Friday, August 29, 2008
| What a change in 24 hours! Inflation was eased; Crude fell by $3 per barrel; American GDP unexpectedly rose; Derivative expiry was over; can any one stop the short term rally in Indian stock markets? Indian stocks which are falling for the last few days will see short term pull back rally due to these fresh positive triggers. Recent correction in the markets is mainly due to inflation concerns (analysts expected 12.8%). We have to wait and see how inflation rate will move in the coming weeks. |
Friday, August 29, 2008 0
Thursday, August 28, 2008
| 22 Indian companies find place in the World Economic Forum's (WEF) list of 200 growth companies. These companies generally considered as having potential to change the global economic landscape. These companies will give exceptional returns for long term investors if they live up to their potential. These stocks will attract huge investments as they find place in this esteemed list. According to WEF, these companies have the potential to become global multinationals in 5-6 years.  1. Maytas Infra- Another GMR Infra. Only Infrastructure stock in this list. 2. Educomp Solutions- Its valuations tell the story. 3. Financial Technologies (FT)- safe business. 4. MCX Limited- Don't miss this IPO. 5. YES Bank Ltd- Very good stock and buy after correction (RBI hike). 6. Praj Industries- Proven performer. 7. Rajshree Sugar and Chemicals- Must buy for 2 year investment. 8. Rupa and Co Ltd 9. UTV Software Communications Ltd- Only for risk takers. 10. HT Media 11. Union Bank of India 12. Wockhardt Hospitals 13. ACC Limited- Contra stock pick. 14. Crompton Greeves 15. Ramsarup group 16. iGATE Global Solutions  18. Dabur India- My pick is Glenmark or Lupin. 19. Apollo Hospitals 20. Amalgamated Bean Coffee Trading Company 21. CMS Computers 22. Mphasis BFL Final advice: These companies are picked by World Economic Forum after extensive research about their growth potential. These stocks are strictly for patient long term investors who will buy good companies and forget about them. Moserbaer and Maytas Infra have the potential to give exceptional returns if you can stay invested for 4-5 years. Don't miss the IPO of MCX Limited. Stocks like Yes Bank, Praj, Educomp, UTV and Rajshree Sugars also provide good investment opportunities but valuations of Educomp and UTV along with Apollo Hospitals are a concern. But don't forget to follow these companies regularly. Most of these stocks are not for short term investors. Final verdict: Accumulate these stocks on every major fall for good returns over long term. Click here to download Global Growth Companies List. |
Thursday, August 28, 2008 0
| India's largest provider of micro-irrigation systems Jain Irrigation Systems Limited (JISL) is now trading at reasonable potential and company will announce robust performance in the upcoming quarters due to recent strategic acquisitions. This niche company's strategic acquisitions will help the company to post robust earnings in the coming quarters. As drip irrigation and food processing are priority sectors for Government, Jain Irrigation will benefit from Government spending.  Jain Irrigation stock price analysis: CMP: 439.3 P/E: 22.4 1 year high-low: 767-410. Jain Irrigation target price: 18-20 month target: 750-800 (conservative estimates). It is currently trading at a forward P/E of 11 for FY2010. Ideal investment duration: 2 years.  Chart courtesy: Business Week. Why Jain Irrigation is a good long term pick: 1. Government will promote micro-irrigation and food processing in a big way as agriculture is a priority sector. Jain Irrigation is the stock to watch out in agriculture sector. 2. Despite bad economic conditions and rising crude oil prices, company announced robust performance in Q1 FY09. 3. The International Finance Corporation (IFC) is betting big on Jain Irrigation Systems. 4. BSE moved Jain Irrigation from group B to Group A. This decision will change investors sentiment in positive manner. 5. Falling crude oil prices will raise margins due to decrease in raw material costs. 6. Company is expecting around 35% growth in U.S irrigation market despite slow down in American economy. 7. Its recent acquisitions will help the company to post very good results in the coming quarters. It acquired companies in United States, Greece, Israel and Switzerland. It made 5 acquisitions in the last 5 years. 