Sanguine Media Services Ltd trading around Rs.3.99 could be dark horse going forward. The company is expected to come up with Q2FY10, results at the end of this month, probably on 31st, October, 2009. The results are expected to be good sequentially and would further improve going forward. The company’s event management section earlier received contract from ICICI Bank and probably from TVS Motors Ltd. The company is focused on rural media coverage.
According to the market sources the stock could cross Rs.11-12 in the next 3 to 4 months time frame. Since the company has very low equity capital and hence, when it starts hitting upper freezes it is very difficult to buy the scrip from the open market. The book value of the shares of the company is Rs.21.88 (Rs.22 approx) against its current market price of Rs.3.99. This essentially means that if the company gets liquidated today, then all of us (shareholders) would get Rs.21.88 per share—less administrative or other charges---doesn’t it look interesting??!! Its price to book is OLNY at 0.18. Can you imagine that the market cap of a BSE listed company is only Rs.5.63 Cr!!
Hence this absurd price of Rs.3-5, cannot remain long—the aberration would be corrected soon. Just buy for 6 months time frame—I am sure your money would get doubled by that time, as the stock in all probability after Q2FY10, results will start to rally again.
Wednesday, October 28, 2009
SEBI okays longer trading hours
Markets can now be open 9 to 5, says regulator.
You could soon be able to trade for an additional two-and-a-half hours on stock exchanges with the Securities and Exchange Board of India (Sebi) on Friday allowing trading between 9 a m and 5 p m to align timings to international standards.
At present, trading hours are between 9.55 a m and 3.30 p m.
Sebi, however, raised the caveat that the exchanges would have to ensure that risk management systems and infrastructure commensurate to longer trading hours were in place before investors transact for eight hours a day.
TRADING PLACES
Local trading hours a m to pm
Cash Futures& Options
New York 9:30 to 4:00 6.00 to 5.00*
Singapore 9:00 to 5:00 9:00 to 5:00
Tokyo 9:00 to 2:00 9:00 to 7:00
London 8:00 to 4:20 8:00 to 9: 00
India (now) 9:55 to 3:30 9:55 to 3:30
India (soon) 9:00 to 5:00 9:00 to 5:00
Source: Bloomberg * 23 hrs
The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) welcomed the Sebi move and added that they would soon extend trade timings. They, however, did not clarify whether timings would be extended to 5 p m, though executives indicated that trading would start at 9 a m.
Last year, NSE had first proposed a change in trading hours at a time when foreign institutional investors and hedge funds preferred to trade on the Singapore Stock Exchange (SGX), where NSE Nifty futures were also listed. With longer trading hours because SGX opened for trading at around 6.30 a m India time, the open interest positions on Nifty futures traded on SGX had reached close to the levels seen on NSE.
“Extending trading hours will improve liquidity and volumes in the market,” said Motilal Oswal, chairman and managing director, Motilal Oswal Securities, adding that the move could also help shift a part of the trading back to the Indian exchanges.
Asked about longer trading hours, a BSE spokesperson said, “We welcome the Sebi directive and we are well-prepared.”
Currency derivatives trading starts at 9 a m and ends at 5 p m, so extending trading hours to equity and equity derivative segment should not be difficult.
Market participants, however, said widespread changes would be required for exchanges to allow trading for eight hours a day. Banks that are involved in settlement, brokerages and exchanges could see an increase in manpower costs , executives said.
They said the risk and collateral management systems would need to be revamped. Further, trade margins would have to be increased and the infrastructure at brokerages, banks and depositories need to be upgraded to handle the additional pressure.
"Though it's a good move that will help us synchronise with the global markets, it may affect productivity because the time for analysis will get squeezed. It will delay the net asset value declaration of mutual funds by at least an hour," said a fund manager with a domestic mutual fund.
“It’s a very positive step. It’s just that market participants will have to realign some processes to deal with longer trading hours,” said Bhavesh Zaveri, head of wholesale banking operations and cash management products at HDFC Bank, the country's largest settlement bank.
An executive at a leading settlement bank said counters would have to open around 8 a m to allow brokers to move funds before trading started. Similarly, the Reserve Bank of India would have to allow real time gross settlement up to 6 p m instead of the 4.30 p m deadline at present, another banker said.
Further, exchanges would have to realign their systems to ensure that pay-in-pay-out files related to settlements are completed faster. At present, when trading finished at 3.30 p m, banks and depositories receive the information related to payments and transfer of shares around 8.30 p m. “This needs to be crunched because we would already be open for 12 hours a day,” said a bank executive.
In addition, a bank executive said entities that are not settlement banks would also need to work longer hours to deal with broker transactions.
You could soon be able to trade for an additional two-and-a-half hours on stock exchanges with the Securities and Exchange Board of India (Sebi) on Friday allowing trading between 9 a m and 5 p m to align timings to international standards.
At present, trading hours are between 9.55 a m and 3.30 p m.
Sebi, however, raised the caveat that the exchanges would have to ensure that risk management systems and infrastructure commensurate to longer trading hours were in place before investors transact for eight hours a day.
TRADING PLACES
Local trading hours a m to pm
Cash Futures& Options
New York 9:30 to 4:00 6.00 to 5.00*
Singapore 9:00 to 5:00 9:00 to 5:00
Tokyo 9:00 to 2:00 9:00 to 7:00
London 8:00 to 4:20 8:00 to 9: 00
India (now) 9:55 to 3:30 9:55 to 3:30
India (soon) 9:00 to 5:00 9:00 to 5:00
Source: Bloomberg * 23 hrs
The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) welcomed the Sebi move and added that they would soon extend trade timings. They, however, did not clarify whether timings would be extended to 5 p m, though executives indicated that trading would start at 9 a m.
Last year, NSE had first proposed a change in trading hours at a time when foreign institutional investors and hedge funds preferred to trade on the Singapore Stock Exchange (SGX), where NSE Nifty futures were also listed. With longer trading hours because SGX opened for trading at around 6.30 a m India time, the open interest positions on Nifty futures traded on SGX had reached close to the levels seen on NSE.
“Extending trading hours will improve liquidity and volumes in the market,” said Motilal Oswal, chairman and managing director, Motilal Oswal Securities, adding that the move could also help shift a part of the trading back to the Indian exchanges.
Asked about longer trading hours, a BSE spokesperson said, “We welcome the Sebi directive and we are well-prepared.”
Currency derivatives trading starts at 9 a m and ends at 5 p m, so extending trading hours to equity and equity derivative segment should not be difficult.
Market participants, however, said widespread changes would be required for exchanges to allow trading for eight hours a day. Banks that are involved in settlement, brokerages and exchanges could see an increase in manpower costs , executives said.
They said the risk and collateral management systems would need to be revamped. Further, trade margins would have to be increased and the infrastructure at brokerages, banks and depositories need to be upgraded to handle the additional pressure.
"Though it's a good move that will help us synchronise with the global markets, it may affect productivity because the time for analysis will get squeezed. It will delay the net asset value declaration of mutual funds by at least an hour," said a fund manager with a domestic mutual fund.
“It’s a very positive step. It’s just that market participants will have to realign some processes to deal with longer trading hours,” said Bhavesh Zaveri, head of wholesale banking operations and cash management products at HDFC Bank, the country's largest settlement bank.
An executive at a leading settlement bank said counters would have to open around 8 a m to allow brokers to move funds before trading started. Similarly, the Reserve Bank of India would have to allow real time gross settlement up to 6 p m instead of the 4.30 p m deadline at present, another banker said.
