Criticising the railways for hiking freight rates by almost 300% in the last three years, the mining industry today demanded a long-term freight policy to make it more cost-competitive and enable miners contribute in containing the inflationary trends in the economy.
"The iron ore industry is trying to reduce cost to bring down the effect of high inflation, and also expect a positive response from the Railway Board...by reducing freight," the Federation of Indian Mineral Industries (FIMI), the apex body of Indian miners, said in a letter to the Railway Board.
"Industry earnestly requests you to roll back the recent hikes in rail freight for domestic as well as exports to help us reduce cost. Any kind of increase in logistics is unjustified as it will result in increase in the cost of steel, which will further lead to inflationary pressure," FIMI added.
"Railways have increased freight substantially on iron ore, which is almost 300% in the last three years," FIMI said in its letter, and pointed out that the "scourge of imposing surcharge and other such levies was introduced in 2006-07 in the name of dynamic freight policy."
The miners' body cited that railway freight in Australia, Brazil and China is as low as 0.43 paise per tonne per kilometre, while in India it is as high as Rs 2.40 per tonne.
Monday, April 07, 2008
OVERLOOK ON TATA
TATA MOTORS
CMP (Rs) : 613.7
M-cap (Rs cr): 25326
Div. Yield (%): 2.41
Inst Holding (%): 34.7
Promoter’s Holding (%): 33.4
Beta: 0.5
Competencies & Opportunities:
Tata Motors has some new offerings on the block. This includes the 200-500 horse power ‘World Truck’ for the global market. It has also taken a huge stride to grow inorganically by acquiring the business of Ford under the brands, Jaguar and Land Rover.
New models such as Sumo Grande and the Rs 1-lakh Nano car are likely to give a fillip to the domestic business.
Challenges
Higher interest rate may dampen the demand for cars. Rising cost of key raw materials such as steel and aluminium will put pressure on margins.
Turning around of the Jaguar Land Rover business into a higher profitable business is a major challenge.
Positioning of the Tata brand over such a wide variety of vehicles segments starting from the cheapest Tata Nano to the luxury brands like Jaguar will not be easy.
TATA STEEL
CMP (Rs) : 660.7
M-cap (Rs cr): 52,020
Div. Yield (%): 2.24
Inst Holding (%): 40.6
Promoter’s Holding (%): 33.7
Beta: 1.16
Competencies & Opportunities
The Corus acquisition will give Tata Steel the access to global markets and higher volumes.
The strong outlook for global as well as domestic steel sector will improve sales realisation.
Acquisition of iron ore and coking coal mines in different parts of the globe will improve the operating margin of Corus and contribute more towards the bottomline of the combined entity.
The new greenfield and brownfield projects in Orissa, Jharkhand and Chhatisgarh will add significantly to the topline.
Challenges
The higher inflation and pressure from the domestic government might force steel producers to reduce domestic steel prices, resulting in lower profit margins.
The higher synergy from Corus will come through only if Tata Steel manages to integrate it successfully.
TCS
CMP (Rs) :870.2
M-cap (Rs cr): 81,628
Div. Yield (%): 1.6
Inst Holding (%): 16.03
Promoter’s Holding (%): 65.77
Beta: 0.69
Competencies & Opportunities
TCS has been focussing on contracts with larger deal size and time span. This helps in increasing client engagement. Broadening of deliverables will also help in improving competence in the global market for IT services.
TCS has opened delivery centres in low-cost destinations of Asia and Latin America. Such a multi-shore delivery strategy comes in handy in times of economic slowdown and lower IT spends by the clients.
Presence in the domestic market is worthwhile in the scenario of a stronger home economy and depreciating dollar.
Challenges
Exposure to dollar denominated income increases risk of margin erosion given appreciating rupee.
Slowdown in the US may impact the IT budgets of the US clients. This may retard the topline growth.
Competition from MNCs in India will intensify. TCS has to come up with firm strategies for its domestic business.
