Sensex up 47% in 2006

The market ended calendar 2006 on a strong note, with the Sensex settling at 13,786.91, less than 200 points off its all time closing high of 13,972.03 of 7 December 2006.

It rose 46.7% for the calendar year.

The S&P CNX Nifty gained 39.8% for the calendar year 2006.

Banking, telecom, IT and cement shares hogged the limelight in 2006.

After a sharp setback witnessed in May-June 2006 due to fears of rise in US interest rates, the market staged a solid rebound and key indices struck lifetime highs in December 2006.

Strong corporate earnings growth remained the key driver of the uptrend in share prices.

FIIs continued to mop up Indian stocks betting that earnings growth of India Inc. will remain strong in a booming Indian economy. The net FII inflow in 2006 totaled $8.2 billion compared to a record inflow of $10.7 billion in 2005. FIIs mopped up Indian equities notwithstanding concerns about stretched valuations of Indian equities.

Mutual funds bought shares worth a net Rs 11453 crore for the 9-months period April-December 2006.

Titan Industries sparkles

Titan Industries jumped 7% to Rs 860 following reports it is betting big on its precision engineering division.

4.6 lakh shares changed hands in the counter on BSE.

The stock made a strong rebound from lower level recently. From Rs 690.65 on 12 September, the scrip surged 15.6% to Rs 798.95 by 28 December.

Titan reportedly expects revenue from precision engineering division to go up to Rs 400 crore in four years from Rs 50 crore this year. Titan’s precision engineering division makes dashboard clocks and precision components for the aerospace and automotive industries. The company is one of the biggest suppliers of dashboard analog clocks for cars to Ford Motor’s plants in the US, Europe and Canada. In the domestic market, Titan supplies to Tata Motors, among others. Titan has invested over Rs 20 crore in the two-year-old business.

Titan expects to post over Rs 2,000 crore revenue for the current fiscal, against Rs 1,481 crore last year. Of this, the jewellery business is expected to contribute Rs 1,100 crore and the watch business will post revenue of around Rs 900 crore.

Titan is planning to open its first exclusive company-owned outlet of its gold jewellery brand Tanishq in the US. It is currently present only in West Asia with a few shop-in-shops. In India, Tanishq plans to cash in on the retail boom in the country. It plans to expand retail network of branded jewellery stores in the country from the present 87 stores in 64 cities to 100 stores by end of 2007.

Titan Industries posted a 56 per cent increase in net profit for the second quarter ended September 30 to Rs 32.18 crore. The topline rose 47 per cent to Rs 539 crore.

Lanco Infratech gains on signing MoU for large thermal power project

Lanco Infratech rose 1.6% to Rs 254 after the company on Thursday entered into a memorandum of understanding with Jharkhand government for a 2,640 MW coal based power plant.

With this, the total capacity of Lanco, both in operation and in process will go up to about 11,000 MW.

5.5 lakh shares changed hands in the counter on BSE.

The scrip had debuted at Rs 241.40 on 27 November (closing price on BSE on that day) compared to IPO price of Rs 240. It moved between Rs 229 to Rs 266 since then. The IPO of Lanco Infratech was subscribed nearly 12 times.

Lanco would be set up the thermal power project in Jharkhand in two phases of 1,320 MW each and the Jharkhand Government would assist the company in acquiring land, permit for required water and provide support infrastructure. Jharkhand would have the first right of purchase of up to 25 per cent of the power generated and the rest would be sold to any other state through competitive bidding process.

Recently, a consortium of Lanco Infratech and UK-based Globeleq won the 4,000 megawatt Sasan ultra mega power project in Madhya Pradesh. The Lanco consortium would borrow around Rs 13,000 crore to build in the project. The consortium had the lowest bid of Rs 1.19 per unit for tariff-based competitively bid Sasan project. The Lanco-Globeleq consortium hopes to start the first unit of the power project three years after tying up funding. The contract stipulates that the consortium has to arrange funds within a year from now.

As per reports, Lanco has roped in Chinese and global equipment major DongFeng Electric Corporation for supercritical technologies for the Sasan project.

Lanco Infratech is an infrastructure development company with interests in power, construction and property development. Its construction division had an order book of Rs 1611.83 crore on 30 September 2006. This includes contracts worth Rs 1229.95 crore with affiliates of Lanco Infratech. The entire order book will be executed by 2010.

