Posts Tagged ‘DLF Ltd’

Indian Stocks Rose to a 15-Month High :)

Indian-stocks-15-month high

Indian stocks rose to a 15-month high yesterday. 🙂

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DLF Ltd led gains as investors judged recent declines as excessive. Mahindra & Mahindra Ltd climbed on a report it will make sports utility vehicles for overseas markets.

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DLF, the biggest real estate developer, jumped 5.5% after losing 10% in the previous five trading sessions.

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Mahindra & Mahindra, the largest sports utility vehicle maker, advanced 1.5%.

Sterlite Industries (India) Ltd, the No 1 copper producer, added 3.8% after metals prices climbed.

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The Bombay Stock Exchange’s Sensitive Index (Sensex), rose 240.26, or 1.5%, to 16,454.45, the highest since May 28, 2008.

The gauge declined 0.3% on Monday, snapping a six-day rally.

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“There is strong liquidity supporting the market,” Jagannadham Thunuguntla, the head of equities at SMC Capitals Ltd in New Delhi. “Yesterday’s fall has made some stocks attractive.”

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The rupee advanced against the US dollar as overseas investors added to holdings of the nation’s assets amid signs economic growth is quickening.

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The rupee climbed 0.2% to 48.655 per dollar at the 5pm close in Mumbai, according to data compiled by Bloomberg.

The currency has risen 0.4% this month.

India’s $1.2tn economy expanded 6.1% in the three months to June from a year earlier, accelerating for the first time since 2007, the government said last month.

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India May Trigger $39 Billion of Share Sales With Ownership Cap :)

India Shines

India may trigger as much as 1.9 trillion rupees ($39 billion) in stock sales, equivalent to five years of equity offerings, with a proposal to limit stakes of controlling shareholders.

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Prime Minister Manmohan Singh’s government is considering a plan that would require at least 25 percent of a company’s stock to be traded.

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The rule would prompt equity sales in 560 of Mumbai’s 3,335 most-active stocks, such as NMDC Ltd. and Steel Authority of India Ltd., according to data compiled by Bloomberg.

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The changes may encourage foreign investment by bringing Indian regulations in line with the U.S., U.K. and Hong Kong.

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The 25 percent minimum would be good for the long-term Indian market. There are many very attractive companies with small floats that investors would like to be able to invest in.

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The rule change would require the government, whose constitution embraces socialism, to reduce dominant stakes in key industries such as steel making, oil and electricity supply.

The top 10 companies that would have to sell stock are state- run, accounting for about 80 percent of the total by value.

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Sensex Surges :

The Bombay Stock Exchange’s Sensitive Index, or Sensex, has climbed 61 percent this year, the eighth-best performer among 89 measures tracked by Bloomberg.

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Growth in Asia’s third-largest economy may accelerate to 7.75 percent after the government initiated stimulus plans to bolster banks’ capital and spur consumer spending, according to the finance ministry.

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International funds have bought 357.5 billion rupees of Indian stocks this year through Aug. 11, compared with record net sales of 530 billion rupees for all of 2008, according to data on the Securities and Exchange Board of India Web site.

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The government plans to boost funding for a rural jobs program by selling shares in some state-run companies.

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No Minimum :

Rules allow companies with a free-float worth at least 1 billion rupees to have as little as 10 percent traded, while there is no minimum for state-run enterprises, the ministry’s Web site says.

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The Sensex has returned 192 percent over the past five years, second in Asia only to Indonesia.

Since 2005, companies have raised 1.89 trillion rupees in share sales, including 116 billion rupees in January last year by Mumbai-based Reliance Power Ltd. that marked the country’s biggest initial public offering.

New Delhi-based DLF Ltd., India’s largest real estate developer, sold 92 billion rupees of stock in June 2007.

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Government Control :

India’s government plans to sell 8.38 percent of NMDC, the nation’s largest iron-ore producer.

The stake would fetch 120 billion rupees at current prices.

The government holds 98.4 percent in Hyderabad-based NMDC, and 85.8 percent of New Delhi-based Steel Authority of India, the nation’s second-biggest producer, according to Bloomberg data.

