STOCK ALERT

SpiceJet may see action

New York-based private equity fund WL Ross and Co. LLC, which in August this year agreed to invest in low cost carrier SpiceJet, has reportedly started talks with Jet Airways and Kingfisher Airlines for a possible merger with SpiceJet.

Reliance Industries is reportedly planning to spend an additional Rs 10000 crore to produce natural gas from discoveries that were not part of the original development plan in the Krishna-Godavari basin.

Petronet LNG may reportedly revise prices in January 2009, increasing power and fertiliser plants’ fuel bills by up to 50%.

Richa Industries reportedly plans to invest Rs 125 crore on a pre-engineered building (PEB) infrastructure project in Uttarakhand to make steel structures. The plant, which is expected to be operational by April, 2009 would have a capacity of 54,000 metric tonnes per annum (MTPA), the reports added.

Lupin bought a 60% holding in South African marketing firm Pharma Dynamics for an undisclosed amount.

Godawari Power & Ispat said its unit had reached deal with the Chhattisgarh government to set up a 1,000 megawatts thermal power project.

The markets have been falling for three days now and one of the main culprits is the Reliance Industries stock. It has fallen below the Rs 2,000 mark for the first time in many months. Brokerages have downgraded earnings and price targets to align with new political and business realities.

We don’t know exactly where it is headed. But the fact is that there is a lot of pressure on the Reliance Industries stock and that is primarily because a lot of earnings downgrades have happened. A lot of brokerages have brought down the price targets.

The earnings downgrades have happened because of a couple of reasons. First is the delay in the KG-D6 Basin. Production that was expected in the end of September, we now hear could happen towards the end of October or November. Some of the brokerages are even looking at production happening in early January 2009. So, that is one of the reasons why earnings have been downgraded by some of the brokerages who were very aggressive on Reliance coming up with the KG Basin production.

The other risk is political. If you look at the movement in its stock price, the stock has been performing in line with what the markets have been doing. So, the stock has fallen nearly 30% while the markets have fallen 29%. But if you look at the stock from the date of the no-confidence motion, the markets have fallen by nearly 4% while Reliance has fallen by nearly 12%.

That gives you an indication about the particular headwinds also that are coming in because now you have the Samajwadi Party as part of the UPA and you are already seeing a lot of newsflow coming in about the letters that have been exchanged between Amar Singh and the Prime Minister’s Office and various other ministries. So, that is creating a little bit of uncertainty for the market.

Apart from that, crude prices have also been falling and Reliance’s Gross Refining Margins stood at nearly USD 15 per barrel in the last two quarters. That is expected to cool down this quarter.

The fourth one is Exploration and Production (E&P) risk. They have the case with RNRL. Many expect that the case will get over by early August or so. But now it is getting prolonged. The next hearing will happen towards the end of September. So, the agreements that Reliance is supposed to sign with fertiliser or power companies who would be buying those will get prolonged, which basically means that even if production starts they cannot sell it because there is no agreement with the prospective buyer.

So these are some of the reasons why they seem a little nerved with conditions. Otherwise, if you look at the YTD performance of Reliance it has been in line with the markets. But in the last few weeks, we have seen a lot of factors coming in.

Punj Lloyd Group has acquired a strategic 74% stake in Technodyne International Ltd, Eastleigh, UK for an undisclosed amount.

Technodyne is a specialist engineering, design and consultancy Company specializing in large scale cryogenic and high pressure tanks. With projects executed across the world, Technodyne carries out the basic design and detailed engineering for complete steel and steel plus concrete tanks including associated piping, Instrumentation and electrical systems. Technodyne also has track record in designing of test rigs.

This acquisition is a strategic fit and further strengthens Punj Lloyd’s existing tankage & terminal business. Punj Lloyd, which has been the only company to be involved in all three LNG terminals - Dahej, Dabhoi and Hazira in India, has also completed the cryogenic storage tank package at the Reliance Jamnagar refinery, among other notable tankage project in South Asia, Asia Pacific and the Middle East successfully in the past.

The acquired capabilities enable the Group to provide end-to-end solutions for complete delivery of complex cryogenic, high pressure LNG, LPG, ethylene, ammonia and other similar storage tanks, a significant growth area in Oil & Gas sector. The capabilities will also be leveraged for design of refinery and petrochemical projects.

As per the price volume movements on 15th May 

Mercator Lines: Stock up 14.2%; del vol of 21%. NSE vol of 1 cr shares Vs 10-day avg of 22.1 lakh.

Shree Renuka Sugars: Stock up 6.1%; del vol of 16.8%. NSE vol of 1 cr shares Vs 10-day avg of 53.2 lakh.

Bajaj Hindustan: Stock up 6.7%; del vol of 11.5%. NSE vol of 38.1 lakh shares Vs 10-day avg of 16.7 lakh.

Lupin: Stock up 10.8%; del vol of 30.7%. NSE vol of 9.4 lakh shares Vs 10-day avg of 60,000.

Triveni Engineering: Stock up 8.3%; del vol of 16.7%. NSE vol of 35.3 lakh shares Vs 10-day avg of 11.7akh.

Crompton Greaves: Stock up 7.5%; del vol of 48%. NSE vol of 7.6 lakh shares Vs 10-day avg of 4.4 lakh.

Voltas: Stock down 6.2%; del vol of 43.2%. NSE vol of 16.1 lakh shares Vs 10-day avg of  7.7 lakh.

PTC: Stock down 3%; del vol of 68.9%. NSE vol of 12.4 lakh shares Vs 10-day avg of 5.9 lakh.