IDBI MF launches IDBI Nifty Junior Index; Principal MF launches Principal Pnb Fixed Maturity Plan-91 Days-Series XXIII; Kotak Mahindra MF launches Kotak FMP 370 Days Series 7; DSP BlackRock MF signs distribution agreement with CBI; SBI Life launches two new ULIPs
IDBI MF launches IDBI Nifty Junior Index
IDBI Mutual Fund has introduced a new fund named as IDBI Nifty Junior Index Fund, an open ended passively managed equity scheme tracking the CNX Nifty Junior Index (Total Returns Index). The new fund offer (NFO) price for the scheme is Rs10 per unit. The new issue opens for subscription on 2 September and will close on 15 September 2010. The investment objective of the scheme is to invest in the stocks and equity related instruments comprising the CNX Nifty Junior Index in the same weights as these stocks represented in the Index with the intent to replicate the performance of the Total Returns Index of CNX Nifty Junior Index. The scheme will adopt a passive investment strategy and will seek to achieve the investment objective by minimising the tracking error between the CNX Nifty Junior Index (Total Returns Index) and the scheme. The scheme offers two options - growth and dividend option (payout and reinvestment). The minimum investment amount is Rs5,000 and in multiples of Rs100 thereafter. The fund seeks to collect a minimum target amount of Rs1 crore under the scheme during the NFO period. Entry load charge is not applicable for the scheme. The scheme will charge an exit load of 1% for exit on or before 1 year from the date of allotment.
Principal MF launches Principal Pnb Fixed Maturity Plan-91 Days-Series XXIII
Principal Mutual Fund has launched Principal Pnb Fixed Maturity Plan-91 Days- Series XXIII, a close ended debt scheme. The new fund offer (NFO) price for the scheme is Rs10 per unit. The new issue opens for subscription on 1 September and will close on 8 September 2010. Entry load charge is not applicable for the scheme. The investment objective of the scheme is to build an income oriented portfolio and generate returns through investment in debt/money market instruments and government securities. Minimum investment amount is Rs5,000 and any amount thereafter. The scheme has two options-growth and dividend. The Benchmark Index for the scheme would be CRISIL Liquid Fund Index.
Kotak Mahindra MF launches Kotak FMP 370 Days Series 7
Kotak Mahindra Mutual Fund has launched Kotak FMP 370 Days Series 7, a close ended debt scheme. The new fund offer (NFO) price for the scheme is Rs10 per unit. The investment objective of the scheme is to generate returns through investments in debt and money market instruments with a view to reduce the interest rate risk. The new issue opens for subscription on 1 September and will close on 6 September 2010. The minimum investment amount is Rs5,000 and in multiples of Rs10 thereafter. The exit load for the scheme is nil. The scheme has two options-growth and dividend (payout). The maturity of the scheme is 370 days after the date of allotment.
DSP BlackRock MF signs distribution agreement with CBI
DSP BlackRock Investment Managers has signed a distribution agreement with Central Bank of India (CBI) to increase their retail presence. CBI will distribute DSP BlackRock Mutual Fund schemes through its various branches spread across the country.
SBI Life launches two new ULIPs
SBI Life has launched two new unit linked insurance plans (ULIPs)-Smart Performer and Unit Plus Super. These plans provide customers a strong rationale to participate in equity markets. These plans also offer higher protection, multiple investment options and a range of riders offering additional protection. Smart Performer offers automatic rebalancing and highest daily net asset value (NAV) guarantee. It offers a policyholder 5% more return than the highest NAV during the first seven years or NAV at maturity. It also includes automatic rebalancing that allows a consumer to avail the potential of higher gains, as only 20% of the premium goes to index fund and 80% goes to daily protect fund. Also, gains of over 15% from the index fund are auto-transferred to the daily protect fund. Unit Plus Super offers guaranteed addition, partial withdrawals and premium redirection. It also provides life insurance coverage, with minimum sum assured, based on the policyholder's age.
