Energy
September 1, 2010
Coal India Limited (CIL) would be a safe stock to invest in if it priced in the indicated manner that is a $33 Billion Market Capitalization.This stock won't be a multi bagger but would offer decent price appreciation with almost no downside risks.At trailing P/E of 15x and 3 year average trailing P/E of 20x,the company is not expensive given its competitive strengths.Its dividend yield would be around 1.5% with growth of around ~10-12%.However if you exclude $8.5 Billion in Cash,then the stock seems cheap at around trailing P/E of 11x.It has a P/B of 6x and P/S of around 3x.With its ASP being at a 65% Discount to the International Price,the Company has a huge moat around its business model and I would recommend it as a Buy.
September 1, 2010
Empire Building through Unrelated Expensive Acquisitions make Reliance Industries Stock Underperform
Reliance Industries is known to have one of the smartest management teams in the country.The Reliance Group led by Mukesh Ambani is well connected with proven record in executing huge projects in the Oil and Gas Arena.However outside of their core competence,the Group has suffered.Its Retail Entry has not been much of a success despite big bucks being poured in the last 3-4 years.It entry into marketing of oil based fuels has also meandered without going anywhere.Now the Reliance Group has announced an entry into the Hotels Sector by acquiring a 14% stake in East India Hotels at a significant premium over the market price from the promoter Group.This ~$220 million investment is totally unrelated to Reliance's activities and make no strategic sense.
August 31, 2010
.Most of the State Electricity Distributors are in poor financial shape and have been known to frequently default on their financial obligations.With almost 70-75% of the estimated $2.2 Billion in the first phase of the PV projects to be financed by debt,this represents a big hurdle for the success of Solar Energy.The government needs to come out with some sort of arrangement of guarantees for the smooth functioning of the Solar Mission and instill confidence amongst investors and Banks.
August 23, 2010
Reliance's Strategy in Shale Gas makes a lot of sense.The Technology is but new and unproven on a long time scale.There have been concerns about the environment impact of Shale Gas Extraction.Also low Gas Prices due to the GFC has made the industry growth slowdown.This is a good time to buy Shale Gas Assets relatively cheaply as Economic Recovery will again see Fossil Fuel Prices heading up.
August 23, 2010
The Green Indices have sharply underperformed the broad market due to a combination of several factors.These are High Competition in Solar Energy,Declining Demand in Wind Energy,Lack of Global Agreement on Climate Change and Slow Growth of Smart Grid Technologies.With developed governments facing pressure to cut fiscal deficits,green investments are also expected to get hit from government stimulus plans.However India and China are the two bright spots in an otherwise bleak Green Investing Landscape.Both countries have a Prodigious Energy Demand which is still growing at a rapid clip.Despite their reliance on Coal and other Fossil Fuel forms,both countries realize the need to promote Renewable Energy.
August 18, 2010
Now Blackstone has decided to gamble on India's Power Deficit Story by investing $300 million for an undisclosed stake in the company.With investment plans of $6.5 billion and parent company sinking under loads of debt,Moser Baer Projects desperately needed equity which has been provided by Blackstone.Its previous track record in Solar and Optical Media does not inspire a lot of confidence.But India's 8-9% Growth Rate is like a Rising Tide which will lift all sorts of Boats.Blackstone is perhaps gambling more on that rather than on Moser Baer.
August 17, 2010
To reduce its expense Vedanta will only pay Rs 355/share to minority shareholders in the open offer while offering Cairn Rs 405/share .This will include Rs 50/share for a non compete agreement.This seems a ruse to shaft minority shareholders as I don't think Cairn poses much of a threat to Vedanta from further Oil Explorationin India.I don't know how Vedanta's returns from the Cairn's oil fields can be impacted through Oil Exploration by Cairn's parent in the future.Indian stock market regulator had earlier rejected Heidelberg's premium to be paid to SK Birla Group when buying Mysore Cements stake.The controlling premium has been paid in earlier M&A by foreign promoters to Indian promoters.The area of controlling premium remains a grey one and I think it is being exploited by Vedanta to lower its open offer price.It remains to be seen if SEBI rules in the favor of the minority shareholders.