Further, exchanges would have to realign their systems to ensure that pay-in-pay-out files related to settlements are completed faster. At present, when trading finished at 3.30 p m, banks and depositories receive the information related to payments and transfer of shares around 8.30 p m. “This needs to be crunched because we would already be open for 12 hours a day,” said a bank executive.
In addition, a bank executive said entities that are not settlement banks would also need to work longer hours to deal with broker transactions.
Monday, October 26, 2009
India Cements ltd:Future growth prospects and outlook
Scripscan:India Cements ltd
cmp:115
Code:530005
Story:India Cements is now one of the cheapest stocks under various valuation metrics — be it price-to-book value, price-to-earnings multiple. For instance, India Cements trades at just 1.2 times its book value. In contrast, Shree Cements with a focus on northern markets, trades at 4.6 times its book value, while UltraTech cement, which also has a presence in the south, trades at 2.85 times its book value. Also, the dividend yield of India Cements at 1.6%, is higher than that of Shree Cement and UltraTech cement.The Street has been concerned that south-based players like India Cements could grapple with weakening price realisations in future. That’s because the cement capacity in the region is expected to rise from 78 million tonnes in FY 09 to nearly 120 million tonnes in FY 12, and demand growth is expected to be much slower. During the monsoon season there was strong price correction in some southern markets.However, India Cements has been attempting to diversify its presence beyond the southern markets, and in April 09, it had brought on stream a one million tonne cement grinding unit capacity in Maharashtra. The company is expected to add nearly Rs 350 crore to its net sales in FY 10 from this plant. Long- term investors have recognised this shift in the strategy and there has been a steady increase in delivery trades.India Cements’ installed capacity at the end of FY 09 was 12.95 million tonnes compared with 8.81 million tonnes a year earlier. As part of this expansion during FY 08, a grinding unit with a capacity of one million tonnes at Chennai was completed in August 2008.In last two years, the company had invested nearly Rs 1,960 crore in capacity expansion. This expansion has been funded largely through internal accruals. India Cements is expected to end FY10 with a capacity of 14.3 million tones. In the first quarter, it commissioned additional grinding capacity at its Malkapur facility and is working on the upgradation of its kiln at Chilamakur, Andhra Pradesh. And despite this capex programme, its debt to equity ratio was at 0.68 at the end of FY 09, compared with 0.96 a year earlier. It had cash flows of Rs 706 crore in FY 09 and Rs 1,017 crore in FY 08. The company is also building two captive power plants of 50 MW each, at its facilities in Tamil Nadu and Andhra Pradesh, at a cost of nearly Rs 500 crore.Recently, the company along with its wholly-owned subsidiary, ICL Financial Services, had launched an open offer for Indo Zinc, a loss-making zinc producer. Indo Zinc was implementing a project for setting up a cement plant in Rajasthan with a capacity of 1.5 million tonnes, but this project will now be implemented by India Cements. The cost of setting up this plant in the north along with captive power facilities, is estimated at Rs 600 crore. India Cements had recently raised Rs 592.5 crore via a QIP for its expansion plans. India Cements also owns an IPL team and has a presence in the shipping industry, with small vessels operating in the dry bulk segment. However, the contribution of the non–cement business was very small to its total net sales. At Rs 115, India Cements trades at a P/E of 7 and investors could take a position in this stock with a long-term outlook. Other south-based players like Madras Cement trades at a P /E of 7,while for UltraTech cement it is at 9.1 times.
cmp:115
Code:530005
Story:India Cements is now one of the cheapest stocks under various valuation metrics — be it price-to-book value, price-to-earnings multiple. For instance, India Cements trades at just 1.2 times its book value. In contrast, Shree Cements with a focus on northern markets, trades at 4.6 times its book value, while UltraTech cement, which also has a presence in the south, trades at 2.85 times its book value. Also, the dividend yield of India Cements at 1.6%, is higher than that of Shree Cement and UltraTech cement.The Street has been concerned that south-based players like India Cements could grapple with weakening price realisations in future. That’s because the cement capacity in the region is expected to rise from 78 million tonnes in FY 09 to nearly 120 million tonnes in FY 12, and demand growth is expected to be much slower. During the monsoon season there was strong price correction in some southern markets.However, India Cements has been attempting to diversify its presence beyond the southern markets, and in April 09, it had brought on stream a one million tonne cement grinding unit capacity in Maharashtra. The company is expected to add nearly Rs 350 crore to its net sales in FY 10 from this plant. Long- term investors have recognised this shift in the strategy and there has been a steady increase in delivery trades.India Cements’ installed capacity at the end of FY 09 was 12.95 million tonnes compared with 8.81 million tonnes a year earlier. As part of this expansion during FY 08, a grinding unit with a capacity of one million tonnes at Chennai was completed in August 2008.In last two years, the company had invested nearly Rs 1,960 crore in capacity expansion. This expansion has been funded largely through internal accruals. India Cements is expected to end FY10 with a capacity of 14.3 million tones. In the first quarter, it commissioned additional grinding capacity at its Malkapur facility and is working on the upgradation of its kiln at Chilamakur, Andhra Pradesh. And despite this capex programme, its debt to equity ratio was at 0.68 at the end of FY 09, compared with 0.96 a year earlier. It had cash flows of Rs 706 crore in FY 09 and Rs 1,017 crore in FY 08. The company is also building two captive power plants of 50 MW each, at its facilities in Tamil Nadu and Andhra Pradesh, at a cost of nearly Rs 500 crore.Recently, the company along with its wholly-owned subsidiary, ICL Financial Services, had launched an open offer for Indo Zinc, a loss-making zinc producer. Indo Zinc was implementing a project for setting up a cement plant in Rajasthan with a capacity of 1.5 million tonnes, but this project will now be implemented by India Cements. The cost of setting up this plant in the north along with captive power facilities, is estimated at Rs 600 crore. India Cements had recently raised Rs 592.5 crore via a QIP for its expansion plans. India Cements also owns an IPL team and has a presence in the shipping industry, with small vessels operating in the dry bulk segment. However, the contribution of the non–cement business was very small to its total net sales. At Rs 115, India Cements trades at a P/E of 7 and investors could take a position in this stock with a long-term outlook. Other south-based players like Madras Cement trades at a P /E of 7,while for UltraTech cement it is at 9.1 times.
Sunday, October 25, 2009
LEARNING SECTION-----The cognitive process of acquiring skill
LOOKING to buy stocks but you are not sure how to select them? Don't fret. We have, here, eight ratios that would make your life easier, and of course, enable you to make the best possible stock selection.
1. Ploughback or Reserves
Every year, the company divides its net profit (profits in hand after subtracting various expenses including taxes) in two portions: ploughback and dividends.
While dividends are handed out to the shareholders, ploughback is kept by the company for its future use and is included in its reserves. Ploughback is essential because, besides boosting the company’s reserves, it is a source of funds for the company’s expansion plans. Hence, if you are looking for a company with good growth prospects, check its ploughback figures. Reserves are also known as shareholders’ funds, since they belong to the shareholders. If a company’s reserves are twice its equity capital, the company can reward its shareholders with a generous bonus. Also any increase in reserves will push the share price of your share.
2. Book value per share
This ratio shows the worth of each share of a company as per the company's accounting books. It is calculated as:
Shareholders' funds
------------------------------------------------ = Book Value per share
Total quantity of equity shares issued
Shareholders' funds can be computed as such:
Total assets (equity capital to the company's reserves) less total liabilities (money owed to creditors).
