Bank, telecom stocks in focus

Bank stocks will be in focus after the Reserve Bank of India (RBI) on Friday, 7 February 2014, said that as a countercyclical measure, banks may utilise up to 33% of countercyclical provisioning buffer/floating provisions held by them as on 31 March 2013 for making specific provisions for non-performing assets as per the policy approved by the bank's board of directors. RBI also said that the utilisation of countercyclical provisioning buffer/floating provisions under this measure may be over and above the utilisation of countercyclical provisioning buffer/floating provisions for the purpose of making accelerated/additional provisions as proposed in the RBI's press release dated 30 January 2014 on "Early Recognition of Financial Distress, Prompt Steps for Resolution and Fair Recovery for Lenders: Framework for Revitalising Distressed Assets in the Economy".

As per RBI's Discussion Paper on Introduction of Dynamic Loan Loss Provisioning Framework for Banks in India dated 30 March 2012, banks are required to build up 'Dynamic Provisioning Account' during good times and utilise the same during downturn. Under the proposed framework, banks are expected to either compute parameters such as probability of default, loss given default, etc. for different asset classes to arrive at long term average annual expected loss or use the standardised parameters prescribed by Reserve Bank of India towards computation of Dynamic Provisioning requirement. Dynamic loan loss provisioning framework is expected to be in place with improvement in the system, the RBI said. Meanwhile, banks should develop necessary capabilities to compute their long term average annual expected loss for different asset classes, for switching over to the dynamic provisioning framework, the central bank said.

Telecom stocks will also be in focus as the auction of spectrum in the 1800 MHz and 900 MHz band that began on 3rd February 2014, continued on Friday, 7 February 2014. It recommenced Friday morning at 9:00 IST and during the day, seven rounds of bidding were completed. At the end of day five, thirty five rounds of bidding have been completed. Bids have been received in all 22 Service Areas in 1800 MHz band and in all 3 Service Areas in 900 MHz band. Thus, bidding has taken place in all the Service Areas in both bands.

Tata Motors, Jaiprakash Associates and NMDC are set to announce Q3 December 2013 results today, 10 February 2014. Hindalco Industries' US subsidiary Novelis Inc. will report its Q3 December 2013 results today, 10 February 2014.

Maruti Suzuki India announced after market hours on Friday, 7 February 2014 that its production fell 11.05% to 1.09 lakh units in January 2014 over January 2013. The company had reported 10.3% decline in total sales at 102,416 vehicles in January 2014 over January 2013. Domestic sales declined 6.3% to 96,569 units in January 2014 over January 2013. Export sales declined 47.7% to 5,847 units in January 2014 over January 2013. The company had unveiled January sales numbers on 1 February 2014.

Indraprastha Gas announced after market hours on Friday, 7 February 2014, that consequent upon decrease in input cost of natural gas due to increase in allocation of domestic natural gas by Ministry of Petroleum & Natural Gas, the company announces reduction in the selling price of compressed natural gas from midnight of 7th & 8th February 2014 in NCT of Delhi from Rs 50.10 per kg to Rs 35.20 per kg and in Noida, Greater Noida and Ghaziabad from Rs 56.70 per kg to Rs 40.15 per kg.

NMDC said on Saturday, 8 February 2014 that on a provisional basis, its iron ore production rose 12.16% to 23.23 million tonne in the ten months ended 31 January 2014 over the ten months ended 31 January 2013. Iron ore despatches on a provisional basis rose 15.45% to 24.28 million tonne in the ten months ended 31 January 2014 over the ten months ended 31 January 2013.

The company also said that it has rolled over the January 2014 prices of lump ore of Rs 4500 per WMT to the month of February 2014. It increased the prices of iron ore fines by Rs 100 per WMT to Rs 2910 per WMT for the month of February 2014.

Reliance Communications (RCom)'s consolidated net profit rose 2.7% to Rs 108 crore on 1.9% growth in revenue to Rs 5403 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Friday, 7 February 2014.

RCom's consolidated EBITDA rose 11.6% to Rs 1845 crore in Q3 December 2013 over Q3 December 2012. EBITDA margin stood at 34.2% in Q3 December 2013 with strong contribution from both India and Global businesses, the company said in a statement.

Revenue from India operations rose 3.2% to Rs 4637 crore in Q3 December 2013 over Q3 December 2012. EBITDA rose 15% to Rs 1606 crore.

