Breaking News & Stocks

BSNL, MTNL lose 46 lakh landline connections in 2007-08
17 Apr, 2008, 1731 hrs IST

NEW DELHI: Telecom PSUs BSNL and MTNL lost about 46 lakh landline connections in 2007-08, Rajya Sabha was informed on Thursday.

While 43.8 lakh BSNL lines were surrendered in the year, its sister concern MTNL lost 2.1 lakh connections, Minister of State for Communications and IT Jyotiraditya Scindia told the Upper House in a written reply.

The minister said the reasons for withdrawal of landline connections includes preference for mobile phones, move to private operator, disconnections due to non-payment of dues and surrendering of second telephone taken for get internet connection due to availability of broadband.

The total number of landlines in the country as on March 2008 is 3.9 crore, which was 4 crore in March 2007. At present, BSNL has 3.1 crore landline users while MTNL has 36.8 lakh users

Power Grid plans Rs 8,040 crore FY-09 capex
17 Apr, 2008, 1325 hrs IST.........................

NEW DELHI: Power Grid Corp of India Ltd plans a capital expenditure of Rs 8,040 crore in the year to March 2009, said J Sridharan, its director of finance, on Thursday.

"Of this, 30 percent will be met through internal resources and the remaining 70 percent will partly be funded by ADB (Asian Development Bank) and World Bank and bonds," he told reporters.

He said the firm plans to issue bonds in the second quarter of this fiscal to raise money from the local market. "In the first quarter we are comfortable. In July-August we may issue bonds," he said.

Last year the company invested Rs 6,615 crore on various projects.

Anand Rathi says 'buy' Bharti Airtel for target Rs 940
17 Apr, 2008, 1728 hrs IST.........................

MUMBAI: Anand Rathi Securities has given a medium-term technical ‘buy’ call on Bharti Airtel.

The brokerage recommends accumulating the stock between Rs 800-818 for a conservative target of Rs 940 and stop loss at Rs 770. The current market price is Rs 815.

The stock has taken a strong support at Rs 800 levels and is trading above short term and medium simple moving averages, which indicate strong Bull Run.

The chart pattern so formed is a bullish flag formation. The RSI oscillator is also in harmony with the bullish formation in the stock, the brokerage says.

Infy shows way to IT stocks; STPI sop fuels midcaps
17 Apr, 2008, 1723 hrs IST...........................

MUMBAI: Export-driven technology stocks continued to march northward for the third straight day on Thursday. Infosys' FY09 guidance has revived investor interest in this sector.

In the last three days alone, the BSE IT Index has gained as much as 13 per cent with Sensex constituents Infosys, Tata Consultancy Services, Wipro, Satyam Computer Services and HCL Technologies gaining 6-10 per cent.

This is because, even now this sector continues to hold consistent growth prospects, analysts said.

“It is quite heartening that Infosys has managed to deliver decent results and guide 19-21 per cent revenue growth for the forthcoming year, even with the fear of a crisis looming in the US. This offers some comfort to smaller mid-sized companies,” said Anita Gandhi, head of institutional business at Arihant Capital Markets.

The weak global economic outlook, particularly for the US which is the largest market for IT players, and the strengthening of the rupee against the dollar have had an adverse impact on IT stocks for over a year now with the BSE IT Index losing 17.2 per cent.

Gandhi added that mutual funds' exposure to the IT sector is expected to build up as fund managers are finding greater value in these stocks.

“After IT stocks lost their charm, people flocked to capital goods, driving their prices ahead of valuations. As of now, most IT stocks are available at prices that are one-third that of capital goods stocks,” she said.

Interest in small and mid-sized companies in this sector also revived today on reports that the prime minister is willing to consider extending the concession on Software Technology Parks of India.

Hexaware Technologies, Rolta, i-flex Solutions and Sonata Software today rose 4-8 per cent on the news.

Orchid Chemicals sees block deals for 1.76% equity
17 Apr, 2008, 1141 hrs IST............................

MUMBAI: Multiple block deals in shares of Orchid Chemicals & Pharmaceuticals Ltd were struck on Thursday for a total of 1.16 million shares, or 1.76 percent equity, at an average price of 320.64 rupees each on the BSE.

On Wednesday, Morgan Stanley acquired a 3.8 percent stake in Orchid through bulk deals at an average price of 313.42 rupees each, data from the BSE and NSE showed.

Over the last fortnight, several institutions and investors have been actively acquiring stakes in Orchid since Solrex Pharmaceuticals, believed to be part of Ranbaxy Laboratories, bought 14.55 percent stake in Orchid.

