ULTRATECH CEMENT LTD ; BUY

Scrip Code : 532538 / ULTRACEMCO

CMP :  Rs.857.95 ; Buy at Rs.840-850 levels

Traget : Rs. 1087

Market Cap : Rs.10,711.1 cr.

52 Week High/Low : Rs.1163.1/Rs.702.8

Total Shares : 124487079 shares; Promoters - 68193101 shares - 54.78%

Book Value : Rs.370.05 ; Face Value - Rs.10; EPS - Rs.73.76;

Enterprise Value : Rs.989.31 per share ;

UltraTech ‘s results for Q1FY11 net realisation declined 4.9% due to its substantial exposure 33% to southern region which was affected by lower off take and shortage of wagons.

The increase in operating expenditure resulted in 1371 basis points YOY decline in operating margins to 23.5% (37.2%) , Going ahead, UltraTech will benefit from its Samruddhi merger % will not face comparatively lower pricing pressure. Post merger UltraTech will have aggregate capacity of 49 million tonne of cement production.. Ultra Tech’s net sales declined 8.1% YOY because of 3.6% decline in dispatches to 5.12 million tonnes. Power cost increased due to higher open market power purchase & reduced coal supply through linkages.

The incorporated post merger number of UltraTech will be 45.3% CAGR in top line over FY10-12 by higher volumes. At current level the stock is trading at an EV/EBITDA of 6.7 times & EV per tonne of $94 on FY 12 estimates.

At an average target of EV/EBITDA of 7 times Ultra Tech’s fair value comes at Rs.1087.

Samruddhi Cements

Share capital (Eq + Prf) – Rs.85 cr

Share Capital Suspense – Rs.45.84 cr.

Reserves & Surplus – Rs.4452.56 cr.

Total Assets – Rs.8562.49 cr.

Total Liabilities – Rs.5217.73 cr.

Investments (Eq) – Rs.4.43 cr.

Investments (Bonds/Mutual Fund) – Rs. 1234.11 cr.

Turnover – Rs.4290.63 cr.

PBT – Rs.941.99 cr.

PAT – Rs.617.96 cr.

UltraTech Cement

Share capital (Eq + Prf) – Rs.124.49 cr

Reserves & Surplus – Rs.4482.17 cr.

Total Assets – Rs.6673.44 cr.

Total Liabilities – Rs.3736.33 cr.

Investments (Eq) – Rs.21.07 cr.

Investments (Bonds/Mutual Fund) – Rs. 1616.68 cr.

Turnover – Rs.7049.68 cr.

PBT – Rs.1588.16 cr.

PAT – Rs.1093.24 cr.

NIFTY TRADES IN US FROM TODAY : S&P DOW JONES WILL JOIN INDIAN MARKETS SOON

Scheduled to Launch Monday, July 19, 2010

CME Group has partnered with The National Stock Exchange of India (NSE) and Standard & Poor’s to offer trading institutions two smart new ways to take part in the dynamic opportunities of the Indian stock market. E-mini and E-micro S&P CNX Nifty futures (Nifty 50 futures) are scheduled to begin trading on Monday, July 19, 2010.

The contracts will be listed and traded on the CME Globex platform, providing nearly round-the-clock trading access. Trading hours will be Monday-Friday, 3:30 p.m. – 3:15 p.m. the next day (except Friday, which closes at 3:15 p.m.) with a trading halt Sundays-Thursdays from 9:30-10:30 p.m. CDT (8:30 p.m.-9:30 p.m. CST) coinciding with the hour prior to the NSE open.

Cross-Listing Arrangement on March 10, 2010, CME Group and NSE announced cross-listing arrangements that Include license agreements covering benchmark indexes for U.S. and Indian equities. The agreement provides CME Group with rights to create and list U.S. dollar-denominated futures contracts for trading on CME, while providing NSE with rights to create and (subject to the regulatory approval) list Rupee-denominated futures contracts on the S&P 500 and Dow Jones Industrial Average (DJIA) for trading on NSE. Combine with other benchmark index contracts to express views on the direction of India’s market vs. the U.S. stock market (E-mini S&P 500 futures), vs. a broader view of world’s emerging markets (E-mini MSCI Emerging Markets futures) or to capitalize on arbitrage opportunities from short-term price differences vs. the SGX futures contract on the S&P CNX Nifty Index. You also can trade the contracts outright to hedge your risk from existing exposure to the Indian stock market.