TATA POWER
CMP (Rs) : 1120.3
M-cap (Rs cr): 15,831
Div. Yield (%): 0.82
Inst Holding (%): 45.3
Promoter’s Holding (%): 33.9
Beta: 0.95
Competencies & Opportunities
Tata Power is India’s largest private sector power utility with installed capacity in excess of 2,300 mw. Over 600 mw new capacity is likely to be added during FY09, with another 8,000 mw capacity to be added over the next five years including a 4,000-mw UMPP at Mundra.
TPL has acquired a 30% stake in two major Indonesian coal producers to assure future fuel requirements.
It is emerging as an integrated player in India's power sector with investments in power generation, transmission, distribution and fuel supplies (coal mining and transport).
Challenges
Meeting the time and cost deadlines while executing the long gestation projects is a big challenge as the costs of equipment and project implementation services have gone up substantially.
Even after the successful completion of its projects, TPL has to manage the regulatory environment well to ensure sufficient return on its investments.
INDIAN HOTELS
CMP (Rs) : 109.5
M-cap (Rs cr): 8,186.7
Div. Yield (%): 1.43
Inst Holding (%): 43.98
Promoter’s Holding (%): 29.16
Beta: 0.86
Competencies & Opportunities
Indian Hotels runs the largest domestic hotel chain with 71 hotels and an inventory of 10,487 rooms. It enjoys presence across wide range of hotels right from deluxe properties to budget. This puts the company in a bright spot and helps it take advantage of the growing tourism industry in India. _Besides, the company has 14 properties overseas and is expanding its global footprint via acquisitions and greenfield ventures. This is likely to result in greater brand recognition abroad.
Its recent entry into lucrative segment of business jets will help the company to take advantage of growing opportunities in this space.
Challenges
Its revenue is greatly dependent on India, where average room rates are expected to see a decline beyond FY09 when supply starts coming in.
Rising real estate costs have greatly reduced the return on capital on new properties in major cities.
TATA TEA
CMP (Rs): 830
M-cap (Rs cr): 5,098
Div. Yield (%): 1.8
Inst Holding (%): 39
Promoter’s Holding (%): 35.4
Beta: 0.6
Competencies & Opportunities
The company has taken initiatives to introduce different variants of tea. It has also forayed into bottled water and other beverages. This is likely to help it transform itself from a tea company to a beverages company.
Acquisitions, geographic expansion and new products are the way to go for Tata Tea, which is already the second largest integrated tea company in the world. Its retail foray through ‘Chai Unchai’ beverage stores is likely to open a new route of growth for the company.
Challenges
Tata Tea operates in a labour-intensive tea industry, which has long gestation periods. This can be an imepdiment in improving operational efficiency.
The company will have to grapple with the increase in raw material prices. The appreciation in the rupee is likely to drag profitability of the international businesses.
TATA COMMUNICATIONS
CMP (Rs): 519.5
M-cap (Rs cr): 14,641.90
Div. Yield (%): 0.88
Inst Holding (%): 13.6
Promoter’s Holding (%): 76.23
Beta: 0.73
Competencies & Opportunities
Utilisation of existing infrastructure to deliver valueadded services is a sound proposition for Tata Communications. The company recently tied up with Telsima to provide WiMAX services in the country. It has also launched its global telepresence network service to offer virtual meeting solutions. These initiatives will fuel future revenue growth.
Tata Comm’s strategy to build global tie-ups for high-end technologies will help it keep pace with the fast-changing technology scenario and improve its global presence.
Challenges
Tata Comm needs to increase focus on deploying managed services, given the stiff competition in domestic as well as global enterprise data space from bigger telecom operators.
The company has to improve operational processes in order to increase customer base for its broadband and other services rapidly.
TATA CHEMICALS
CMP (Rs) : 299.3
M-cap (Rs cr): 6,891
Div. Yield (%): 2.72
Inst Holding (%): 39.45
Promoter’s Holding (%): 29.93
Beta: 0.51
Competencies & Opportunities
The recent acquisition of US-based General Chemicals has consolidated position of Tata Chemicals (TCL) in the global soda ash market. Post-acquisition, TCL has become the second largest soda ash manufacturer in the world with majority of the production coming from cheaper natural sources. This goes well with its overall global strategy.
TCL is already on an expansion spree for its inorganic chemicals and fertilisers plants in India. This will help it to strengthen its domestic presence.
