after Jignesh Shah, accused of being involved in the NSEL scam, stepped down from its board. Consumer non-durable shares were also muted, with leader HUL falling 0.8 percent. Tech Mahindra, the other player that announced an M&A deal with its USD 240 million buyout of US-based telecom service provider LCC, fell 1.1 percent.

Equity benchmarks saw fresh record closing high on Friday aided by banking and financials stocks. The 30-share BSE Sensex rose 267.07 points or 0.95 percent to close at 28334.63 and the 50-share NSE Nifty climbed 75.45 points or 0.90 percent to 8477.35. However, the broader markets underperformed benchmarks with the BSE Midcap and Smallcap indices falling 0.1 percent each. About 1371 shares advanced while 1644 shares declined on the Bombay Stock Exchange.   ICICI Bank, BHEL, SBI, Hindalco Industries, Axis Bank, Kotak Mahindra Bank and Punjab National Bank rallied 2-4 percent whereas Infosys, Tata Power, Sun Pharma, HUL, Tata Steel, Jindal Steel and Tech Mahindra fell 1-2 percent. 


3:00 pm: Market Check


 It’s been a breathless rally for the Indian stock market today, with both the Sensex and the Nifty venturing into uncharted terrain and scaling fresh all-time highs, not for the first time through this year’s rally. At the time of this writing, the Nifty has surged 1.02 percent, or 85 points, to 8,487 and is within sniffing distance of 8,500. The Sensex is also up 1.02 percent, or 287 points, to 28,355. Banks have led the charge all day with Kotak Mahindra Bank rising 4 percent a day to hit a record high after it announced a USD 2.5 billion worth all-share merger deal that would make it India’s fourth largest private bank behind ICICI, HDFC and Axis. ICICI (up 2.5 percent) too is trading at fresh lifetime highs, How ferocious is the bank rally today can be judged by the fact that the top five gainers in the Nifty and the top eight gainers in the futures space are all banks. The much-watched Bank Nifty sector index has jumped 2.5 percent. Among other sector gainers are autos, capital goods and banks, rising between 0.3 percent and 0.8 percent while pharma is having a dull day despite Cipla rising 1.9 percent on a positive brokerage call. In news-driven stocks, Yes Bank is up 4 percent after the central bank allowed fresh FII buying in the counter, JM Financial is up 1.8 percent after announcing an infusion in its realty subsidiary and appointing former Citi chief Vikram Pandit to its board and Financial Technologies, which gained 3.2 percent after Jignesh Shah, accused of being involved in the NSEL scam, stepped down from its board.

In a biggest overseas acquisition,  Tech Mahindra acquired Virginia based Lightbridge Communications Corporation (LCC) for an enterprise value of approximately USD 240 million. The company's annual revenue stands at nearly USD 400 million. The deal which is funded via internal accruals and the acquisition is likely to be completed by fourth quarter of FY15. LCC is one-of-the world’s largest independent global providers of network engineering services provider with more than 5000 employees in over fifty countries. Speaking to CNBC-TV18, Vineet Nayyar said employees of LCC need not fear retrenchment. "We don’t see absorbing LCC’s 5,700 employees a challenge. The company said that the buyout is not only based on the EPS accretiveness adding that "Tech Mahindra has a track record of turning around company like Satyam."

Kritika: This is one of the largest acquisitions you have made overseas. USD 240 million this is coming in from your internal accruals, how comfortable would you be to be able to make another bay acquisition now? Are you dipping too much into your cash flows yet or are you comfortable? 

Nayyar: I am very comfortable and we have always said for us acquisitions are strategic; we don’t do them to bulk. So, this is a very strategic acquisition in the sense that the network market is almost as large as IT market in the areas we are in. So, consequently getting into this space will give us a brand new market to grow in. This is the largest company in the world in the network side and they have tremendous expertise. It will give us new markets and it will supplement the area in which we had started somewhat gingerly going into and now we will have the vehicle to expand. So, the way I look at it is that why this is so strategic to us is that it gets us into a brand new area. We are there but we have been making tentative steps there but now we will do it with people of recognised competence, who have been there for 30 years and have a great brand acquisition. So, that is the difference. 

Kritika: We have been talking about USD 5 billion till the Q4 of CY2015. As Vineet had said it is an aspiration that you are hoping to achieve. How much better placed are you now to be able to reach that acquisition with this deal coming in and what is the kind of revenue growth that you are expecting? 

Give me a clear cut number by the end of next year. Gurnani: The good news is earlier it was an aspiration of about 60,000 people when we met in 2012 end. Now I can say it has become an aspiration of 100,000 people. So, if there is a power of dreams then I have the tailwind of 100,000 dreams with me. Secondly, I think important is that we are working hard towards this aspiration, towards our stretched goals. Post this acquisition, post merger formalities being completed it is clear that our last quarter run rate was USD 3.6 billion. This company gives me about USD 100 million plus per quarter so now the gap is next five quarters, last quarter we have to deliver USD 1250 million if we were to meet our goals, our stretched goals, again repeating it is a direction, it is not a commitment; it is not a guidance.

