Most Indian Stocks Gain as Software Exports Climb on Weak Rupee

By Rajhkumar K Shaaw - Oct 1, 2014

Most Indian stocks rose as software exporters climbed after the rupee weakened to a seven-month low amid concern the U.S. Federal Reserve may raise interest rates.
Tata Consultancy Services Ltd. (TCS), Infosys Ltd. (INFO) and Wipro Ltd., India’s largest technology companies, were the biggest gainers on the benchmark S&P BSE Sensex. (SENSEX) Jet Airways (India) Ltd. and SpiceJet Ltd. climbed after refiners cut aviation-fuel prices. The currency dropped 0.1 percent to 61.82 per dollar.
Six stocks climbed for every five that fell on the S&P BSE 100 Index. The Sensex dropped 0.1 percent to 26,593.96 at 11:17 a.m., after changing direction at least 12 times before markets close for a five-day holiday starting tomorrow. Volume on the CNX Nifty Index was 8 percent below the 30-day average for this time of day, data compiled by Bloomberg show.
“This rare bunching of holidays that we haven’t seen in at least nine years is deterring investors from taking fresh positions,” V.K. Vijayakumar, an investment strategist with Geojit BNP Paribas Financial Services Ltd., in the southern state of Kerala, said by phone.
The Sensex lost less than 0.1 percent last month, ending seven months of advance that was the longest winning run since January 2007. The gauge has risen 26 percent this year, the top performer among the world’s 10 biggest markets, as foreigners purchased $13.8 billion of local shares, the most among eight Asian markets tracked by Bloomberg.
Tata Consultancy gained 1.6 percent, taking this year’s advance to 28 percent. Wipro (WPRO), the third-biggest software exporter, rallied 2.8 percent. Infosys Ltd. added 1.2 percent.

Fuel Prices

IPO Markets Don’t Need Alibaba for Best Third Quarter Since 2010

By Leslie Picker, Ruth David and Fox Hu - Sep 29, 2014

Ali...who? One company dominated the conversation about initial public offerings in the third quarter, and for good reason: Alibaba Group Holding Ltd. (BABA) raised a record-breaking $25 billion in the U.S. this month.
Leave it out of the total raised, though, and the three months through September were still the busiest for IPOs in four years. From German online retailer Zalando SE to WH Group Ltd. (288), the world’s largest pork producer, companies raised $41.8 billion through yesterday, data compiled by Bloomberg show. In the U.S., it was the busiest third quarter in more than a decade -- also without Alibaba included.
Record stock prices are drawing sellers to the market while investors hunting for returns have been rewarded for betting on new stocks: Globally, the median performance of newly-listed shares this year was nearly three times as much as the broader stock market. While a drop in share prices or a few high-profile flops could slow down dealmaking, the IPO market is for now feeding off of the success of deals like Alibaba’s.
“Alibaba breathed even more life into the IPO market,” said Liz Myers, global head of equity capital markets at JPMorgan Chase & Co. in New York. “It has definitely helped to enhance the sentiment for new deals in what has been a busy IPO calendar year.”
Including Alibaba, IPOs globally raised $66.8 billion during the quarter, the most during this period ever. About $40.1 billion of that was raised in the the U.S., with another $8.6 billion in Europe and $14.3 billion in Asia, data compiled by Bloomberg show. For the first nine months of the year, the global total has reached $182.7 billion.

Seller’s Market

The demand for IPOs has created an opportunity for sellers to start exiting long-standing investments. Yahoo! Inc., which invested in Alibaba in 2005, profited by selling shares of the e-commerce company to fund managers drawn to its exposure to Chinese consumers. Royal Bank of Scotland Group Plc spun off its U.S. unit Citizens Financial Group Inc. (CFG), ING Groep NV sold almost one-third of insurer NN Group NV.
Also in Europe, Germany’s Samwer brothers sold a stake in Zalando, the continent’s largest online-only fashion and shoe retailer. The company will raise as much as $768 million in Germany’s first big technology IPO since Deutsche Telekom AG listed its dial-up business in 2000.
The Samwers have another IPO in the pipeline. Rocket Internet AG, the investment vehicle that backs Zalando and replicates businesses from Groupon Inc. to Airbnb Inc., is expected to set the price of a potentially $1.8 billion sale later this week.