ANIL PLAYS THE GAME AGAIN...!!!!!!

Anil Ambani decided to merge RNRL with Reliance Power today....The ratio as I thought was 1 Reliance power for every 4 RNRL. The merger deal is valued at $11 billion. This merger values RNRL at Rs.7157 cr.

Reliance Power will dilute around 40.8 crore Sharea a 17.00 %. This merger will be negative for Reliance Power shareholders, while very good for RNRL, Rpower pays for a shell co with no real asset to invest into....whereas RNRL shareholders will now have a real assets to invest. Anil Ambani holds 42.39 % in Rel.Power & Rel Infra Holdes - 42.39 %. The combine market cap will be Rs.50,000 crs. 

RNRL shareholders including the promoters will get shares of RELIANCE POWER worth Rs.7157 cr, out of these,promoter would get shares worth over Rs.3600 cr. Here are some details of this both company -

RELIANCE POWER

Equity Sh (nos. in Cr) - 239.68 ;  Equity Cap (Rs. In Cr) -2396.80 ; Market Cap (Rs. In Cr) -41979.95 ; Net Sales - FY10  - 0.00 ; Net Profit - FY10  -683.89 ; Other Income - FY10  -843.38 ; Earning Per Share - 2.85 ; P/E Ratio  - 61.46 ; Face Value -10.00 ; TOTAL ASSET -  FY09  - 15111.64 ; Market Price -175.15 ;26- week H/L avg price - 152.58 ; 2 - week H/L avg price - 170.46 ; Promoter Share holding % - 84.78 ; Public Share holding % -15.22 ; No. share holders - 3595703 ; EV - 175.15/sh ; Book Value - 57.55/sh ; EV/EBITDA - 162.44 ; Long term Debt - 0.00

RNRL

Equity Sh (nos. in Cr) -163.31; Equity Cap (Rs. In Cr) - 816.56 ;Market Cap (Rs. In Cr) -10394.94 ; Net Sales - FY10 (Rs.In Cr) -298.39 ; Net Profit - FY10 (Rs.In.Cr) -90.75 ; Other Income - FY10 (Rs.In.Cr) -167.63 ; Earning Per Share (In Rs) -0.56 ; P/E Ratio (In Times) -113.66 ; Face Value - 5.00 ; TOTAL ASSET - FY09 (Rs.In Cr) -3323.44 ; Market Price -63.65; 26- week H/L avg price - 62.60 ; 2 - week H/L avg price - 64.61 ; Promoter Share holding % - 54.84 ; Public Share holding % - 45.16 ; No. share holders - 2534917 ; EV - 72.97/sh ; Book Value - 11.02/sh ; EV/EBITDA - 71.45 ; Long term Debt- Rs.1522.05 cr - Rs.9.32/sh

THE YUAN DE - PEGGING STORY........

                    Almost for 2 year’s Chinese government with the help of People’s Republic Bank Of China – the Chinese central bank had managed to keep the value of their currency Yuan pegged to the value of US dollar. One $ was worth around 6.82 Yuan.

                    China is an export driven economy. Their main export market is the US. So when an Chinese company exports goods to US it gets paid in US$. These $ are converted to Yuan, it means $ are sold and Yuan is bought. Over a period of times, as exports keeps going up, more $ are sold and more Yuan are bought. This of course increases demand for Yuan & it starts to appreciate or increase in value against $. And an appreciation in currency is detrimental to exporter.

                    This means, suppose say a Chinese exporter exports goods worth $100000. When he converts them at 1$=6.82 Yuan he gets 682000 Yuan ($100000x6.82) in return. Now say the Yuan appreciates and 1$=6.6 Yuan, then the exporter will get 660000 ($100000x6.6). Thus he will not make the same amount of 682000. If he wants to make the same money he will have to raise prices. It’s well known that Chinese compete on price & not quality, the exporter may not be in position to raise prices. This is were the government comes in by ensuring that the value of the Yuan stays constant around 6.82 to $, so that the exporter does not have to deal with any fluctuation in currency.

                    Government of china in order to maintain Yuan at 6.82 to $ starts selling Yuan & buys $. Because when lots of $ come into china to buy Yuan, pushes up the demand of Yuan & Central Bank of China starts selling Yuan & buys $. This ensures that there are enough Yuan in market & its value dos not appreciate.

