SREI Infrastructure Finance - A good bet

Srei Infrastructure Finance Ltd. is one of India's leading Non Banking Financial Institutions and the only private sector infrastructure financing NBFI.With a customer base of over 15,000, over Rs. 8,000 crore in Assets Under Management and total capital base of over Rs. 700 crore, Srei today has emerged as the largest player in a fiercely competitive market of infrastructure equipment financing. Srei has entered into a strategic alliance with BNP Paribas Lease Group, a subsidiary of BNP Paribas of France, for equipment financing business through a joint - venture. The JV will expand to financing in new areas such as agriculture equipment, medical equipment, information technology and other equipment classes.

Over the years, Srei has expanded its unique business model internationally. It has three offices in Russia and is in the process of replicating the model in many other countries. It enjoys a strong national presence with a network of 63 offices. 
 
Srei has taken the initiative of building rural infrastructure in the country on an information and technology platform under the National e-Governance Plan of the Government of India. This mega project envisages setting up nearly 25,000 common service centres in six states and will offer a host of B2B, B2C and G2C services to 21 crore rural population.
 
In addition to infrastructure, Srei also offers a bouquet of allied financial services like capital market services, insurance broking and venture capital. These have not only helped to serve existing customers better, they have also grown into healthy stand-alone services.


SREI GROUP COMPANIES:

Srei Capital Markets Limited

Srei Venture Capital Limited 

Srei Insurance Broking Private Limited

Bengal Srei Infrastructure Development Limited 

Srei Equipment Finance Private Limited  

Srei Sahaj e-Village Limited

ZAO Srei Leasing 

QUIPPO Infrastructure Equipment Limited

Srei Infrastructure Advisors Limited


SREI Operations:


Infrastructure financing

• The division provides financing for infrastructure projects such as bridges, approach roads, bypasses and roads, power projects, private berths and container handling jetties in the port sector. It also provides large-ticket equipment finance to oil rigs, cranes, railway wagons, mining equipment, airports, etc.

Infrastructure advisory

• Under this LoB, SREI undertakes project conceptualization, pre-feasibility studies, project monitoring, etc. SREI primarily partners with governments for such projects and hence, there is no slowdown evident yet in advisory business.

• Currently, SREI has 12-15 active projects with the various governments. The management has expressed that this stream is in the initial stage and expects it to become a steady performer by Q1FY10.

SREI-BNP Paribas Lease JV

• BNP infused Rs7.75bn towards its capital contribution for a 50% share in the JV. The JV had net worth of Rs8bn initially. BNP paid Rs8bn for the 50% stake in the JV, valuing the equipment finance business at Rs16bn.

The JV undertakes asset financing for smaller ticker size.


SREI Venture Capital

• It is a family of funds with a primary focus on infrastructure and caters to a wide network of third party investors such as PSU banks, financial institutions and insurance companies.

• Total funds under management are at Rs8.4bn.

SREI Sahaj e-Village

• As a part of the government’s e-governance initiative, SREI proposes to set up 24,755 kiosks across the states of West Bengal, Bihar, Uttar Pradesh, Tamil Nadu and Orissa. SREI partners with a local villager who manages the kiosk.


Quippo World

• Quippo was started as a rental business company in the construction equipment, oil & gas, telecom, energy space among other verticals.

• Under the telecom tower vertical, Quippo has developed a portfolio of 5,000 towers. It is currently setting up 200 towers every month, a pace which the management aims to accelerate to 300-500 towers in the near future.

• Quippo had acquired 1,000 towers from Spice and future-guaranteed rollout of 12,000 towers. It has entered into a strategic alliance with Tata Teleservices and merged Quipo Telecom Infrastructure (QTIL) – its tower arm. With Quippo bringing in all its 5,000 towers, the combined entity is estimated to have 18,000 towers and plans to expand to 50,000 towers over the next two years.


Financials:

52 Wk 173.00 

52 Wk 22.30

Book Value 55.12

Face Value 10.00

CMP 35.45

A good buy for medium to long term.