Gains Continue

Even though Alibaba soaked up $25 billion of investor capital, fund managers continue to put more cash toward IPOs.
“It’s not a capital-constrained market, it’s an opportunity-constrained one,” Paul Donahue, co-head of equity capital markets at Morgan Stanley in New York. “As a class, IPOs are still working. As long as underwriters and business owners remain responsible with valuation and positioning, the broader backdrop still remains conducive to IPOs.”
In the U.S., IPOs returned an average of 19 percent over the quarter, whereas the broader S&P 500 Index rose just 0.9 percent. In Europe, IPOs that started trading in the quarter were up 11 percent, compared with a 1 percent decline in the benchmark Stoxx Europe 600 Index. In Asia the jump was 64 percent over the period, when the MSCI Asia Pacific Index slipped 3.1 percent.

Potential Reversal

The IPO market remains susceptible to a reversal in stock prices and corresponding pickup in volatility, which makes pricing new deals difficult. WH Group, the owner of Smithfield Foods Inc., raised about $2.4 billion in Hong Kong in July, three months after the company and investors dropped a plan to sell more than $5 billion of stock as equities fell.
Hong Kong led a global decline in stocks again yesterday, after pro-democracy protests in the city were met with a police crackdown. Major benchmarks across the world have posted a week of losses while in the U.S., markets have become more volatile with the Dow Jones Industrial Average (INDU) alternating between gains and losses of more than 100 points the previous four days.
High-profile deals like Alibaba’s also have the power to shut the entire global IPO market if they don’t fare well, according to Goldman Sachs Group Inc.’s Richard Cormack.
“Alibaba’s success is certainly helpful for global IPO markets,” said Cormack, the firm’s co-head of equity capital markets for Europe, Middle East and Africa. “Had it not done well, the impact would have been more dramatic on the downside.”

Growth Prospects

One factor behind Alibaba’s success was its relatively conservative pricing: The company sought a lower price-to-earnings valuation than its Chinese Internet peers and raised its fundraising target by just three percent.
Like Alibaba, other companies with high growth prospects fared well in the IPO market. Mobileye NV (MBLY), the Israeli company creating software for driverless cars, raised $890 million in July after increasing the size of its IPO by 28 percent and surged on its debut.
Rocket Internet almost doubled the amount it’s seeking to raise in an initial public offering to $1.8 billion after receiving enough orders to cover the sale across its price range.
“The level of appetite and interest in IPOs post-summer has been a pleasant surprise and most of the transactions that came to the market in the quarter were well-received,” said Nick Williams, head of equity capital markets for Europe, the Middle East and Africa at Credit Suisse Group AG. “As long as companies are disciplined on pricing and deal structures, we expect that to continue for the rest of the year.”
To contact the reporters on this story: Leslie Picker in New York at lpicker2@bloomberg.net; Ruth David in London at rdavid9@bloomberg.net; Fox Hu in Hong Kong at fhu7@bloomberg.net
To contact the editors responsible for this story: Mohammed Hadi at mhadi1@bloomberg.net; Philip Lagerkranser at lagerkranser@bloomberg.net; Aaron Kirchfeld at akirchfeld@bloomberg.net Elizabeth Fournier, Ben Scent

®2014 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Palm Seen Losing 13% by Godrej’s Mistry on Oils Surplus

By Ranjeetha Pakiam and Swansy Afonso - Sep 28, 2014

Palm oil prices will decline as the world’s most-used edible oil is no longer competitive against alternatives even after dropping to the lowest level since 2009, according to Dorab Mistry, director at Godrej International Ltd. Futures retreated.
“Palm desperately needs to regain its competitiveness,” Mistry said at conference in Mumbai yesterday. Futures must drop to 1,900 ringgit ($581) a metric ton to revive consumption, he said, reiterating a forecast made on Sept. 15. The outlook compares with a price of 2,168 ringgit a ton on Bursa Malaysia Derivative at 10:52 a.m. in Kuala Lumpur after the most-active contract lost 0.4 percent.
The oil used in everything from noodles to biofuels fell 18 percent this year as surging supplies from Southeast Asia topped estimates, widening a glut in cooking oils and helping to push global food costs to the lowest level since 2010. Top growers Indonesia and Malaysia announced cuts in export taxes to zero this month to spur sales and restrain the buildup of reserves. Stockpiles will keep expanding because of better-than-expected production before peaking in December, said Mistry.
“Palm oil has lost its price competitiveness, particularly against rapeseed oil and sunflower oil,” said Mistry, who’s traded the commodities for more than three decades. “This is most apparent in a market like India, where palm has been replaced by larger imports of sunflower oil, soybean oil and even small quantities of rapeseed oil.”