August 17, 2010
The stock might offer some short term profits for high risk traders on a dead cat bounce,but it is definitely not a fundamental pick.Unless the company really makes significant progress on the revenue and orders front,it is not a buy in my book.
August 12, 2010
While L&T and BHEL,the two Largest Capital Equipment Companies have won a lot of orders,the sheer scale of Demand requires Huge Imports as well.Low cost Chinese equipment providers like Shanghai Electric and Dongfang Electric have won almost half of the power equipment orders raising concerns amongst the Indian administrators.The relations between the 2 countries has always been testy with a major war being fought in 1962.Recently India banned Chinese telecom equipment providers Huawei and ZTE over Security Concerns.
August 12, 2010
UN's CDM panel which decides on the eligibility of projects under this scheme has come under criticism for being too lenient in approving projects.It has been said that these projects sometimes lead to more emissions defeating the very purpose of this scheme.The Panel has become more discerning and has rejected around 50 Wind Projects in China because they were thought to be profitable even without these credits.
August 12, 2010
The competition has been extremely high for these projects leading to zero to negative returns for investors.This is due to a) low electricity rates on offer b) Aggressive bidding leading to even lower rates.This new phase of projects seems to be repeat of the old program.Giant state utilities can easily bid to win even if they lose money in the process.
August 3, 2010
India’s Green Energy Sector got an unexpected boost when the Central Electricity Regulatory Commission (CERC) mandated that utilities all over India will have to compulsorily generate […]
July 20, 2010
India has ambitious plans for the growth of its Nuclear Energy Industry to meets its increasing Energy Demand.India’s Economy has been growing at a scorching pace […]
July 17, 2010
India’s Western state of Gujarat is one of the most developed regions in the country and has shown tremendous economic growth over the past decade.The state […]
July 16, 2010
A huge 2640 MW coal plant has received a major jolt after its environment clearance was rejected by he National Environmental Appellate Authority (NEAA).This plant which […]
July 14, 2010
US Export Import Bank (Exim) is a government owned financial institution which helps support US trade through credit financing of exports/imports of US companies.The Bank is […]
July 13, 2010
Jindal Steel and Power Limited (JSPL),one of India’s biggest private sector Steel companies is looking to build a Rs 42000 crore ( ~$10 billion) Coal to […]
July 5, 2010
Landmark Nuclear Deal between US and India removes India’s pariah status The landmark Nuclear Energy deal signed between USA and India was supposed to herald the […]
July 5, 2010
Solar Energy in India has the potential to be one of the biggest opportunities in the Energy Sector in the 21st Century.The government’s strong backing through […]
June 8, 2010
Green Investing in India has become a buzzword much as it has become in the rest of the world.However the Green Industry in India is at […]
June 8, 2010
The Indian Government failed to pass a law reforming the structure of state subsidies to the Oil sector .The Meeting between a empowered committee of Indian […]
June 7, 2010
The detente between the Ambani brothers which lead to the rescinding of the non-compete agreement has resulted in Reliance Industries Ltd (RIL) being the biggest Winner […]
May 24, 2010
Indian mega industrial groups led by Ambani brothers decided to rescind their non-compete agreement which allows oil and petrochemical giant Reliance to enter the financial,telecom and […]
May 23, 2010
Indian companies Fear Foreign Competition Indian companies raised a massive hue and cry against the Indian government’s draft to allow foreign made modules to be used […]
May 20, 2010
SJVN was one decent quality company to offer shares amongst the sea of junk initial public offerings.The government which had faced tepid response to the IPO […]
May 20, 2010
India has a number of large state owned Oil/Gas companies most of which are listed on the stock exchange.However these companies are difficult to value fairly […]
May 16, 2010
The Indian Government under the Jawaharlal Nehru Solar Mission has proposed ambitious plans for the development of solar energy with a 20 GW target by 2022. […]
April 25, 2010
Orient Green Power Ltd (OGPL), is planning to raise Rs 900 crore to fund its expansion plans of raising capacity to 1000 MW by 2013 from […]