8. It is the only listed company in the drip irrigation business. 9. Good results in Q1 FY09 but Forex losses spoilt the sentiment. 45% increase in revenues. 10. Many mutual funds are betting big on this stock due to its long term potential. What are the negative points? 1. Comparatively high valuations. 2. High interest rates. 3. Uncertain crude oil prices. 4. American economy is slowing down. 5. Frequent dilution of equity. 6. High foreign investor holding. Final analysis: Jain Irrigation is a niche agriculture player which will give very good returns for long term investors. Strong management, strategic acquisitions coupled with Government priority made this stock a "Must and Safe buy" for long term investors. Don't forget to accumulate Jain Irrigation aggressively on further falls for long term gains. Source/Credit: Dr. Krishna (IndianStockGuide) |
Wednesday, August 27, 2008
Rain Commodities:
Calcined Petroleum Coke (CPC) major Rain Commodities is under the radar of several funds after its recent inclusion in mid-cap index.According to brokers, it is witnessing sustained buying by funds like Swiss Finance Corporation and Morgan Stanley, among others. The interest has emerged after it reported a PAT of Rs 94 crore in this quarter. Going forward, this is expected to go up substantially as average realisation of CPC was $355 per tonne for the second quarter and may go up to over $550 per tonne in the third quarter as it has recently booked some orders at $700 per tonne.Further, the series of rate cuts in the US is likely to save around Rs 60-crore interest every year as interest cost alone, which would be utilised for putting up a co-gen power plant in the US.
According to analysts tracking the counter, the company is expected to report an EPS of nearly Rs 90-100 for Calendar Year 2008. Due to increasing consolidation and limited supplies, CPC may remain sellers market for next 4-5 years.
Source:ET
Also Read: Multi Bagger: Rain Commodities
Wednesday, August 27, 2008 0
Friday, August 22, 2008
| |
| Ferrochrome giant Balasore Alloys Limited (Previous name is Ispat Alloys) is currently trading at attractive valuations for long term investors. Company which announced exceptional results in the June quarter will continue to post good results due to strong demand for Ferroalloys in the international market. After recent sharp correction, Commodity prices made strong bounce back in the international markets yesterday which is good news for metal stocks. BAL corrected from 56 to 47 despite good results due to change in market sentiment.  1. Record ferroalloys prices are expected to hold for the rest of the year and a very strong performance is expected in the second half of 2008- Market Watch. 2. Commodities made biggest weekly gain in 33 years- Bloomberg. 3. Rise in commodity prices will continue due to increase in demand from China as country will open closed factories after the Beijing Olympics. 4. Weakness in dollar will make investors to accumulate commodities. Significant statistic: 1. Balasore Alloys announced 318% increase in net profit in Q1FY09 over Q1FY08. Profit in Q1 F2008: Rs.5.38 crore Profit in Q1 FY2009: Rs 22.53 crore  Balasore stock price analysis: CMP: 47.5 (BSE) P/E: 6.3 Book value: 43 1 Year high-low: 78-26 Balasore Alloys target price: 1 year target: 80-100 (EPS of 14-16 and P/E of 6-7). Ideal investment horizon: 2 years to get full benefits. Why I am recommending BAL: 1. Ferro Alloys sector is on exceptional growth path due to strong demand from China. This strong demand will continue for some more time. 2. BAL posted outstanding Q1 results and is expected to increase EPS to more than 15 levels in this financial year. 3. Commodity prices are once again rising after sharp correction in the recent days. 4. Company announced massive expansion plans which are a good sign for long term investors. 5. International Ferrochrome market will see huge growth from the fourth quarter in FY09 onwards, according to experts. 6. BAL valuations are looking very attractive for long term investors. 7. Parent Ispat group is also doing well in the recent days which may raise the sentiment of investors towards company. Negative triggers: 1. 80% of its earnings are from exports. So Any Government intervention may spoil the earnings prospects. 