Introduction It was incorporated in 2006, as Reliance Technology Ventures Ltd. On March 3, 2010, company changed its name from Reliance Technology Ventures Ltd to Reliance Venture Asset Management Ltd. As the worlds of finance, technology, markets and people expand and converge, Reliance Group’s horizons [...]]]> Reliance Venture Capital
Reliance Venture Asset Management Limited

Introduction
It was incorporated in 2006, as Reliance Technology Ventures Ltd. On March 3, 2010, company changed its name from Reliance Technology Ventures Ltd to Reliance Venture Asset Management Ltd.
As the worlds of finance, technology, markets and people expand and converge, Reliance Group’s horizons are constantly expanding. Reliance Venture Asset Management Limited (RVAM) has been promoted by the Reliance Group to leverage emerging and high growth potential technologies, business models, world class management teams and markets to look ahead at future opportunities that can be enriched and enhanced by taking advantage of the group and its ecosystem. The company was ranked 30th in the Red Herring Top 100 Global Venture Capital Firms in 2009-2010 and was the only India based corporate venture capital company to feature in the ranking.
The venture capital industry is hotting up, with opportunities opening up in new sectors. To be part of this new growth story, Reliance Venture Asset Management is looking at investments in sectors such as microfinance, education and clean tech but it want to direct their funds into ancillary businesses as compared to those that directly comprise these sectors. The VC firm has already invested in a number of growth stage startups such as Yatra.com, Dhama Innovations, Suvidhaa Infoserve and Reverse Logistics and is now keen to invest another $50 million this year in startups.
Recently on 24th March 2011 the company announced that it will Exit from Dhama Innovations and some other portfolios. The CEO stated that it had recorded more than triple-digit IRRs on Dhama, similar is the case with other portfolios, and at present it is looking for an exit option.
Reliance and other VC companies mostly look for the businesses which are directly or indirectly related to their own business which helps to earn good return.
To sum up, it can be seen that the need of Venture Capital is growing in the Indian Economy with more and more people obtaining to start their own Business, there is high potential of Venture Capital Companies to grow in such a pace. Aerospace and defense sectors, both of which have typically been considered as government domains have a lot to gain with private sector involvement, given the kind of demand enjoyed by these sectors. Education, micro finance and clean tech are already enjoying a lot of investor interest.

(CMP: Rs. 172.35) Buy Target Price: Rs 260 (nishit@managementfunda.com) ________________________________________

Company Profile:

• Phoenix Mills Ltd. (PML) began operations as a textile manufacturing company in 1905, on 17.3 acres of land in Lower Parel, Mumbai. • In 1987, the company entered Mumbai’s real estate market through development of High Street [...]]]> March 06, 2011

(CMP: Rs. 172.35)
Buy
Target Price: Rs 260
(nishit@managementfunda.com)
________________________________________

Company Profile:

• Phoenix Mills Ltd. (PML) began operations as a textile manufacturing company in 1905, on 17.3 acres of land in Lower Parel, Mumbai.
• In 1987, the company entered Mumbai’s real estate market through development of High Street Phoenix (HSP) on the textile mill property in Lower Parel (involving development of ~3 msf [million square feet] of retail, entertainment, commercial and residential space).
• Besides HSP, the company is developing 4 market cities in Kurla (Mumbai), Bangalore, Chennai and Pune. Moreover, the company has ventured into hospitality business through its subsidiary – Phoenix Hospitality – that is currently developing five hotels across five cities.
• In 2008, PML acquired 40% stake (currently 33% pre-IPO) in Entertainment World Developers (EWDPL), operating under Treasure Island Brand in tier II cities. PML has also acquired 73% stake in Big Apple Real Estate (BARE) that develops malls under the brand name ‘Phoenix United’ across North India.

Q3 FY11 Updates:

• During the quarter, PML registered 49.32% growth in its net income over Q3 FY10 to Rs. 45.07 crores
• De-leveraging helped the company reduce its interest burden which resulted into stunning 133.28% jump in its profit after tax to Rs. 23.77 crores from Rs. 10.19 crores in Q3 FY10.
• Earnings Per Share (EPS) of PML in this quarter stood at Rs. 1.64 compared to Rs. 1.53 in Q2 FY11 (increase of 7.1%).

Palladium’s rental to HSP will increase:
• PML average rentals for HSP increased to Rs166-170psf in 9MFY11, 20% higher than the FY10.
• Going ahead with renewal of 0.15 msf in FY11 we expect average rental income to increase to Rs175-180 psf. Estimated rental income will be in the range of Rs. 200-220 crores for FY12.

