Wednesday, May 20, 2009
Markets retain gains as FIIs infuse $1 b into equities
Markets retain gains as FIIs infuse $1 b into equities
The Hindu Business Line, May 20, 2009, Page 1
Record Rs 1.58-lakh cr turnover amid high volatility.
Our Bureau, Mumbai
Huge trading volumes on Tuesday illustrated that Monday’s stratospheric market rise was no flash in the pan. The benchmark stock indices were maintained at the levels reached on Monday as foreign institutional investors poured in a net $1 billion into Indian equities.
NSE’s cash market turnover at Rs 40,151 crore surpassed the previous high of Rs 28,746 crore touched on November 1, 2007. Its F&O turnover was over Rs 1 lakh crore, at Rs 1,05,985 crore, close to its all-time record of Rs 1,10,563 crore on October 18, 2007.
The combined turnover in the cash and F&O segments on both NSE and BSE was Rs 1.58 lakh crore (against around Rs 70,000 crore last Friday).
The Sensex and Nifty closed near flat after a highly volatile trading session. The Sensex gained just 18 points closing at 14,302. The Nifty closed five points lower, at 4,318.
FIIs were net buyers for Rs 4,793 crore, provisional data on the exchanges showed. Domestic institutions were net sellers for Rs 1,964 crore.
Client data on BSE showed that retail and corporate investors were sellers too, for a net amount of Rs 708 crore.
Trade pattern
The likelihood of another circuit breaker was on everybody’s mind as the opening bell sounded on Tuesday, but that didn’t happen, allowing retail, HNI and institutional investors to trade freely (The Singapore Nifty Futures were up by over 4 per cent at the time of the opening of the Indian market.)
The Sensex opened 456 points higher from Monday’s close (of 14284) as buy orders queued up, after which there was a bout of selling which brought it down over 900 points (from opening), to 13,834.
Brokers said some public sector domestic institutions, presumably instructed to sell, infused some liquidity into the markets. The volatility in the market was unabated after the initial sharp dip. The Sensex surged closer to the 15,000 mark (14,930) at around 1 p.m., also marking an intra-day gain of around 1100 points.
The index dipped on heavy selling in IT stocks; while resumption of buying saw solid buying in realty stocks, said a Sharekhan report.
But the intra-day high was not sustainable due to the profit booking that took place in the last two hours of trading.
The global markets were positive but didn’t have much impact domestically where the markets maintained their own dynamics after Monday’s 17 per cent gains. “The market was very volatile, as there was much euphoria in the market; there was heavy participation both on the buy and sell sides,” Ms Anita Gandhi, Head of Institutional Business, Arihant Capital Markets Ltd, said.
The advance decline ratio on the BSE (1927:739) and NSE (906:331) was heavily in favour of the gainers. Realty, bank and capital goods stocks gained the most, their sectoral indices gaining between 6 per cent and 12 per cent.
The mid-cap stocks were in the limelight with many registering more than 20 per cent gains. Prominent gainers included India Infoline (25.39 per cent), Aban Offshore (21.54 per cent), and IVRCL Infra (21.33 per cent).
On BSE, many small-cap stocks hit their upper circuits.
FIIs infuse Rs 20k cr in 43 days
FIIs infuse Rs 20k cr in 43 days
The Times of India, May 20, 2009, Page 25
Bullish On India Growth Story Again, But MFs Pump In Only Rs 3300 Crore
Kumar Shankar Roy TNN
Chennai: Foreigners have been able to spot value better than Indians, at least as far as the stock market goes. FIIs have put in close to Rs 20,000 crore into Indian stock markets in the last 43 days since the bull rally began. Simply put, FIIs were daily net buyers of Rs 500 crore investments per day at a time the benchmark index went up above 14,000 from 8,160 levels. In comparison, mutual funds have been net buyers of Rs 3,300 crore - around 1/7th of the amount committed by FIIs.
According to Sebi data, FIIs have made net investments of Rs 19,820 crore till Tuesday from March 9, (when the 6,000-point rally began). The deluge of funds brought into the country by the FIIs has made them net buyers of equity for the calendar year 2009 at Rs 10,681 crore. They were net sellers of stocks amounting to a whopping Rs 52,987 crore in calendar year 2008.
FIIs are betting on companies reporting an improved financial performance in the years to come on the back of solid government policy initiatives. "We think the ensuing policy action will improve growth and thus earnings. We are forecasting 2.5% and 12.5% growth in earnings for sensex constituents in FY2010 and FY2011 respectively compared to our earlier forecast of minus 10% and 11%," Ridham Desai of Morgan Stanley said.
