Analyst's Corner - IDFC

Kotak Securities, initiating coverage on IDFC, gives a "neutral" view. The report believes that investment in infrastructure could potentially grow by 100 per cent over the next five years. The increasing share of the private sector within this will likely provide growth opportunities to financiers like IDFC.

It is one of the most experienced infrastructure financiers in the country and has been extensively involved in formulating government policies across the power, telecom and road sectors.

The report estimates a potential growth of 120 per cent in investment in infrastructure space over the next five years. IDFC will likely capitalise on this investment opportunity and grow its loan book by around 40 per cent per annum, over the next three years.

Between FY05 and FY08, IDFC will likely report 34 per cent CAGR in operating profit driven by higher leverage, fee income and lower spreads. While IDFC's growth prospects remain strong, the report adds that the stock is fully priced at 17.1x P/E FY07.

OCL India

Angel Broking report states that OCL plans to increase its cement production capacity from 1.8 mtpa to 3.5-4 mtpa. The first phase (additional 0.5 mtpa) would be completed by September 2006 and the balance capacity would be installed by 2008. It plans to focus on its cement division and aims to achieve 75 per cent contribution by FY08.

The company is also setting up a 14-MW power plant at a cost of Rs 48 crore. The plant, to be installed by January 2006, will cater to 37 per cent of its requirements and result in annual savings of Rs 12 crore.

The company is making a rights issue of Rs 100 crore in January 2006 to finance its capex plans. OCL India, formerly known as Orissa Cement, is engaged in the manufacture and sale of cement (53 per cent), refractory (28 per cent) and sponge iron (17 per cent).

The company sells its cement under Konark brand nameand has an installed capacity of 1.8 mtpa (1.45 mtpa as on FY05). The company expects cement demand to grow at a CAGR of eight per cent during the next three years.

ICICI Bank

CLSA Research rates ICICI Bank as an "outperformer". The report states that the bank's just concluded issuance places it well to continue its loan growth momentum.

With this Rs 8,050 crore ($1.8 billion) issuance, the bank's tier 1 CAR will rise to over 12 per cent and easily support a 30 per cent loan growth over the next three years. It has successfully metamorphosed into a premier retail bank and rapidly developing international operations provide additional growth opportunity. The issuance has gone through at an average price of Rs 543 per share. This translates to a 20 per cent dilution of its equity.

As only 57 per cent of new issue has been allocated to foreign funds, it opens up 1.5 per cent room for foreign buying, a technical positive. Incidentally, post this issuance, it is the largest Indian bank by market capitalisation after SBI.

The bank is the largest retail bank in the country, with retail assets at 61 per cent of loan book. It is the market leader at 30 per cent market share, in most retail asset segments.