Book value is an old record that uses the original purchase prices of the assets.
However, it doesn't show the present market price of the company’s assets. As a result, this ratio has a restricted use when it comes to estimating the market price of the shares, but can give you an estimate of the minimum price of the company’s shares. It will also help you judge if the share price is overpriced or under-priced.
3. Earnings per share (EPS)
One of the most popular investment ratios, it can be computed as:
Profit Post Tax
------------------------------------------------ = EPS
Total quantity of equity shares issued
This ratio computes the company's earnings on a per share basis. Say, you own 100 shares of ABC Co., each having a face value of Rs 10. Assume the earnings per share is Rs 10 and the dividend declared is 30 per cent, or Rs 3 per share. This implies that on every share of ABC Co., you earn Rs 6 each year, but you actually get Rs 3 via dividend. The balance of Rs 4 per share goes into the ploughback (retained earnings). Had you purchased these shares at par, it implies a return of 60 per cent.
This example shows that instead of looking at the dividends received from to company as the base of investment returns, always look at earnings per share, as it is the actual indicator of the returns earned by your shares.
4. Price Earnings Ratio (P/E)
This ratio highlights the connection between the market price of a share and its EPS.
Price of the share
------------------------ = P/E
Earnings per share
It shows the degree to which earnings of a share are protected by its price. Say, the P/E is 40, it means the share price is 40 times its earnings. So if the company's EPS is constant, it will need about 40 years to make up for the purchase price of the share, after taking into account the dividends and the capital appreciation. Hence, low P/E means you will recover your money quickly.
P/E ratio shows what the market thinks about the earnings potential and future business forecast of a company. Companies with high P/E ratios are the darlings of the investors and thus enjoy a higher market rating. In order to use the P/E ratio properly, take into account the future earnings and growth projections of the company. If the current P/E ratio is low, as against the future prospects of a company, then the shares make an attractive investment option. But if the company is saddled with losses and falling sales, stay away from it, despite the low P/E ratio.
5. Dividend and yield
Dividend is the portion of the profit that is distributed amongst shareholders. Companies offering high dividends, normally don’t have much of growth to talk about. This is because the ploughback required to finance future development is insufficient. Similarly, those companies in high growth sector don’t give any dividend. Instead here they give sharp capital appreciation, which ultimately will lead to higher dividends.
So it makes much more sense to invest for capital appreciation instead of dividends. Rather it makes more sense to invest for yield, which is nothing but the association between the dividends and the market price of the shares. Yield (dividend yield) can be calculated as:
Dividend per share
----------------------------- x 100 = Yield
Market price of a share
Yield shows the returns in percentage that you can expect via dividends earned by your investment at the current market price. It is more useful than simply focusing on the dividends.
6. Return of capital employed (ROCE)
ROCE is the ratio that is calculated as:
Operating profit
----------------------------------------
Capital employed (net value + debt)
To get operating profit, add old taxes paid, depreciation, special one-off expenses, and special one-off income and miscellaneous income to get the net profit. The operating profit is a far better indicator of the profits earned by the company instead of the net profit. Hence this ratio is the better indicator of the general performance of the company and the company’s operational efficiency. It is one of the most useful ratio that lets you compare amongst the companies.
7. Return on net worth (RONW)
RONW is calculated as
Net Profit
-----------------
Net Worth
This ratio gives you an idea of the returns generated by investing in the company. While ROCE is an effective measure to get a general overview of the profitability of the company’s business operations, RONW lets you gauge the returns you can earn on your investment. When used along with ROCE, you get an overview of the company’s competence, financial standing and its capacity to generate returns on shareholders’ finances and capital employed.
8. PEG ratio
PEG is an essential and extensively used ratio for calculating the inbuilt worth of a share. It helps you decide whether the share is under-priced, totally priced or overpriced. To derive the ratio, you have to associate the P/E ratio with the expected growth rate of the company. It assumes that higher the growth rate of the company, higher the P/E ratio of the company’s shares. Vice versa also holds true.
P/E
----------------------------------
Expected growth rate of the EPS of the company.
These are some of the most critical ratios that must be considered when purchasing a share. Extensive reading of the financial performance of the company in newspapers and magazines will help you get all the relevant information to arrive at the correct decision.
1. Ploughback or Reserves
Every year, the company divides its net profit (profits in hand after subtracting various expenses including taxes) in two portions: ploughback and dividends.
While dividends are handed out to the shareholders, ploughback is kept by the company for its future use and is included in its reserves. Ploughback is essential because, besides boosting the company’s reserves, it is a source of funds for the company’s expansion plans. Hence, if you are looking for a company with good growth prospects, check its ploughback figures. Reserves are also known as shareholders’ funds, since they belong to the shareholders. If a company’s reserves are twice its equity capital, the company can reward its shareholders with a generous bonus. Also any increase in reserves will push the share price of your share.
2. Book value per share
This ratio shows the worth of each share of a company as per the company's accounting books. It is calculated as:
Shareholders' funds
------------------------------------------------ = Book Value per share
Total quantity of equity shares issued
Shareholders' funds can be computed as such:
Total assets (equity capital to the company's reserves) less total liabilities (money owed to creditors).
Book value is an old record that uses the original purchase prices of the assets.
However, it doesn't show the present market price of the company’s assets. As a result, this ratio has a restricted use when it comes to estimating the market price of the shares, but can give you an estimate of the minimum price of the company’s shares. It will also help you judge if the share price is overpriced or under-priced.
3. Earnings per share (EPS)
One of the most popular investment ratios, it can be computed as:
Profit Post Tax
------------------------------------------------ = EPS
Total quantity of equity shares issued
This ratio computes the company's earnings on a per share basis. Say, you own 100 shares of ABC Co., each having a face value of Rs 10. Assume the earnings per share is Rs 10 and the dividend declared is 30 per cent, or Rs 3 per share. This implies that on every share of ABC Co., you earn Rs 6 each year, but you actually get Rs 3 via dividend. The balance of Rs 4 per share goes into the ploughback (retained earnings). Had you purchased these shares at par, it implies a return of 60 per cent.
This example shows that instead of looking at the dividends received from to company as the base of investment returns, always look at earnings per share, as it is the actual indicator of the returns earned by your shares.
4. Price Earnings Ratio (P/E)
This ratio highlights the connection between the market price of a share and its EPS.
Price of the share
------------------------ = P/E
Earnings per share
It shows the degree to which earnings of a share are protected by its price. Say, the P/E is 40, it means the share price is 40 times its earnings. So if the company's EPS is constant, it will need about 40 years to make up for the purchase price of the share, after taking into account the dividends and the capital appreciation. Hence, low P/E means you will recover your money quickly.
P/E ratio shows what the market thinks about the earnings potential and future business forecast of a company. Companies with high P/E ratios are the darlings of the investors and thus enjoy a higher market rating. In order to use the P/E ratio properly, take into account the future earnings and growth projections of the company. If the current P/E ratio is low, as against the future prospects of a company, then the shares make an attractive investment option. But if the company is saddled with losses and falling sales, stay away from it, despite the low P/E ratio.
5. Dividend and yield
Dividend is the portion of the profit that is distributed amongst shareholders. Companies offering high dividends, normally don’t have much of growth to talk about. This is because the ploughback required to finance future development is insufficient. Similarly, those companies in high growth sector don’t give any dividend. Instead here they give sharp capital appreciation, which ultimately will lead to higher dividends.