Record Output

World production of 10 major oilseeds is forecast to climb 4.3 percent to a record in 2014-2015, with the outlook for soybeans raised on increased estimates for the U.S. and Brazil, according to Oil World. Oilseed output may rise to 519.7 million tons from 498.2 million tons in 2013-2014, the Hamburg-based researcher said in a report Sept. 23.
Palm oil fell to 1,914 ringgit on Sept. 2, the lowest since March 2009, then rebounded to 2,177 ringgit last week after Malaysia scrapped its tax on exports for two months through October. Indonesia, applying a formula to set export tariffs, said last week that the tax on its shipments will be set at zero percent in October. Palm’s discount to soybean oil -- which was $40.31 a ton on Sept. 26, the narrowest since February 2011 -- widened to $41.61 today.
The tropical oil may drop to 2,000 ringgit a ton by the year-end, according to the median of estimates from 10 refiners, traders and analysts who attended the conference addressed by Mistry. That would be a 25 percent retreat this year, the biggest annual loss since the financial crisis in 2008.

‘Come Down’

“The world has surplus soybean crops and Malaysia and Indonesia also have higher production” of palm oil, said Dinesh Shahra, managing director of Ruchi Soya Industries Ltd., India’s biggest palm oil importer. “Therefore prices need to come down and what we see is not enough.”
If palm’s discount to soybean and other oils doesn’t widen, “demand will gravitate toward soft oils and away from palm,” said Mistry. “The removal of export duty is meant to make palm oil more competitive.”
A bottom for prices can be predicted only after a clearer picture of output in October emerges and of how the weather impacts Brazil’s soybean crop, said Mistry. Palm oil may find support at 2,000 ringgit a ton if the ringgit weakens against the dollar, he said.
Output in Malaysia this year will probably reach a record 19.8 million tons to 20 million tons, higher than the earlier estimate of 19.7 million tons to 19.9 million, said Mistry. Indonesian production will exceed 30.5 million tons, he said.

Expanding Stockpiles

Reserves in Malaysia jumped 22 percent to 2.05 million tons in August from July, the highest level since March 2013, as production expanded and exports fell, according to official data from the largest producer after Indonesia.
Soybeans in Chicago slumped 30 percent this year, dropping to $9.055 a bushel today, the lowest since July 2010. Soybean oil tumbled 19 percent in 2014, and dropped on Sept. 10 to 31.52 cents a pound, the lowest since March 2009.
“After several years of prosperous growth, the oilseeds and palm industry are in a bear market,” said Mistry. “We must batten down the hatches and be resilient.”
To contact the reporters on this story: Ranjeetha Pakiam in Kuala Lumpur at rpakiam@bloomberg.net; Swansy Afonso in Mumbai at safonso2@bloomberg.net
To contact the editors responsible for this story: Jake Lloyd-Smith at jlloydsmith@bloomberg.net Ovais Subhani

®2014 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Billionaire Agarwal to Donate Most of Wealth After Meeting Gates

By Netty Ismail and Firat Kayakiran - Sep 26, 2014

Anil Agarwal, the billionaire founder of Vedanta Resources Plc, said he and his family decided to donate 75 percent of their wealth to charity after meeting Bill Gates, the world’s richest person.
Agarwal has a fortune of $3.3 billion that includes an almost 70 percent stake in London-listed mining and energy group Vedanta, according to the Bloomberg Billionaires Index. Gates, the co-founder of Microsoft Corp., has a fortune valued at $84.7 billion.
“What we earn must be returned for the greater good of society,” the 62-year-old said at an event yesterday to celebrate the 10th anniversary of Vedanta’s (VED) listing on the London Stock Exchange. “Life is not only about wealth.”
Interest in charitable giving is growing in Asia. In 2013, Azim Premji, chairman of Bangalore-based software exporter Wipro Ltd., became the first Indian to join the Giving Pledge program, which seeks to encourage the world’s wealthiest people to give away half of their wealth to charity.
The program was founded by Gates and U.S. investor Warren Buffett, the world’s 3rd-richest person with $67.3 billion, according to the index.
Agarwal said Gates and his wife, Melinda, discussed their philanthropic causes with him in Seattle last summer.
“After that, I had a meeting with my family and we decided to donate 75 percent of our wealth,” the Indian billionaire said.
To contact the reporters on this story: Netty Ismail in Singapore at nismail3@bloomberg.net; Firat Kayakiran in London at fkayakiran@bloomberg.net
To contact the editors responsible for this story: Robert LaFranco at rlafranco@bloomberg.net Andrew Heathcote