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“The sheer magnitude of offloading involved may result in an overhang on the secondary capital markets,” Jagannadham Thunuguntla, the head of equities at SMC Capitals Ltd. in New Delhi, said in an interview.

“The capital market may find it difficult to absorb such heavy equity” he added.

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The Securities and Exchange Board of India advocates “a phased approach, as companies may need time” to sell shares, N. Hariharan, a Mumbai-based spokesman for the market regulator, said in an e-mail Aug. 7.

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‘Phased Manner’

The proposal “should be positive for markets if introduced in a phased manner,”

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Such a change is a welcome one.

Ensuring a reasonable minimum float would help avoid share price manipulation, scams, abuse by majority shareholders, etc. This would constitute a positive structural change.

🙂

India may trigger as much as 1.9 trillion rupees ($39 billion) in stock sales, equivalent to five years of equity offerings, with a proposal to limit stakes of controlling shareholders.

Prime Minister Manmohan Singh’s government is considering a plan that would require at least 25 percent of a company’s stock to be traded. The rule would prompt equity sales in 560 of Mumbai’s 3,335 most-active stocks, such as NMDC Ltd. and Steel Authority of India Ltd., according to data compiled by Bloomberg.

The changes may encourage foreign investment by bringing Indian regulations in line with the U.S., U.K. and Hong Kong, said Anshul Krishan, the Mumbai-based head of Goldman Sachs Group Inc.’s India financing group. The sales, equal to about 4 percent of India’s $1 trillion stock market, probably won’t affect prices if they’re staggered over time, said Purav Jhaveri, senior investment strategist at Franklin Global Advisers.

“The 25 percent minimum would be good for the long-term Indian market,” Seth Freeman, chief executive officer of EM Capital Management LLC in San Francisco, which advises investors on emerging markets and runs the EM Capital India Gateway Fund, said in an e-mail response to questions. “There are many very attractive companies with small floats that investors would like to be able to invest in.”

The rule change would require the government, whose constitution embraces socialism, to reduce dominant stakes in key industries such as steelmaking, oil and electricity supply. The top 10 companies that would have to sell stock are state- run, accounting for about 80 percent of the total by value.

Sensex Surges

The Bombay Stock Exchange’s Sensitive Index, or Sensex, has climbed 61 percent this year, the eighth-best performer among 89 measures tracked by Bloomberg. Growth in Asia’s third-largest economy may accelerate to 7.75 percent after the government initiated stimulus plans to bolster banks’ capital and spur consumer spending, according to the finance ministry.

International funds have bought 357.5 billion rupees of Indian stocks this year through Aug. 11, compared with record net sales of 530 billion rupees for all of 2008, according to data on the Securities and Exchange Board of India Web site.

Finance Minister Pranab Mukherjee said in his July 6 budget speech that a rule requiring a public float of at least 25 percent for listed companies should be enforced uniformly, even for state-run enterprises that had been exempted. The government plans to boost funding for a rural jobs program by selling shares in some state-run companies.

No Minimum

Rules allow companies with a free-float worth at least 1 billion rupees to have as little as 10 percent traded, while there is no minimum for state-run enterprises, the ministry’s Web site says.

“The average public float in Indian listed companies is less than 15 percent,” Mukherjee said. “Deep, non-manipulable markets require larger and diversified public shareholdings.”

The Sensex has returned 192 percent over the past five years, second in Asia only to Indonesia. Since 2005, companies have raised 1.89 trillion rupees in share sales, including 116 billion rupees in January last year by Mumbai-based Reliance Power Ltd. that marked the country’s biggest initial public offering. New Delhi-based DLF Ltd., India’s largest real estate developer, sold 92 billion rupees of stock in June 2007.

Government Control

India’s government plans to sell 8.38 percent of NMDC, the nation’s largest iron-ore producer, Steel Secretary Pramod Rastogi said Aug. 5. The stake would fetch 120 billion rupees at current prices, he said. The government holds 98.4 percent in Hyderabad-based NMDC, and 85.8 percent of New Delhi-based Steel Authority of India, the nation’s second-biggest producer, according to Bloomberg data.