So it makes much more sense to invest for capital appreciation instead of dividends. Rather it makes more sense to invest for yield, which is nothing but the association between the dividends and the market price of the shares. Yield (dividend yield) can be calculated as:
Dividend per share
----------------------------- x 100 = Yield
Market price of a share
Yield shows the returns in percentage that you can expect via dividends earned by your investment at the current market price. It is more useful than simply focusing on the dividends.
6. Return of capital employed (ROCE)
ROCE is the ratio that is calculated as:
Operating profit
----------------------------------------
Capital employed (net value + debt)
To get operating profit, add old taxes paid, depreciation, special one-off expenses, and special one-off income and miscellaneous income to get the net profit. The operating profit is a far better indicator of the profits earned by the company instead of the net profit. Hence this ratio is the better indicator of the general performance of the company and the company’s operational efficiency. It is one of the most useful ratio that lets you compare amongst the companies.
7. Return on net worth (RONW)
RONW is calculated as
Net Profit
-----------------
Net Worth
This ratio gives you an idea of the returns generated by investing in the company. While ROCE is an effective measure to get a general overview of the profitability of the company’s business operations, RONW lets you gauge the returns you can earn on your investment. When used along with ROCE, you get an overview of the company’s competence, financial standing and its capacity to generate returns on shareholders’ finances and capital employed.
8. PEG ratio
PEG is an essential and extensively used ratio for calculating the inbuilt worth of a share. It helps you decide whether the share is under-priced, totally priced or overpriced. To derive the ratio, you have to associate the P/E ratio with the expected growth rate of the company. It assumes that higher the growth rate of the company, higher the P/E ratio of the company’s shares. Vice versa also holds true.
P/E
----------------------------------
Expected growth rate of the EPS of the company.
These are some of the most critical ratios that must be considered when purchasing a share. Extensive reading of the financial performance of the company in newspapers and magazines will help you get all the relevant information to arrive at the correct decision.
Saturday, October 24, 2009
A solid bet with a nominal risk of downfall ; MIC Electronics
To fund its future growth plans MIC Electronics (50.00) has decided to make preferential allotment of 1.65 cr warrants to promoters and others at the rate of Rs 44 per warrant. It is further contemplating to raise nearly Rs 150 cr thru QIP or FCCB route. Although this may lead to ~40% equity dilution but it will put the company on the fast track growth for coming years. MIC is a pioneer in design, development, manufacture & supply of true color LED Video Displays, LED Lighting products and solutions. Infact, it is the only integrated LED display manufacturer in India with design-to-manufacture capabilities. To cater the rising demand company is in the midst of tripling its total capacity to 50,000 modules from 15,000 modules. It is setting up a manufacturing unit for LED true colour displays, LED lighting solutions and solar based LED lighting products at Fab City SEZ near Hyderabad for which it has already been allotted 50 acre of land on lease. Lately, company has got the RDSO approval for its unique & innovative video cum train info display system thereby becoming the first and only company to get such approval. Couple of months ago it signed an MOU with IOC for marketing high efficiency Solar LED Lantern thru their rural retail outlets. Earlier company bagged a long term contract for display of advertisement thru 50 nos of LED display system in Delhi. For FY10 it may clock a turnover of Rs 275~300 cr and profit of Rs 60 cr leading to an EPS of Rs 6 on current equity of Rs 20 cr having Rs 2 as face value. However for the next 3~4 years, company has the potential to record a CAGR of ~30%.
Thursday, October 22, 2009
STOCK TO WATCH ; A good bet for medium to long term.
IMP Power (125.00) has come out with good set of nos for the June’09 quarter. Sales as well as PBT increased by 70% to Rs 52 cr and Rs 7.2 cr respectively. Due to lower tax provisioning its PAT quadrupled to 6.30 cr for the quarter. Thus for the full year ending June 2009 it recorded 40% growth in sales to Rs 190 cr and 70% increase in NP to Rs 15.70 cr posting an EPS of Rs 19 on equity of Rs 8.10 cr. Company is engaged in manufacturing of entire range of power & distribution transformers, electrical & digital measuring instruments, testing equipments etc. It has vendor approval from almost all the State Electricity Boards, major turnkey EPC contractors and the only transformer company in India to be in zero sales tax zone enjoying 15 year sales tax holiday which shall continue till year 2012. Secondly, it has achieved backward integration through manufacturing of OLTC & RTCC in house thereby emerging as one of the lowest cost manufacturer of transformers. To cater to the rising demand and increase its market share, company has last year doubled its production capacity from 3,600 MVA to 7,000 MVA. Further its in the midst of expanding it to 10,000 MVA in the current fiscal itself. Post this completion, company will be among the very few transformer manufacturers having the capability to make EHV power transformer up to 200 MVA in 330 kV class. Besides, company has also upgraded its Kandivali plant to manufacture complete range of analog meters in addition to high end meters like maximum demand indicator, trivector meter, multifunctional and kWh Meters. Recently company converted the preference share into equity shares @ Rs 161 per share thereby diluting the equity by 20% to Rs 8.14 cr. For FY10 ending June’10 it may report sales of Rs 250 cr and NP of Rs 18.25 cr i.e. EPS of Rs 22 on current equity. For FY11 it has the potential to post an EPs of Rs +30. A good bet for medium to long term.
Wednesday, October 21, 2009
Small Cap Stock With Good Dividend Yield - Visaka Industries
Visaka Industries is basically a play on rural infrastructure. This company manufactures cement asbestos sheets and also reinforced cement boards. The company also has a textile division.
It has got six manufacturing plants for making asbestos products and two manufacturing plant for garments.
If you take a look at the financials of the company. FY09, the sales of the company were about Rs 575 crore, profit after tax of about Rs 36 crore. This was after paying a tax of about Rs 20 crore. EPS for FY09 was about Rs 23.
If you look at the first quarter sales are up by about 10% to about Rs 190 crore. Profit after tax for the June quarter is about Rs 26 crore as against Rs 36 crore for the full year last year. Tax payment for this quarter is about Rs 12.5 crore.
For FY10 we expect the company to do a profit close to Rs 55 crore which would mean an EPS of about Rs 35. This is the stock which has got a good potential going ahead, it is catering to a growth market and at the same time the stocks is available at sensible valuations. It is available at a price to earning multiple of about 3.5 going on FY10 earnings.
If you see the dividend track record of the company, this company has got an uninterrupted track record of dividend payment for the past 12-13 years. Last year they paid about 40% dividend. So dividend yield at the current price is also about 3.5 to 4%.
So you have a stock with the market cap of about Rs 200 crore. Cash profits for FY10 are expected to be around Rs 70-75 crore. So you are getting a business to market cap to cash ratio of less than three years which is under valuation. Dividend yield is also pretty good at about 3.5-4%.
My view on Visaka Industries:
If you look at the valuations of the company, it is definitely available for lower valuations.
Market Cap 222.73
* EPS (TTM) 29.69
* P/E 4.72
* P/C 3.49
* Book Value 118.23
* Price/Book 1.19
Div(%) 40.00
Div Yield(%) 2.85
Market Lot 1.00
Face Value 10.00
Industry P/E 8.68
P/E of 4.7 with good dividend yield of 3% at CMP 140 seems good. But this stock has run a lot in recent past. From Rs.31 to Es.141. That makes uncomfortable to buy at this level. If correction comes in Indian stock markets, it could correct considerabley.
I would advice to buy stocks of Visaka when it is in correction mode. Do not chase the stock. Wait for correction and you may get it at good bargain price.