Not heavily traded and lesser tracked, this stock has some untapped potential
Adhunik Metaliks Ltd (AML) is a long steel manufacturer with a plant in Sundergarh, Orissa. It has a steelmaking capacity of 0.45 million tonnes of billets, forward integration for manufacturing 0.22 million tonnes of rolled products, and stainless steel capacity of 0.12 million tonnes. It is also into steel product trading, but the share of this in its revenue has been declining over the last few years and is currently only around 10%-15%. About 10% of its revenues come from pig iron. Billets and rolled products are the main revenue generators currently - both these products contributed 71% of revenues in FY09 versus 23% in FY06.
A large part of its value is in its subsidiaries, especially its merchant mining subsidiary, Orissa Manganese & Minerals (OMM). A lot of value also comes from its 98.6% stake in Adhunik Power & Natural Resources and a 50% JV (with Tata Steel) in United Minerals. A few details:
OMM has iron ore reserves of 97 million tonnes in Ghatkuri, Jharkhand with ferrous content of around 60%, and 53 million tonnes of manganese ore reserves in Patmunda, Orissa. It sold 1.15 million tonnes of iron ore and 0.15 million tonnes of manganese in FY10. AML is setting up a pellet plant with a capacity of 1.2 million tonnes (expected to start production between October 2011 and March 2012). For this, it will use surplus fines (from its mines) and thus expects better profitability.
In addition to OMM, AML has been allocated iron ore mines in Keonjhar, Orissa, which are estimated to have reserves of 25 million tonnes and may begin production between February and March 2011.
Through a 17.5% stake in a JV, AML has been allocated thermal coal mines in Talcher, Orissa, bringing its share to 31 million tonnes. Its own coal requirement is just around 0.42 million tonnes. AML could start realising benefits from these mines only in FY13.
Currently, Adhunik Power & Natural Resources (APNR) is setting up two 270MW thermal power plants - one each in Padmapur and Srirampur in Jharkhand, expected to be completed in January 2012 and March 2012 respectively. In long-term projects, it has signed MoUs with the government of Jharkhand for setting up a power plant of 1,080MW and with the governments of Chhattisgarh and Bihar for setting up power plants of 1,000MW each.
Through a 50:50 joint venture (with Tata Steel) it has been allocated coal mines in Ganeshpur, which are expected to begin production only by March 2013. AML's share in these mines is 69 million tonnes.
AML is expected to be a great performer over the next 3-4 years based on the following:
1. Improving efficiencies: With production from its captive mines in Keonjhar starting, its dependency on externally sourced iron ore is expected to come down from the current 70% to almost zero by FY13.
2. AML has already signed power purchase agreements for almost half of its generation capacity with Tata Power and the Jharkhand government. Benefits from this will flow in FY13.
3. OMM is set to increase its iron ore production by as much as 22%-43% to 1.4-2 million tonnes in FY11-12 and its manganese production by as much as 14%-52% to 0.22-0.25 million tonnes in the same period.
4. Its thermal coal linkages should start kicking in from FY13.
In its Q1FY11, OMM was the star performer with its net profit zooming 264% y-o-y to Rs487 million due to higher realisations of manganese and iron ore and higher volumes of manganese ore. Standalone PAT also increased 3x y-o-y to Rs183 million.
Systematix has split the valuation of AML into two parts - it values the steel and merchant mining business on EV/EBIDTA of 5x on FY12E estimates and arrives at a value of Rs18.36 billion (to capture the high debt in the standalone steel business). It values the power business on 1x P/BV of equity investments in APNRL and arrives a fair value per share of Rs157 (current market price is at Rs112). Equirus values the standalone business and OMM at 8x FY11 EPS and uses IDFC's project equity's investment for the power business to arrive at a fair value of Rs161 (IDFC Project Equity Company invested Rs 2.5 billion in the power subsidiary). ICICI Securities has a price target of Rs171 while Motilal has reiterated a 'buy' on the stock. Prabhudas Lilladher has a price target of Rs147.
The stock has been trading in a range of Rs100 and Rs125 since June. Currently it is at the lower end of that range at Rs112 and is showing a bearish trend on technical charts. It is not very heavily traded and the two-week average traded quantity is around 88,000 shares. It is not available in the F&O segment.
(With inputs from the company's presentation and research reports of Motilal Oswal, Systematix Shares & Stock Brokers, and Equirus).
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