Cairn India - a good buy

Cairn India is the fourth largest oil and gas exploration and production company in India and has a working interest in 14 blocks. Two of these are currently producing hydrocarbons. Cairn India is focused on creating shareholder value by developing its world class resource base in Rajasthan and seeks to continue with its track record of exploration success. Cairn India’s portfolio is fostered in both mature and frontier areas, as well as in regions and basins where the current data set can be optimised or reinterpreted.


Operations 

Cairn India has two processing plants, 11 platforms, 200km of sub-sea pipelines and operations spanning the Indian continent. The company operates the largest producing oil field in the Indian private sector and has pioneered the use of cutting-edge technology to extend production life. Three of the fields – Ravva, Lakshmi and Gauri – are already producing more than 80,000 barrels of oil equivalent per day (boepd) on behalf of Cairn and its joint venture (JV) partners. 

In Rajasthan Cairn India has made 23 discoveries including some of the biggest finds in the last two decade. 

Cairn India has maintained a low operating cost base through efficient operations. Part of its strategy, the Company’s has focused on life-cycle planning and continuous monitoring and control of operational costs as well as applying innovative operating concepts and technologies. 

Cairn India sells its oil to four major refineries across India and its gas to both public and private buyers.


According to production plans, in the third quarter of 2009, output from Mangala fields will begin, which will be transported through trucks. By the fourth quarter, the company expects to increase the crude output to 50,000 barrels a day and transport crude through its pipeline network (from Barmer to Gujarat coast).




Recent News :


MRPL has been appointed as the buyer of the initial crude oil and state-run refiner Indian Oil Corporation (IOC) would take the crude once volumes rise.

Cairn will initially produce 4,000 to 5,000 barrels of oil per day from its fields in Barmer district of Rajasthan which would be transported in trucks to Kandla on Gujarat coast for onward shipment to Mangalore.Output from the Mangala field, the first of the three fields Cairn is putting to production, would rise to 30,000 barrels per day (1.5 million tonnes) in July-September.

The Mangala field is expected to produce 30,000 bpd by the second quarter of 2009-10. Production is then expected to ramp up to 80,000 bpd by the end of 2009 before reaching a plateau of 1,25,000 bpd during H1 of 2010.

Besides 1,25,000 bpd of Mangala, the adjacent Bhagyam field would produce 40,000 bpd and Aishwariya another 20,000 bpd. The peak of 1,75,000 bpd would be reached in 2011. Cairn is investing $850 million in a processing facility and another $940 million in a heated oil pipeline from the fields to the port of Viramgam in Gujarat.

Cairn India, the subsidiary of UK-based Cairn Energy, holds a 70% stake and is the operator of the Rajasthan block. ONGC is its partner with a 30% stake.

Financials :

Cairn India Ltd reported a consolidated net profit of Rs236.42 crore in the quarter ended 31 December 2008 as compared to a loss of Rs13.91 crore in the year-ago period.The net profit included one-time reversal of deferred tax liability amounting to Rs123.60 crore.

The consolidated profit before tax for the fourth quarter of 2008 was Rs169.37 crore as opposed to Rs20.52 crore in the October-December quarter of 2007.


2009 Year HIGH 201

2009 Year LOW 142

CMP : 199


Investors having long term view can invest in this stock on dips (150-170) for a good return in the medium term.

Sector Watch : RENEWABLE ENERGY

RENEWABLE ENERGY SCENARIO IN INDIA

India is blessed with an abundance of sunlight, water and biomass. Vigorous efforts during the past two decades are now bearing fruit as people in all walks of life are more aware of the benefits of renewable energy, especially decentralized energy where required in villages and in urban or semi-urban centers. India has the world’s largest programme for renewable energy.

Solar Energy: 

The scope of generating power and thermal applications using solar energy is promising. Only a fraction of the aggregate potential in renewable resources and in particularly solar energy is being used so far. Processed raw material for solar cells, large capacity SPV modules, film solar cells, SPV roof tiles, inverters, charge controllers etc., have good market potential in India.


