Two Upper Circuits in just a few minutes of trading at the BSE Sensex! Now thats what you call a BULL RUN. It was shocking but we were desperate for such shocks. We are hungry and foolish enough for a few more of such shocks, knowing the fact that this would lead to correction in future. I have never been so confident about throwing positive vibes about the Indian Economy over the last ten issues of Niveshak as I am now. The stock market was buoyed not by any corporate financial results or GDP figures on 18th May 2009, but by a favourable election result that saw the incumbent Congress coming to power with more style and stability. The Indian public brutally punished the Left party for hindering the reforms and growth agenda for years, making clear that we desperately need economic growth and cannot tolerate any nonsense. After that, the market has not only been pushed up by positive sentiments alone but by strong fundamentals as well. The Central Statistical Organization also came up with revised data about the overall performance of the Indian Economy, as well as some favourable future predictions that further pushed up sentiments and the market benchmark indices a bit. This proves the age old fact that Bear and Bull run are an 80% play of sentiments and 20% play of economic fundamentals. And always remember one thing – The Stock market moves 3 months ahead of the real economy. So we can expect recovery in the Indian Economy very soon, maybe today onwards.

There has not been much of good news from the western markets although, there has been some built-up for it. Large western banks wrote off almost all their toxic debts making way for profits in future quarters; expect some positive results for Q209. US iconic automaker Chrysler filed for Bankruptcy protection and was fortunate enough to find out a suitor in European auto behemoth Fiat. This could ensure it a smoother and quicker recovery. White House and Capitol Hill think-tanks are also thinking on similar lines for rehabilitation of General Motors and Ford. Positive results are expected very soon from United States and the Eurozone. Commodity prices are rising and Crude prices have touched USD 60 per barrel. This could be indicating a rise in demand. While the Eastern part of the world may be blamed for not having pulled any miracles to electrify the markets, it must be greatly appreciated for not throwing any disturbing news for the past few days that could have further deepened the crisis. There was some great news of market performance only from India, but we will hold on talks about Decoupling for some time.

Now, let me put my feet back on the ground and lets have a glimpse of the current issue. As, we talk of recovery, we also take a look at the mother cause of all economic crisis the modern world has seen till date. We will see if the basic premise on which modern money is created and multiplied, without any asset backing, builds up a faulty system where inflation and bankruptcies are just a part of the process. Our quest for moving away from traditional financing and search for newer investment opportunities continues as this time we try to acquaint you with the Art of Investing in Art. Hope you got a hint of that on the cover. Under this quest, we will also try to find out if public investment in private equity or PIPE as is popularly known would be a better financing and investing option. 

We present to you an Investment B anking perspective of the Indian Ship building Industry. This issue will try to foresee the future prospects and possible roadblocks for the Small and Medium Enterprise sector of India. Who will be the superpower of the Asian Century? The often debated topic – China or India or its Chindia has been taken up by Niveshaks to give a perspective to this gripping encounter. As India prepares to recover, we will also see if Foreign Currency Convertible Bonds carry the seeds for another crisis in the near future. 

And now, back to the caveat-The market moves three months ahead of the real Economy.

So, HAPPY RECOVERY.

Biswadeep Parida

(Editor- Niveshak)

(click on image or here to view)

• Daiichi full-year losses narrow down to $2.2 bn
• IOC Q4 net profit at Rs 6,622.96 cr
• Colgate Palmolive India Q4 net at Rs 77 cr
• Welspun-Gujarat FY'09 net dips 37.34 pc at Rs 213.50 cr
• Sundaram Finance reports Rs 150.73 crore net profit
• Tata Motors FY09 net down 51 pc
• Madras Cements net dips 11% at Rs 363.52 cr
• Bank of India FY'09 net up 58 pc at Rs 3,087.54 cr
• BPCL Q4 net jumps 62-fold to Rs 3,628 cr; declares 70% dividend
• IVRCL Q4 profit up at Rs 80 crore
• BPCL Q4 net jumps 62 times to Rs 3,628 crore
  

Highlights of the deal:

• The proposed $23-billion mega deal between Bharti Airtel and South Africa's MTN would be the biggest ever M&A transaction involving an Indian company.
• As per the exploring agreement, MTN and its shareholders would acquire around 36 per cent economic interest in Bharti Airtel. While, the Sunil Mittal-promoted Bharti Airtel would acquire 49 per cent stake in South African telecom giant MTN
• If the deal materializes, the combined entity would have revenues of over 20 billion dollars and a subscriber base of over 200 million.
• MTN is 50% bigger than Bharti though Bharti grows at 1,000 bps faster than MTN
• Bharti commands a higher multiple than MTN, though growth opportunities are extremely similar in both target markets, i.e. India or MEA
• Net debt / EBITDA is still pretty good for MTN Airtel given the > 40% growth rates, which should sustain at 35-40% levels at least till FY11/12
• Although gearing appears to increase post-transaction EBITDA is strong enough to support debt servicing
• Capex requirements possibly range from $5-6 billion going forward, coupled with strong network footprint established by both players in the existing markets.
• MTN is essentially part financing the buyout of its own shareholders by paying $2.9 billion to Bharti for the latter to increase its stake to 49% in MTN
• Bharti is thinly leveraged currently, and would need to resort to short term acquisition financing to fund the deal
• Minority interests of JV partners needs to be assessed
• Any further upsides on synergy (capex, management, towers, etc) will only add to the value proposition