Revenue from Global operations declined 8.3% to Rs 1090 crore in Q3 December 2013 over Q3 December 2012. EBITDA fell 6.6% to Rs 239 crore. EBITDA margin stood at 21.9% in Q3 December 2013.

RCom said it has generated operational cash flow (EBITDA) of Rs 1845 crore during the quarter, paid net finance charges of Rs 749 crore and invested Rs 327 crore on capex in Q3 December 2013. It remains free cash flow (FCF) positive and this is expected to continue, the company said in a statement.

DLF said before market hours today, 10 February 2014 that its 100% step down subsidiary DLF Global Hospitality (DGHL) has completed the sale of 100% equity stake in Silverlink Resorts (SRL), the owner of Amanresorts to Aman Resorts Group (ARGL), a joint venture between Peak Hotels & Resorts Group (PHRL) and Mr. Adrian Zecha, the founder of Amanresorts for an enterprise value of $358 million. The sale has been in the form of management buyout. DLF Global Hospitality had purchased 100% equity in Amanresorts in 2007 from a group of investors. The deal excludes the iconic Lodhi Hotel in Delhi which shall remain a part of DLF. The transaction is a part of DLF's objective of divesting its non core assets.

Engineers India will be in focus as the follow-on public offer (FPO) of the company's shares concludes today, 10 February 2014. Bids were received for a total of 3.97 crorer shares on day three of the bidding by Saturday, 8 February 2014. The FPO was subscribed 1.18 times, as per NSE data. The Government of India has put on block 3.36 crore shares of Engineers India through the FPO. The FPO had opened for bidding on 6 February 2014.

The price band for the FPO has been fixed at Rs 145 to Rs 150. A discount of Rs 6 per share on the final issue price discovered through the book-building route will be offered to retail investors and employees of the company.

After the successful completion of the FPO, the government holding in the company would fall to 70.4%. The government's stake in the company stood at 80.4% as on 31 December 2013.

Jet Airways (India) reported a net loss of Rs 267.89 crore in Q3 December 2013 as against net profit of Rs 85 crore in Q3 December 2012. The Q3 result was announced after market hours on Friday, 7 February 2014.

Jet Airways (India)'s net sales rose 7.3% to Rs 4229.41 crore in Q3 December 2013 over Q3 December 2012.

Jet Airways' net loss narrowed to Rs 267.89 crore in Q3 December 2013, from net loss of Rs 891.01 crore in Q2 September 2013.

Jet Airways (India) said that rupee depreciation, high fuel prices and increase in airport charges continued to impact costs in Q3 December 2013.

Instances of aircraft on ground impacted the quarter by Rs 105.70 crore, Jet Airways (India) said in a statement. During the quarter two A330's were sold and the balance access capacity is expected to be sold/leased out in coming quarter, the company said.

Jet Airways said that fuel costs went up by approximately 10.6% in Q3 December 2013 over Q3 December 2012.

Etihad invested Rs 2057 crore in November 2013 for a 24% stake in Jet Airways.

With regard to future business outlook, Jet Airways said that Q4 March 2014 is expected to be muted on account of both yields and seat factors. Rupee depreciation versus dollar continues to be a cause of concern, it added. High cost debt will be replaced with cheaper debt resulting in reduced interest costs, Jet Airways said. The surplus aircraft in the system will be either leased out or sold in coming quarter, it said. Focus on various avenues of Ancillary revenues should help to boost revenues in the quarters to come, the company said. Synergies in terms of network and costs will start to impact numbers positively in the next few quarters, Jet Airways said in a statement.

Jet Airways (India)'s board of directors have decided to seek the assent of the shareholder by way of postal ballot for the following resolutions that pursuant to the provisions of Section 192A (2) of the Companies Act, 1956, read with The Companies (Passing of the Resolution by Postal Ballot) Rules, 2011.

The Board mulls transfer/sell/otherwise dispose of the Jet Privilege Frequent Flyer Programme (JPFFP) of the company to its subsidiary, Jet Privilege (JPPL) as a going concern on a slump sale basis under Section 180(1)(a) and other applicable provisions of the Companies Act, 2013. Authority for making investments in JPPL notwithstanding the limits prescribed under Section 372A of the Companies Act, 1956.