SPV Systems:

More than 700000 PV systems of capacity over 44MW for different applications are installed all over India. The market segment and usage is mainly for home lighting, street lighting, solar lanterns and water pumping for irrigation. Over 17 grid interactive solar photovoltaic generating more than 1400 KW are in operation in 8 states of India. As the demand for power grows exponentially and conventional fuel based power generating capacity grows arithmetically, SPV based power generation can be a source to meet the expected shortfall. Especially in rural, far-flung where the likelihood of conventional electric lines is remote, SPV power generation is the best alternative.


Biomass Energy: 

In a country like India, biomass holds considerable promise as 540 million tons of crop and plantation residues are produced every year, a large portion of which is either wasted, or used inefficiently. Conservative estimates indicate that even with the present utilization pattern of these residues and by using only the surplus biomass materials, estimated at about 150 million tons, about 17,000 MW of distributed power could be generated.

Hydro Projects: 

With numerous rivers and their tributaries in the country, the small hydro sector presents an excellent energy opportunity with an estimated potential of 15,000 MW. About 10 percent of this has been exploited so far. In order to accelerate the development of small hydropower in the country, the GOI also provides concessions for existing hydro projects including financial support for renovation, modernization and capacity upgrading of aging small hydro power stations.

Energy from Wastes:

 The rising piles of garbage in urban areas caused by rapid urbanization and industrialization throughout India represent another source of non-conventional energy. Good potential exists for generating approx. 15,000 MW of power from urban and municipal wastes and approx. 100 MW from industrial wastes in India.

Biofuels:

 The GOI recently mandated the blending of 5 percent fuel ethanol in 95 percent gasoline in 9 states and 4 union territories as of January 1, 2003. This mandate has created an approx. 3.6 billion liter demand for fuel ethanol in the entire country, and also further increase in the fuel ethanol component of the blend to 10% as of October 1, 2003. The significant demand growth creates a tremendous manufacturing opportunity for the U.S. fuel ethanol industry seeking to expand its investments internationally. A substantial import of fuel ethanol will be necessary to supply the product required to meet the burgeoning demand created by the currently effective GOI mandate.



Indian Companies Engaged In Alternate Energy Development:


Solar Power:

1. Moserbaer

2. XLTELECOM

3. Tata Power (Through TataBP solar)

4. Titan Industries ( Through Titan Energy)

5. WebelSolar


Wind Power:

1. Suzlon

2. Elecon Engineering

3. Indowind

4. LITL


Bio Fuel:

1. Praj Industries

2. Sugar Companies

3. Tata Chemicals

Investor who are looking for long term opportunities can invest in the above companies

Mobile Value-Added Services

   Instant messaging is a rapidly expanding mode of real-time communication across the world. The global messaging market, which was $65 billion in 2007, is predicted to touch $117 billion by 2012 according to Portio Research. A more recent report also states that Mobile Instant Messaging, which generated $2.5 billion in 2008, is expected to increase to $12.4 billion by 2013.

Geodesic

  Geodesic is an innovative technology company making software products focused on Information, communication and entertainment for mobile phones and desktop computers. The products include Instant messenger, Mobile VoIP (Voice over Internet Protocol) and Internet radio. The company has plans to launch a VoIP product soon. The company has tied with up with leading online & offline marketing companies to globally launch its new product.

   Geodesic derives most of its revenues from developing instant messaging platforms/services and licensing them to enterprises as well as retail users (directly or indirectly) under the ‘Mundu’ brand. The company’s products (Mundu ICE stack) cater to clients ranging from portals and publishers to telecom operators, mobile handset manufacturers, system integrators and even retail consumers. Geodesic also licenses its instant messaging platform to mobile handset manufacturers and telecom operators, thus providing it with sustainable revenue streams, with scope for expanding margins.