Orchid shares are trading 3.5 percent lower at 308 rupees in a strong Mumbai market.

Motilal maintains 'buy' call on IVRCL
17 Apr, 2008, 1809 hrs IST...............

MUMBAI: Motilal Oswal has maintained ‘buy’ recommendation on IVRCL. At the CMP of Rs 380 per share, the stock trades at reported PER of 23.5 times FY08E, 17.9 times FY09E and 12.9 times FY10E. Adjusted for BOT, real estate the stock is trading at PER of 17.3 times FY08E, 13.2 times FY09E and 9.5 times FY10E.

Motilal expects IVRCL to report net profit of Rs 200 crore in FY08 (up 44.4% YoY), Rs 270 crore in FY09 (up 34.4% YoY) and Rs 380 crore in FY10 (up 38.8% YoY).

IVRCL's current order backlog stands at Rs120 billion v/s Rs 81billion in FY07 (up 48.1% YoY). This represents a book to bill ratio of 3.5 times FY08E revenues of Rs 34.3 billion.

About 93 per cent of IVRCL’s order book comprises cash contracts that include price variation clauses, thus minimizing the impact of raw material price increases. The company is thus better positioned versus peers such as Gammon, NCC, L&T, which have order books that comprise large proportion of fixed price contracts.

IVR Prime Urban has a land bank of 3,086 acres, representing a development area of 85 meter square feet in the cities of Hyderabad, Chennai, Bangalore, Pune and Noida. Planned projects include residential, commercial, retail, hotel projects, scheduled for completion by 2011. Management has informed that work on the Jigny project in Bangalore has started while excavation work at Gachibowli IT park project, Hyderabad is over and construction work has begun.

The company has also obtained permission for development of the land from the local government at Noida. Of the total current development, Chennai accounts for 63 per cent of the developable area while the second highest concentration is in the city of Pune at 12 per cent. The significant land bank of the company in Chennai is in the town of Sriperumbudur, which accounts for 34.2 million square feet (45% of the total area) of the total developable area of 75.46 million square feet.

The brokerage expects EBITDA margin for IVRCL to improve 70 basis point during FY08-FY10 on account of increasing proportion of buildings and power transmission in the order book to 21 per cent in December 2007 (v/s 12% in December 2006), where EBITDA margins are relatively higher at 13-15 per cent, compared with transportation projects (EBITDA margins 7-10%). Strong operating leverage from 40 per cent revenue CAGR during FY08-10E. Share of transportation projects to order book has reduced from 22% in March 2007 to 12 per cent as at December 2007, which again is positive for margins, given that road projects enjoy among the lowest margins.

IVR Prime has sold 28 per cent strategic stake in the Chennai real estate project at Sriperumbedur, which entails 600 acres (development area 30msf) to Kotak Realty Fund for Rs 250 crore out of which Rs150 crore has been received. Of the Rs 250 crore as part of the transaction, Rs 90 crore will go to the SPV for project development and Rs 160 crore to IVR Prime Urban.

The brokerage expect IVRCL to report strong revenue CAGR of 40.4 per cent over FY08-10, driven by robust order book of Rs 120 billion (3.5x FY08E revenues) as at March 2008, ensuring revenue and earnings visibility over the medium term, increasing proportion of relatively shorter execution cycles and high-margin segments like building and power in the order book from 22 per cent in March 2007 to 30 per cent in December 2007; also share of roads to order book has declined from 22 per cent to 12 per cent in the same period; and fixed price contracts account for just 8 per cent of the order book, thus restricting impact from commodity price increases

Merrill Lynch posts steep first-quarter loss on write-downs
Thursday April 17, 8:24 am

Merrill Lynch posts first-quarter loss amid more write-downs on credit investments

NEW YORK -- Merrill Lynch & Co., the world's largest brokerage, on Thursday said it would cut 4,000 jobs after more than $6 billion fresh write-downs pushed it to a loss for the first quarter.
Chief Executive John Thain also cautioned that things were unlikely to improve much in the next couple of quarters.

The write-downs caused Merrill Lynch to lose $2.14 billion, or $2.19 per share, after paying preferred dividends, compared to a profit of $2.11 billion, or $2.26 per share, a year earlier.

The New York-based firm posted negative revenue in its fixed-income trading business and a 40 percent slump in investment banking fees. This caused total revenue to slip 69 percent to $2.93 billion from $9.6 billion a year earlier.