2. Global slowdown in economy may impact the company but marginal impact on Ferro Alloys. Final Advice: Balasore Alloys will give 70-80% returns in 1 year. It will cross 60 (25% returns) by October before results announcement. So medium and long term investors should not hesitate to buy this stock and accumulate more on any further correction. Ferro Alloys bull run will at least last for another 2-3 years. Only worry is Government intervention. Other stock picks: Closely follow commodity prices and make quick gains. 1. Hindustan Zinc: More than 5% increase in zinc and nickel prices. 2. Rohit Ferrotech: Recent mine buyout and sharp correction. 3. Navbharat Ventures: Bullishness in sugar, Ferro alloys and power and cheap valuations. Good stock for long term. 4. Cairn Energy: Unexpected rise in crude prices by more than $5. 5. Sterlite/Hindalco: Depends on how long this bounce back in commodities will continue. Source/Credit: Dr.Krishna (Stockmarketguide) Also Read |
Friday, August 22, 2008 0
Thursday, August 21, 2008
MultiBagger: Texmaco Ltd
Recommended Price Rs 1279.15
S.P.Tulsian, Investment Advisor
Report Dated: August 19, 2008
Texmaco Ltd. is a K. K. Birla Group company engaged in making Railway Freight Cars, Hydro Mechanical Equipments & Steel Structures, Process Equipment, Agro Machinery and Steel Foundry. The company has signed a Memorandum of Agreement with United Group Rail Services Ltd. of Australia to tap the opportunities of Indian Railways Development Programme for projects including the Dedicated Freight Corridor, design and manufacture and supply of wagons, locomotives bogies and components and encompass passenger rolling stock.
The company has posted exemplary results for FY 08 with total income of Rs 705 crores. This does not include the value of free materials of Rs 205 crores provided to the company by the Indian Railways and other clients for major contracts. PBT for FY 08 was placed at Rs 100 crores while PAT was at Rs 69.50 crores resulting in an EPS of Rs 62.25. A dividend of 75% was paid by the company for the year. Paid-up equity of the company is Rs 11.08 crores with face value of Rs 10. Promoters stake in the company is at 56% while 22% is held by Mutual Funds Insurance Companies and FIIs and 22% by the public. The board of the company has recently proposed to split face value of share from Rs 10 to Re 1.
The company has received an order of Rs 296 crore from NHPC for Hydro Mechanical Equipment as also an order of Rs 187 crores from Indian Railways for Container Freight Wagons. Indian Railways Wagon Tenders for 15,348 wagons for 2008 – 09 have been opened and orders are expected to be released shortly, of which, the company is likely to bag atleast 50% of the orders. For quarter ending 30th June 08, the topline of the company was at Rs 198 crores against Rs 143 crores in the similar quarter of the previous year. PBT for the quarter was at Rs 32.28 crores (Rs 16.53 crores) while PAT rose to Rs 22.82 crores from Rs 11.37 crores. The quarter had witnessed robust increase in the margins which is almost 100% higher, inspite of rise in topline by just 38%.
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The company, always have excellent results for March quarter due to higher dispatch of Wagons to Railways. For FY 09, the company should be able to achieve a topline of Rs 1,000 crores with PBT of Rs 160 crores and PAT of Rs 110 crores, which should result in an EPS of Rs 100 for the year. The company has decided to transfer its Heavy Engineering Division to a newly formed subsidiary, in order to raise resources. This division gives almost 80% to the company’s topline, while 75% to the bottomline. This would definitely enable the company to expand in other area, as also to induct a technology partner in this subsidiary to capitalize on booming Railway Sector. The company is presently a debt free, as its debt of about Rs 40 crores, is mainly to finance its working capital.
The company is a leader in supply of Railway Wagons and recently launched scheme by Indian Railways of Own Your Wagons Scheme is giving good Demand and lucrative orders to the company. Over the next 3 – 5 years, due to huge demand of Railway Wagons, the company should be able to have 25% growth annually, in its topline and over 40% growth in bottomline, for the next 3 years. Share would go with face value of Re 1 in the next couple of months, and hence on split basis would be preferred more by the investors, thus leaving good scope for the share price to rise.
