Stocks
Herd on the Street: Indiabulls Financial, Bhushan Steel, Sintex India

Indiabulls Finanical: The buzz seems to be around Anil Dhirubhai Ambani Group's buying 26% stake from Indiabulls Financial Services in the Indian Commodity Exchange, which was jointly founded by Indiabulls and trading giant MMTC. Since Indiabulls has said it will completely exit the exchange business by selling its entire 40% stake in ICX, the market hopes that the gains will be much more than anticipated. Late August, Indiabulls raised Rs12.8 billion through a QIP of non-convertible debentures and warrants.

The company is into consumer finance, housing finance, commercial loans, life insurance, asset management and advisory services. We had previously said that there were rumours of Indiabulls applying for a bank licence (http://www.moneylife.in/article/81/8153.html).

Mid-September, media reports suggested the company paid Rs250 million in advance taxes for the September quarter versus nothing y-o-y. This has led to speculation of a good result. Early September, Indiabulls came out with a special home loan scheme for the salaried class - 8.5% for a year. At the time CEO Gagan Banga had disclosed that the company has an annual target of Rs60 billion for new home loans disbursement and plans to grow its home loans business by 40%-45% in FY11 and increase its market share from the current 4% to 10%-15% by 2014.

Market talk indicates that investors expect another 15% upside from current levels. However, retail investors should be cautious since the stock has risen almost 20% in less than 10 days. FII holding in this stock has fallen from almost 48% in September 2009 to 36% in June 2010.

In the June quarter, Indiabulls Financial posted a revenue of Rs4 billion and a net profit of Rs1.3 billion (Rs3.6 billion and Rs835 million in the March quarter) and in FY10 its revenues were Rs14.2 billion and profit was Rs2.6 billion. Indiabulls Finanical had touched a high of Rs1,030 in December 2007.

Bhushan Steel: The stock has been rising right since June but has got an extra fillip after it made a cash takeover bid for Bowen Energy, an Australian coal and minerals exploration company. Media reports said that Bhushan Steel, through its Australian subsidiary Bhushan Steel Australia Pty Ltd, has been investing in Bowen Energy since 2007 and had acquired almost 60% stake in it. Another factor driving the stock is hopes of another round of price hikes by steel companies. Bhushan Steel recently increased prices of its value-added products by around Rs1,500 per tonne. Another story is its move from a cold rolled steelmaker into an integrated steel plant.

In the June quarter, Bhushan Steel posted a revenue of Rs13.7 billion and a net profit of Rs2 billion (Rs13 billion and Rs1.7 billion in the March quarter) and in FY10 its revenues were Rs56 billion and profit was Rs8.5 billion. Bhushan Steel is trading near its all-time high.

Sintex Industries: The stock is up more than 10% in seven days. In a September televised interview, Sunil Kanojia, group president at Sintex Industries had said that this year the monolithic business was going to be a big business for the company and expected to maintain margins at 18%-20%. He said the company expects to achieve a top-line of Rs43 billion-Rs44 billion and bottom-line growth of 30%-35%. Sintex's consolidated FY10 top-line was Rs33 billion and net profit was Rs3.3 billion. The June quarter top-line was Rs9 billion and net profit was Rs791 million (Rs6.6 billion, Rs 611 million). The main buzz has been around a 2:1 stock split for which the company has fixed 28 October 2010 as the record date. Sintex achieved an all-time high of Rs620 in January 2008.

(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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Domestic car sales up 30%, bikes over 15% in September

New Delhi: Domestic passenger car sales jumped by 30.38% to 1,69,082 units in September, compared to 1,29,684 units in the corresponding month last year, reports PTI. This was the best performance by any category in the auto sector last month.

According to numbers from the Society of Indian Automobile Manufacturers (SIAM) released today, total vehicle sales across all categories registered a growth of 21.63% at 13,29,086 units in September, as against 10,92,687 units in the month a year ago.

Motorcycle sales grew by 15.50% to 7,78,352 units from 6,73,893 units in September last year. Two-wheeler sales overall increased by 19.93% to 10,05,162 units from 8,38,152 units in the month a year ago. Sales of commercial vehicles also registered a good growth of 29.56% to 59,455 units from 45,889 units in the period a year ago.

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Reward & Punishment

While on the ambiguous governance standards at SEBI, most people have forgotten Dr Mohan Gopal,...

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