Stocks
CLSA conference highlights: ICICI Bank, IDFC, Zee Entertainment

CLSA is hosting a corporate conference in Hong Kong for its institutional investors. Here are a few highlights from the ICICI Bank, IDFC, and Zee managements

MD and CEO of ICICI Bank Chanda Kochhar talked about the bank's new strategy - an addition to its '4 Cs' strategy in the form of credit growth (CASA ratio, credit quality, cost control and customer service are the other Cs). Last year, ICICI Bank had deliberately gone slow on credit growth to get its other Cs under control. She expects the bank's loan book to grow by 18% in FY11, largely domestic (FY10 loan growth was -17%). She also expects margins to expand due to higher CASA ratio and improving pricing power. RoA expectations are 1.4%-1.5% over the next 2-3 years (currently 1.1%).

About the Bank of Rajasthan (BoR) merger, ICICI Bank said that nearly 3,900 BoR employees have been integrated into ICICI's employee base - which means some additional provisions on staff costs in 2QFY11. For BoR, it has already restarted retail deposit mobilisation and loan processing and IT systems will be fully integrated by March 2011.

ICICI Bank believes that in its life insurance business it can hold NBAP (New Business Achieved Profits) margins near 16% and that the contraction in NBAP margins will stabilise at 200-300bps. It expects 15% new business premium growth in FY11 and to maintain its market share.

In line with the huge rally in banking stocks, ICICI Bank rose from a low of Rs833 early July to Rs1,100 levels currently, a huge 32% rise in just 3 months. 

MD and CEO of IDFC, Rajiv Lall said that he expects a strong 30%-40% compounded annual growth rate (CAGR) in loans over the next 3-4 years, which will entail tripling its balance sheet. The infrastructure finance company status will help IDFC to lend to larger projects and improve access to funds from banks (risk weight on its credit rating falls from a flat 100% to 20%, which mean more funds), ECBs (cost is lower) and retail sources (it can issue tax-free infrastructure bonds). IDFC is also looking at improving its fee income from infra-lending and retail channels.

From a low of Rs150 early June, IDFC is now trading at Rs191 levels, an almost 30% rise in just under 4 months.

Zee Entertainment's management said that they are looking at DTH (Direct to Home) as a big opportunity. CLSA expects India's DTH subscribers to jump to 52 million by FY13 from 23 million currently, and expects Zee's domestic subscription revenues to grow by a 17% CAGR over FY10-12. DTH makes up for only 22% of the country's current pay TV homes and the subscription revenue share of broadcasters is even lower at just 10%-15% with the rest cornered by local cable operators. Zee believes that the sunset date for digitisation of 31 December 2013 is ambitious and will be delayed. Of late, Zee TV's viewership ratings have slipped and the channel is now ranked No 3 behind Star Plus and Colors. However, the management said that it is introducing new shows in Zee TV which it hopes will drive advertising revenues.

Zee's share price has been oscillating between Rs270 and Rs325 for the past few months.

(This article is based on secondary research. The report is for information only. None of the stock information, data and company information presented herein constitutes a recommendation or solicitation of any offer to buy or sell any securities. Investors must do their own research and due diligence before acting on any security. Some of the opinions expressed in this article are the author's own and may not necessarily represent those of Moneylife).

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Herd on the street: Rama Newsprint, Archies, Sri Adhikari Brothers

What’s buzzing in these stocks right now

Rama Newsprint: Rumours range from land bank sale to the sale of the promoter shareholding - small share sales from the promoters have been happening regularly from June (as per the BSE website). However, the real story seems to be newsprint prices and a recent interview in which the management talked about developing its surplus land into an SEZ.

Paper and newsprint prices, which were flat to down in the calendar year 2009, have firmed up in recent months. Rama Newsprint (which claims on its website to be India's largest private sector newsprint and printing and writing paper manufacturing company at a single location in India meeting 22% of India's newsprint capacity) is set to benefit from this. Its manufacturing facility is spread over 450 acres of land in village Barbhodhan, Gujarat. Barbhodhan is not close to Ahmedabad (more than 300km away) but is pretty close to Surat (20km or so) and also close to Hazira port.

(See map: Barbhodhan, Surat and Hazira)

In a recent televised interview, Rama's management had said that it has a sales target of  Rs3.5 billion for FY11. It also said it has 415 acres of surplus land and has earmarked around 250 acres out of this for a possible SEZ (study being conducted by Tata Strategic Management Group and Ernst & Young). It had said it is in dialogue with "possible co-developers and bankers and the response is quite positive".