 Kritika: You have taken in 5,700 employees just a clarification from you will you be absorbing all of them is there a possibility that in the overlap in the consolidation as we see in any acquisition there could be any involuntary or voluntary exists for that matter?

 Nayyar: I don’t see that because 1)– these are people with great expertise. 2) – the business is kind of local 3) – after all we have taken this not sit still we are going to expand we are going to grow we see this as a great market to go into which is by and large untouched by our traditional IT companies. So, absorbing good technical people of this number is not going to be a challenge so I don’t see any reduction. 

Kritika: Will the entire management of the LLC will be absorbed into Tech Mahindra and Tech Mahindra network solutions team can you just clear that bit out and would there be any changes in your current management structure as a result of that? 

Nayyar: As CP Gurnani has already announced we will have a people like Manish Vyas who heads our Teleco practice and Ayon Banerjee these are the guys who will be working with Kenny to make this grow as a composite unit. 


Reema:


 Would this deal be earnings per share (EPS) accretive from year one, that’s in CY15? Gurnani: Deputy CFO has already clarified - year one it is little diluted but overall it will be an accretive deal from year two onwards. 



Reema: Let’s assume you meet your aspirations by USD 5 billion of revenue run rate in Q4 of CY15 that is about a year from now. What would be the approximate margins that Tech Mahindra would be comfortable with say in the next five quarters? Gurnani: We will have to separate my business momentum which is my current business momentum of USD 900 million a quarter. We clearly have internal operating levers and we will be working on it and number two is what I call upscaling of LCC business, upscaling here is both from growth and from earnings before interest, taxes, depreciation, and amortization (EBITDA) margins. We have to trust both the sides because only doing operating margin increase is not the way we run the business we want to grow the business and also improve the operating margins so I am reasonably confident that you will see a rise in trajectory at this stage I would not like to give any guidance because we never give any guidance. 



Reema: Network Services Management (NSM) has clearly been a focus area for Tech Mahindra, your last two big deal wins were also in the NSM area. What is the kind of growth rate that you expect from Network Services in the next one year? 

Nayyar: As I said it is a USD 80 billion market and we have not even scratched the surface and that is what excites me. Reema: What would be the margins in NSM generally for the industry and the growth rate that you expect for the industry? Nayyar: Communication has become the life plant of every industry, every enterprise. It is going to see dramatic growth rate and also remember that technology is evolving, the technology is changing which would create its own new demands and its own new obsolescence. With all these factors put in this is in many ways a sunrise area. It is traditional but it is going to see a tremendous change over the period. The magnitude of connectivity is going to escalate exponentially. So, look at it on a macro sense. I think we have done the right thing, we are moving in the right direction. I am relatively indifferent to what the EPS is going to be because this is where the potential lies and this is how Tech Mahindra is going to differentiate itself from other entities. 

Government on Thursday approved Rs 43,033-crore rural electrification scheme Deendayal Upadhyaya Gram Jyoti Yojana. The scheme will replace the existing Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY). "Cabinet today approved the launch of Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) with components to separate agriculture and non-agriculture feeders facilitating judicious rostering of supply to agricultural and non-agricultural consumers in rural areas," Union Minister Ravi Shankar Prasad told reporters here. The scheme also includes strengthening and augmentation of sub transmission and distribution infrastructure in rural areas, including metering of distribution transformers and feeders. The estimated cost of the scheme for above two components is Rs 43,033 crore which includes the requirement of budgetary support of Rs 33,453 crore from the government over the entire implementation period. The balance work relating of the ongoing scheme of RGGVY till 2022 will get subsumed in this scheme as a distinct component for rural electrification. For this purpose, the Cabinet Committee on Economic Affairs has already approved the scheme cost of Rs 39,275 crore including budgetary support of Rs 35,447 crore. This outlay will be carried forward to the new scheme of DDUGJY in addition to the outlay of Rs 43,033 crore. The scheme is likely to work towards improvement in hours of power supply in rural areas, reduction in peak load, improvement in billed energy based on metered consumption and providing access to electricity to rural households. The process of sanction of projects shall commence immediately. After sanction of projects, contracts for execution of projects will be awarded by states discoms or power departments. The projects shall be completed within 24 months from date of award. 