Share now ruling at Rs 1279.15, had its 52 week high/low of Rs 1,965 and Rs 950 and has all the potential to rise to Rs 200, post split to Re 1, in the next 8 – 10 months. A safe bet at Rs 1279.15 levels for Rs 10 face value for a return of almost 50% in less than one year.
Thursday, August 21, 2008 0
Saturday, August 16, 2008
How much can you make in 25+ years by just investing Rs.10,000 initially in any of financial instruments ?
Let us look at the real time example…
If you have subscribed in 100 shares of ________ company with a face value of Rs. 100 in 1980…
In 1981 company declared 1:1 bonus = you have 200 shares
In 1985 company declared 1:1 bonus = you have 400 shares
In 1986 company split the share to Rs. 10 = you have 4,000 shares
In 1987 company declared 1:1 bonus = you have 8,000 shares
In 1989 company declared 1:1 bonus = you have 16,000 shares
In 1992 company declared 1:1 bonus = you have 32,000 shares
In 1995 company declared 1:1 bonus = you have 64,000 shares
In 1997 company declared 1:2 bonus = you have 1,92,000 shares
In 1999 company split the share to Rs. 2 = you have 9,60,000 shares
In 2004 company declared 1:2 bonus = you have 28,80,000 shares
In 2005 company declared 1:1 bonus = you have 57,60,000 shares
At the end of 2005…
You have 57,60,000 shares of the company
Any guess about the company ? Its an Indian company
Any guess about the present valuation ?
The result of 'Power of Compounding'
Your present valuation is about
Rs. 200 Cr.+ & The company is 'WIPRO'
Other such examples…
CIPLA
Investment of Rs. 10,000 in 1979 will fetch Rs. 95 cr.+
INFOSYS
Investment of Rs. 10,000 in 1992 will fetch Rs. 1.5 cr.+
RANBAXY
Investment of Rs. 1000 in 1980 will fetch Rs. 1.9 cr.+
If you think the above is not possible then read on…
A Chartered Accountant by profession Mr. Rakesh Jhunjhunwala is a name today on every Indians mind. He is often termed as Warren Buffet of India by many. His name catapulted into fame when Forbes, in 2007, ranked him as the 51st richest man in India. Son of an income tax officer late Shri. RadheShyam Jhunjhunwala, he started investing in stocks while in college. Rather than take a job, he started investing, with around an initial capital of Rs.5000 in 1985 when the BSE Sensex was at 150. His privately owned stock trading firm Rare Enterprises, the name derived from first two initials of his name and wife Rekha's name.
| NAME OF COMPANY | SHARES HELD (as on 30/06/08) | APPROX (as on 5/08/08) | VALUE (Rs.in crores) |
| TITAN INDUSTRIES | 39,85,756 | 1277 | 508.98 |
| PRAJ INDUSTRIES | 1,33,76,624 | 188 | 251.48 |
| LUPIN LTD | 27,52,135 | 753 | 207.24 |
| CRISIL | 5,50,000 | 3631 | 199.70 |
| NARAGJUNA CONSTRN | 1,24,50,000 | 134 | 166.83 |
| BILCARE | 20,25,000 | 640 | 129.60 |
| PUNJ LLOYD | 50,40,000 | 291 | 146.66 |
| PANTALOON RETAIL | 23,30,895 | 353 | 82.28 |
| KARUR VYSYA BANK | 24,94,073 | 348 | 86.79 |
| BHUSHAN STEEL | 8,20,000 | 922 | 75.64 |
| GEOJIT FINANCE | 1,80,00,000 | 43 | 77.40 |
| PROVOGUE INDIA | 3,80,000 | 850 | 32.30 |
| GARWARE WALL ROPE | 5,00,000 | 86 | 4.30 |
| PRIME FOCUS | 8,82,500 | 460 | 40.59 |
| VICEROY HOTELS | 47,50,000 | 51 | 24.22 |
| INFOMEDIA INDIA | 15,06,062 | 155 | 23.34 |
| AGROTECH FOODS | 17,03,259 | 126 | 21.46 |
| ZENOTECH LABS | 11,50,000 | 113 | 12.99 |
| MID-DAY MULTIMEDIA | 22,50,000 | 26 | 5.85 |
| ION EXCHANGE | 5,00,000 | 153 | 7.65 |
| ZEN TECHNOLOGY | 5,00,000 | 164 | 8.20 |
| ALPHAGEO | 1,25,000 | 413 | 5.16 |
| JB CHEMICALS | 10,81,650 | 47 | 5.08 |
| AUTOLINE INDUSTRIES | 12,11,622 | 182 | 22.05 |
| MRO TEK | 5,70,834 | 51 | 2.91 |
