Indian Financial Markets: Bharti

Friday, August 10, 2012

Should you buy Bharti, RIL, Tata Motors now? Baliga guides

Despite disappointing quarter one results, market analyst Ambareesh Baliga suggests that one should buy Bharti Airtel . The stock tanked almost 7% yesterday after it disappointed the street by reporting lower-than-expected numbers in the quarter ended June 2012.

"It is very much possible that we could get a better price." The stock closed at Rs 274 yesterday because of FII selling, but it could slip to about Rs 255-260 going ahead, he added.

Its consolidated net profit fell by 24.23% quarter-on-quarter to Rs 762.2 crore, while analysts on an average had expected it in the vicinity of Rs 1,075 crore.

However, net sales rose just 3.3% to Rs 19,350.1 crore from Rs 18,729.4 crore during the same period, which was almost in-line with forecast of Rs 19,530 crore.

However, Baliga expects rise in tarrifs to be one trigger for the stock.

Bharti's net loss from Africa widened to Rs 669.3 crore from a net loss of Rs 301.6 crore in the same period last fiscal.

It added 2.7 million users during the quarter taking its subscriber base to nearly 60 million at the end of June 30, 2012, across 17 African countries. Average revenue per user stood at USD 6.5 per month.

Its African operations have the great potential to perform well ahead and boost the company's performance, which the market is not taking in account, he added.

He also shared reading and outlook on Tata Motors and Reliance

Below is the edited transcript of Baliga’s interview with CNBC-TV18

Q: Tata Motors is to announce its numbers today, what are you expecting this time?

A: Profits should move up about 24-25%. But in case again there is a disappointment like what we saw in Bharti yesterday, this stock can go back to Rs 220-222 levels from where it started its upmove this time.

Q: You spoke about the disappointment in Bharti, at Rs 274 would you buy the stock or do you expect to get a better price?

A: The way things are and the sort of a disappointment which we saw yesterday, it is very much possible that we could get a better price. Although day before yesterday even you had asked me I had said yes, we are buying at about Rs 290-294 levels. But the sort of a disappointment which was there will make these FIIs who have been quite patient with the stock for a while to possibly sell in.

Yesterday what we saw was FII selling because of which we saw this stock closing at about Rs 274. It is very much possible that we could see levels of about Rs 255-260. Maybe at those levels one should take a fresh view. My belief is that going ahead tariffs will move up. That will be one trigger.

The other one is clearly the African operations which I see how the Indian operations were in 2001 that is where the African operations are there right now. That is a huge potential, which I don’t think the market is taking to account. From that point of view, one should look at buying Bharti at lower levels.

Q: What do you think, Reliance is good for more than Rs 800 or you would draw the line here?

A: It is good for more than Rs 800 and the bottom has moved up. Earlier Rs 700-720 was a good bottom for Reliance, which has moved to levels of about Rs 750-760. I suppose the next big trigger for Reliance would be the gas pricing post 2014. That is something to be looking forward to.

I also feel that the petchem margins have bottomed out. In the next quarter you will see that petchem margins are moving up. Refining margins have already moved up, we have seen the Singapore refinery margins moving upto USD 7.75-8. With the premium, which Reliance gets, I suppose that the next quarter results would be much better than what we have seen last time.

View the original article here

Monday, August 6, 2012

Spectrum order risk for telcos; Bharti top pick: JM Fin

Mon, Aug 06, 2012 at 11:04

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Spectrum order risk for telcos; Bharti top pick: JM FinThe cabinet on Friday had fixed a minimum base price of Rs 14,000 crore for the auction of telecom spectrum. While there has been mixed reactions from the street, Sanjay Chawla of JM Financial believes the litigation remains a real risk for the telecom sector. . Share . Email . Print . A+A- Sanjay Chawla, JM Financial

The cabinet on Friday had fixed a minimum base price of Rs 14,000 crore for the auction of telecom spectrum. While there has been mixed reactions from the street, Sanjay Chawla of JM Financial believes the litigation remains a real risk for the telecom sector.

According to Chawla, telecom companies can challenge the order on grounds of lack of spectrum auction. Talking about the various telecom players, Chawla said RIL may not acquire spectrum and launch Greenfield operations. It would be more logical for RIL to acquire an existing operator, he added.

Other major telecom operators like Bharti Airtel and Vodafone is likely to be impacted when their licenses are up for renewal, Chawla told CNBC-TV18. It might impact tariffs by 25-30% if a complete pass through is assumed. However, he keeps Bharti amongst his top picks in the telecom sector and recommends investors to stay away from Idea till its bidding strategy is clarified.

Below is the edited transcript of the interview on CNBC-TV18.

Q: All the telecom companies are up in arm saying that they will take the government to court, do you see litigation as a real option?

A: Absolutely, because companies have been talking about taking on the government from a legal point of view ever since the Supreme Court (SC) verdict came out and their review petitions were not accepted by the SC. Now ofcourse the final proposals are out from the cabinet and the final decision has been made.

There are two-three grounds of litigations. One is the restriction in the supply of spectrum. Even though about 20 megahertz has been cancelled based on the SC verdict, government is only auctioning 10-13 megahertz of spectrum. There is a scarcity which is apparently being created.

Secondly, a high spectrum price in our view is against the public policy and also against the spirit of a free and fair auction. It is preventing market from discovering the true value of the spectrum. So on both these grounds, there is ground two challenge, there is room to challenge the cabinet decision.

Q: How do you see the auction proceeding? What is your sense of how early or when the timing of the auction could be and do you think there is a realistic probability of the auction actually bombing?

A: On the timing, clearly, auction will not be completed in the next 20-30 days as per the previous deadline. I guess it is very likely that auction will now happen in the October to December quarter and government will probably ask for an extension to the existing deadline in the next week or so.

Also in terms of how successful the auction will be, a lot depends on the position taken by the potential bidders, by companies like Uninor, Idea Cellular and also Sistema. At this point of time, there seems to be an even matching of supply and potential demand.

But, if a new entrant jumps into the fray from a pure Greenfield operator, then I think the bids could go higher. Otherwise, there is a good chance that in some of the circles, not all the spectrum which is on auction will get picked up.