Three Market City projects to be operational in Q4 FY11 & One in Q1 FY12:
• Market City projects at Kurla, Bangalore and Pune are in the final stages of completion and would generate rentals from Q1 FY12 onwards. The one in Chennai will be generating rentals from Q2 FY12.
• Leasing status for Market City Projects is expected to improve further before they become operational. PML has increased its stake in the Bangalore project (to 32.7% from 28.1% earlier) and Pune project (to 58.5% from 50% earlier). Both stakes increases are value-accretive.

Three residential & the hotel projects to be launched in FY12:
• PML expects to launch two Bangalore & one Chennai residential projects in late Q4FY11 (or early FY12). This will help the company generate cash flows. This launch will also help it enhance its brand value in the Bangalore market.
• The hotel project in Lower Parel of 410 keys (+23 service apartments) which will be operated by Shangri-La is expected to be launched in Q1 FY12.

Outlook and Conclusion:
• At the current market price of Rs. 172.35, the stock is trading at 20.8 x FY11E and 12 x FY12E respectively.
• Price to Book Value of the stock is expected to be at 1.4 x and 1.3 x respectively for FY11E and FY12E.

I expect that the company will generate substantial cash flows & keep its growth story in the coming quarters also. I recommend ‘BUY’ in this particular scrip with a target price of Rs. 260 for Medium to Long term investment.

(Disclaimer: As per SEBI requirements it is stated that, the writer and/or individuals thereof may have positions in securities referred herein and may make purchases or sale while report is in circulation.)

27th February, 2011                                                                                                                           (nishit@managementfunda.com)

Introduction:

• Gold & Silver prices have been going up for a while now. Gold has appreciated 29.3% from Rs 16,220 a year earlier to Rs 21,038 on Saturday. On Saturday, Silver closed at an all time high of Rs [...]]]>

27th February, 2011                                                                                                                           (nishit@managementfunda.com)

Introduction:

• Gold & Silver prices have been going up for a while now. Gold has appreciated 29.3% from Rs 16,220 a year earlier to Rs 21,038 on Saturday. On Saturday, Silver closed at an all time high of Rs 50,250. In last one year, silver has given return of 92.34% in rupee terms & 86% in dollar terms, clearly out-performing the gold.

What is causing this surge!!!

Surge in Gold:
• Economic uncertainty of the developed nations (US & EU countries) has never been this high, fuelled after the recession of 2008. The resulting effect of this is directly linked to credibility of the global currency ($=US dollar).

• According to IMF, US spends $3 for every $1 earned and this cannot last long. To cover up this enormous debt position, support the growth & liquidity in the market and avoid double dip, US has an easy way out-PRINT MORE DOLLARS (Quantitative Easing 2- $600 billion).

• The dollars are printed without backing of any tangible asset. Consequently, it leads to easy availability of cheap dollars (low or no interest rate) resulting in devaluation of dollar. In this scenario, world is losing its long term faith on dollar, it wants something that is credible and rare (limited).

• Precious metals predominantly Gold & Silver are the most tangible and liquid asset to possess. Indian central bank-Reserve Bank of India (RBI) purchased 200 metric tons of gold from IMF in Oct’09 for $6.7 billion in a move to diversify its foreign exchange reserve.

• India continues to the largest consumer and importer of gold worldwide. Indian households are estimated to own 15,000 tons of gold. But Chinese are not far behind, according to the World Gold Council, gold demand in China has risen by 26% in the last one decade. In the 30 months between Jan’08 and June’10 alone, private households bought more gold (1057 tons) than the central bank reports in its entire gold reserves (1054 tons).

Surge in Silver:

• China has turned net importer:
In 2005, China exported 100 million ounces of silver (one troy ounce = 31.1 grams). In 2010, five years down the line, the country has turned into a net importer, importing 122.6 million ounces, which is around 14% of global production. India, imported 1200 tons of silver in 2010, up 20% from the previous year.

• Supply demand mismatch:
The Silver Institute, reports supply of silver in 2009 was 519 million ounces. It is equivavelent to 2% increase per year the entire decade. Silver demand in 2009 stood at 889 million ounces and the difference between demand & supply was met out of scrap sales which are 19% of silver demand. This is not sustainable.