TCL is setting up a 30,000-litres-per-day ethanol plant and has ventured into wholesaling of fresh agricultural produce. This diversification would help in mitigating risk from slowdown in the core business.
Challenges
TCL has to see through an effective integration strategy of its soda ash business with the overseas acquisition.
Managing overall growth of the company will be a tough task given the diversification into new business domains.
VOLTAS
CMP (Rs) : 162
M-cap (Rs cr): 5,865
Div. Yield (%): 0.6
Inst Holding (%): 45.64
Promoter’s Holding (%): 27.3
Beta: 1.06
Competencies & Opportunities
Voltas is a market leader in central air-conditioning and climate control business in India, besides being a major player in booming West Asia. It is also India's leading distributor and re-seller of textile and mining equipment.
Recently it went through a corporate restructuring which has transformed it into a leaner and competitive player.
The demand for central A/Cs and climate control systems is booming, thanks to rapid growth in retail, real estate and hospitality sectors.
It has also got a boost from strong capex in textile, mining and retail sectors where it supplies forklifts.
Challenges
Being a capital goods supplier, it's highly prone to an economic downturn. It faces strong competitors across its product portfolio.
The consumer air-conditioner business continues to be a drag on the company's profitability.
TATA TELE (MAHA)
CMP (Rs) : 27.4
M-cap (Rs cr): 5,320.9
Div. Yield (%): ---
Inst Holding (%): 7.04
Promoter’s Holding (%): 65.77
Beta: 1
Competencies & Opportunities
The company is aggressively expanding its base in smaller circles. Increasing presence in high-growth telecom circles B and C will help the company grow its subscriber base rapidly from existing five million.
Challenges
Higher competition is likely to put further pressure on the company’s average revenue per user. This necessitates more focus on value-added services.
The company currently provides mobile services on CDMA platform. Establishing a GSM footprint would be a challenging task given competition from bigger GSM players.
The company needs to expand its operations in the field of managed services to stay competitive.
The company lacks brand recognition. It has to establish its brand presence in the highly competitive
markets.
TITAN IND
CMP (Rs) : 988.5
M-cap (Rs cr): 4715.5
Div. Yield (%): 0.5
Inst Holding (%): 14.7
Promoter’s Holding (%): 53.05
Beta: 1.2
Competencies & Opportunities
Titan has diversified into a wide consumer-centric product portfolio comprising time pieces, jewellery, eye wear, and precision equipment among others.
A good pedigree, reputed brand standing and strong distribution and service network offer good prospects for the company to ride the boom in consumption.
Expansion of retail stores, specially in tier II cities, will help the company increase profitability.
Challenges
Record high gold prices can lead to a drop in jewellery demand, restricting the company's growth in the business.
International foray may not be very profitable in view of the global economic slowdown.
Branded retail segment is fraught with intense competition. Dominance of unorganised players in the lower end of the watch market poses a challenge.
Given rising incomes, Titan may have to face competition from international brands in the premium watch category.
TRENT
CMP (Rs) : 498.6
M-cap (Rs cr): 953
Div. Yield (%): 1.33
Inst Holding (%): 30.65
Promoter’s Holding (%): 32.22
Beta: 0.74
Competencies & Opportunities
After establishing its foothold in retail space through Westside stores, Trent is taking new initiatives of foraying into the premium segment. Recently, it joined forces with the Benetton Group for the expansion of the Sisley brand in India. It is tying up with designers to mark its presence in a range different from the private labels. This will help the company face stiff competition in the domestic retail space.
Trent has reported good growth in the past few years. Revenues have grown consistently (CAGR of 55% from FY04-07). A sustained revenue model is necessary as it facilitates future expansion plans.
Challenges
The roll out of new stores has not been aggressive. The company has added only 19 stores from ’03 till date.
Faces competition from aggressive players such as Pantaloon and new entrants including Reliance Retail.
CMP (Rs) : 613.7
M-cap (Rs cr): 25326
Div. Yield (%): 2.41
Inst Holding (%): 34.7
Promoter’s Holding (%): 33.4
Beta: 0.5
Competencies & Opportunities:
Tata Motors has some new offerings on the block. This includes the 200-500 horse power ‘World Truck’ for the global market. It has also taken a huge stride to grow inorganically by acquiring the business of Ford under the brands, Jaguar and Land Rover.