It has got six manufacturing plants for making asbestos products and two manufacturing plant for garments.
If you take a look at the financials of the company. FY09, the sales of the company were about Rs 575 crore, profit after tax of about Rs 36 crore. This was after paying a tax of about Rs 20 crore. EPS for FY09 was about Rs 23.
If you look at the first quarter sales are up by about 10% to about Rs 190 crore. Profit after tax for the June quarter is about Rs 26 crore as against Rs 36 crore for the full year last year. Tax payment for this quarter is about Rs 12.5 crore.
For FY10 we expect the company to do a profit close to Rs 55 crore which would mean an EPS of about Rs 35. This is the stock which has got a good potential going ahead, it is catering to a growth market and at the same time the stocks is available at sensible valuations. It is available at a price to earning multiple of about 3.5 going on FY10 earnings.
If you see the dividend track record of the company, this company has got an uninterrupted track record of dividend payment for the past 12-13 years. Last year they paid about 40% dividend. So dividend yield at the current price is also about 3.5 to 4%.
So you have a stock with the market cap of about Rs 200 crore. Cash profits for FY10 are expected to be around Rs 70-75 crore. So you are getting a business to market cap to cash ratio of less than three years which is under valuation. Dividend yield is also pretty good at about 3.5-4%.
My view on Visaka Industries:
If you look at the valuations of the company, it is definitely available for lower valuations.
Market Cap 222.73
* EPS (TTM) 29.69
* P/E 4.72
* P/C 3.49
* Book Value 118.23
* Price/Book 1.19
Div(%) 40.00
Div Yield(%) 2.85
Market Lot 1.00
Face Value 10.00
Industry P/E 8.68
P/E of 4.7 with good dividend yield of 3% at CMP 140 seems good. But this stock has run a lot in recent past. From Rs.31 to Es.141. That makes uncomfortable to buy at this level. If correction comes in Indian stock markets, it could correct considerabley.
I would advice to buy stocks of Visaka when it is in correction mode. Do not chase the stock. Wait for correction and you may get it at good bargain price.
Tuesday, October 20, 2009
Small Cap Stocks To Buy - Hidden Gems From Amit Chugh
Deccan Gold Mines is the first private sector gold mining company and rather the only gold mining company listed on the Indian stock exchanges. The company has got blocks spread across four states. The total area of the blocks is more than 10,000 sq kilometers.
Talking of gold mining business, gold mining company has to pass through three stages before they can commercially start mining gold. The first stage is called reconnaissance permit where they seek the approval of the authorities to do exploratory activities on say 200-300 sq kilometer of the block. Second stage is prospecting license wherein they short list about 25 sq kilometer or 30 sq kilometer out of the total area where they would like to do the further exploratory studies and the third stage is called mining lease where in they short list about half a sq kilometer or one sq kilometer where they would actually like to drill and take gold out or rather rock out and then refine it and produce gold.
The company has filed application for about six blocks for mining license. As per the management the actually mining of the company is expected to start in the last quarter of FY10-11 which is January to March of FY11 and if you look at the valuations of this company as of now the company has got zero revenues. It has a market cap of Rs 200 crore but going by what the management has been saying that. Management says that they are able to derive about 4 tonne of gold per annum assuming on a conservative basis that they are able to do only 2 tonne and taking a price of about Rs 15,000 per ten grams this would translate into revenues of about Rs 300 crore. Typically internationally the gold exploration cost is about USD 350-400 per ounce which in this case will translate into Rs 5000-5500 per ten grams.
Assuming initial expenses to be high we still believe that on a conservative basis the operating profit of the company could be in the region of 40-50% which means on a revenue of about Rs 300 crore the company can do about Rs 120-150 crore of operating profit so as of now there are no profits but market cap is only Rs 200 crore which is less than 2 years of the companies operating profit. The valuation is low mainly because of two reasons. One is the uncertainties involved in the business and also the uncertainties with regard to the regulatory clearances for this company. The second relates to the psychology of the investor. Most people do not want to buy these companies now when the production is still one, one and a half years away.
Everybody thinks that they are going to buy the company as soon as the company is going to start production but people will realize that smart money would already have accumulated the stock at lower levels.
I am not advocating buying the stock just now at upper circuits. I would not advise doing that but I think one can keep an eye on the stock. I would ideally believe that Rs 25-30 levels would be a good level to get into the stock but one can chose to do staggered purchases for this stock. Rather than thinking that they will buy everything when the production starts, start accumulating at this point of time. I would like to say that this is the one for a very high risk investor because of the uncertainties involved in the business and also somebody with a time frame of about 3-5 years.
Talking of gold mining business, gold mining company has to pass through three stages before they can commercially start mining gold. The first stage is called reconnaissance permit where they seek the approval of the authorities to do exploratory activities on say 200-300 sq kilometer of the block. Second stage is prospecting license wherein they short list about 25 sq kilometer or 30 sq kilometer out of the total area where they would like to do the further exploratory studies and the third stage is called mining lease where in they short list about half a sq kilometer or one sq kilometer where they would actually like to drill and take gold out or rather rock out and then refine it and produce gold.
The company has filed application for about six blocks for mining license. As per the management the actually mining of the company is expected to start in the last quarter of FY10-11 which is January to March of FY11 and if you look at the valuations of this company as of now the company has got zero revenues. It has a market cap of Rs 200 crore but going by what the management has been saying that. Management says that they are able to derive about 4 tonne of gold per annum assuming on a conservative basis that they are able to do only 2 tonne and taking a price of about Rs 15,000 per ten grams this would translate into revenues of about Rs 300 crore. Typically internationally the gold exploration cost is about USD 350-400 per ounce which in this case will translate into Rs 5000-5500 per ten grams.
Assuming initial expenses to be high we still believe that on a conservative basis the operating profit of the company could be in the region of 40-50% which means on a revenue of about Rs 300 crore the company can do about Rs 120-150 crore of operating profit so as of now there are no profits but market cap is only Rs 200 crore which is less than 2 years of the companies operating profit. The valuation is low mainly because of two reasons. One is the uncertainties involved in the business and also the uncertainties with regard to the regulatory clearances for this company. The second relates to the psychology of the investor. Most people do not want to buy these companies now when the production is still one, one and a half years away.
Everybody thinks that they are going to buy the company as soon as the company is going to start production but people will realize that smart money would already have accumulated the stock at lower levels.
I am not advocating buying the stock just now at upper circuits. I would not advise doing that but I think one can keep an eye on the stock. I would ideally believe that Rs 25-30 levels would be a good level to get into the stock but one can chose to do staggered purchases for this stock. Rather than thinking that they will buy everything when the production starts, start accumulating at this point of time. I would like to say that this is the one for a very high risk investor because of the uncertainties involved in the business and also somebody with a time frame of about 3-5 years.