There is a lot of angst on social media regarding to SBI  loan to Adani, even suggesting that Adani managed a loan from SBI because of his "alleged" proximity to Prime Minister Narendra Modi. I am wondering, what is all the fuss about? First of all, as clarified to the Bombay Stock Exchange by the Adani group – the loan is not final yet. There is a difference between MOU and final agreement. Here is what Adani has told exchanges. Adani Enterprises Ltd  replied stating "The Company has signed Memorandum of Understanding (''MOU") with State Bank of India ("SBI") wherein SBI has agreed in principle to consider extending financial assistance of an amount up to USD 1 billion for development of Carmichael coal mine. This is, however, subject to SBI's due diligence and internal credit approval and also pursuant to the definitive understanding/agreement to be executed between the parties." Note the phrase in bold– there will be due diligence by SBI. Raise this issue if they approve the loan without appropriate collateral in place or without being satisfied by the viability of the project. Anyway that’s a technical issue, so we move on.What exactly is this project and how did Adani manage to get this? Let’s take a look at a Reuters story just to put things in perspective "This project has the potential to be the largest coal mine in Australia and one of the largest in the world," Queensland deputy premier Jeff Seeny said in a statement. The state's report, which set 190 conditions for Adani to meet, including compensating landholders affected by any harm to water supplies, now goes to Australia's environment minister for a final decision. Now this is a USD 15 bn project, won by Adani fair and square after meeting 190 conditions set by Australian government and more importantly, this is not in India. Unless you want to brand the entire Australian decision making body also a Modi agent, you would want to believe that there is nothing wrong in winning a contract in Australia. Now coming back to the loan for a group which has a long-term debt of $10 bn – yes, it has – but the group also has a market capitalization of USD 20 billion!! Ever heard of a concept called the debt/equity ratio? It has a networth of nearly USD 5 billion. For a power, infra, port conglomerate – this is a reasonably healthy ratio. For me, the biggest question is “Has Adani ever defaulted on any loan”? – The answer is no. This is an absolute non issue. If you want to raise bad loan issues, go chase Mr Vijay Mallya –whose Kingfisher Airlines kept getting loans from PSU banks under the tenure of previous governments. Oh and one more thing, yes Adani group has debt of USD 10 billion – but 60% of that, or nearly USD 6 billion is not even raised in India – it’s overseas debt. Go find out all those Adani agents in these countries.

Sun Group may have finally finalised an investor for partially or completely offloading its stake in SpiceJet . Sources say talks are in the final stages and a term sheet may be signed by December. As per the talks with investors, SpiceJet is valued at Rs 1500 crore, which is double the company’s market cap. Sun Group and Kalanithi Maran together hold 53.4 percent stake in SpiceJet. It is not yet clear whether SpiceJet promoter and media baron Kalanithi Maran is mulling to exit completely from the low-cost airline. Earlier, the Marans were looking to sell 12-14 percent stake to bring in capital in a bid to bring down debt, which currently stands at Rs 1,486 crore. But currently they may be looking to sell their entire stake in the company. The company is exploring various options to further capitalize. SpiceJet reported a net loss of Rs 310 crore for the second quarter ended September 30, 2014. The airline had posted a net loss of Rs 559 crore in the corresponding quarter of the last financial year, the company said in a BSE filing. SpiceJet witnessed a 15 percent growth in total revenue in comparison to same quarter last year, the company said. Maran has been on the lookout for potential buyers to offload his stake in the loss-making airline. Kapil Kaul, south Asia chief executive of aviation consultancy Centre for Asia Pacific Aviation (Capa) has said that SpiceJet requires around USD 250 million as on March 2014 to bring books in order.

The Nifty is now a full percentage point up, and is away a mere 10 points from a new record high of 8,500. Will the level be taken out with the one hour of trading left to go? 2:00 pm: Shares extended their gains Friday, with banks powering part of the rally, as the Nifty mounted a bid to scale the uncharted 8,500 level. At the time of writing, the Sensex was up 240 points (0.83 percent) to 28,301 while the Nifty was up 75 points (0.85 percent) to 8,477. The rally in banks, which were on average 2.5 percent higher, was triggered by the mega merger deal yesterday between Kotak Mahindra Bank and ING Vysya Bank. Kotak hit a lifetime high early, before retreating marginally to trade 5.25 percent higher to Rs 1217. ICICI Bank too was trading at a record high. IT shares, however, traded lower with Infosys leading the losses with a 2 percent decline. The IT outsourcer was recently hit by an overbilling scandal in which a top executive from its BPO unit was found involved. Power shares climbed marginally – Power Grid was up 0.4 percent while NTPC gained 0.6 percent – after the government announced a Rs 33,000 crore infusion into a scheme aimed at splitting electricity feeders for agriculture and to strengthen transmission and distribution in the country. Sugar stocks were lower with Balrampur Chini losing 3.75 percent.

