Tyre scrips merrier as rubber slips to 8-month low

Tyre scrips merrier as rubber slips to 8-month low. The softening of rubber prices and the players' success in increasing tyre prices has sparked renewed interest in the tyre sector.

A host of tyre scrips surged today. Apollo Tyres rose 8% to Rs 341.80, JK Industries rose 5% to Rs 125, Goodyear India gained 5% to Rs 118.65, CEAT rose 5% to Rs 111.90, Falcon Tyres gained 4% to Rs 120 and MRF rose 2.6% to Rs 3,956.

>From a low of Rs 72.90 in late July, JK Industries has risen to current Rs 125. CEAT has spurted to Rs 111.90 from a low of Rs 72.05 on 24 July. MRF has risen to current Rs 3,956 from a low of Rs 2,611.70 in late July.

The price of natural rubber is falling in domestic as well as global markets. The cost of rubber, the main raw material for tyre companies, has touched an eight-month low. February 2007 rubber futures contract in Tokyo closed 2.2% down, at 218 yen ($1.87) per kg, on Thursday (7 September 2006).

Natural rubber constitutes roughly 40% of the total input costs for the manufacture of tyres. Most companies have been increasing the prices of tyres since the last few months. Tyre makers, which were earlier raising prices just twice a year in the past, have started announcing price hikes every six weeks.

Meanwhile, early last month, the Directorate-General of Anti-Dumping and Allied Duties, Ministry of Commerce, recommended imposition of provisional anti-dumping duty on import of cross-ply, truck-bus tyres from China and Thailand. The duty-burden is heavier on tyres from Thailand. In its preliminary findings announced on 31 July, the anti-dumping authority found that imports were causing injury to the domestic tyre industry, during the 14-month enquiry period from June 2004, and issued fresh set of reference prices for such imports. The enquiry was launched, based on complaints from the tyre industry in late 2005.

Tyre sector is witnessing robust demand from the booming automobile sector. Strong demand is also helping industry to regularly hike prices. Analysts feel that demand from the replacement market will remain strong due to ever increasing number of vehicles in India. Replacement demand is for the tyre sector. As much as 49% of tyres produced enter the replacement market, while only 43% find their way into the original equipment manufacturers (OEM) segment.

For Q1 June 2006, Apollo Tyres reported 3% fall in net profit, to Rs 16.26 crore (Rs 16.69 crore). Sales jumped 33%, to Rs 757.27 crore (Rs 568.09 crore).

MRF's Q3 June 2006 net profit plunged 52%, to Rs 8.17 crore (Rs 16.88 crore). Sales rose 25%, to Rs 994.77 crore (Rs 795.12 crore).

JK Industries reported 59% fall in net profit for Q3 June 2006, to Rs 3.63 crore (Rs 8.88 crore). Net sales rose 23.9%, to Rs 696.93 crore (Rs 562.67 crore).

CEAT performed well with a net profit of Rs 23 lakh in Q1 June 2006 as against a net loss of Rs 1.98 crore in Q1 June 2005. Sales rose 24% to Rs 497.66 crore (Rs 402.77 crore).

Source: Capitalmarket

UWB roars as Indiabulls joins fray for acquisition

United Western Bank jumped 10%, to Rs 21 after Indiabulls Financial Services submitted a bid to the Reserve Bank of India to buy the bank.

As many as 1.56 lakh shares were traded on the BSE. There were pending buy orders for 17.87 lakh shares at the maximum price.

On 4 September, the stock had tanked 28.38%, to Rs 16.15 on a huge volume of 2.24 crore shares after the RBI placed it under a moratorium. The stock has since managed to advance to Rs 19.10 by 7 September 2006, after the company got good response from the banking sector to acquire the ailing bank.

Earlier, the stock had been consistently declining, from Rs 45.35 on 11 May 2006 to Rs 16.15 by 04 September 2006, due to sustained selling.

United Western Bank (UWB) got another shot-in-the-arm when Indiabulls Financial submitted a letter of intent with the Reserve Bank of India, proposing its merger into Indiabulls Financial. Indiabulls Financial proposes to offer one share of Indiabulls, post demerger of the real estate business, for every six shares of United Western Bank. The offer is based on 53.77 million shares of UWB as per its 30 June 2006 filings with the exchanges and will result in the issuance of approximately 9 million additional Indiabulls Financial shares in exchange for UWB shares.