New models such as Sumo Grande and the Rs 1-lakh Nano car are likely to give a fillip to the domestic business.
Challenges
Higher interest rate may dampen the demand for cars. Rising cost of key raw materials such as steel and aluminium will put pressure on margins.
Turning around of the Jaguar Land Rover business into a higher profitable business is a major challenge.
Positioning of the Tata brand over such a wide variety of vehicles segments starting from the cheapest Tata Nano to the luxury brands like Jaguar will not be easy.
TATA STEEL
CMP (Rs) : 660.7
M-cap (Rs cr): 52,020
Div. Yield (%): 2.24
Inst Holding (%): 40.6
Promoter’s Holding (%): 33.7
Beta: 1.16
Competencies & Opportunities
The Corus acquisition will give Tata Steel the access to global markets and higher volumes.
The strong outlook for global as well as domestic steel sector will improve sales realisation.
Acquisition of iron ore and coking coal mines in different parts of the globe will improve the operating margin of Corus and contribute more towards the bottomline of the combined entity.
The new greenfield and brownfield projects in Orissa, Jharkhand and Chhatisgarh will add significantly to the topline.
Challenges
The higher inflation and pressure from the domestic government might force steel producers to reduce domestic steel prices, resulting in lower profit margins.
The higher synergy from Corus will come through only if Tata Steel manages to integrate it successfully.
TCS
CMP (Rs) :870.2
M-cap (Rs cr): 81,628
Div. Yield (%): 1.6
Inst Holding (%): 16.03
Promoter’s Holding (%): 65.77
Beta: 0.69
Competencies & Opportunities
TCS has been focussing on contracts with larger deal size and time span. This helps in increasing client engagement. Broadening of deliverables will also help in improving competence in the global market for IT services.
TCS has opened delivery centres in low-cost destinations of Asia and Latin America. Such a multi-shore delivery strategy comes in handy in times of economic slowdown and lower IT spends by the clients.
Presence in the domestic market is worthwhile in the scenario of a stronger home economy and depreciating dollar.
Challenges
Exposure to dollar denominated income increases risk of margin erosion given appreciating rupee.
Slowdown in the US may impact the IT budgets of the US clients. This may retard the topline growth.
Competition from MNCs in India will intensify. TCS has to come up with firm strategies for its domestic business.
TATA POWER
CMP (Rs) : 1120.3
M-cap (Rs cr): 15,831
Div. Yield (%): 0.82
Inst Holding (%): 45.3
Promoter’s Holding (%): 33.9
Beta: 0.95
Competencies & Opportunities
Tata Power is India’s largest private sector power utility with installed capacity in excess of 2,300 mw. Over 600 mw new capacity is likely to be added during FY09, with another 8,000 mw capacity to be added over the next five years including a 4,000-mw UMPP at Mundra.
TPL has acquired a 30% stake in two major Indonesian coal producers to assure future fuel requirements.
It is emerging as an integrated player in India's power sector with investments in power generation, transmission, distribution and fuel supplies (coal mining and transport).
Challenges
Meeting the time and cost deadlines while executing the long gestation projects is a big challenge as the costs of equipment and project implementation services have gone up substantially.
Even after the successful completion of its projects, TPL has to manage the regulatory environment well to ensure sufficient return on its investments.
INDIAN HOTELS
CMP (Rs) : 109.5
M-cap (Rs cr): 8,186.7
Div. Yield (%): 1.43
Inst Holding (%): 43.98
Promoter’s Holding (%): 29.16
Beta: 0.86
Competencies & Opportunities
Indian Hotels runs the largest domestic hotel chain with 71 hotels and an inventory of 10,487 rooms. It enjoys presence across wide range of hotels right from deluxe properties to budget. This puts the company in a bright spot and helps it take advantage of the growing tourism industry in India. _Besides, the company has 14 properties overseas and is expanding its global footprint via acquisitions and greenfield ventures. This is likely to result in greater brand recognition abroad.