While many investors are waking up the possibility of Indian economy coming back on track with a smootherthan expected government formation, experts say the bet taken by FIIs for the last 2 months has paid off.
In the last one month, foreign investors have also aggressively taken up stakes in cash-strapped real estate companies such as DLF, Unitech, Indiabulls Real Estate as well as Suzlon either through qualified institutional placements or direct buying on the stock exchanges from the promoters. This has helped FIIs who actively participated in such offerings to immediately sit on significant gains (notional).
Deals like DLF promoters selling off 16.8 crore shares at Rs 230 apiece (current price Rs 385), Indiabulls Real Estate just sold off 15 crore shares at Rs 185 (current price Rs 200) and Unitech sold off 42 crore shares at Rs 38.50 apiece (current price Rs 71) show how foreign investors profited.
A re-rating of the markets is likely to take markets to expensive territory relative to current earnings but an improving fiscal situation would improve the optimism regarding growth next year, Jyotivardhan Jaipuria of Bank of America Merrill Lynch said. However, cautious mutual funds have stuck to debt as their choice of asset during the same period - taking a diametrically opposite view. While FIIs were net sellers of debt to the tune of Rs 3,500 crore from March 9 - fund majors were net buyers having put Rs 46,000 crore into debt during the same time.
Contraction easing, recovery likely by year-end: Zoellick
Contraction easing, recovery likely by year-end: Zoellick
The Financial Express, May 20, 2009, Page 11
Reuters, Madrid
The pace of contraction in world economic output appears to be easing and recovery could begin at the end of this year, World Bank President Robert Zoellick told Spanish television on Tuesday. “I’m neither an optimist nor a pessimist, I am uncertain, a realist. Clearly the fall has been interrupted. I think there’s a good chance that while we face declines, they will be smaller in size. The majority expect a recovery at the end of this year, at the beginning of next year,” Zoellick told an interviewer in remarks translated into Spanish by an interpreter.
Speaking ahead of a meeting with Spanish President Jose Luis Rodriguez Zapatero, Zoellick said financial market conditions were improving and urged developed countries to boost support to poorer states to ensure a truly global recovery.
“What you’ve seen is financial markets clearly showing signs of recovery in developed countries,” said Zoellick. “It’s not enough to focus on markets. If we don’t look at unused capacity in the global economy the recovery will be slower, so we have to make enough resources available to those who are weakest.”
Realty firms are first off block with major fund-raising plans
Realty firms are first off block with major fund-raising plans
The Financial Express, May 20, 2009, Page 1
Corporate Bureau, New Delhi
Real estate companies seem to be first off the block to access capital markets to raise funds, barely days after a stable government at the Centre became a possibility. Unitech promoters said on Tuesday they planned to invest Rs 1,000 crore in the next 18 months by subscribing to convertible warrants—debt paper that can be converted to shares at predetermined prices. The first tranche of Rs 275 crore will be invested in June.
The move is expected to encourage investors in the company about the long-term plans of its promoters, despite a debt overhang of Rs 8,500 crore. The promoters are expected to finance the investment by exiting from non-core businesses. Following the conversion, the promoter stake in Unitech is likely to rise by 7.5-10%. It is currently at 51.2%. Unitech shares rose 10% to close at the NSE at Rs 70.95.
The company told exchanges it would call an extraordinary general body meeting of shareholders for approval. The plan to invest in convertible warrants follows the Rs 1,621 crore that Unitech raised recently through a placement of its shares with investment companies—a qualified institutional placement.
Unitech’s announcement comes just a day after Indiabulls said it planned to raise up to Rs 3,000 crore through the same qualified institutional placement. Company director Gagan Banga said, “We are planning to use the money to invest in our power project, new commercial and residential projects, apart from servicing our debt of Rs 1000 crore.”
Real estate companies have reason to move quickly. The realty index was the largest mover on the BSE on Tuesday. It rose by a massive 12.8%, double the rise in the next best sector, banking, at 6.84%. The IT index slipped despite the 10.1% market surge.
Realty firms had leveraged themselves massively in the stock market in the upswing until last year. The result is a debt overhang that all companies are finding it difficult to service. Other than Unitech, DLF has a debt of Rs 16,358 crore, HDIL has a debt load of Rs 4,000 crore.
Indiabulls Real Estate raises $550 mn through QIP
Indiabulls Real Estate raises $550 mn through QIP
Business Standard, May 20, 2009, Page 6
BS Reporter / Mumbai
Indiabulls Real Estate (Ibrel), a major property developer, has raised $550 million (Rs 2,585 crore) by selling shares at a discount to overseas investors on Monday, a person involved with the share sale said.