Saturday, October 17, 2009
Scripscan:EID Parry India Ltd
cmp:325
Code:500125
Story:Eid Parry (India), part of the $3.14-bn Murugappa Group, has been steadily moving up over the last few trading sessions. Although the diversified company generates a significantly large chunk of consolidated revenues from its fertiliser subsidiary, Coromandel Fertiliser, the latest uptick on the scrip is attributed to the acquisition of 76% equity stake in privately-held Sadashiva Sugar (SSL) for a consideration of Rs 50 crore.With the acquisition of Bangalore-based SSL, its sugar production capacity is expected to grow 15% to around 21,500 tonnes crushed per day (TCD). Assuming the current capacity utilisation at 75% with increased capacity and the ruling price of sugar at Rs 30/kg, EID Parry is likely to grow standalone revenues in the coming quarters. At the consolidated level, however, the business is dominated by its fertiliser subsidiary, which accounted for 92% of the company’s revenues and its entire profits in FY09.Its standalone turnover for the year ended March 2009 stood at Rs 755 crore compared with Rs 616 crore last year. For the first quarter ended June 2009, it posted 0.8% growth in standalone revenues to Rs 205 crore and net profit was Rs 26 crore compared with Rs 3 crore during the same quarter last year, due to improved realisation in sugar prices. Sugar is the main business of the company besides co-generation power and distillery.EID Parry’s operating margin for the June quarter ended 2009 at 29.71% is comparable to its peers in the sugar industry and has improved significantly compared with 11.78% in the corresponding quarter last year. As the industry estimates supply deficit of close to 5 million tonnes of sugar during the sugar season 2009-10, prices may continue to see an upward trend. But availability of sugarcane poses challenge for sugar producers.Despite the recent run-up in its stock price, the company looks cheaper than its peers. At its current stock price of Rs 325, the stock is trading at a trailing price-earning multiple of close 20x (on a standalone basis) and looks pricey, considering that sugar companies are currently trading at a P/E of around 10x.However, the market value of EID Parry investment is equivalent to around 70% of its total market capitalisation, which means that either its sugar division is not getting fair valuation, or its investments in fertilisers are being undervalued by the market.Thus a hold as of now.
Code:500125
Story:Eid Parry (India), part of the $3.14-bn Murugappa Group, has been steadily moving up over the last few trading sessions. Although the diversified company generates a significantly large chunk of consolidated revenues from its fertiliser subsidiary, Coromandel Fertiliser, the latest uptick on the scrip is attributed to the acquisition of 76% equity stake in privately-held Sadashiva Sugar (SSL) for a consideration of Rs 50 crore.With the acquisition of Bangalore-based SSL, its sugar production capacity is expected to grow 15% to around 21,500 tonnes crushed per day (TCD). Assuming the current capacity utilisation at 75% with increased capacity and the ruling price of sugar at Rs 30/kg, EID Parry is likely to grow standalone revenues in the coming quarters. At the consolidated level, however, the business is dominated by its fertiliser subsidiary, which accounted for 92% of the company’s revenues and its entire profits in FY09.Its standalone turnover for the year ended March 2009 stood at Rs 755 crore compared with Rs 616 crore last year. For the first quarter ended June 2009, it posted 0.8% growth in standalone revenues to Rs 205 crore and net profit was Rs 26 crore compared with Rs 3 crore during the same quarter last year, due to improved realisation in sugar prices. Sugar is the main business of the company besides co-generation power and distillery.EID Parry’s operating margin for the June quarter ended 2009 at 29.71% is comparable to its peers in the sugar industry and has improved significantly compared with 11.78% in the corresponding quarter last year. As the industry estimates supply deficit of close to 5 million tonnes of sugar during the sugar season 2009-10, prices may continue to see an upward trend. But availability of sugarcane poses challenge for sugar producers.Despite the recent run-up in its stock price, the company looks cheaper than its peers. At its current stock price of Rs 325, the stock is trading at a trailing price-earning multiple of close 20x (on a standalone basis) and looks pricey, considering that sugar companies are currently trading at a P/E of around 10x.However, the market value of EID Parry investment is equivalent to around 70% of its total market capitalisation, which means that either its sugar division is not getting fair valuation, or its investments in fertilisers are being undervalued by the market.Thus a hold as of now.
NOTICE.Dated: 17/10/2009
ALL REGISTERED MEMBERS ARE HEREBY INFORMED THAT SCRIPTS FOR GOOD RETURN IS LIKELY TO BE FORWARDED TO ALL MEMBERS TO BE BOUGHT FOR GREAT RETURNS.
IN THIS REGARD ALL MEMBERS ARE SUPPOSE TO EMAIL ME MENTIONING THE DATE OF REGISTRATION ASKING FOR THE LIST.
In INDIA, people generally relate to stock market as “EASY MONEY” or “SATTA BAZAAR”. For them it’s purely a GAME or matter of sheer LUCK and nothing more than that. But seldom do they know, by following certain PRINCIPLES and taking INFORMED decision, this same platform has the power to take them from rags to riches. No doubt, it has a certain amount of RISK attached to it. But every business or investment has it. What more, the Finance Ministry has already made the long term capital gain as TAX FREE whereas the short term capital gain is taxed at merely 10%. On the economic front, India’s GDP is growing and is expected to grow at scorching pace of more than 8%. Unfortunately, even today our market is being ruled and dominated by FIRANGI’s money. But I can see, the day is not far when our general PUBLIC will change its perception and start putting MOST of their savings in equities as an ** Investment **.
Remember, "K N O W L E D G E" and "P A T I E NC E" are the key to success
IN THIS REGARD ALL MEMBERS ARE SUPPOSE TO EMAIL ME MENTIONING THE DATE OF REGISTRATION ASKING FOR THE LIST.
In INDIA, people generally relate to stock market as “EASY MONEY” or “SATTA BAZAAR”. For them it’s purely a GAME or matter of sheer LUCK and nothing more than that. But seldom do they know, by following certain PRINCIPLES and taking INFORMED decision, this same platform has the power to take them from rags to riches. No doubt, it has a certain amount of RISK attached to it. But every business or investment has it. What more, the Finance Ministry has already made the long term capital gain as TAX FREE whereas the short term capital gain is taxed at merely 10%. On the economic front, India’s GDP is growing and is expected to grow at scorching pace of more than 8%. Unfortunately, even today our market is being ruled and dominated by FIRANGI’s money. But I can see, the day is not far when our general PUBLIC will change its perception and start putting MOST of their savings in equities as an ** Investment **.
Remember, "K N O W L E D G E" and "P A T I E NC E" are the key to success
Friday, October 16, 2009
LEARNING SECTION-----The cognitive process of acquiring skill
Do you know these basics, even if you know this you should repeat it once for knowledge.
Investment Basics
What is Investment?
The money you earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future. This is called Investment.
Why should one invest?
One needs to invest to:
earn return on your idle resources
generate a specified sum of money for a specific goal in life
make a provision for an uncertain future
One of the important reasons why one needs to invest wisely is to meet the cost of Inflation. Inflation is the rate at which the cost of living increases The cost of living is simply what it costs to buy the goods and services you need to live. Inflation causes money to lose value because it will not buy the same amount of a good or a service in the future as it does now or did in the past. For example, if there was a 6% inflation rate for the next 20 years, a Rs. 100 purchase today would cost Rs. 321 in 20 years. This is why it is important to consider inflation as a factor in any long-term investment strategy. Remember to look at an investment's 'real' rate of return, which is the return after inflation. The aim of investments should be to provide a return above the inflation rate to ensure that the investment does not decrease in value. For example, if the annual inflation rate is 6%, then the investment will need to earn more than 6% to ensure it increases in value. If the after-tax return on your investment is less than the inflation rate, then your assets have actually decreased in value; that is, they won't buy as much today as they did last year.
When to start Investing?
The sooner one starts investing the better. By investing early you allow your investments more time to grow, whereby the concept of compounding (as we shall see later) increases your income, by accumulating the principal and the interest or dividend earned on it, year after year. The three golden rules for all investors are:
Invest early
Invest regularly
Invest for long term and not short term
What care should one take while investing?