®2014 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Jaiprakash Sells Indian Power Assets to JSW in Third Try

By Unni Krishnan and George Smith Alexander - Sep 26, 2014

Jaiprakash Associates Ltd. (JPA), the builder of India’s only Formula One race track, agreed to sell some of its assets to JSW Energy Ltd. (JSW) in its third attempt to raise funds and pare debt.
JSW signed a memorandum of understanding to acquire one thermal and two hydropower plants operated by Jaiprakash Power Ventures Ltd., the companies said in statements late yesterday, without disclosing terms. Shares of both the Jaiprakash companies rebounded after the announcement.
Two failed attempts earlier had eroded confidence in Jaiprakash’s ability to find buyers, and investors will watch closely if the latest preliminary agreement will translate into a real deal, said Deepak Agrawala, an analyst at Elara Securities Pvt. in Mumbai. Success may help Chairman Manoj Gaur to cut debt after expanding the cement maker’s power, sports and construction businesses, including an F1 race track on the outskirts of India’s capital, New Delhi.
“As has happened in the past, there is and will be skepticism on whether or not the deal can fructify,” Agrawala said. “Everyone would wait for the actual transaction to happen before they start building this in their earnings estimate.”

Shares Recover

Jaiprakash Power (JPVL) jumped as much as 15 percent after tumbling 14 percent yesterday to a 13-month low. It traded at 12.65 rupees as of 11:25 a.m. in Mumbai, up 8.1 percent from yesterday’s close. Jaiprakash Associates climbed 4.7 percent to 27 rupees after plunging 19 percent yesterday, the most since January 2009. JSW Energy slumped 8.3 percent to 66.15 rupees.
Jaiprakash Associates’ debt climbed 64 percent over three years to 726 billion rupees ($11.8 billion) in March, according to data compiled by Bloomberg.
A unit of billionaire Anil Ambani’s Reliance Power Ltd. scrapped a deal on Sept. 24 to buy three of Jaiprakash’s hydropower plants, citing regulatory uncertainties and tariff issues.
In July, Abu Dhabi National Energy Co., known as Taqa, withdrew from an agreement to buy two hydropower projects after having signed a deal in March to take over the assets at an enterprise value of $1.6 billion along with a Canadian institutional investor and Indian infrastructure finance fund, IDFC Ltd.

Target Cut

The sale of the hydro units would have helped bring down the debt of the Jaiprakash group by 58 billion rupees, according to a company presentation in June. Jaiprakash aims to reduce its debt to 450 billion rupees by the end of this fiscal year in March 2015, it said in July after the Taqa deal fell through.
Kim Eng Securities Pvt. cut its rating on Jaiprakash Associates to “hold” from “buy” yesterday and reduced its target price by 58 percent to 39 rupees. Deutsche Bank AG also cut its target price to 32 rupees.
JSW will add 1,891 megawatts of generating capacity from the deal. Currently, JSW produces 3,140 megawatts of power, with a capacity for another 8,630 megawatts under implementation, according to the company’s website.
JSW Energy’s balance sheet allows it to raise as much as 100 billion rupees, assuming a 3:1 net debt to equity ratio, Bhargav Buddhadev, an analyst at Ambit Capital Pvt., said on the phone from Mumbai. “If they want to raise further they will have to dilute equity.”
The Mumbai-based company’s debt fell to 91 billion rupees in March as against 95 billion rupees last year, according to data compiled by Bloomberg.

Coal Permits

Jaiprakash Associates also had coal mining permits canceled Sept. 24 by India’s Supreme Court, which annulled 98 percent of extraction licenses issued from 1993 until now.
The cancellation of the four coal blocks alloted to Jaiprakash Associates was “negative as it takes away the captive mines linked to its power and central India-based cement capacities, and in turn, takes away its supply of inexpensive fuel,” Pulkit Patni and Mohit Soni, Mumbai-based analysts with Goldman Sachs Group Inc., wrote in a research note yesterday.
“There are gray areas and whether JSW is able to successfully close it or not, only time will tell,” Ambit’s Buddhadev said. “There could be regulatory issues and knowing JSW they have so far stayed away from assets that are not clear in terms of regulatory requirements.”
Jaiprakash Associates sold its Gujarat cement unit to billionaire Kumar Mangalam Birla’s UltraTech Cement Ltd. for 38 billion rupees. It also sold its 74 percent stake in Bokaro Jaypee Cement Ltd., a joint venture with Steel Authority of India Ltd., to Dalmia Bharat Ltd. for 11.5 billion rupees in March.
To contact the reporters on this story: Unni Krishnan in New Delhi at ukrishnan2@bloomberg.net; George Smith Alexander in Mumbai at galexander11@bloomberg.net
To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net; Daniel Ten Kate at dtenkate@bloomberg.net Sam Nagarajan, Abhay Singh