Results missed Wall Street projections for a loss of $1.99 per share on $3.7 billion of revenue, according to analysts polled by Thomson Financial.

Merrill Lynch, the third-largest U.S. securities firm by market value, has been slammed by the global credit crisis that roiled markets since last summer. Risky bets in mortgage-backed securities have led to nearly $200 billion of write-downs -- with Merrill Lynch contributing at least $24 billion to that amount.

Despite the turbulence, Thain said the company has $82 billion of excess liquidity to help protect against choppy market conditions.

"This was about as difficult a quarter as I've seen in my 30 years on Wall Street," Thain told analysts during a conference call. "We are planning for a slower and more difficult next couple of months and probably next couple of quarters, but are also hopeful for our full year 2008 results."

After joining Merrill four months ago, Thain pledged to clean up the brokerage's balance sheet and take steps to make it more profitable. He already secured more than $12 billion worth of new capital, and now has unveiled a plan to trim the company's ranks.

Merrill said it will record a restructuring charge of $350 million in the current quarter for the layoffs, which will reduce its headcount by 10 percent in areas outside of financial advisers and investment associates. The entire company has about 63,000 employees globally.

During the first quarter, Merrill Lynch said it suffered a $1.5 billion write-down linked to asset-backed securities, and a $3 billion write-down tied to the value of bond insurance contracts. The brokerage also lowered the value of leveraged loans by $925 million.

It reported that fixed-income trading revenue was $3.38 billion because of the tightening credit markets. Equity-trading revenue was $1.88 billion, down from $2.39 billion a year earlier.

Meanwhile, debt underwriting fell to $231 million from $586 million last year. Stock underwriting revenue fell to $199 million from $363 million a year ago.

Shares of Merrill Lynch fell 74 cents to $44.15 in premarket trading after closing Wednesday at $44.89. The stock is down 53 percent from where it traded one year ago.

Pfizer 1Q profit falls on buyout charges, patent losses
Thursday April 17, 8:23 am ET
Pfizer's 1st-quarter profit falls on generic competition and acquisition charges

NEW YORK -- Drug maker Pfizer Inc. said Thursday its first-quarter profit fell 18 percent as generic competition hurt sales of blood-pressure drug Norvasc and allergy drug Zyrtec.
The profit drop weighed on Pfizer's stock in premarket trading, sending shares down 85 cents, or 4 percent, to $20.25.

The company earned $2.78 billion, or 41 cents per share, compared with profit of $3.39 billion, or 48 cents per share, during the same period a year ago. Pfizer earned 61 cents per share, excluding charges for the buyouts of CovX and Coley Pharmaceutical Group Inc.

Revenue fell 5 percent to $11.85 billion from $12.47 billion.

Analysts polled by Thomson Financial expected higher adjusted profit of 66 cents per share on revenue of $12.09 billion.

Norvasc lost patent protection in March of 2007 and sales were cut in half to $513 million during the quarter. Pfizer stopped selling Zyrtec in January after that drug lost patent protection.

Pfizer said cost-cutting measures partially offset revenue declines and the company is on track to reduce costs by $1.5 billion to $2 billion by the end of 2008. The measures, which included cutting 11,000 jobs and closing eight facilities in 2007, are part of an effort to shore up the company's financial position as it faces more costly drug patent expirations.

Sales of the world's best-selling drug, Lipitor, fell 7 percent to $3.14 billion from $3.36 billion during the quarter. The cholesterol drug is Pfizer's key revenue driver and will lose patent protection in 2010, opening the floodgates for cheaper generic versions.

Despite the overall sales drop, Chairman and Chief Executive Jeff Kindler touted the drug's international sales.

"Lipitor remains a powerful global brand supported by extensive outcomes data and it continues to grow on an operational basis in many international markets," he said, in a statement.

Sales of the anti-smoking drug Chantix rose 71 percent to $277 million from $162 million, though Wall Street has become concerned over the drug's future growth because of stronger safety warnings, due to higher risks for psychiatric problems.

Other key revenue drivers for the company included the fibromyalgia treatment Lyrica, which had a sales boost of 47 percent to $582 million. Sales of Celebrex, the only COX-2 inhibitor painkiller still on the market since Vioxx was withdrawn, rose 2 percent to $611 million.

Kindler reaffirmed the company's full-year outlook for adjusted profit between $2.35 and $2.45 per share. Analysts, on average, forecast profit of $2.39 per share.