Post the mega-merger announcement on Thursday evening - Kotak Mahindra - ING Vysya Bank deal - Deven Choksey of KR Choksey Securities advises investors to buy Kotak Mahindra Bank on every dip and stay invested for 2-3 years. He says the market cap of Kotak Mahindra Bank and  Axis Bank will be Rs 1 lakh crore and it is trading at half the price  State Bank of India is trading at. This one proposition becomes attractive for many to consider in the portfolio, he adds. He feels it makes sense for investors to invest in both Axis Bank and Kotal Mahindra Bank. Choksey, however, is not too enthused about the other major deal that happened yesterday.  Tech Mahindra signed a definitive agreement to acquire Lightbridge Communications Corporation (LCC), a global network services leader for an enterprise value of approximately USD 240 million, subject to regulatory approvals. Choksey says though the deal is topline accretive, it will contribute hardly 8 percent to margin. He is of the opinion that it will be better to wait for the management commentary before making a move on this company as he is unsure how much Tech M is willing to capitalize or invest in this market (network sevices). On the market as a whole, the next sector or companies that can perhaps take leadership as far as the Nifty is concerned is the oil and gas space. If crude oil price bounces back to USD 84 per barrel as is expected, then companies like  ONGC and  Reliance can take leadership positions, he believes. He also advises investors to also invest in large PSU banks such as State Bank of India and  Punjab National Bank as these banks are likely to benefit once credit growth revives and when rate cut becomes a reality. Also the stress on the books is coming down for SBI with NPA issues subsiding to an extent. 

IDFC sees Tech Mah @ Rs 3200, rates KPIT Tech as outperform


Placing a target of Rs 3200 on the  Tech Mahindra stock, IDFC Securties' IT & Telecom Analyst, Hitesh Shah says the company was its top recommended pick for two long years. On Thursday, Tech Mahindra acquire 100 percent of US-based network solutions company Lightbridge Communications Corporation (LCC) for USD 240 million. Shah says the buyout will be incrementally positive for Tech Mahindra, doubling its addressable market in telecom space. Below is the transcript of Hitesh Shah’s interview with Latha Venkatesh & Anuj Singhal on CNBC-TV18. 




Anuj: How do you view Tech Mahindra and its recent acquisition and what is your call on the stock? A: Tech Mahindra acquired this company which is focused on network services a new service area that company had organically got into about in 18-24 months back and they have already bagged two large deals there, one from KPN and other from UK based tier-I services provider. Clearly this double addressable market for Tech Mahindra in the telecom space. Global telecos spend about USD 40 billion globally in IT services, IT spending and another USD 40 billion on network services. Having done this acquisition, a) they double their addressable market in their telecom space, b) they get the expertise of network services which is very difficult to hire in India at this point of time and they get 20 new clients in some of this newer geographies like South Korea, Latin America, Africa to which they can cross sell their IT services as well. So, I see this acquisition as incrementally positive. Also the kind of valuation that they had paid seven times trailing 12 months enterprise value (EV) earnings before interest, taxes, depreciation, and amortization (EBITDA) is not very expensive. Even if they can grow their EBITDA by about 15-20 percent over the next 12 months or so we would see that this money which they are spending in the acquisition would almost generate 20 percent of yield for them vis-à-vis cash generating 9 percent pre tax yield. So I view this acquisition of Tech Mahindra as positive. We continue to like this name; it has been our top pick for more than two years now. We have reiterated the same with a target price of Rs 3,200 in this morning.

Gammon India up 4.4%, may sell arm Gammon Infrastructure

Shares of  Gammon India gained as much as 4.4 percent intraday Friday as media report suggested that the civil construction company has initiated talks to sell its arm  Gammon Infrastructure Projects (that rallied 10 percent intraday). "Gammon has already met 3-5 potential buyers, which includes strategic and financial investors, for selling the 58.6 percent held by the promoter group in Gammon Infrastructure Projects (GIPL)," said the report quoting unnamed sources. According to the report, the transaction could fetch Gammon anything between Rs 1,000 crore and Rs 1,200 crore which it plans to use to trim debt. At 10:51 hours IST, the scrip of Gammon India was quoting at Rs 35.50, up Rs 1.05, or 3.05 percent while Gammon Infrastructure Projects jumped 5.5 percent to Rs 19.90 on the BSE. 

BANGALORE: Flipkart has rejigged its top management, handing over more responsibility to Mukesh Bansal, the founder of fashion portal Myntra which was acquired by India's largest online retailer earlier this year. The reshuffle will also result in a higher profile for Ankit Nagori, the marketplace head who will also now oversee general merchandise and book-retailing, the business Flipkart began life with. 

The moves are part of a larger organisational rehaul, according to two people with direct knowledge of the process. 

In one of the first moves Mukesh Bansal, who was so far heading fashion, will also head marketing. His role has also expanded and he will take care of additional categories like computers and consumer electronics. Ankit Nagori, senior vice president in-charge of Flipkart's marketplace operations, will have additional responsibility over books and general merchandise. As reported by ET on October 17, the marketplace team is also being expanded and restructured as the number of merchants on the platform grows. 