    The client base for Geodesic also includes portals such as Naukri, bigadda.com, Edelweiss Capital Ltd, First Global Stock Broking, Business Standard and Dialog Telekom.



Headquartered in India, Offices in: UK, Sweden, Germany, Hong Kong, Mauritius, USA


Subsidiaries: 

Chandamama India Limited
Engage Solutions Limited
Geodesic Technology Solutions Limited
Geodesic Information Systems Inc
Geodesic Information Systems AB



Recent News Updates:

Geodesic Holdings Limited, wholly owned subsidiary of Geodesic Limited has signed a Share Purchase Agreement to acquire 100% of a privately held software company, headquartered in Uruguay. The company focuses on developing advanced messaging and collaboration solutions for Telecom operators, and has implemented their solution across 12 carriers in Latin America, South Africa and Asia.

Geodesic has announced its decision to buyback 25% of the equity shares at a maximum price of Rs 75 a share.

Recently, Geodesic won a deal from Idea Cellular in India, for Internet radio services on a revenue sharing basis.


Financial:


Geodesic reported revenues of Rs 191.07 crore for the quarter ended Dec 31, 2008, an increase of 115% as compared to the quarter ended Dec 31, 2007. 

Geodesic’s operating income for the third quarter ended Dec 31, 2008 was Rs 183.46 crore, an increase of 114% as compared to the quarter ended Dec 31, 2007. 

Geodesic’s net profit for the third quarter ended Dec 31, 2008 soared by 93.23% at Rs 83.70 crore compared to the quarter ended Dec 31, 2007. 


year High : 84

Year Low : 38

CMP : 66

Face Value : 2


One can invest in this stock at Current Market Price for a good return over a period of 3-5 years.

Mobile value-added services

Onmobile Global Ltd


OnMobile is India's largest VAS and Data solutions provider for Mobile, Landline and Media Service Providers. OnMobile's innovative Multimodal and Multiservices Platform integrates technologies like Speech Recognition, WAP, SMS, MMS, USSD, Voice and Location amongst others. This enables Service Providers, media houses, corporate, & merchants to offer interactive services on any network technology to provide an enriched end-user experience. In addition to providing technology, platform, applications and content, OnMobile also offers its customers a Managed Services operations model. OnMobile is the first Indian telecom VAS service company to go public. It made its debut on the two most prominent Indian Stock Exchanges - BSE & NSE. OnMobile is headquartered in Bangalore, with offices in 9 countries, customers in over 20 countries, and employee strength of 1000+.

All leading mobile operators in the country such as BSNL, Bharti Airtel, RCom, Vodafone Essar and Idea Cellular feature on the client list. The revenue share for any VAS product is between 20-25 per cent of usage. With all these operators witnessing rapid subscribing additions and looking to augment non-voice revenues to stem the falling realisation, OnMobile appears well-placed to benefit from the opportunity.

OnMobile recently acquired Telsima, a natural speech recognition software player that has capabilities in foreign and several Indian languages. This paves the way for additional license fee in addition to revenue share for OnMobile in addition to geographical expansion.

Recent News:

Norwest Venture Partners India has invested about $15 million (Rs.75 crore) for a stake less than 5% in OnMobile Global Ltd, a provider of value-added services for mobile phones.


Financials:

OnMobile Global, has announced a 7.63 per cent growth in net profit to Rs 27.64 crore for the third quarter ended 31 December 2008. Total revenue rose to Rs 115.72 crore in the latest quarter from Rs 80.50 crore in the corresponding year-ago period.


CMP : 314

52wk H/L (Rs) 744.70 - 185.20 


Onmobile Advantage:

The inorganic growth strategy of the company has started to boost the revenues of the company with the share of international revenues having gone up from 19% in the last year to 24% as on December 2008. The international revenues have registered a growth of approximately 90% as compared to a growth of 40% in the domestic revenues. The share of international revenues has gone up due to the contributions from Voxmobili and Telisma.



Long Term Investors can stay invested in this stock and can add this stock on dips for a period of 3-5 years. (Buy 200-250)