Jitendra Kumar Gupta's blog

The pipe sector went through a lean patch last year due to the global slowdown in oil exploration and production (E&P) activities. However, the recent flow should keep order books of companies in this sector robust and translate into higher revenues. The domestic pie India’s largest gas company, GAIL, which operates about 7,200 km of pipelines, recently announced plans to put up an additional 1,000 km by the end of this calendar year and a total of 5,000 km by 2013. The company has outlined investments of $6-7 billion (Rs 28,000-33,000 crore) in the next five years. These investments are almost equal to the amount it had invested in the last 25 years. GAIL’s decision to expand its pipe network would help it meet the increasing demand for gas. While India has a supply deficit, the situation is expected to improve as a result of the new gas discoveries in the country by RIL, ONGC and others. Currently, the gas supply is about 135 mscmd; this should go up to 215-220 mscmd by 2014. Th...

The Indian equity market lost momentum last week due to global concerns, rising interest rates and higher valuations. Jitendra Kumar Gupta speaks to Mark Mobius, executive chairman, Templeton Asset Management, on the road ahead. Edited excerpts: Has the post-Budget rally taken valuations to an expensive zone? India has seen considerable interest as have all emerging markets over the last year. Although valuations are currently at a high level, in the past, markets have traded even higher. An improvement in earnings is the key thing to watch out for. Should Indian investors be wary of global risks in the form of further credit shocks, fallout of Eurozone/Greek crisis and a possible Chinese bubble? Emerging markets are actually in a pretty good shape. The accumulation of foreign exchange reserves that puts emerging economies in a much stronger position to weather external shocks, relatively lower debt levels and the high level of money supply growth globally should allow them to overco...

India’s middle class, which according to a McKinsey report was 50 million in 2005, would jump by 11.6 times or about 583 million by the end of 2025. And, people who earn Rs 10 lakh per annum would grow four-fold from the current 4.4 million households to 18.1 million by 2020. The reason is higher incomes. McKinsey’s estimates suggest that as a result of rising incomes, 291 million people will move out of poverty and climb to higher income groups. Further, with India’s Gross Domestic Product growing at about seven per cent yearly in the past 10 years, its per capita income has grown by 9.11 per cent annually from $439 per person in 1999 to $1,050 per person in 2009. Also worth noting, according to Edelweiss Capital, is that this figure would further jump by over three times to $3,231 per person by 2020. “In the near term, the government stimulus programmes and personal tax incentives will mean higher disposable income. Apart from that, if we take a view beyond 18-24 months, there are ot...

Punj Lloyd Punj Lloyd’s stock has also been impacted on account of concerns over its prospects. For instance, in the case of Simon Curve’s (its subsidiary) ethanol project, analysts expect Punj to book additional liquidated damages in the March 2010 quarter. While Punj has already booked Rs 300 crore so far in 2009-10, its client raised a claim of Rs 160 crore in early March 2010. Punj’s large project in Libya, which is delayed and accounts for about 43 per cent of its order book, could mean more earnings downgrades by analysts in the near term. Also, concerns over its ONGC project exists, even as the company has booked most of the likely cost overrun. In terms of revenue visibility, too, Punj’s order book has been shrinking in the last few quarters on account of lower order inflows due to the lower capex in the global oil and gas industry. PUNJ LLOYD in Rs crore FY09 FY10E ...

This article was originally produced in November 2009. The broking industry is considered to be at a nascent stage and evolving to grow bigger as they explore new areas for growth. Importantly, experts say that the Indian households’ savings will gradually move away from traditional instruments towards equity and other related instruments. Room to grow From the longer-term perspective, a growing economy and lower penetrations levels of financial services are positives. As the economy grows, households’ savings will also grow which will find its way into various savings instruments. “We generate about Rs 20 lakh crore of annual savings but only a fraction of this comes to the financial markets, which will grow as the economy grows,” says Motilal Oswal, chairman, Motilal Oswal Financial Services. During 2008-09, only 4.7 per cent of total household savings of Rs 12,95,000 crore was deployed into equities. Experts believe that this ratio could gradually go up to 14-15 per cen...

Thanks to conservative accounting and reporting policies, intangible assets of companies do not get noticed by many investors. These ought to merit attention. The difficulty is in valuing assets such as goodwill, licences, large advertising expenditure, development rights, patents, brands, intellectual rights and research and development pluses. Most of these do not find any mention in financial statements and balance sheets. Take Educomp, a company with huge assets, not easily replicable, in terms of education content, which it developed over several years of research and efforts. The company got listed in January 2006 at Rs 155 a share and the market believed the stock was expensive, at about 30 times its earnings. But, ultimately, that content or intellectual property, not listed anywhere, paid off and company sales jumped almost 20 times in the past four years. Post its listing, the stock has given huge returns of 2,500 per cent. In such cases, as an investor, one shou...

Nice way of showing how minute we are!!! I certainly thought this was enlightening. Beyond our sun ... It's a big universe. Antares is the 15th brightest star in the sky. It is more than 1000 light years away. Now how big are you? And how big are the things that upset you day to day? Or for that matter, the things that are important? Keep life in prospective

Gerard Lyons, Chief Economist & Group Head of Global Research, Standard Chartered talks to Jitendra Kumar Gupta on the Indian economy and the factors that may help or hinder the growth. What is your view on the Indian economy in terms of the GDP growth, especially after India’s central bank’s recent measure to raise CRR and Repo rates? We think the industrial recovery in India is well under way with the average growth in industrial production at 12.7% for the last 6 months. Some service sector activities are also showing signs of improvement. Export growth has come back into positive territory. We expect GDP growth in India for FY11 to be in excess of 7.5% with chances of an upside surprise. Simultaneous tightening of fiscal and monetary policies are possible headwinds along with a staggered recovery in the developed world. Also some support for the labor intensive industries need to continue because they are still not faring well. Post budget do you think India's worries regar...