Kalyan Krishnamurthy, interim chief financial officer at Flipkart for over a year, is going back to Tiger Global. Krishnamurthy, who is director of finance for portfolio companies at Tiger, had taken on the interim CFO role after Karandeep Singh quit as head of finance at the company in January last year. 

In an email sent out to employees on Monday founders Sachin Bansal and Binny Bansalwrote that Krishnamurthy will be moving back to Tiger Global and will be transitioning out of his current role, as senior vice president of retail, over the next three weeks. In September Flipkart had hired Tata Communications CFO Sanjay Baweja to be its new finance head. 

The email sent out states: "Kalyan came on board full-time in Jan 2013 as our interim CFO. We were facing multiple challenges in business and finance at that time and Kalyan has was (sic) instrumental in fundamentally changing the business trajectory for us with his passion and drive." 

The email goes on to detail Mukesh Bansal's and Ankit Nagori's additional responsibilities and the senior managers who will now report into them. 

Michael Adnani, vice president of retail and head of strategic alliances, will report into Mukesh Bansal, who is also on the board of Flipkart. Adnani has spearheaded Flipkart's exclusive and successful partnerships with Motorola and Xiaomi. Amitesh Jha, who heads electronics and computers at Flipkart, will also report into Mukesh Bansal. 

In a related development, Ravi Vora, who was handling marketing, will now take care of development of new in-house brands. "While Flipkart has digital brands like Digiflip, no major marketing initiative has been done around them," said a person with direct knowledge of the development. "The idea is to create new brands especially in the consumer durables space and focus on making large brands out of them."

With its eye on economic revival and infrastructure development, the finance ministry has asked the RBI governor to water down several of the “stringent” provisions notified by the central bank in the last few months. In a letter to Raghuram Rajan, banking secretary, GS Sandhu, has asked the RBI to delink the extent of a project cost over-run with the restructuring of a loan as it feels this provision is counterproductive when it comes to reviving stalked projects. The banking secretary has suggested the lenders be allowed to decide the funding, debt equity ratio and upfront contribution by promoters. The banking secretary also wants the RBI to extend the flexible structuring of long tenor loans for CDR cases for projects under implementation. North Block also wants a level-playing field between domestic and foreign banks vis-a-vis ECB refinancing.

Hinduja Group flagship  Ashok Leyland has reported a 23.1 percent increase in its sales in October at 8,375 units. The city-based heavy commercial vehicle manufacturer had sold 6,803 units during the same month of previous year. Majority of sales in October were contributed by medium and heavy commercial vehicles at 5,838 units while light commercial vehicles contributed 2,537 units, the company said in a statement. For the period of April to October 31, 2014, the company witnessed a marginal increase of four per cent in its total sales. The company had sold 53,694 units in April-October 2014 while it was 51,644 units during the same period of previous year. While Medium and Heavy Commercial Vehicle units sold in April-October 31,2014 grew to 38,953 units from 34,913 units sold during the same period of previous year, sales of LCVs declined to 14,741 units in April-October 2014 from 16,731 units sold during year ago period. Shares of the company were trading at Rs 46.50 apiece up by 0.32 percent over previous close in afternoon BSE.

Indian factory activity expanded at a modest pace in October, as stronger demand led manufacturers to add jobs for the first time in four months and allowed them to raise prices, a business survey showed on Monday. The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, rose to 51.6 in October from 51.0 in September. The index has now been above the 50 level that indicates an expansion in activity for a year. "Manufacturing activity picked up modestly amid stronger output and new order flows, particularly from overseas clients," said Frederic Neumann, co-head of Asian economic research at HSBC. The new orders sub-index rose to 53.0 from September's 51.3 on robust overseas demand that helped push output higher. That prompted manufacturers to add jobs for the first time since June. Also read:  China's final HSBC PMI hits 3-month high, but risks remain The improvement in activity allowed companies to increase prices charged slightly, even as the cost of raw materials rose at their slowest pace in 17 months. The increase in output prices will likely nudge overall inflation higher and may prompt the Reserve Bank of India to keep monetary policy restrictive in the near term. "This trend (rising output prices) could strengthen with growth, which is why the RBI will remain cautious about relaxing its grip at this juncture," Neumann said. 