Indiabulls Financial is the latest addition to the 12 other companies contending for ownership of UWB. September 7 was the last day for submitting the bids. UWB, on its own, has forwarded a reconstruction scheme to the RBI.

Meanwhile, the Maharastra Government had proposed to provide financial support to the bank and help in its reconstruction through the State Industrial Investment Corporation of Maharastra (SICOM), the single largest shareholder in UWB, which presently holds 10.8% stake.

SICOM had proposed a reconstruction scheme to the RBI by infusing Rs 350 crore to help the ailing UWB. Those aiding SICOM in this scheme are HDFC and Infrastructure Development Financial Corporation (IDFC). The scheme has been approved by the board of UWB on Wednesday. As per the proposal, HDFC will infuse Rs 70 crore jointly with any one, or more, of its subsidiary companies and IDFC will chip in Rs 35 crore. SICOM will probably have to raise the rest of the Rs 245 crore along with the Government of Maharashtra.

The other banks chasing the UWB are Corporation Bank, UCO Bank, ICICI Bank, Canara Bank, Andhra Bank, Allahabad Bank, Federal Bank, IDBI Bank, Saraswat Co-operative Bank, Standard Chartered Bank and Citibank.

UWB has been put under moratorium by the RBI, which was enforced on 2 September 2006, and will be valid till 1 December 2006. As a consequence of this restriction, the banking operations and depositors will be entitled to a withdrawal of only Rs 10,000 of the total balance lying in the account of a customer.

The UWB has a positive networth as on 31 March 2006, but its adjusted book value, after deducting 100% of non-performing assets, was negative (as on 31 March 2006).

The latest total public holding in United Western Bank is 65.84%.

United Western Bank is a 70-year old bank and has over 240 branches spread across 14 states. However, it is mostly concentrated in Maharashtra. The bank's portfolio of services includes retail banking, accepting deposits and lending money, leasing and hire-purchase, foreign exchange, letters of credit, bank guarantees, credit cards, investment assistance, and merchant banking

UWB registered a net loss of Rs 6.08 crore for Q1 June 2006 compared to a net loss of Rs 14.64 crore in Q1 June 2005. Net income rose 9.4% to Rs 155.15 crore from Rs 141.76 crore.

Jay Bharat Maruti Record date for Bonus issue.

Jay Bharat Maruti Ltd has informed BSE that the members at the 19th Annual General Meeting (AGM) of the Company held on August 28, 2006, have approved issue of Bonus Shares in the ratio of 1:1 i.e. One Bonus Share of Rs 5/- each for One equity Share of Rs 5/- each held. Record date is decided as 26th Sept 2006.

Cellulose & Chemicals Board to consider stock split

Cellulose & Chemicals Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on September 11, 2006 to discus matter relating to sub division (split) of the equity shares of the company.

Aditya Birla Nuvo - Board Meeting for Rights Issue

Aditya Birla Nuvo Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on September 11, 2006, inter alia, to consider, capital raising plan including a rights issue.

Bhagyanagar Metals goes Ex-Bonus

Bhagyanagar Metals Ltd had informed BSE that September 08, 2006 has been fixed as Record Date for the purpose of Bonus issue. Yesterday, this stock went Ex-Bonus.

BUY Calls from Deepak Mohani, E Mathew and Rajat Bose

Deepak Mohani:
Buy Hindustan Motor below Rs 43 with stop loss of Rs 42. This is a day-trading recommendation.
Buy Gitanjali Gems below Rs 207.50 with stop loss of Rs 205. This is a day-trading recommendation.

E Mathew
Buy Bajaj Hindustan on declines with a stop loss of Rs 310, for a medium-term target of Rs 390
Buy Lok Housing (279.30) with a stop loss below Rs 272 for a target of Rs 305

Rajat K Bose
Buy Lok Housing (279.30) with a stop loss below Rs 272 for a target of Rs 305
Buy IVRCL Infrastructure (264.70) with a stop loss below Rs 258.80 for a target of Rs 277