Mr. Ravishankar Gopalakrishnan, CFO, Jet Airways (India) said, Jet Airways reports a reduced loss of Rs 283.90 crore in Q3 owing to improved passenger yields and sustained market share. Post equity infusion by Etihad, Jet reduces its debt from Rs 12494.70 crore as of 30 September 2013 to Rs 10895.20 crore in December 2013. This will help lower Jet's interest costs going forward.

Corporation Bank's net profit declined 58.2% to Rs 126.69 crore on 16.2% growth in total income to Rs 4947.34 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Friday, 7 February 2014.

Corporation Bank's provisions and contingencies jumped 103.5% to Rs 826.33 crore in Q3 December 2013 over Q3 December 2012. Provision Coverage ratio works out to 53.59% as on 31 December 2013.

The bank's ratio of gross non-performing assets (NPAs) to gross advances stood at 3.08% as on 31 December 2013 as against 3.17% as on 30 September 2013 and 2.18% as on 31 December 2012. The ratio of net NPAs to net advances stood at 2.15% as on 31 December 2013 as against 2.2% as on 30 September 2013 and 1.63% as on 31 December 2012.

Corporation Bank's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 11.89% as on 31 December 2013 as against 10.55% as on 30 September 2013.

The RBI vide its circular dated 20 December 2013 has advised banks to create a Deferred Tax Liability (DTL) on outstanding amount in Special Reserve created under Section 36(1)(viii) of the Income Tax Act, 1961 as a matter of prudence. Accordingly, during Q3 December 2013, the bank has created a DTL of Rs 364.46 crore on Special Reserve outstanding as at 31 March 2013 by reducing the General Reserves, Corporation Bank said.

Godrej Industries' consolidated net profit declined 64% to Rs 65 crore on 18% growth in total income to Rs 2033 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Friday, 7 February 2014.

Godrej Industries' consolidated profit before depreciation, interest and taxation (PBDIT) rose 47% to Rs 150 crore in Q3 December 2013 over Q3 December 2012.

The consolidated profit after tax (PAT) during the quarter was pulled down due to higher base in Q3 December 2012. The Q3 December 2012 results include profit from sale of Godrej Agrovet shares to a strategic partner. The PAT growth in Q3 December 2013 would have been 27%, if one excludes the impact of exceptional items, Godrej Industries said in a statement.

Commenting on the company's Q3 performance, Mr. A. B. Godrej, Chairman, Godrej Industries said, I am pleased to share with you that the performance of our core businesses has been encouraging despite the overall challenging macro-economic environment. Momentum in our agri businesses continued with robust results in Animal Feed, Oil Palm, Agri-Input segments and agri joint ventures. The performance of the Animal Feed business was driven by improved demand in aqua feed, layer feed and cattle feed segments. Our oil palm business grew by 85% during the quarter driven by higher volumes and better realizations. The Agri-inputs segment witnessed healthy results led by growth across key product segments.

Godrej Properties has demonstrated a healthy growth in earnings and an ability to maintain growth in adverse market conditions. The company has witnessed a growth of 41% in EBITDA and 30% growth in net profit this year in the midst of a tough operating environment. On the sales front, we saw a 29% QoQ increase in value of sales bookings in the third quarter and we would continue to be focused on a high growth trajectory in the years ahead.

Godrej Consumer Products continues to deliver topline growth that is far ahead of the growth both for the overall FMCG sector and for the home and personal categories what we participate in. We have been consistently gaining share and strengthening our market positions. We have delivered net profit growth that is close to our topline growth. We continue to make right investments for the longer term while managing our business more prudently in the short term.

The profitability of the chemicals business was better this quarter compared to the corresponding quarter last year. Activity at our new Oleo-chemicals facility at Ambernath has begun and should be fully operational in Q4 FY 2013-14. I am pleased to share with you that the Chemicals business won the CII Environmental Best Practices Award 2013 for Innovation.

Godrej Industries' board of directors in its meeting held on Friday, 7 February 2014, approved the scheme of amalgamation of Wadala Commodities with Godrej Industries (the Scheme) and their respective shareholders under sections 391 to 394 of the Companies Act, 1956.