Ibrel sold 139.7 million shares at Rs 185 a share to investors, including TPG Capital and Fidelity, the source said. The issue price was 6 per cent lower than Monday’s price of Rs 197.50, when the Sensex soared by over 2,111 points.
However, the issue price is 60 per cent higher than the company’s six-month average price of Rs 115.66.
Ibrel, which opened its $600 million issue on Monday, received subscription worth $2 billion (Rs 9,400 cr), a company source said. The company spokesperson did not respond to calls on the development.
“The response to the issue was good. Investors got 20-30 per cent of what they applied for,” sources said, without elaborating. Morgan Stanley was the lead manager.
The development comes on the same day when Ibrel’s board approved the $600 million qualified institutional placement (QIP) in its extra-ordinary general meeting.
Though the company did not say anything on the end use of the QIP proceeds, sources said it was expected to be used for power projects, mainly the 1,320 Mw one planned to be built at Amravati, Maharashtra, and for new businesses.
Indiabulls QIP sold in a day
Indiabulls QIP sold in a day
The Economic Times, May 20, 2009, Page 17
Our Bureau MUMBAI
INDIABULLS Real Estate is learnt to have sold its $600-million qualified institutional placement (QIP) in a day. Sources close to the issue said the country’s third largest developer had received total applications worth $2 billion from private equity and hedge funds including Farallon, TPG Capital, Och Zoff, Moon Capital and Fidelity. It is also learnt that the company has placed the QIP at Rs 185 per share, slightly lower than the ruling market price of the stock. The Indiabulls stock closed at 199.75 on Tuesday.
When contacted, Indiabulls CEO Gagan Banga said: “I can only say that the book has been closed. I would not be able to share the details of the issue at this point of time.”
Indiabulls announced its plans to raise funds through QIP on Monday. It was the first instance of an equity issue which was aimed at riding the improved sentiment in the stock markets, post general elections. The issue opened on Tuesday. Morgan Stanley is the advisor to the issue. Indiabulls is expected to announce the details of the issue by this week.
Domestic realty players are going through tough times due to liquidity problems as well as shortage of fresh demand. New projects were put on the backburner for some time while many of those under construction are delayed. Though this situation, say industry experts, may improve following the performance of BSE during past two days. Last week the India’s largest listed developer, DLF raised $783 million through a share sale. DLF is also looking at selling some of its land parcels.
Another realty major Unitech had raised $325 million through a QIP last month. It is believed the QIP proceeds were used to bring down the company’s debt of Rs 8,900 crore. Unitech sold shares through the issue at a 11% discount to the stock’s last closing rate. However, market sentiments have dramatically improved since the Unitech issue.
DLF, Unitech aim to lower debt burden
DLF, Unitech aim to lower debt burden
The Hindu Business Line, May 20, 2009, Page 1
Moumita Bakshi Chatterjee, New Delhi
Real estate major DLF aims to nearly halve its current debt position of Rs 14,000-15,000 crore by the end of the financial year, and its rival Unitech wants to lower borrowings to Rs 6,000-6,500 crore from the existing Rs 7,800 crore.
Market analysts said that although the two companies have outlined aggressive plans to lower their debt obligation, achieving the target could take more time. “The companies are going for asset sale or sale of non-core businesses and that cannot be done overnight. The intention is correct but it may take time,” said a Mumbai-based analyst.
Market observers also felt that while the residential market appears to be showing some signs of improvement, it may be too early to raise a toast.
De-leveraging path
In an investor presentation circulated last evening, Unitech said that its operational strategy (improved operational cash flow, monetisation of non-core assets and debt management) along with recent fund-raising activity (QIP issue) had resulted in a “comfortable liquidity position”, but that debt levels were “still high”.
“De-leveraging will remain a focus area to reduce the interest expense, and utilise the saved cash for project development,” it said.
Unitech claimed that it has sold projects worth Rs 850 crore between April 1 and May 15.
The company is looking to prune debt to Rs 6,000-6,500 crore during FY10. Its debt stood at Rs 10,900 crore in December 2008 but subsequently dropped to Rs 8,400 crore after the Unitech-Telenor deal saw Rs 2,000 crore of telecom debt being transferred to Unitech Wireless’ balance sheet.
Asset sale
Unitech’s target for lowering the debt largely hinges on asset sales (commercial property in Saket, sale of hotels, school and hospital plots). It hopes to reduce the debt to Rs 4,500-5,000 crore by the first half of FY2011.
