Mumbai Mar 4 ,2011 (Ajay Rawal )

Coal India (CIL) has raised prices by 30-100%, largely for non-power consumers. While prices for A-B grades (primarily consumed by non-power industries) have been hiked by 100% for all consumers, C-G grades (consumed by all) have been increased by 30% for non-power/fertilizers consumers. However, Mahanadi Coalfields (a subsidiary co and ~22% of CIL’s total volumes) has raised prices by 16-25% for all kind of consumers (including power producers). Overall, we expect this to translate into an average linkage price increase of 15% in FY12E and generate additional revenue of Rs 62 bn in FY12E. Impact on consuming industries is also discussed.

This hike also signifies CIL’s power to raise prices independently despite adverse macro conditions. We also view this event as a first step towards alignment of CIL’s coal pricing to market driven pricing. Rising domestic coal prices would put pressure on govt. to expedite clearances for coal projects leading to higher volume growth for CIL. We have not considered upside from additional volume growth. Our sales growth assumption for FY12 stands at 5% (450 mn tonnes), based on inventory sales as production growth assumed at only 2% in FY12.

Our IFRS compliant EPS estimate for FY12E now stands at Rs 26.5 (vs. Rs 21.2 earlier). We reiterate our strong buy call on CIL with a revised target price of Rs 412 (as against Rs 373 earlier). Any further coal price increase, post wage hike in July 2011 (25% considered in our assumption), could provide additional upside to our earnings estimates and target price.

 

 

 

Lovable Lingerie IPO to open on March 8

Mumbai Mar o3 (Ajay Rawal)

Mumbai-based women’s innerwear manufacturer Lovable Lingerie is entering capital market with a public issue of 45.5 lakh equity shares of face value of Rs 10 each on March 8.

The issue would constitute 27.08% of the post issue paid-up capital, which will close on March 11.

The company CMD Mr L Vinay Reddy told mediapersons here today, ” The firm will use the issue proceeds to set up a manufacturing facility to create additional capacity at Bangalore, where it will invest Rs 23 crore. Lovable also plans to invest Rs 25 crore in its joint venture Lovable Lifestyles Private Limited, which will market, manufacture, distribute and direct retail in the super premium lingerie segment. Lovable will hold 90% stake in the JV with London’s Lifestyle Galleries. It will also spend additional amount on brand building and setting up exclusive brand outlets (EBOs).

Sequoia Capital India’s growth fund picked up a 5.95% stake in a pre-IPO investment in the company for Rs 20 crore. The deal was involved SCI Growth Investments II picking up one million shares at a price of Rs 200 per share. The deal would value the firm on a post-issue basis at around Rs 336 crore.

With this pre-IPO deal benchmark, the firm could be looking to raise anywhere over Rs 91 crore through the issue.

Anand Rathi Advisors Limited is the book running lead manager to the proposed IPO.

The company’s brands include ‘Lovable’, ‘Daisy Dee’ and ‘College Style’ which are retailed through 103 distributors in India. Lovable has three manufacturing facilities – two in Bengaluru, with an installed capacity of 60 lakh pieces p.a. and another unit in Uttarakhand with an installed capacity of 7.5 lakh pieces p.a.