                    Now China has suddenly decided to de-peg its currency as US feels that China is a currency manipulator, US feels that china has held the value of Yuan against the $ constant & this is what has kept their export machinery chugging along. They feel this has led to situation where Americans citizens continue to buy cheap Chinese goods instead of home grown ones.If Chinese government had not involved itself with the foreign exchange market & let it work independently then the flow of $ into china would have ensured that the Yuan would have appreciated against $.

                    Suppose if 1 $ = 6 Yuan, means exporter exporting goods worth $100000 would make 600000 Yuan. Under the pegged regime he would have earned 682000 Yuan. Now, to earn that much, he has to sell goods for $113666.7 (682000/6). This means he has to increase its price to 13.67%. This in turn would make Americans buy American goods instead of low priced Chinese goods. Nobel Prize winning economist Pual Krugman had earlier proposed to impose a 25 % surcharge on Chinese imports to US. He felt that this will make Chinese goods expensive & will result into Americans buying more US goods. Basically the allegation against china on being currency manipulator have been growing in US, and US the biggest market for china do not want US to take any strict steps that would hurt its exports. So it wants to de-peg it currency against US$.

                    Currently if something worth $1000 it will be worth 6820 Yuan in china if it is imported, if 1$ = 6 Yuan, then it would be worth 6000 Yuan which is lower. So some experts believe that this will make Chinese buy more imported goods & that in turn will help the exports across the globe. China will take time to change its spending habits. Currently china’s saving rate is 54 %.

                    And off course in order to maintain the peg, the Chinese Central Bank bought $ & sold Yuan that explains Foreign Exchange Reserve of $ 2.4 trillion. And all this money found its way back primarily into US & other western economies, helping them to finance their fiscal deficits. Now if these Chinese really let the Yuan float even partially, its rate of accumulation of Forex reserve might slow down. This means lesser $ to help finance the fiscal deficit in the US.

SAMRUDDHI CEMENTS LISTS AT Rs.579.75

NAME - NSE - SAMRUDDHI ; BSE- 533209.

Share Price - Rs.488 ;

Market Cap - Rs.12,770.15 cr ;

Total Debts - Rs.2100 cr ;

52 Week High - Rs.590 ; Low- Rs.477.15 ;

P/E - 00.00 ; EPS - 00.00 ;

Book Value - Rs.175.15 ; Industry P/E - 8.95 ;

Fv - Rs.5.00 ; Dividend - 35 % ;

Total Shares Issued - 26,16,83,571 shares ;

Promoter's Holding - 16,99,99,988 shares ; Promoter's holding in % - 65%

SAMRUDDHI CEMENTS LTD today made its debut at Rs.588 on BSE after its demerger with GRASIM IND

Listing Samruddhi Cement on the bourses is a part of the restructuring process of the cement business of the Aditya Birla group.

The company has listed with 26.16 crore equity shares of face value of Rs 5 each.

Shares of Samruddhi Cement touched a high of Rs 600 and a low of Rs 478.15 on the Bombay Stock Exchange.

On the National Stock Exchange, the scrip listed at Rs 579.75. It touched a high of Rs 590 and low of Rs.477.15.

The company made its listing on the bourses after Aditya Birla Group flagship firm Grasim Industries, last year, approved the demerger of Samruddhi Cement with itself.

As part of the arrangement, the company will be merged with UltraTech Cement on 10 July 2010.

Accordingly, 4 shares of UltraTech would be issued for every 7 shares of Samruddhi.

Each Grasim shareholder had received one equity share of Rs 5 of Samruddhi Cement for every one share held in Grasim, as a part of the scheme.

The merged entity will have an annual capacity to produce 48.8 million grey cement with 22 plants. It will also have 11. 7 million cubic metres of ready mix concrete across 68 plants along with captive thermal power plants of 504 mega watts.

After the completion of the merger, Grasim would hold 60. 3% of UltraTech's expanded equity capital and 39.7 % would be held directly by other shareholders of UltraTech and Samruddhi.

It is to be noted that the Fair Value of Samruddhi Cements is 55 % Ultratech Cements price.

My previous post on this event click - GRASIM IND SAMRUDDHI DEMERGER