Lanco Infratech is also obtaining approvals for a large integrated IT park and township on a 100-acre plot on which it proposes to develop 18.5 million square feet of saleable area in Manikonda, Hyderabad. The company also owns land banks, aggregating about 21.8 acres, close to Ocean Park in Hyderabad, where it intends to develop a residential housing project with one million square feet of saleable area. In addition, it has won a bid to develop an IT park and township on a 10.7-acre plot, on which it proposes to develop two million square feet of saleable area, in Vishakhapatnam, Andhra Pradesh.

Due to the nature of the business, Lanco Infratech’s projects typically require a long gestation period and substantial capital outlay before completion.

SBI inches ahead

State Bank of India rose 0.7% to Rs 1245.45 after its Chairman O.P. Bhatt said the recent lending rate increase would help the bank maintain its profitability.

He also said that the bank plans raise Rs 2000 crore in tier II debts by March 2007.

1.1 lakh shares changed hands in the counter on BSE.

The scrip witnessed a solid surge over the past few months as investors chased banking scrips due to strong lending growth. From Rs 689.50 on 19 July 2006, the stock rose 79% to Rs 1236.05 by 28 December.

Effective 27 December, SBI raised its prime lending rate by 50 basis points to to 11.50 per cent, the third increase in its benchmark rate since May 2006. It raised its PLR in May 2006 by 50 basis points to 10.75 per cent and again in August 2006 by 25 basis points to 11 per cent. SBI's cost of deposits was 4.51 per cent in September 2006 down from 4.64 per cent a year ago.

With the revision in PLR, all advances linked to it, including working capital loans, will be adjusted with immediate effect. About 70 per cent of SBI's existing loans are on floating basis, linked to PLR. Thus, the hike in PLR will help the bank to improve its interest income from its existing loan book. SBI had hiked deposit rates ahead of lending rates earlier this month.

Since a large number of SBI’s branches have migrated to the core banking solution, SBI is moving to a centralised system. For retail lending, it has set up retail asset centralised processing centres. On March 31, 2006, SBI had more than 5,000 ATMs and over 9,000 branches. The SBI group had more than 8,000 ATMs and around 14,000 branches.

On 18 December, Finance Minister P Chidambaram introduced the State Bank of India (amendment) Bill, 2006 that seeks to allow reduction in the Reserve Bank of India's shareholding (statutory minimum) in SBI from 55 per cent to 51 per cent of the issued equity capital. Currently, the RBI holds 59.73 per cent stake in State Bank of India (SBI). The Centre has already agreed in-principle to acquire the RBI's shareholding in SBI and indicated that it would maintain a minimum 51 per cent stake in SBI, as is the case with other public sector banks.

The State Bank of India (amendment) Bill 2006 proposes to allow SBI to issue preference and bonus shares. Although SBI can access the capital market by issuing equity shares or bonds, or by both equity share and bonds, there is currently no express provision under the SBI Act to enable SBI to issue preference shares and bonus shares. Besides increasing the authorised capital of SBI to Rs 5,000 crore, the Bill also proposes to enable the bank to increase issued capital by preferential allotment or private placement of equity or preference shares.

SBI’ consolidated net profit rose 9% in Q2 September 2006 to Rs 1734.45 crore. Consolidated net total income rose 16% to Rs 8288.13 crore (Rs 7157.42 crore).

The current price of Rs 1245.45 discounts its 6 months April- September 2006 annualised EPS of Rs 102.50 (based on consolidated financial performance), by a PE multiple of 12.1

Aurobindo Pharma in the thick of the action

Drug maker Aurobindo Pharma gained 2% to Rs 707.95 following media reports that the company is likely to announce on Friday acquisition of a Dutch formulations firm for more than $20 million.

So far there is no announcement from Aurobindo Pharma

The target company had several market authorisations and would enable Aurobindo to expand faster in Europe, a newspaper report said.

The scrip witnessed a surge over the past one month. From Rs 589.10 on 23 November, it surged 18% to Rs 695.55 on 15 December. It pared gains later before bouncing back again, to settle at Rs 693.30 on 28 December.

Aurobindo along with two other Indian firms Ranbaxy and Zydus Cadila got US FDA nod to market 5, 10, 20 and 40 mg versions of Simvastatin, the generic name of Merck’s Zocor, the cholesterol drug from December 23. This is expected to unleash fierce competition and lower prices in the US for the drug.