Before making any investment, one must ensure to:
1.obtain written documents explaining the investment
2.read and understand such documents
3.verify the legitimacy of the investment
4.find out the costs and benefits associated with the investment
5.assess the risk-return profile of the investment
6.know the liquidity and safety aspects of the investment
7.ascertain if it is appropriate for your specific goals
8.compare these details with other investment opportunities available
9.examine if it fits in with other investments you are considering or you
have already made
10. deal only through an authorised intermediary
11. seek all clarifications about the intermediary and the investment
12. explore the options available to you if something were to go wrong,
and then, if satisfied, make the investment.
These are called the Twelve Important Steps to Investing.
What is meant by Interest?
When we borrow money, we are expected to pay for using it - this is known as Interest. Interest is an amount charged to the borrower for the privilege of using the lender's money. Interest is usually calculated as a percentage of the principal balance (the amount of money borrowed). The percentage rate may be fixed for the life of the loan, or it may be variable, depending on the terms of the loan.
What factors determine interest rates?
When we talk of interest rates, there are different types of interest rates -rates that banks offer to their depositors, rates that they lend to their borrowers,the rate at whichtheGovernment borrows in the Bond/Government Securities market, rates offered to investors in small savings schemes like NSC, PPF, rates at which companies issue fixed deposits etc. The factors which govern these interest rates are mostly economy related and are commonly referred to as macroeconomic factors. Some of these factors are:
Demand for money
Level of Government borrowings
Supply of money
Inflation rate
The Reserve Bank of India and the Government policies which determine some of the variables mentioned above
What are various options available for investment?
One may invest in:
Physical assets
and/or
Financial assets
like real estate, gold/jewellery, commodities etc. such as fixed deposits with banks, small saving instrume nts with post offices, insurance/provident/pension fund etc. or securities market related instruments like shares, bonds, debentures etc.
What are various Short-term financial options available for investment?
Broadly speaking, savings bank account, money market/liquid funds and fixed deposits with banks may be considered as short-term financial investment options:
Savings Bank Account is often the first banking product people use, which offers low interest (4%-5% p.a.), making them only marginally better than fixed deposits.
Money Market or Liquid Fundsare a specialized form of mutual funds that invest in extremely short-term fixed income instruments and thereby provide easy liquidity. Unlike most mutual funds, money market funds are primarily oriented towards protecting your capital and then, aim to maximise returns. Money market funds usually yield better returns than savings accounts, but lower than bank fixed deposits. Fixed Deposits with Banksare also referred to as term deposits and minimum investment period for bank FDs is 30 days. Fixed Deposits with banks are for investors with low risk appetite, and may be considered for 6-12 months investment period as normally interest on less than 6 months bank FDs is likely to be lower than money market fund returns.
What are various Long-term financial options available for investment?
Post Office Savings Schemes, Public Provident Fund, Company Fixed Deposits, Bonds and Debentures, Mutual Funds etc.
Post Office Savings: Post Office Monthly Income Scheme is a low risk saving instrument, which can be availed through any post office. It provides an interest rate of 8% per annum, which is paid monthly. Minimum amount, which can be invested, is Rs. 1,000/- and additional investment in multiplesof 1,000/-.Maximum amount is Rs. 3,00,000/- (if Single) or Rs. 6,00,000/- (if held Jointly) during a year. It has a maturity period of 6 years. A bonus of 10% is paid at the time of maturity. Premature withdrawal is permitted if deposit is more than one year old. A deduction of 5% is levied from the principal amount if withdrawn prematurely; the 10% bonus is also denied.
Public Provident Fund: A long term savings instrument with a maturity of 15 years and interest payable at 8% per annum compounded annually. A PPF account can be opened through a nationalized bank at anytime during the year and is open all through the year for depositing money. Tax benefits can be availed for the amount invested and interest accrued is tax-free. A withdrawal is permissible every year from the seventh financial year of the date of opening of the account and the amount of withdrawal will be limited to 50% of the balance at credit at the end of the 4th year immediately preceding the year in which the amount is withdrawn or at the end of the preceding year whichever is lower the amount of loan if any.
Company Fixed Deposits: These are short-term (six months) to medium-term (three to five years) borrowings by companies at a fixed rate of interest which is payable monthly, quarterly, semi-annually or annually. They can also be cumulative fixed deposits where the entire principal alongwith the interest is paid at the end of the loan period. The rate of interest varies between 6-9% per annum for company FDs. The interest received is after deduction of taxes.
Bonds : It is a fixed income (debt) instrument issued for a period of
more than one year with the purpose of raising capital. The central or state government, corporations and similar institutions sell bonds. A bond is generally a promise to repay the principal along with a fixed rate of interest on a specified date, called the Maturity Date.
Mutual Funds: These are funds operated by an investment company which raises money from the public and invests in a group of assets
(shares, debentures etc.), in accordance with a stated set of objectives. It is a substitute for those who are unable to invest directly in equities or debt because of resource, time or knowledge constraints. Benefits include professional money management, buying in small amounts and diversification. Mutual fund units are issued and redeemed by the Fund Management Company based on the fund's net asset value (NAV), which is determined at the end of each trading session. NAV is calculated as the value of all the shares held by the fund, minus expenses, divided by the number of units issued. Mutual Funds are usually long term investment vehicle though there some categories of mutual funds, such as money market mutual funds which are short term instruments.
What is meant by a Stock Exchange?
The Securities Contract (Regulation) Act, 1956 [SCRA] defines ‘Stock Exchange' as any body of individuals, whether incorporated or not,
constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. Stock exchange could be a regional stock exchange whose area of operation/jurisdiction is specified at the time of its recognition or national exchanges, which are permitted to have nationwide trading since inception. NSE was incorporated as a national stock exchange.
What is an ‘Equity' Share?
Total equity capital of a company is divided into equal units of small denominations, each called a share. For example, in a company the total equity capital of Rs 2,00,00,000 is divided into 20,00,000 units of Rs 10 each. Each such unit of Rs 10 is called a Share. Thus, the company then is said to have 20,00,000 equity shares of Rs 10 each. The holders of such shares are members of the company and have voting rights.
What is a ‘Debt Instrument'?
Debt instrument represents a contract whereby one party lends money to another on pre-determined terms with regards to rate and periodicity of interest, repayment of principal amount by the borrower to the lender. In the Indian securities markets, the term ‘bond' is used for debt instruments issued by the Central and State governments and public sector organizations and the term ‘debenture' is used for instruments issued by private corporate sector.
What is a Derivative?
Derivative is a product whose value is derived from the value of one or more basic variables, called underlying. The underlying asset can be equity, index, foreign exchange (forex), commodity or any other asset. Derivative products initially emerged as hedging devices against fluctuations in commodity prices and commodity-linked derivatives remained the sole form of such products for almost three hundred years. The financial derivatives came into spotlight in post-1970 period due to growing instability in the financial markets. However, since their emergence, these products have become very popular and by 1990s, they accounted for about two- thirds of total transactions in derivative products.
What is a Mutual Fund?
A MutualFund is a body corporate registered with SEBI (Securities Exchange Board of India) that pools money from individuals/corporate investors and invests the same in a variety of different financial instruments or securities such as equity shares, Government securities, Bonds, debentures etc. Mutual funds can thus be considered as financial intermediaries in the investment business that collect funds from the public and invest on behalf of the investors. Mutual funds issue units to the investors. The appreciation of the portfolio or securities in which the mutual fund has invested the money leads to an appreciation in the value of the units held by investors. The investment objectives outlined by a Mutual Fund in its prospectus are binding on the Mutual Fund scheme. The investment objectives specify the class of securities a Mutual Fund can invest in. Mutual Funds invest in various asset classes like equity, bonds, debentures, commercial paper and government securities. The schemes offered by mutual funds vary from fund to fund. Some are pure equity schemes; others are a mix of equity and bonds. Investors are also given the option of getting dividends, which are declared periodically by the mutual fund, or to participate only in the capital appreciation of the scheme.