Public sector lender  Bank of India met street expectations with the profit rising 26.4 percent year-on-year to Rs 786 crore in September quarter led by fall in provisions and higher net interest income. Profit in the year-ago period was Rs 621.77 crore. Net interest income, the difference between interest earned and interest expended, shot up 20 percent (better than expectations) to Rs 3,031 crore in the second quarter of current financial year 2014 compared to Rs 2,527 crore in same quarter last year but other income (non-interest income) declined by 8.5 percent to Rs 1,006.4 crore during the same period. Net profit was expected at Rs 786 crore and net interest income at Rs 2,745 crore for the quarter, according to the average of estimates of analysts polled by CNBC-TV18. Operating profit increased by 2 percent year-on-year to Rs 2,135 crore impacted by higher operating expenses. Total operating expenses of the bank jumped 24.7 percent to Rs 1,901.6 crore during the quarter from Rs 1,524.5 crore in corresponding quarter of last fiscal on the back of 26.5 percent rise in employee cost and 22 percent increase in other operating expenses. Provisions and contingencies fell 21.8 percent on yearly basis (up 7.9 percent sequentially) to Rs 963.4 crore in the quarter gone by, with provision coverage ratio at 56.32 percent as on September 2014 (against 63.29 percent in corresponding quarter of last fiscal). Bank of India's asset quality deteriorated further in second quarter with the gross non-performing assets (NPA) climbing 61 basis points year-on-year (up 26 bps Q-o-Q) to 3.54 percent and net NPA rising 47 bps on yearly basis (up 18 bps Q-o-Q) to 2.32 percent in September quarter. In absolute term, gross NPA shot up 43 percent year-on-year (up 12.7 percent on sequential basis) to Rs 14,127 crore and net NPA surged 47.8 percent Y-o-Y (up 13.2 percent Q-o-Q) to Rs 9,101 crore during the quarter. At 12:25 hours IST, the stock was quoting at Rs 286.45, up Rs 1.05, or 0.37 percent on the BSE.

Emerging market assets have gotten cheaper, but in the face of four key headwinds, it might not be the right time to buy back in, Barclays said. "Although emerging-market risk premia generally fell in 2002-07, they rewidened last year in anticipation of the end of QE (quantitative easing). In some cases, such as some fixed income markets and especially in equity markets, that rewidening remains tempting," Barclays said in a note Friday. "But it is no longer obvious to jump back in." Emerging markets face four key headwinds to regaining momentum,Barclays said. Firstly, China's economic growth slowed from its average of 11 percent annually over 2002-07 to just 8.2 percent over 2011-13, it noted, adding it expects a further slowdown in 2015 to around 6.9 percent.

Gold prices are likely to decline further to around Rs 24,500 per 10 grams by December if the rupee continues to rule at the current level, according to analysts. "We expect the gold prices to remain bearish and if the rupee continue to rule at current level the yellow metal may touch Rs 24,500 level by December. We expect gold to consolidate in a week or two, then continue to decline further from mid or end of December," Motilal Oswal Associate Vice President - Commodities - Kishore Narne told PTI. MCX gold was at Rs 26,143 per 10 grams on Saturday while in the international market it was at USD 1,173.30 an ounce. The major fundamental behind the bearishness of gold is the improving US economy, Narne said. "The better than expected economic condition in the US is likely to lead to rise in interest rates, which will further strengthen the US dollar that will put more pressure on gold," he said. In the international market gold is expected to rule at USD 1,080-1,120 level by the end of this year, he added. Echoing the view, Commtrendz Research Director Gnanasekar Thiagarajan said the prices are expected to be around Rs 25,000-25,500 by December if the rupee continues at the current 61 level. The further decline in prices may lead to production cuts, which is likely to be positive for gold and help in firming up of prices of the yellow metal, he said. In the international market, gold is likely to be at USD 1,100-1,075 level by December. "The bearishness is mostly due to strengthening of US dollar, which is leading to bullishness in the equity markets putting pressure on commodities across the board, including gold," he added. Naveen Mathur, Associate Director, Commodities and Currencies, Angel Broking said expectation of interest rate hike by mid next year, improving US economy, bearish trend in crude price, stable geo-political issues and strengthening US dollar will put pressure on gold prices in the mid term. "Gold is expected to be around Rs 25,500 level by December, after which it may begin to firm up on higher demand triggered by lower prices," he said. In the global markets gold is expected to rule at USD 1,150-1,175 an ounce by December.

Coal India Ltd's  production beat its target in October, the first time in seven months, as the state-owned miner opened a major mine and there were no rain-related disruptions. The world's largest coal miner, which has missed its annual production targets for years due to its inefficiency and other reasons, is under pressure from Prime Minister Narendra Modi's government to quickly boost output to cater to fuel-starved power plants. The company produced 40.2 million tonnes last month, higher than its target of 39.74 million, it said in a statement on Monday. April-October production, however, was 97 percent of its target. Scrambling to add new mines and expand capacity, Coal India started production in July at a 12-million-tonnes-per-year mine, its first major new project in at least five years. The mine is ramping up production but a lack of rail connectivity means it has been able to sell very little. The company failed to meet its offtake target for October and faces an uphill task of meeting its goal for this fiscal year ending March 31, a Coal India official said. He declined to be named as he is not authorised to talk to media. Sixty one of India's 103 power plants had coal enough to last less than four days as of Thursday mainly due to lower supplies from Coal India, which accounts for more than 80 percent of the country's total production. India sits on the world's fifth-largest reserves but is the third largest importer of the fuel. This has forced Modi to open up the sector to commercial mining by private companies incorporated in India. Coal India stock price On November 03, 2014, Coal India closed at Rs 360.30, down Rs 9.05, or 2.45 percent. The 52-week high of the share was Rs 423.85 and the 52-week low was Rs 240.50. The company's trailing 12-month (TTM) EPS was at Rs 20.04 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 17.98. The latest book value of the company is Rs 26.04 per share. At current value, the price-to-book value of the company is 13.84.