Its recent entry into lucrative segment of business jets will help the company to take advantage of growing opportunities in this space.
Challenges
Its revenue is greatly dependent on India, where average room rates are expected to see a decline beyond FY09 when supply starts coming in.
Rising real estate costs have greatly reduced the return on capital on new properties in major cities.
TATA TEA
CMP (Rs): 830
M-cap (Rs cr): 5,098
Div. Yield (%): 1.8
Inst Holding (%): 39
Promoter’s Holding (%): 35.4
Beta: 0.6
Competencies & Opportunities
The company has taken initiatives to introduce different variants of tea. It has also forayed into bottled water and other beverages. This is likely to help it transform itself from a tea company to a beverages company.
Acquisitions, geographic expansion and new products are the way to go for Tata Tea, which is already the second largest integrated tea company in the world. Its retail foray through ‘Chai Unchai’ beverage stores is likely to open a new route of growth for the company.
Challenges
Tata Tea operates in a labour-intensive tea industry, which has long gestation periods. This can be an imepdiment in improving operational efficiency.
The company will have to grapple with the increase in raw material prices. The appreciation in the rupee is likely to drag profitability of the international businesses.
TATA COMMUNICATIONS
CMP (Rs): 519.5
M-cap (Rs cr): 14,641.90
Div. Yield (%): 0.88
Inst Holding (%): 13.6
Promoter’s Holding (%): 76.23
Beta: 0.73
Competencies & Opportunities
Utilisation of existing infrastructure to deliver valueadded services is a sound proposition for Tata Communications. The company recently tied up with Telsima to provide WiMAX services in the country. It has also launched its global telepresence network service to offer virtual meeting solutions. These initiatives will fuel future revenue growth.
Tata Comm’s strategy to build global tie-ups for high-end technologies will help it keep pace with the fast-changing technology scenario and improve its global presence.
Challenges
Tata Comm needs to increase focus on deploying managed services, given the stiff competition in domestic as well as global enterprise data space from bigger telecom operators.
The company has to improve operational processes in order to increase customer base for its broadband and other services rapidly.
TATA CHEMICALS
CMP (Rs) : 299.3
M-cap (Rs cr): 6,891
Div. Yield (%): 2.72
Inst Holding (%): 39.45
Promoter’s Holding (%): 29.93
Beta: 0.51
Competencies & Opportunities
The recent acquisition of US-based General Chemicals has consolidated position of Tata Chemicals (TCL) in the global soda ash market. Post-acquisition, TCL has become the second largest soda ash manufacturer in the world with majority of the production coming from cheaper natural sources. This goes well with its overall global strategy.
TCL is already on an expansion spree for its inorganic chemicals and fertilisers plants in India. This will help it to strengthen its domestic presence.
TCL is setting up a 30,000-litres-per-day ethanol plant and has ventured into wholesaling of fresh agricultural produce. This diversification would help in mitigating risk from slowdown in the core business.
Challenges
TCL has to see through an effective integration strategy of its soda ash business with the overseas acquisition.
Managing overall growth of the company will be a tough task given the diversification into new business domains.
VOLTAS
CMP (Rs) : 162
M-cap (Rs cr): 5,865
Div. Yield (%): 0.6
Inst Holding (%): 45.64
Promoter’s Holding (%): 27.3
Beta: 1.06
Competencies & Opportunities
Voltas is a market leader in central air-conditioning and climate control business in India, besides being a major player in booming West Asia. It is also India's leading distributor and re-seller of textile and mining equipment.
Recently it went through a corporate restructuring which has transformed it into a leaner and competitive player.
The demand for central A/Cs and climate control systems is booming, thanks to rapid growth in retail, real estate and hospitality sectors.
It has also got a boost from strong capex in textile, mining and retail sectors where it supplies forklifts.
Challenges
Being a capital goods supplier, it's highly prone to an economic downturn. It faces strong competitors across its product portfolio.
The consumer air-conditioner business continues to be a drag on the company's profitability.