On 22 December, Aurobindo Pharma received tentative approval from the US Food and Drug Administration for anti-AIDS drug efavirenz in capsule forms. Efavirenz is the generic version of Bristol-Myers Squibb’s brand drug Sustiva.

Recently, Aurobindo Pharma also announced marketing authorization from Medicines Control Council (MCC) of South Africa. The council has approved Sertraline tablets in 50mg and 100mg strengths. Sertraline is the generic version of Zoloft marketed by Pfizer. Sertraline hydrochloride is a popular orally administered antidepressant of the selective serotonin reuptake inhibitor (SSRI) type.

Aurobindo Pharma is the largest manufacturer of semi-synthetic penicillin bulk drugs -- ampicillin and amoxycillin. It has integrated facilities to manufacture bulk drugs, bulk drug intermediates and formulations.

Recently, Aurobindo Pharma’s board approved the merger of APL Life Sciences and Senor Organics, the wholly owned subsidiaries of the company, with itself.

Aurobindo Pharma came out with fabulous result with a multifold growth in profits for the quarter ended September 2006. The net profit surged to Rs 54.64 crore in Q2 September 2006 from Rs 3.64 crore in Q2 September 2005. Net sales rose 50% to Rs 480 crore. Aurobindo’s thrust into regulated markets and formulation business contributed to the significantly improved performance. The exports of the company spurted strongly led by growth in Europe and the US.

The current price of Rs 707.95 discounts its 6 months April-September 2006 annualised EPS of Rs 34.10, by a PE multiple of 20.7.

Dr Reddy’s Lab in demand

Dr. Reddy's Laboratories gained 1.5% to Rs 811.75 after it got final approval from the US Food and Drug Administration for cholesterol-lowering simvastatin tablets.

Simvastatin is the generic equivalent of Merck & Co. Inc.'s blockbuster drug Zocor.

70,433 shares changed hands in the counter on BSE.

Dr Reddy's Laboratories (DRL) is in for a windfall for the next two quarters with the US Food and Drug Administration recently granting final approval for the company's abbreviated new drug application for ondansetron hydrochloride tablets, that are indicated for nausea treatment. The news had lifted the Dr Reddy’s Lab scrip up by 0.6% on Wednesday (27 December) to Rs 807.55. It had eased to Rs 799.55 the next day i.e. on 28 December.

With the approval, Dr Reddy's can exclusively market ondansetron tablets for 180-day period. The company will commence the shipment of this product shortly. Dr Reddy's will begin shipment of these tablets across the dosage spectrum of 4 mg, 8mg, 16 mg and 24 mg. Dr Reddy's ondansetron hydrochloride tablets are the AB-rated generic equivalent of GSK's ZofranR, used for prevention of nausea and vomiting associated with cancer treatment. The brand product has annual IMS sales of approximately $639 million.

In an attempt to combat uncertainties surrounding the product, as well as to lower legal costs, DRL is aggressively pursuing settlement of patent litigations wherever possible, while simultaneously exploring authorised generics opportunities with innovators. Recently, DRL entered into a patent litigation settlement with GSK, for Imitrex (sumatriptan succinate) tablets (25, 50 and 100mg). As part of the settlement, the company will be authorised to launch the generic version of Imitrex in the latter part of 2008.

DRL’s quarterly net profit more than tripled in Q2 September 2006, helped by strong growth in the key US market and gains from drugs exclusivity. Net profit, according to US accounting standards, rose to Rs 280 crore from Rs 89 crore. Total revenue jumped to Rs 2,000 crore from Rs 580 crore, while revenue from its core businesses, excluding the contribution from authorised generics and acquisitions, grew 42%, to Rs 820 crore.

On November 16, the company announced the pricing of the public offering of 1,25,00,000 ADS (excluding the underwriters over-allotment option) at a public offer price of $16 per ADS.

Chinese foray powers Thermax

Thermax rose 2.6% to Rs 380 after the company said on Thursday it would invest $8 million to set up a plant in China to manufacture absorption chillers.

Thermax also said it would set up a subsidiary in China.

20,531 shares changed hands in the counter on BSE.

After a solid surge in November 2006, the stock moved in a narrow range. The scrip moved between Rs 364 to Rs 393 since late November. Earlier, the stock surged to Rs 391.90 on 23 November from Rs 314.75 on 31 October 2006.