Archies: Renewed rumours of a takeover bid from Videocon. Promoters hold 62% stake in Archies while Videocon has 4% stake. However, merger/stake sale rumours are not restricted to Videocon but spill over to Bennett, Coleman & Company, which holds 3.7% stake, and Hanung Toys. Archies has repeatedly denied such rumours.

Sri Adhikari Brothers: The buzz around this stock seems to be from the launch of its channel Mastiii, India's first music and comedy channel. The channel has 70% music, and 30% humour such as gags, spoofs and jokes with artistes like Raju Srivastava, Suresh Menon, Sunil Pal, etc. The channel was launched on 4th July and is being hailed a success by the media. It is currently free-to-air.

In its June quarter, it made Rs80 million in revenue and Rs14 million in profit (Rs282 million and a loss of Rs1 million in FY10). Promoters hold 43% in the company while some 'bodies corporate' hold 30%.

(This article is based on secondary research. The report is for information only. None of the stock information, data and company information presented herein constitutes a recommendation or solicitation of any offer to buy or sell any securities. Investors must do their own research and due diligence before acting on any security. Some of the opinions expressed in this article are the author's own and may not necessarily represent those of Moneylife).
 

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Personal finance Wednesday

Nokia launches music phone X2 at Rs6,579; Baroda Pioneer MF unveils Baraod Pioneer PSU Equity Fund; HDFC Mutual Fund introduces HDFC FMP 100D September 2010 (2); L&T Mutual Fund floats L&T FMP-I (September24M A); SBI Mutual Fund launches SBI Debt Fund Series-24 Months-2
 
 Nokia launches music phone X2 at Rs6,579

Mobile handset maker Nokia has launched its latest music phone, Nokia X2 in the market at a price of Rs6,579. Nokia X2 comes with dedicated music keys and 3.5mm AV connector, FM radio with built-in antenna, a digital music player and loud stereo speakers for sharing music. It also offers a 5 megapixel camera with flash and a video recorder.

Baroda Pioneer MF unveils Baraod Pioneer PSU Equity Fund

Baroda Pioneer Mutual Fund has launched Baraod Pioneer PSU Equity Fund, an open-ended growth scheme. The investment objective of the scheme is to provide long-term capital growth along with liquidity by making investments in equity stocks of domestic public sector undertakings. The scheme offers two options - growth and dividend. The new fund offer (NFO) price for the scheme will be Rs10 per unit. The scheme opened on 13th September and will close on 24th September. An exit load of 1% will be applicable if the units are redeemed on or before 365 days from the date of allotment. The minimum investment amount is Rs5,000. The benchmark for the scheme is BSE PSU Index.

HDFC Mutual Fund introduces HDFC FMP 100D September 2010 (2)

HDFC Mutual Fund has introduced HDFC FMP 100D September 2010 (2), under HDFC Fixed Maturity Plans-Series XIV. The scheme is a close- ended income scheme. The investment objective of the plan under the scheme is to generate income by making investments in debt instruments maturing on or before the maturity date of the plan. The plan offers growth and dividend (payout) option. The plan opens of 15th September and closes on 16th September. The new fund offer (NFO) price for the plan is Rs10 per unit. The exit load for the plan is nil. Minimum investment amount is Rs5,000. The minimum target amount is Rs1 crore. The benchmark index for the plan is Crisil Liquid Fund Index.

L&T Mutual Fund floats L&T FMP-I (September24M A)

L&T Mutual Fund has launched L&T FMP-I (September 24M A), a close-ended income scheme. The investment objective of the plan under the scheme is to achieve growth of capital by making investments in debt/fixed income securities maturing on or before the maturity of the plan. The scheme opened on 13th September and will close on 22nd September. The exit load for the plan is nil. The new fund offer (NFO) price for the plan will be Rs10 per unit. The minimum investment amount is Rs5,000. The plan offers growth and dividend (payout) option. The minimum target amount is Rs1 crore. The benchmark index for the plan is CRISIL Short Term Bond Fund Index.

SBI Mutual Fund launches SBI Debt Fund Series-24 Months-2

SBI Mutual Fund has launched SBI Debt Fund Series-24 Months-2, a close-ended income scheme. The investment objective of the scheme is to provide regular income, liquidity and returns to the investors by making investment in debt instruments. The scheme has two options - growth and dividend (payout). The scheme opened on 13th September and will close on 17th September. The new fund offer (NFO) price for the scheme will be Rs10 per unit. The minimum investment amount is Rs5,000. The benchmark index for the scheme is CRISIL Short Term Bond Fund Index. The exit load for the scheme is nil.
 

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