“The sheer magnitude of offloading involved may result in an overhang on the secondary capital markets,” Jagannadham Thunuguntla, the head of equities at SMC Capitals Ltd. in New Delhi, said in an interview. “The capital market may find it difficult to absorb such heavy equity.”

GMR Infrastructure Ltd., based in Bangalore, scrapped a $500 million international sale on June 30 as at least 40 companies announced plans to sell more than 350 billion rupees of shares, mostly to foreign institutional investors.

The Securities and Exchange Board of India advocates “a phased approach, as companies may need time” to sell shares, N. Hariharan, a Mumbai-based spokesman for the market regulator, said in an e-mail Aug. 7.

‘Phased Manner’

The proposal “should be positive for markets if introduced in a phased manner,” Franklin’s Jhaveri said in an e-mail response to questions. Franklin Templeton Investments in San Mateo, California manages $482.4 billion worldwide, including more than $3 billion in Indian stocks.

The Finance Ministry sought public comment on the plan on its Web site July 9. Singh’s administration plans to take up the issue after completing 100 days in office, Junior Finance Minister Namo Narain Meena said in a written statement to parliament in New Delhi on Aug. 4. Singh was sworn in on May 22.

The changes are important for protecting shareholders in India, said Andrew Foster, who oversees $2 billion in assets, including Indian securities, at Matthews International Capital Management LCC in San Francisco.

“Such a change is a welcome one,” Foster said in an e- mailed response to questions. “Ensuring a reasonable minimum float would help avoid share price manipulation, scams, abuse by majority shareholders, etc. So I think this would constitute a positive structural change.”

Companies Go Slow on Share Buy-Backs.

Companies go slow on share buy-backs

Companies go slow on share buy-backs

In a tight money market, companies that have moved to buy back their shares are going slow on these efforts either because they do not have the money or are saving it for a better use, according to analysts and executives at some of the firms.

Currently, 22 companies have ongoing offers to buy back their own shares and, according to SMC Capitals Ltd, the merchant banking arm of New Delhi-based financial services house SMC Global Securities Ltd, they have spent less than 25% of the aggregate Rs 4,559.47 crore they would have to spend if they bought back all the shares they set out to at the maximum buy-back price.

To be sure, buy-back offers are typically open for several months and many of the 22 companies still have time to repurchase their shares.

Companies buy back shares in an effort to boost investor sentiment and prop up the share price, and increase the return on equity (money for the buy-back usually comes from reserves which is part of the shareholders’ funds or equity) and earnings per share (the shares bought back are destroyed, leaving fewer shares among which the earnings have to be shared).

No companies launched buy-back programmes in 2007, when the equity markets were on a roll. Several companies, however, announced such programmes as the markets started melting last year.

India’s benchmark equity index, Sensex, has lost nearly 50% of its value since January 2008, in the wake of the global credit crunch and an economic slowdown.

Delhi-based real estate firm DLF Ltd, which had announced one of the biggest buy-back plans last year at a total maximum cost of Rs1,100 crore, has thus far repurchased shares worth only Rs 51.3 crore, according to SMC. The offer closes on 9 July.

“The money we have deployed in the buy-back is a reflection of the general market conditions and the liquidity crisis worldwide,” said Saurabh Chawla, executive director, finance, DLF.

Similarly, Reliance Infrastructure Ltd, owned by the Reliance Anil Dhirubhai Ambani Group (R-Adag), has bought back shares worth Rs806 crore in an offer capped at Rs2,000 crore, according to SMC data.

“At a time when cash is king, many companies may not be as committed to their buy-backs as they would have been otherwise,” said Jagannadham Thunuguntla, head of equity at SMC Capitals.

Jagannadham Thunuguntla, head of equity at SMC Capitals

Usually, a firm specifies a maximum price for the buy-back and a maximum amount it will utilize for the buy-back.

But it doesn’t necessarily use this amount, and the buy-back happens at the prevailing market price.

“If the maximum buy-back price is Rs600, but the current market price is only Rs 300, the firm will naturally buy back at Rs 300,” said Thunuguntla of SMC Capitals.

A buy-back gives investors the option of liquidating their position in a market that doesn’t have too many buyers.
More read on SMC Capitals : http://www.smccapitals.com/index.htm