• No recycling of silver:
Silver is used in very small amounts as industrial metal. Given this it is not easy to recycle silver & also it is not monetary feasible to recycle at current rates. Experts say recycling of silver will be monetarily feasible if silver rises $50 per ounce (currently it quotes around $32- $33 per ounce). Given these reasons, increase in sale of scrap is not very easy.

Conclusion:

It is very predictable as history tells us equities will beat gold & silver in the next decade. But it’s a sunshine asset class to hedge an individual’s portfolio against the volatility and risk-return ratio of stock markets.
One thing is certain bullion is a definite asset class that provides a comfortable degree of safety of capital at the same time decent return in the times wide spread economic uncertainty.

Moral: Park a portion of your capital in Gold & Silver. You won’t regret.

Royal Orchid Hotels Ltd. (Stock Analysis) Dated 20th Feb, 11 Review

During the week, Sensex tumbled from 18,211 to 17,700 while ROHL corrected from Rs 63.7 to Rs 61.25. I continue to maintain ‘BUY’ on the stock and can be accumulated for the investment horizon of 18-24 months.

(CMP: Rs 63.7) Buy Target Price: Rs 110 (nishit@managementfunda.com) ________________________________________

Company Profile:

• Royal Orchid Hotels Ltd. is an India-based company. Royal Orchid engages in the operation and management of hotels/holiday resorts, as well as the provision of related services in India. The company operates 15 business & leisure hotels in 7 [...]]]> February 20, 2011

(CMP: Rs 63.7)
Buy
Target Price: Rs 110
(nishit@managementfunda.com)
________________________________________

Company Profile:

• Royal Orchid Hotels Ltd. is an India-based company. Royal Orchid engages in the operation and management of hotels/holiday resorts, as well as the provision of related services in India. The company operates 15 business & leisure hotels in 7 destinations.
• The Royal Orchid Hotels are amongst India’s fastest growing hotels. The group achieved remarkable position in the hospitality industry and now operates more than 15 hotels across Bangalore, Mysore, Pune, Jaipur, Goa and Hyderabad.
• The Company’s hotel properties include Hotel Royal Orchid, Royal Orchid Central, Royal Orchid Resorts and Ramada in Bangalore, Royal Orchid Metropole and Royal Orchid Brindavan, heritage properties in Mysore, Royal Orchid Central, Pune, Jaipur, and Royal Orchid Galaxy Resorts, Goa.
• The Company’s subsidiaries include Icon Hospitality Private Limited, Maruti Comforts and Inn Private Limited, Royal Orchid Hyderabad Private Limited, AB Holdings Private Limited, Royal Orchid Jaipur Private Limited and Royal Orchid South Private Limited.

Q3 FY11 Updates:

• Royal Orchid Hotels Ltd. (ROHL) showed substantial rise in its bottom-line and top-line due its unique business model & aggressive expansion.
• ROHL registered 23.2% rise in its sales in Q3 FY11 to Rs 24.85 crores from Rs 20.17 crores in Q3 FY10.
• During the same period, ROHL saw stunning 55.71% growth in its net profit to Rs 3.27 crores from Rs 2.10 crores in Q3 FY10.

Aggressive Expansion:

• ROHL have eight hotels opening up this year. Currently company has 1,500 rooms in pipeline coming up in next two years of which majority will open in this year before December.
• Company currently has 15 operational hotels which will scale up to 22-23 hotels by December of this year. The required funds (in tune of Rs 150 crores) for the same are raised by the company.

Low Debt Volumes:

• The company is having a low debt volume of leads to the debt equity ratio of 0.69x in FY10 which is very low as compare to its peers. Low debt gives an advantage to the company to raise funds for its expansion plans.
• ROHL is planning its first corporate bond issue to finance new hotels in the cities of Mumbai and Hyderabad.

Unique Business Model:

• Royal Orchid Group of Hotels has grown immensely in the last few years despite the recessionary trends of market and striving to emerge as one of the larger hotel chains in the country.
• The hotels of the Company are situated across the major markets in India giving it an advantage of adequately balanced representation. With the new hotels of the Company coming up in Hyderabad, Jaipur, Shimoga, Hospet, Mussoorie, Mumbai, Delhi & Shimla the group is poised for a substantial growth in near future.

Outlook and Conclusion:

• At the current market price of Rs 63.7, the stock is trading at 11.17x FY11E and 8.41x FY12E respectively. Price to Book Value of the stock is 0.87 & relatively cheap compared to peers.