In consideration for the amalgamation of Wadala Commodities with Godrej Industries in terms of the Scheme and based on the share swap ratio, Godrej Industries will issue 1 fully paid up equity share of Re 1 each of Godrej Industries to the equity shareholders of Wadala Commodities whose name is registered in the Register of Members of Wadala Commodities on the record date (as may be determined in terms of the Scheme) for every 108 fully paid-up equity shares of Re 1 each of Wadala Commodities held by the equity shareholders of Wadala Commodities and 10 fully paid up equity share of Re 1 each of Godrej Industries, to the preference shareholder(s) whose name is registered in the Register of Members of Wadala Commodities on the record date (as may be determined in terms of the Scheme) against 50,00,000, 0.01% redeemable cumulative preference shares of Rs 10 each (Rs 9 called and paid up) held by the preference shareholder(s) of Wadala Commodities.

Further, in order to ensure that the interest of the public shareholders of Godrej Industries is not prejudiced and to ensure that there is no dilution of shareholding of the public shareholders of Godrej Industries pursuant to the amalgamation of Wadala Commodities with Godrej Industries, Godrej Industries would issue bonus equity shares of Re 1 each of Godrej Industries, credited as fully paid-up equity shares to its shareholders (except to the promoters and promoters group entities of Godrej Industries) whose name is registered in the Register of Members of the Company on the record date in the proportion of 1 new fully paid up equity shares of Re 1 each in Godrej Industries for every 1,250 fully paid-up equity shares of Re 1 held by them in Godrej Industries by way of capitalization of sum to the extent of Rs 67,680 standing to the credit of the General Reserve Account of Godrej Industries. The aforementioned issue of bonus shares shall also include issue of bonus shares upon exercise of outstanding stock options (whether vested or unvested) in accordance with the employee stock grant scheme of Godrej Industries in the aforesaid bonus proportion, Godrej Industries said.

The Scheme is subject to approval of High Court of Judicature at Bombay and High Court of Judicature at Madhya Pradesh, Indore Bench and the shareholders and creditors, if any, of Wadala Commodities with Godrej Industries, as may be directed by the High Court of Judicature at Bombay and High Court of Judicature at Madhya Pradesh, Indore Bench, Godrej Industries said.

GAIL (India) turns ex-dividend today, 10 February 2014 for the interim dividend of Rs 4.50 per share for the year ending 31 March 2014.

India Nippon Electricals turns ex-dividend today, 10 February 2014 for the interim dividend of Rs 4 per share for the year ending 31 March 2014.

Indian Overseas Bank turns ex-dividend today, 10 February 2014 for the interim dividend of Rs 0.70 per share for the year ending 31 March 2014.

Mukand turns ex-rights issue today, 10 February 2014 for the rights issue of one share for every one share held in the company.

JSW Energy said that Raj WestPower (RWPL), a wholly-owned subsidiary of JSW Energy, has taken shutdown of the 8X135 megawatts (MW) power station at Barmer for around one month due to non-availability of lignite under the fuel supply agreement. Meanwhile, RWPL is exploring various possibilities of securing fuel to ensure that plant gets into operation at the earliest.

Thomas Cook (India) (TCIL), India's leading integrated travel and travel related financial services company, and the 27-year old vacation ownership pioneer, Sterling Holiday Resorts India (Sterling) announced a merger between the companies on Saturday, 8 February 2014. The transaction is expected to close by the fourth quarter of 2014, subject to customary closing conditions and regulatory approvals as required.

The part equity, part merger deal is structured as a multi stage process, whereby TCIL Group will make a preferential allotment investment for approximately of Rs 187 crore into Sterling. TCIL Group will purchase shares from Sterling shareholders for Rs 176 crore. Later, TCIL Group will make a mandatory open offer for Rs 230 crore. There will be a merger between the two companies at a defined swap ratio of 120:100.

TCIL said the merger brings significant synergies to both partners - with Thomas Cook India gaining access to Sterling Resorts' network of 19 resorts in 16 holiday destinations across India.

The company also has 15 additional sites where it plans to add new resorts in the coming years. Sterling's affiliation with Resort Condominiums International (RCI) - the global expert in exchange vacations, also allows its members to vacation in over 4000 RCI affiliated resorts all over the world, TCIL said in a statement.

Speaking post the announcement, Madhavan Menon, Managing Director, TCIL, said: "Ramesh Ramanathan and his team at Sterling Resorts, are veterans who were instrumental in developing the Vacation Ownership category in India and we are delighted to partner them via this merger! The synergistic opportunities that this new partnership between Thomas Cook & Sterling Resorts offers are enormous, because they create multiple avenues to grow our respective businesses and to create valuable business opportunities together."