| HIND OIL EXPLOR | 61,00,666 | 136 | 82.97 |
| TOTAL VALUE OF PORTFOLIO – Rs. 2231.67 crore. | |||
Saturday, August 16, 2008 0
Friday, August 8, 2008
Significant news:
1. Inflation was at 12.01% Vs 11.98%. Inflation for the same week in 2007 was at 4.7%. See the difference and imagine its effect on the consumption power.
2. Largest American Insurance Company AIG fell most in 39 years after 3rd straight loss.
3. US jobless claims reached March, 2002 levels.
4. Sales would slow in August- Wal-Mart.
5. Crude Oil prices broke crucial $120 resistance.
Why I am bearish on India over short term:
1. Inflation is at 13 year high.
2. Fiscal deficit is reaching alarming proportions. India is set for down gradation by International rating agencies unless it takes crucial measures.
3. RBI will continue to hike interest rates in the coming weeks. There is more than 20% downside in inflation sensitive stocks.
4. Consumption power of people will be severely affected due to these successive interest rate hikes.
5. Most Indian companies will announce disappointing results in Q2.
6. Recent pull back rally set to reverse as in any bear market.
7. There will be no aggressive reforms in the election year except in Insurance sector.
Significant statistic:
Business Optimism Index fell to 136.5 points in Q2F2009 from 153.7 points in Q1FY2009. It is expected to touch 110 points in Q3FY2009. It means business leaders are not optimistic about their business prospects. But investors are optimistic about business prospects. So they are buying their company shares at these levels. What a pity it is! Who will save these investors?
My estimation: GDP growth for FY 2009 may be at around 7.5%.
Chaturvedi committee suggested "Super profit tax" for oil companies. Bad news for Reliance Industries and Cairn Energy.
Hopes on Crude: Investors are betting on news that crude prices will fall to below $110 levels which are now trading at $116 level. Fall in crude oil prices will only act as short term trigger.
Verdict: When will RBI hike Repo rate? Who will save these careless investors? Why don't they do even basic research on fundamentals? If Central Government fails to control fiscal deficit, rating agencies will downgrade India to BB+ from BBB- (current rating). China rating is A+ while Russia rating is A-. Where will foreign investors park their money? Don't expect any control measures in election year. Investors should look at their portfolios and plan to exit overvalued stocks.
Friday, August 8, 2008 0
India is the fastest growing mobile market in the world. According to PWC, Mobile VAS industry will see huge growth in the coming years and set to reach a turnover of Rs 20,000 crore by 2015. Entry of new mobile operators will improve the margins of VAS companies. 3G rollout will see the utilization of high margin Value Added Services like Banking, gaming and video applications.
Contrary to popular belief, mobile operators are not the initial beneficiaries due to 3G rollout. Like DTH, 3G needs huge investments in the initial days along with auction fee from the mobile operators.
Which companies will benefit more from third generation network?
Companies that provide high end value added services are the real beneficiaries. They can now provide rich VAS (they now depend on ringtones and SMS) in gaming, data and video segments. Currently low margin SMS is occupying 44% share of VAS in India. 3G services will change the scenario towards high margin banking, video and gaming segments. In future, one will see more innovations from VAS players in movie and cricket fields.