With the improvement in industry trend & positive outlook of the company’s future, I initiate ‘BUY’ with a long term investment horizon with the price target of Rs 110.

(Disclaimer: As per SEBI requirements it is stated that, the writer and/or individuals thereof may have positions in securities referred herein and may make purchases or sale while report is in circulation.)
Axis Bank (Stock Analysis) Dated 31st Jan’11 Review
• The volatility in markets has caused huge swings in the stock. While Axis Bank made a low of Rs 1,149 it has bounced back to Rs 1,293 which is 3.5% above the call price.
Venus Remedies Ltd. (Stock Analysis) Dated 6th Feb’11 Review
• While the Sensex has bounced back from 18,008 to 18,211, Venus Remedies Ltd. touched 52-week low of Rs 195 & closed at Rs 215 on 18th Feb. I continue to maintain ‘BUY’ on the counter as it has potential of huge upside from these levels.

Buy Target Price: Rs 310 (nishit@managementfunda.com)

Company Profile:

Dated : 31/01-2011

(CMP: Rs. 1,251)

Buy

Target Price: Rs 1,610

(nishit@managementfunda.com)

Axis Bank has reported excellent set of numbers with net profit up by 36% y-o-y at Rs 891 crore which is higher than market expectations. NII grew 28% y-o-y and 7% q-o-q driven by robust loan growth and sequential margin improvement. Net interest [...]]]>

Dated : 31/01-2011

(CMP: Rs. 1,251)

Buy

Target Price: Rs 1,610

(nishit@managementfunda.com)

Axis Bank has reported excellent set of numbers with net profit up by 36% y-o-y at Rs 891 crore which is higher than market expectations. NII grew 28% y-o-y and 7% q-o-q driven by robust loan growth and sequential margin improvement. Net interest margin expanded 13bps to 3.81% on the back of de-growth in term deposits, strong CASA growth, hike in PLR & base rates and strong traction in high yield retail loans. Non-interest income increased 16% y-o-y and 11% q-o-q driven by healthy fee income growth and higher trading gains. Advances growth accelerated to 46% y-o-y and 12% q-o-q, while deposits de-grew sequentially by 1%, resulting into sharp jump in CD ratio from 70% in Q2FY11 to 79% in Q3FY11. CASA ratio remained at healthy level of 42% reflecting underlying growth momentum. Asset quality held well during the quarter as gross NPA and Net NPA stood at 1.1% and 0.29% respectively.

High growth in Loan Book: Advances grew 46% y-o-y and 12% q-o-q driven by retail, agri and corporate loans. Improving economic environment, revival in industry credit demand and infrastructure development were key underlying growth drivers for corporate credit growth. Retail banking including retail assets saw strong traction during quarter. CD ratio sharply moved up from 70% in Q2FY11 to 79% in Q3FY11, although average CD ratio improved only 100bps to 73% in Q3FY11. Advances growth is likely to moderate from 45% y-o-y to 28-30% y-o-y due to run down of short term loans from the book and higher base effect.

NII beats the estimates: NII came at Rs 1,733 crore against our estimate of Rs 1,670 crore. Growth in net interest income has been driven by sequential margin expansion, loan volume growth of 12% q-o-q and higher growth in retail assets especially in personal loan segment. It is expected that net interest margin to be moderated by ~15-20 bps in Q4FY11 due to higher deposit mobilization and translation of higher cost of deposit. However, we expect net interest margin to be maintained at ~3.50% to 3.60% in medium term.

Fee Income (Non-interest Income) Rises: Fee income contributed 84% of total non-interest income, which grew 21% y-o-y. Corporate banking, fee income from treasury and retail distribution were major drivers for fee income growth. Trading gain came at Rs134 crore against Rs108 crore in Q2FY11, up 24.3% q-o-q.

Valuation & Outlook: Reported earnings are above estimates driven by core operating performance and healthy trading gains. The bank performed strongly well on most of the operating parameters during the quarter. I continue to believe Axis Bank to maintain its quality liability franchise, superior return ratios, healthy fee income growth, and stable asset quality in medium term. At Rs.1,253, the stock is trading at 2.4xFY12 adjusted book and 12.1 xFY12 earnings. I believe current correction in the stock offers attractive entry point for medium term perspective with a price target of Rs.1,610.

(Disclaimer: As per SEBI requirements it is stated that, the writer and/or individuals thereof may have positions in securities referred herein and may make purchases or sale while report is in circulation.)

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