He added: "As India's leading integrated travel and travel related financial services company, TCIL's merger with Sterling Holiday Resorts reaffirms our commitment to our stated strategy of investing in mutually beneficial partnerships that broaden our business services platform to increase shareholder value."

Siddharth Mehta, Chairman, Sterling Holiday Resorts (India) said: "The last few years have seen the resurgence of the Sterling brand in the Vacation Ownership and Leisure Holidays space. The investments we made in designing and delivering best-in-class holiday experiences through renovated and new resorts has yielded results in healthy yearonyear growth in Vacation Ownership sales and Resort Occupancy. Having brought Sterling to a position of strength in the market, I am now delighted Sterling is merging with Thomas Cook India as I see a significant opportunity to create a dominant market leader in the Travel & Leisure Holidays sector."

Commenting on the merger, Sidharth Subramanian, Vice Chairman, Sterling Holiday Resorts (India) said, "Sterling was founded by my father in 1986 and I am proud that Sterling is widely acknowledged as the Company that truly pioneered Vacation Ownership in India. The success the Company enjoyed in the first decade of its operations led to the opening up of the industry with more players setting up operations. At Sterling, we have always been passionately committed to our customers. That commitment is what kept us going during our period of strife. I took over the helm in late 2007 when the company was going through a difficult phase. I would like to take this opportunity to publicly acknowledge that we managed to keep Sterling going because of the commitment and support of the Board and a core group of employees who stayed the course with us. In 2009, I saw in Bay Capital a partner who was committed to turning the company around and I am pleased that together we have brought Sterling back into a position of strength. Today, Sterling merging with Thomas Cook India is another positive step forward as the strengthened entity will enable Ramesh Ramanathan and his team to deliver more value to the company's customers."

Ramesh Ramanathan, Managing Director, Sterling Holiday Resorts (India) stated, "The merger with Thomas Cook will strengthen Sterling's market position as there are multiple natural synergies which both companies will mutually benefit from. Thomas Cook customers will have access to our pan-India network of well located, full-service, quality resorts which offer great holiday experiences. Sterling stands to benefit from Thomas Cook's iconic brand reputation and TClL's large base of domestic and inbound travel customers. There is also scope to add value to Sterling's Vacation Ownership members through the synergies that exist between the two companies."

Puravankara Projects (Puravankara)'s consolidated net profit fell 68.78% to Rs 20.1 crore on 13.67% decline in revenue to Rs 268.30 crore in Q3 December 2013 over Q3 December 2012. The Q3 result was announced after market hours on Friday, 7 February 2014.

Commenting on the company's Q3 performance, Ashish Puravankara, Joint MD, Puravankara Projects said, We have focused on new launches in the last quarter, the response of which has been very good with consistent sales. The impact of these sales will be realized on our cash flows and profitability in the coming quarters and we expect to continue this momentum.

Area sold in Q3 December 2013 was at 0.90 million square feet (msf) compared to 0.91 msf in Q3 December 2012. Sales value rose 9% to Rs 402.80 crore in Q3 December 2013 over Q3 December 2012. Puravankara's sales realization for ongoing projects rose 10% to Rs 5,042 per square feet (psft) in Q3 December 2013 over Q3 December 2012. Provident realization stood at Rs 3,702 psft in Q3 December 2013.

Puravankara said that immediate launches of the group in Q4 March 2014 totals 2.73 msf under both Puravankara and Provident. Of this, Puravankara has already pre-launched 1.92 msf in Bengaluru which has met with an excellent response from the market, the company said in a statement.

On a consolidated basis, New Delhi Television (NDTV) reported net loss of Rs 10.43 crore in Q3 December 2013 compared with net profit of Rs 14.87 crore in Q3 December 2012. Total income from operations fell 2.06% to Rs 127.43 crore in Q3 December 2013 over Q3 December 2012.

In a separate announcement, NDTV said its board has accorded their in-principle approval to the merger of NDTV Labs with NDTV Convergence, both step down subsidiaries of the company.

Aksh Optifibre said that the committee of directors (CoD) of the company at its meeting held on 8 February 2014 has approved the opening of FCCBs issue aggregating upto $3.792 million, to be opened on 10 February 2014.

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