The Royal Bank of Scotland today said the economic indicators like softening of inflation suggests that key interest rates could be slashed sooner than later by the Reserve Bank of India. Reserve Bank had kept the key interest rates unchanged while unveiling its fourth bi-monthly monetary policy statement for 2014-15 on September 30. "I think the RBI is a very fine institution and it is their job to take a call on monetary policy, rate cut and inflation...but the indicators seem to suggest that rate cut would be sooner rather than later," the RBS's Country Executive Brijesh Mehra told reporters. According to him, one can argue that easing of inflation and less capital expenditure do indicate scope of interest rate cut by Reserve Bank of India. The inflation measured in terms of Wholesale Price Index (WPI) touched a five year low of 2.38 per cent in September. Besides, retail inflation has also dropped to 6.46 percent, the lowest since the new series of Consumer Price Index was released in January 2012. The experts think that the slight tinkering in the key interest rate by RBI in its next bimonthly policy statement scheduled on December 2 will help in perking up economic growth as well as lowering the burden of home and other loan instalments.

Fiscal reforms such as subsidy rationalisation and GST could help the government meet its fiscal consolidation goal of 3 per cent fiscal deficit by financial year 2017, says a Citigroup research report. Besides, the 4.1 percent fiscal deficit target for the current financial year is "challenging but achievable", the report said. "While the FY15 targets are challenging, recent steps on fuel reforms, coupled with austerity measures, could enable the govt to meet its 4.1 percent fiscal deficit estimate," it said. As per the official data, fiscal deficit has touched 82.6 percent of budget estimates for 2014-15 to cross Rs 4.38 lakh crore at the end of September. For entire 2014-15, fiscal deficit -- gap between government expenditure and revenue -- has been pegged at Rs 5.31 lakh crore or 4.1 percent of GDP. To reduce the fiscal deficit to the 7-year low level, the government had announced a slew of austerity measures aimed at cutting non-plan spending by 10 per cent. According to Citigroup, such an initiative "could lead to an expenditure cut of Rs 400 billion or 0.3 percent of GDP". As per the austerity measures, the government has banned first class air travel for bureaucrats, meetings in five-star hotels and purchase of cars. It also decided to freeze new appointments. "Over the medium term, fiscal reforms such as subsidy rationalisation, Goods and Services Tax, expenditure commission review could enable the govt meet its fiscal consolidation goal of a 3 per cent fiscal deficit by FY17," the report noted. The government had put in place a fiscal consolidation roadmap as per which the fiscal deficit has to be brought down to 3 percent of the GDP by 2016-17.

Asian markets ended mostly in red on Monday, after gauges of China’s manufacturing and services industries showed signs of a broadening slowdown in the world’s second-largest economy. The Japanese market remained shut for the trade today for Culture Day holiday. Growth in China’s factories fell to a five-month low in October, missing expectations for an expansion as manufacturers battled cooling order growth and rising costs in the slowing economy. The official Purchasing Managers’ Index (PMI) eased to 50.8 in October from September’s 51.1. Growth in new orders cooled in October, as the index retreated to 51.6 from 52.2. New export orders were 49.9 in October, pointing to a contraction, from 50.2 in September. The services sector has been more resilient than the manufacturing sector and is creating more jobs, which partly explains why the government has so far refrained from more aggressive policy easing in supporting the slowing economy. The official non-manufacturing Purchasing Managers’ Index (PMI) fell to 53.8 in October from September’s 54.0, which was the weakest reading since January.