Themax has a robust order-book position with a order backlog of Rs 2,973 crore on a consolidated basis as on 30 September 2006. This is 142% higher from that of last year. The company continues to get major orders from iron & steel, cement, sugar and refining sectors.

On a consolidated basis, Thermax’s net profit jumped 104% to Rs 79.67 crore for the first six months April-September 2006, on a 23% growth in sales to Rs 875.34 crore (Rs 710.09 crore).

Thermax is substantially expanding its manufacturing capacity for boilers & heaters with an investing of Rs 175 crore in a facility at Savli in Gujarat. The plant is expected to be in operation in the next 12 months.

Sadbhav Engineering extends gains on achieving financial closure of a major project

Sadbhav Engineering gained 2.3% to Rs 513 after the company said it had achieved financial closure of a major road construction project.

20,691 shares changed hands in the counter on BSE.

The stock had bounced back from lower level from early this month. From Rs 401.35 on 12 December, the stock surged almost 25% in a short while to Rs 501.45 by 28 December.

In early August 2006, Sadbhav had bagged a Rs 560-crore road construction project to improve and widen the Sardar Patel Ring Road around Ahmedabad from the city's urban development authority. It has now achieved financial closure of this project.

Within the construction sector, Sadbhav Engineering’s focus areas are irrigation, construction of roads, highways and mining, including excavation of overburden and mining of minerals. In November 2006, Sadbhav Engineering was awarded the projects worth Rs 216.34 crore by the Government of Andhra Pradesh Irrigation and CAD Department.

For Q2 September 2006, Sadbhav reported net profit of Rs 2.55 crore on revenue of Rs 50.54 crore. It had net profit of Rs 5.12 crore on revenue of Rs 94.57 crore in Q1 June 2006.

Recently, Sadbhav’s board had proposed raising up to Rs 100 crore through placement with qualified institutional buyers. Assuming that the institutional placement is made at the current market price, it would result in about 17% equity dilution. The company’s current equity base is Rs 10.90 crore. Face value per share is Rs 10.

Micro Inks makes a mark

Printing ink maker Micro Inks rose 3% to Rs 330 after the company said on Thursday its US subsidiary had entered into a supply deal worth about $3 million with St. Ives Inc.

The company said the deal for the supply of heatset ink was for one year.

2,096 shares changed hands in the counter on BSE.

The stock edged lower in the past one month. From Rs 359.05 on 27 November, the stock slipped to Rs 320.25 by 28 December.

Mirco Inks is the largest printing ink manufacturing company in India commanding a 30% market share. In March 2004, the company changed its name from Hindustan Inks & Resins to Micro Inks, which also is the name of its 100% subsidiary in the US.

Micro Inks posted a net loss of Rs 7.41 crore for the quarter ended September 30, as compared to net profit of Rs 16.09 crore for the same quarter last year. The total income (net of excise) increased 1.28% to Rs 237.27 crore for the quarter ended September 30, from Rs 234.26 crore a year ago.

Smooth sailing for Varun Shipping

Varun Shipping Company rose nearly 4% to Rs 66 after the company said on Thursday it was buying a very large gas carrier.

The vessel is expected to join Varun's fleet by July 2007, the company said in a statement. It did not specify the size of the deal. With this, the company said it would have spent half of the $400 million it earmarked for fleet expansion.

53,508 shares changed hands in the counter on BSE.

The stock witnessed a sustained fall since early November 2006. From Rs 76.75 on 10 November, the stock declined to Rs 63.55 by 28 December.

Varun Shipping Company (VSC) is the largest owner of liquefied petroleum gas (LPG) vessels by tonnage in India. It is also among the larger global players in this space. Varun Shipping also plans to strengthen its presence in the offshore sector.

Varun Shipping reported a 68% fall in net profit for the quarter ended September 2006 to Rs 13.77 crore (Rs 43.35 crore). Net sales rose 16.7% to Rs 170.56 crore (Rs 146.11 crore).

Recently, Varun Shipping raised Rs 169 crore from allotting 2.25 crore equity shares at Rs 75 each (Rs 10 on capital account and Rs 65 on premium account) for cash to six entities. The company had earlier planned a Singapore listing to raise $50 million but this was later dropped. Its fund requirements are now being met by these preferential allotments.

The company’s current equity base is Rs 141.50 crore. Face value per share is Rs 10.