®2014 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Coal India Promises Higher Bonuses to Woo Staff Before Sale

By Rajesh Kumar Singh - Sep 24, 2014

Coal India Ltd. (COAL) is offering higher payouts and family benefits to workers to avoid any unrest before the government sells a stake worth $3.5 billion in the state-run miner.
Bonuses will be increased by almost 30 percent to 13 billion rupees ($213 million), Personnel Director R. Mohan Das said in an interview. The company will improve post-retirement health benefits and assure female workers taking early retirement that one of their children will get a job with the company, Das said.
Trade unions have vowed to go on an indefinite strike should the government proceed with the planned 10 percent stake sale. The success of the sale is crucial for Finance Minister Arun Jaitley to meet almost a third of his 634 billion rupee asset-sale target in the year to March 31.
“The government is going to follow a carrot and stick approach with the workers and unions to make the plan a success,” said Deven Choksey, managing director at Mumbai-based KR Choksey Shares & Securities Pvt. “The government is also engaging in more constructive communication with the unions so that they don’t come in the way of economic goals. Raising public shareholding will improve corporate governance in the company.”
Coal India gained as much as 2 percent to 341.90 rupees, the most in three weeks, in Mumbai. They traded at 339.25 rupees as of 10:23 a.m. local time, boosting this year’s gain to 17 percent. The key S&P BSE Sensex fell as much as 0.5 percent. The stake sale will raise about 214 billion rupees at today’s price.

Public Holding

The government, which owns 89.65 percent in the company, also needs to comply with a June 19 ruling by the capital markets regulator that requires state-owned companies to increase public shareholding to at least 25 percent within three years. A timeline for the sale has yet to be set.
Coal India’s moves aren’t convincing some unionists.
“Stake sales raise the ownership of foreign institutions in the company and we fear the company will curtail workers’ benefits to protect those shareholders’ interests,” said Jibon Roy of the All India Coal Workers Federation, a group of five major trade unions at the coal miner. “There’s an effort to dilute worker resistance but we will not agree to any disinvestment in the company.”
The cabinet on Sept. 10 approved share sales in Coal India, Oil & Natural Gas Corp. and hydropower-producer NHPC Ltd.
To contact the reporter on this story: Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net
To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net Indranil Ghosh, Abhay Singh

®2014 BLOOMBERG L.P. ALL RIGHTS RESERVED.

India’s Rupee Snaps Five-Day Gain on Month-End Dollar Purchases

By Kartik Goyal - Sep 23, 2014

India’s rupee fell for the first time in six days on speculation importers boosted dollar purchases to pay month-end bills.
The Indian currency weakened 0.2 percent to 60.9100 per dollar as of 9:47 a.m. in Mumbai, according to prices from local banks compiled by Bloomberg. The rupee has gained 1.4 percent this year, after plunging 11 percent in 2013, supported by $34 billion of inflows into local stocks and bonds.
“Month-end dollar demand by importers is impacting the rupee,” said Ankur Jhaveri, co-head of currency and rates at Edelweiss Financial Services Ltd. in Mumbai. “The rupee’s direction is highly dependent on foreign flows.”
Improving economic growth and slowing inflation are attracting overseas investment. Consumer-price inflation eased to 7.8 percent in August, from 7.96 percent in July, and the economy expanded 5.7 percent in the second quarter, the fastest pace since 2012.
The rupee should outperform regional currencies including Malaysia’s ringgit and Indonesia’s rupiah as lower commodity prices will help curb India’s import bill and reduce inflationary pressure, Jonathan Cavenagh, a foreign-exchange strategist at Westpac Banking Corp. in Singapore, wrote in a research note last week.
One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose eight basis points, or 0.08 percentage point, to 7.03 percent.
Three-month offshore non-deliverable forwards fell 0.1 percent to 61.82 per dollar, according to data compiled by Bloomberg. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
To contact the reporter on this story: Kartik Goyal in Mumbai at kgoyal@bloomberg.net
To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Andrew Janes

®2014 BLOOMBERG L.P. ALL RIGHTS RESERVED.