Thai Consumer Price Inflation fell to a seasonally adjusted annual rate of 1.48%, from 1.75% in the preceding month. Indonesian Trade Balance rose to a seasonally adjusted -0.27B, from -0.31B in the preceding month while Indonesian Inflation rose to a seasonally adjusted 4.83%, from 4.53% in the preceding month. South Korean Trade Balance rose to a seasonally adjusted 7.50B, from 3.43B in the preceding quarter whose figure was revised up from 3.40B.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2430.03	9.85	0.41
Hang Seng	23,915.97	-82.09	-0.34
Jakarta Composite	5085.51	-4.04	-0.08
KLSE Composite	18553.34	-1.81	-0.10
Nikkei 225	-	-	-
Straits Times	3290.84	16.59	0.51
KOSPI Composite	1952.97	-11.46	-0.58
Taiwan Weighted	9004.86	30.10	0.34

Asian markets trade mostly higher in early deals on Monday Most of the Asian equity benchmarks are trading higher in the morning deals on Monday on the back of Wall Street's strong gains on Friday. On the regional front, Chinese Shanghai Composite rose for a fifth day, led by a rally for property companies. Among other markets in the Asia-Pacific region, Taiwan, Hong Kong, Shanghai and Singapore are up with notable gains. Meanwhile, Indonesia and Malaysia are down marginally and South Korea is trading notably lower. Hang Seng surged by 296.02 points or 1.25% to 23,998.06, Straits Times rose 13.12 points or 0.40% to 3,287.37, Shanghai Composite increased by 14.82 points or 0.61% to 2,435.00 and Taiwan Weighted was up by 48.62 points or 0.54% to 9,023.38. On the flip side, KOSPI Index dropped 9.71 points or 0.49% to 1,954.72, Jakarta Composite contracted 9.06 points or 0.18% to 5,080.49 and FTSE Bursa Malaysia KLCI was down by 0.26 points or 0.01% to 1,854.89. The Japanese market remained shut for the trade today for Culture Day holiday.

BHEL, Sterlite Technologies and Tata Motors to see some action today In the face of stiff competition from international and domestic bidders, Bharat Heavy Electricals (BHEL) has bagged a prestigious contract for the supply and installation of the lectrostatic Precipitator (ESP) package for the 2x800 MW Darlipali Super Thermal Power Project (STPP). Valued at around Rs.220 Crore, the order for the ESP package has been placed on BHEL by NTPC Limited for the upcoming Darlipali STPP in Sundargarh district of Odisha. Vedanta Group firm  Sterlite Technologies, which is into heavy electrical equipment in the power and telecom sectors, will be investing up to Rs 900 crore in the next 12 months. The company has plans of investing Rs 8,000 crore till FY19 and it will invest Rs 800-900 crore in the next one year as part of the same plan. Moreover, the company is undertaking multiple projects as part of an eight-year plan, which will be implemented as part of the capex plan. The company, which is 55 per cent owned by a holding company owned by mining and resources major Vedanta Group, will raise around three-fourths of the capital requirement by raising debt, while the rest will be equity. To fund its increased capital expenditure plans for product development Tata Motors, India’s biggest automaker, is on a fund raising spree. The Mumbai-based company is raising a further Rs 300 crore through a bond sale which is expected to hit the market in the coming days. The country’s largest two-wheeler maker  Hero MotoCorp has lined a total investment of over Rs 5,000 crore across the globe, including manufacturing plants in Colombia and Bangladesh, and the new plants coming up at Gujarat and Andhra Pradesh and the Hero Global Centre for Research & Design at Kukas in Rajasthan. Meanwhile, the company has reported 8.05 per cent decline in its sales in October to 5,75,056 units. The company had sold 6, 25, 420 units of two-wheelers in October 2013. State-run  Rashtriya Chemicals and Fertilisers (RCF) will soon invite bids for its proposed Rs. 4,500-crore urea capacity expansion at its Thal plant near Mumbai. The company is getting the bids and the lump sum turn-key bids. The company will soon invite bids, which will be followed by a detailed project report. The Mini-Ratna company, which has said that it will be raising fertiliser prices by 2-3 per cent to offset the natural gas price hike impact on margins from this month, is going to set up a new urea capacity at its Thal plant near Mumbai with an estimated investment of Rs 4,500 crore. Mahindra and Mahindra's (M&M) subsidiary, Mahindra First Choice Services (MFCS), a leading chain of multi-brand car workshop service is in the process of expanding its network across the country. MFCS’ all-India network now encompasses 41 workshops of which 29 are COCO (Company-Owned Company-Operated) workshops and the rest - FOFO (Franchisee-Owned Franchisee-Operated) service stations. It plans to expand the network to 100+ workshops by the end of this fiscal and reach the 600-mark by 2018. Shobha and Ekta Kapoor-owned production house  Balaji Telefilms, with interests in films, television and events, is looking at TV-centric intellectual property rights as an additional revenue booster. One such property the company is betting on is the sports reality show, Box Cricket League (BCL). Tata Steel has proposed to revise the compensation package for families displaced by its Gopalpur project in Ganjam district. The package will be announced after the government gives its go-ahead. In 1996, people of Sindhigaon, Badapaur, Patrapur, Kalipalli and Paikapada villages near Gopalpur were displaced when the company acquired 2,970 acres for the then proposed shore-based mega steel plant. People of eight other villages were affected by the project.