TATA TELE (MAHA)
CMP (Rs) : 27.4
M-cap (Rs cr): 5,320.9
Div. Yield (%): ---
Inst Holding (%): 7.04
Promoter’s Holding (%): 65.77
Beta: 1
Competencies & Opportunities
The company is aggressively expanding its base in smaller circles. Increasing presence in high-growth telecom circles B and C will help the company grow its subscriber base rapidly from existing five million.
Challenges
Higher competition is likely to put further pressure on the company’s average revenue per user. This necessitates more focus on value-added services.
The company currently provides mobile services on CDMA platform. Establishing a GSM footprint would be a challenging task given competition from bigger GSM players.
The company needs to expand its operations in the field of managed services to stay competitive.
The company lacks brand recognition. It has to establish its brand presence in the highly competitive
markets.
TITAN IND
CMP (Rs) : 988.5
M-cap (Rs cr): 4715.5
Div. Yield (%): 0.5
Inst Holding (%): 14.7
Promoter’s Holding (%): 53.05
Beta: 1.2
Competencies & Opportunities
Titan has diversified into a wide consumer-centric product portfolio comprising time pieces, jewellery, eye wear, and precision equipment among others.
A good pedigree, reputed brand standing and strong distribution and service network offer good prospects for the company to ride the boom in consumption.
Expansion of retail stores, specially in tier II cities, will help the company increase profitability.
Challenges
Record high gold prices can lead to a drop in jewellery demand, restricting the company's growth in the business.
International foray may not be very profitable in view of the global economic slowdown.
Branded retail segment is fraught with intense competition. Dominance of unorganised players in the lower end of the watch market poses a challenge.
Given rising incomes, Titan may have to face competition from international brands in the premium watch category.
TRENT
CMP (Rs) : 498.6
M-cap (Rs cr): 953
Div. Yield (%): 1.33
Inst Holding (%): 30.65
Promoter’s Holding (%): 32.22
Beta: 0.74
Competencies & Opportunities
After establishing its foothold in retail space through Westside stores, Trent is taking new initiatives of foraying into the premium segment. Recently, it joined forces with the Benetton Group for the expansion of the Sisley brand in India. It is tying up with designers to mark its presence in a range different from the private labels. This will help the company face stiff competition in the domestic retail space.
Trent has reported good growth in the past few years. Revenues have grown consistently (CAGR of 55% from FY04-07). A sustained revenue model is necessary as it facilitates future expansion plans.
Challenges
The roll out of new stores has not been aggressive. The company has added only 19 stores from ’03 till date.
Faces competition from aggressive players such as Pantaloon and new entrants including Reliance Retail.
MARKET PREDICTION
GLOBAL MARKET DISCOUNTED THE FACTOR OF JOB CUT IN USA AND INFLATION ALL TIME HIGH IN INDIA.
LEVEL OF NIFTY IS 4620 IS CRUCIAL SUPPORT 4550-4620-4730-4800
BUY FORM LOWER SUPPORT AND GO SHORT FROM HIGH LEVEL, WITH SL OF 4850.
TOTAL MARKET OI IS 52K CR PUT CALL RATIO IS 1.12.
SINCE FROM THE BEGINNING OF THE FINANCIAL YEAR FII TUNRNED NET SELER OF 1751 CR AND DOMESTICS MF SOLD ABOUT 481 CR IN CASH MARKET.
NO SOLID BUYING IS FOUND,MARKET IS COUNTINUE TO BE WEAK.
WISH YOU A HAPPY UGADI TRADING.
-MR.SAM
LEVEL OF NIFTY IS 4620 IS CRUCIAL SUPPORT 4550-4620-4730-4800
BUY FORM LOWER SUPPORT AND GO SHORT FROM HIGH LEVEL, WITH SL OF 4850.
TOTAL MARKET OI IS 52K CR PUT CALL RATIO IS 1.12.
SINCE FROM THE BEGINNING OF THE FINANCIAL YEAR FII TUNRNED NET SELER OF 1751 CR AND DOMESTICS MF SOLD ABOUT 481 CR IN CASH MARKET.
NO SOLID BUYING IS FOUND,MARKET IS COUNTINUE TO BE WEAK.
WISH YOU A HAPPY UGADI TRADING.
-MR.SAM
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