Significant statistics on Mobile VAS: This segment is growing on steroids for the last 3 years but operators are sharing lesser amount to the VAS providers.
Indian mobile VAS turnover in 2004: Rs 558 crore (700 crore in FY05)
Value Added Services turnover in 2008: Rs 4,500 crore
Estimated Indian VAS turnover in FY 2012: Rs 12,000 crore
1. Tanla Solutions: This zero debt company announced good results in the June quarter. This is a must buy stock for any long term investors. "Openbit" (mobile payment company) is a good strategic move.
CMP: 216.
2. OnMobile Global: Due to Telesma (European speech Recognition Company) acquisition, margins were affected in the June quarter results.
CMP: 518.5
CMP: 182.6
Note: I have holdings in Tanla Solutions and Geodesic Information systems.
Why I am bullish on mobile VAS?
1. Operators will try to control their falling ARPU by concentrating on value added services.
2. Due to competition, operators will share more revenues with VAS providers.
3. 3G will attract high end users to use more VAS.
4. We will see more VAS in data, banking, TV and gaming segments which improve margins over current SMS VAS.
5. New age customers will use more value added services in the coming years.
6. All listed companies are growing both organically and inorganically (global acquisitions).
7. Mobile VAS industry is expected to post CAGR of more than 40% in the next 5 years. How many sectors can post such growth rates?
8. VAS players will get more revenues from mobile advertising which is set to grow exponentially.
9. There will be huge demand for good VAS content providers from mobile operators.
10. New subscriber addition will continue to grow at healthy rate.
Verdict: This sector is strictly for long term investors who want safe and good returns for the next 5 years. From 2009 onwards, we will see huge spike in revenues for these VAS players. Don't hesitate to accumulate more on further fall of these stocks. CRAMS and Mobile VAS are the safest stocks for investment for long term investors. Consistent growth coupled with good growth opportunities make Mobile VAS sector as an attractive investment opportunity.
Monday, August 4, 2008
Everest Kanto Cylinder (EKC) is a leader in the industrial and CNG cylinders manufacturing business in India. It commands an overall market share of 85% in CNG cylinder industry & is well placed to tap the growing market for environment-friendly Compressed Natural Gas (CNG) applications.
Compressed Natural Gas (CNG) offers a feasible alternative to petroleum fuels in vehicles. CNG is a source of mobile-energy, which can be easily supplied on a mass scale at affordable prices. Due to its inherent clean properties, the substitution of petrol & diesel by CNG is advantageous in not only enhancing energy security but also in cutting harmful GHG emissions.
Roughly 800,000 vehicles in Pakistan run on compressed natural gas (CNG). Each needs a specialised cylinder where the CNG is stored under high pressure. And, an Indian company — Everest Kanto Cylinders — is controlling 65 per cent of this market.The company makes CNG cylinders in India and Dubai and sells them in Malaysia, Thailand, several Gulf countries and CIS nations, besides Pakistan.
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Everest Kanto's story turned out differently because its founder chairman and managing director P.K. Khurana spotted a good opportunity in South America. Here, Brazil and Argentina were using CNG as a low-cost, environment-friendly fuel for automobiles, and had approximately 10,00,000 CNG vehicles on their roads. Wondering whether CNG would catch on in India as well, Khurana sent study teams to South America and the US. Initial research convinced him that this would be a good business opportunity in India.
Leading cylinder manufacturer Everest Kanto (plans to invest Rs 1.5-1.75 billion on capacity expansion across its plants in US, Dubai and India.The company expects to clock 35% increase in volumes and 50% increase in earnings in the current fiscal. Also company`s wholly owned subsidiary in China has successfully completed the trial production phase and commercial production has been already started.
EKC is ramping up its capacity to enhance its market share and is also planning to exploit other markets such as Iran and China, where a well timed capacity expansion would drive a ~36.8% EPS CAGR over FY08-FY10E.
Monday, August 4, 2008 0