Wall Street set to open lower after slew of earnings
Thursday April 17, 9:02 am

Wall Street set to open lower after Merrill posts quarterly loss, IBM posts strong profit rise

NEW YORK -- Wall Street headed for a lower opening Thursday with investors growing more cautious about the nation's financial health as they examined a batch of mixed earnings reports.
Merrill Lynch reported a first-quarter loss of $2.14 billion, a shortfall that was wider than the average analyst estimate. The loss came after the world's largest brokerage wrote down the value of assets tied to mortgages and leveraged loans by several billion dollars. The company also said it would eliminate a net 4,000 jobs.

Merrill's report followed a larger-than-anticipated rise in IBM Corp.'s quarterly earnings, but there were disappointing results from Nokia Corp., the world's biggest mobile phone company, as well as drug maker Pfizer Inc. and student lender Sallie Mae.

Dow Jones industrial average futures fell 64, or 0.51 percent, to 12,590 shortly before the market opened.

Broader stock index futures also slid. Standard & Poor's 500 index futures fell 8.20, or 0.60 percent, to 1,362.70, and Nasdaq 100 index futures fell 7.25, or 0.39 percent, to 1,855.00.

On Wednesday, stocks had shot higher on the heels of stronger-than-expected earnings from JPMorgan Chase & Co., Coca-Cola Co. and Intel Corp.

The earnings reports that investors parsed on Thursday were not as auspicious. Nokia's U.S. shares fell nearly 11 percent in premarket trading after the Helsinki-based cell phone maker said Thursday that its profit rose by 25 percent, below expectations. It also said that its global market share is down slightly.

Pfizer shares fell nearly 3 percent in pre-market trading, following the company's report that its first-quarter profit fell 18 percent due to competition from generics and falling sales of drugs including Lipitor, Norvasc and Zyrtec.

And meanwhile, Harley Davidson Inc. shares dropped more than 6 percent ahead of the market's open, after saying that its profit declined, that it was cutting hundreds of jobs, and that it would ship up to 27,000 fewer of its iconic motorcycles this year.

After Sallie Mae reported a loss late Wednesday, it slipped less than 1 percent in pre-market trading.

Merrill fell more than 1 percent in pre-market trading.

IBM was one bright spot on the earnings landscape, boasting a higher-than-expected 26 percent jump in profit. IBM shares rose more than 2 percent in pre-market trading.

Government bonds rose slightly in early trading Thursday. The 10-year Treasury note's yield, which moves opposite its price, dipped to 3.70 percent from 3.71 percent late Wednesday.

In economic news, the Labor Department reported that initial claims rose by 17,000 to 372,000.

Later Thursday, the Philadelphia Federal Reserve releases its index of area manufacturing, and several Fed officials will give speeches.

Oil prices continue to hit record highs, and recently surpassed the $115-a-barrel mark. In premarket electronic trading on the New York Mercantile Exchange, crude slipped 37 cents to $114.56 a barrel.

Gold prices rose, and the dollar was mixed against other major currencies.

Overseas, Japan's Nikkei stock average rose 1.92 percent. Britain's FTSE 100 fell 0.54 percent, Germany's DAX index rose 0.13 percent, and France's CAC-40 added 0.20 percent.

Inter-ministerial group agrees on steps to control steel price

New Delhi, April 17: An inter-ministerial group constituted to suggest measures for containing steel prices has finalised its report that prescribes imposition of 10 percent duty on exports and 15 percent ad-valorem duty on shipping iron ore abroad.

The report, to be submitted to Prime Minister Manmohan Singh, is understood to have been okayed by finance minister p Chidambaram who has been insisting on a "revenue-neutral" model to offset the losses that would be incurred due to some proposed fiscal measures.

At the Prime Minister's behest, Chidambaram, Steel Minister Ram Vilas Paswan, Commerce and Industry Minister Kamal Nath and Mines Minister Sis Ram Ola had met last evening as part of inter-ministerial consultations on containing steel prices.

The government would convene a meeting of the cabinet committee on price once the prime minister goes through the report.

Steel prices have risen by up to 49 percent in the last one year, exerting inflationary pressure on the economy. Inflation is hovering at over a three-year high of 7.14 percent.

In the report, the ministries have broadly agreed on imposing a duty of 10 percent on export of steel, reduction of excise duty to 8 percent from the current 14 percent, abolishing import duty on scrap and metcoke prices and doing away with the countervailing duty.

The significant part of the recommendations is to impose a 15 percent ad-valorem duty on iron ore export.