The promoters of DLF recently raised Rs 3,860 crore by selling their stake to institutional investors. Of this, nearly Rs 1,800 crore is likely to be injected into the privately-held DLF Assets Ltd which, in turn, will use the proceeds to pay DLF on “contractual obligations”.
“The Group would also raise money through sale of non-core assets such as the wind power business, and it has also put hotel sites on the block,” a senior DLF official said.
The official indicated that the Group may realise Rs 1,000-1,200 crore from the wind power business. “Similarly, the sale of our holding in Hindustan Spinning Mills site could fetch another Rs 400 crore,” the source said citing certain instances of asset sales.
Unitech promoters to infuse Rs 1,000 crore
Unitech promoters to infuse Rs 1,000 crore
Business Standard, May 20, 2009, Page 6
BS Reporter / Mumbai
Also divesting stake in its non-core assets such as hotels.
Unitech Ltd, the country’s second-biggest real estate developer, has announced the approval of a plan by its board to raise additional long-term funds by selling securities and issuing convertible warrants to its promoters.
This was communicated by the company in a statement to the BSE.
A source involved with the development said the promoters will invest as much as Rs 1,000 crore through subscription of the warrants, of which Rs 275 crore will be brought in by June.
After conversion of the warrants, the promoters’ stake is expected to go up by 10 per cent to 61 per cent.
“The subscription to the convertible warrants emphasises the confidence of the promoters in the company,” a company official said on condition of anonymity.
The additional infusion of capital is expected to help the company in reducing its debt to equity ratio considerably. The realtor has about Rs 8,400 crore of debt on its books.
The move to infuse additional capital into the company comes after Unitech offloaded some stake worth $325 million last month to select investors in order to tide over tight liquidity.
The promoters’ stake had fallen to 51 per cent after issue of new shares to overseas investors.
The promoters of Unitech are expected to liquidate their investment in other ventures to bring in the additional capital, the source said.
Indian realtors are facing a severe cash crunch as sales of offices, homes and shops have tumbled, owing to the economic slowdown.
In an attempt to boost cash flows, Unitech and other developers are now focusing on launching affordable housing projects, which have received a good response from buyers in the past couple of months.
Unitech is also divesting stake in its non-core assets, such as hotels and land parcels meant for other purposes. The New Delhi-based real estate developer has already raised Rs 231 crore from sale of a hotel in Gurgaon.
The company plans to sell four of its hotel projects, including in Noida, Kolkata and Gurgaon, as part of its asset sale plan and will also bring in private equity at project level.
Besides, the company has decided not to acquire land in the near future, except for extremely attractive opportunities.
Unitech to raise funds via securities
Unitech to raise funds via securities
The Times of India, May 20, 2009, Page 25
Amrita Nair-Ghaswalla TNN, Mumbai
Real estate majors, hit by a severe cash crunch after high prices kept buyers of homes, offices and shops away, are in a frenzy to raise money. On Tuesday, cash-strapped builder Unitech received the approval of its board to raise additional long term funds by issuing securities.
On Monday, Indiabulls Real Estate raised $550 million by selling shares, while last month, the country's largest realty giant, DLF, raised $783 million by selling promoters' stake. In a bid to lessen its debt levels, the Bangalore-based realty developer Sobha Developers is also set to raise long term capital during the current fiscal (FY10).
Unitech's board has also agreed to raise funds by issuing warrants to the promoters, an official said. Last month too, Unitech had raised $325 million through a QIP (qualified institutional placement) ‘‘to part retire its Rs 8,900 crore debt and strengthen its balance sheet. The promoter holding in the company had fallen to 51% from 64%, post the QIP'', the official added.
‘‘The global credit crunch has adversely impacted the realty segment, leading to delay in under-construction projects and postponement of new projects,'' an analyst tracking the sector said. ‘‘This has ensured that most firms are in talks to sell prime properties,'' the analyst with Angel Broking added.
Unitech also plans to generate Rs 900 crore from the sale of two hotels in Gurgaon and a commercial office complex in Saket, New Delhi, by the end of June. The company plans to generate Rs 1,600 crore by selling assets, including plots and residential projects, by the end of the current fiscal.
In April '09, the company raised Rs 1,625 crore from share sale to select investors, as part of a plan to repay debt and invest in affordable housing projects. The company allotted 42 crore equity shares of Rs 2 each at a price of Rs 38.50 per share to 55 QIP allottees, the official added.
While DLF promoters recently sold a 9.9% stake to raise Rs 3,860 crore, the company also plans to raise Rs 10,000 crore in the next 2-3 months by selling some of its real estate projects.
Sources said Bangalore-based Shobha Developers is in the process of disposing land where projects cannot be launched in the near future.
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