What is an Index?
An Index shows how a specified portfolio of share prices are moving in order to give an indication of market trends. It is a basket of securities and the average price movement of the basket of securities indicates the index movement, whether upwards or downwards.
What is a Depository?
A depository is like a bank wherein the deposits are securities (viz. shares, debentures, bonds, government securities, units etc.) in electronic form.
What is Dematerialization?
Dematerialization is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form and credited to the investor's account with his Depository Participant (DP).
Investment Basics
What is Investment?
The money you earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future. This is called Investment.
Why should one invest?
One needs to invest to:
earn return on your idle resources
generate a specified sum of money for a specific goal in life
make a provision for an uncertain future
One of the important reasons why one needs to invest wisely is to meet the cost of Inflation. Inflation is the rate at which the cost of living increases The cost of living is simply what it costs to buy the goods and services you need to live. Inflation causes money to lose value because it will not buy the same amount of a good or a service in the future as it does now or did in the past. For example, if there was a 6% inflation rate for the next 20 years, a Rs. 100 purchase today would cost Rs. 321 in 20 years. This is why it is important to consider inflation as a factor in any long-term investment strategy. Remember to look at an investment's 'real' rate of return, which is the return after inflation. The aim of investments should be to provide a return above the inflation rate to ensure that the investment does not decrease in value. For example, if the annual inflation rate is 6%, then the investment will need to earn more than 6% to ensure it increases in value. If the after-tax return on your investment is less than the inflation rate, then your assets have actually decreased in value; that is, they won't buy as much today as they did last year.
When to start Investing?
The sooner one starts investing the better. By investing early you allow your investments more time to grow, whereby the concept of compounding (as we shall see later) increases your income, by accumulating the principal and the interest or dividend earned on it, year after year. The three golden rules for all investors are:
Invest early
Invest regularly
Invest for long term and not short term
What care should one take while investing?
Before making any investment, one must ensure to:
1.obtain written documents explaining the investment
2.read and understand such documents
3.verify the legitimacy of the investment
4.find out the costs and benefits associated with the investment
5.assess the risk-return profile of the investment
6.know the liquidity and safety aspects of the investment
7.ascertain if it is appropriate for your specific goals
8.compare these details with other investment opportunities available
9.examine if it fits in with other investments you are considering or you
have already made
10. deal only through an authorised intermediary
11. seek all clarifications about the intermediary and the investment
12. explore the options available to you if something were to go wrong,
and then, if satisfied, make the investment.
These are called the Twelve Important Steps to Investing.
What is meant by Interest?
When we borrow money, we are expected to pay for using it - this is known as Interest. Interest is an amount charged to the borrower for the privilege of using the lender's money. Interest is usually calculated as a percentage of the principal balance (the amount of money borrowed). The percentage rate may be fixed for the life of the loan, or it may be variable, depending on the terms of the loan.
What factors determine interest rates?
When we talk of interest rates, there are different types of interest rates -rates that banks offer to their depositors, rates that they lend to their borrowers,the rate at whichtheGovernment borrows in the Bond/Government Securities market, rates offered to investors in small savings schemes like NSC, PPF, rates at which companies issue fixed deposits etc. The factors which govern these interest rates are mostly economy related and are commonly referred to as macroeconomic factors. Some of these factors are:
Demand for money
Level of Government borrowings
Supply of money
Inflation rate
The Reserve Bank of India and the Government policies which determine some of the variables mentioned above
What are various options available for investment?
One may invest in:
Physical assets
and/or
Financial assets
like real estate, gold/jewellery, commodities etc. such as fixed deposits with banks, small saving instrume nts with post offices, insurance/provident/pension fund etc. or securities market related instruments like shares, bonds, debentures etc.
What are various Short-term financial options available for investment?
Broadly speaking, savings bank account, money market/liquid funds and fixed deposits with banks may be considered as short-term financial investment options:
Savings Bank Account is often the first banking product people use, which offers low interest (4%-5% p.a.), making them only marginally better than fixed deposits.
Money Market or Liquid Fundsare a specialized form of mutual funds that invest in extremely short-term fixed income instruments and thereby provide easy liquidity. Unlike most mutual funds, money market funds are primarily oriented towards protecting your capital and then, aim to maximise returns. Money market funds usually yield better returns than savings accounts, but lower than bank fixed deposits. Fixed Deposits with Banksare also referred to as term deposits and minimum investment period for bank FDs is 30 days. Fixed Deposits with banks are for investors with low risk appetite, and may be considered for 6-12 months investment period as normally interest on less than 6 months bank FDs is likely to be lower than money market fund returns.
What are various Long-term financial options available for investment?
Post Office Savings Schemes, Public Provident Fund, Company Fixed Deposits, Bonds and Debentures, Mutual Funds etc.
Post Office Savings: Post Office Monthly Income Scheme is a low risk saving instrument, which can be availed through any post office. It provides an interest rate of 8% per annum, which is paid monthly. Minimum amount, which can be invested, is Rs. 1,000/- and additional investment in multiplesof 1,000/-.Maximum amount is Rs. 3,00,000/- (if Single) or Rs. 6,00,000/- (if held Jointly) during a year. It has a maturity period of 6 years. A bonus of 10% is paid at the time of maturity. Premature withdrawal is permitted if deposit is more than one year old. A deduction of 5% is levied from the principal amount if withdrawn prematurely; the 10% bonus is also denied.
Public Provident Fund: A long term savings instrument with a maturity of 15 years and interest payable at 8% per annum compounded annually. A PPF account can be opened through a nationalized bank at anytime during the year and is open all through the year for depositing money. Tax benefits can be availed for the amount invested and interest accrued is tax-free. A withdrawal is permissible every year from the seventh financial year of the date of opening of the account and the amount of withdrawal will be limited to 50% of the balance at credit at the end of the 4th year immediately preceding the year in which the amount is withdrawn or at the end of the preceding year whichever is lower the amount of loan if any.
Company Fixed Deposits: These are short-term (six months) to medium-term (three to five years) borrowings by companies at a fixed rate of interest which is payable monthly, quarterly, semi-annually or annually. They can also be cumulative fixed deposits where the entire principal alongwith the interest is paid at the end of the loan period. The rate of interest varies between 6-9% per annum for company FDs. The interest received is after deduction of taxes.
Bonds : It is a fixed income (debt) instrument issued for a period of
more than one year with the purpose of raising capital. The central or state government, corporations and similar institutions sell bonds. A bond is generally a promise to repay the principal along with a fixed rate of interest on a specified date, called the Maturity Date.
Mutual Funds: These are funds operated by an investment company which raises money from the public and invests in a group of assets
(shares, debentures etc.), in accordance with a stated set of objectives. It is a substitute for those who are unable to invest directly in equities or debt because of resource, time or knowledge constraints. Benefits include professional money management, buying in small amounts and diversification. Mutual fund units are issued and redeemed by the Fund Management Company based on the fund's net asset value (NAV), which is determined at the end of each trading session. NAV is calculated as the value of all the shares held by the fund, minus expenses, divided by the number of units issued. Mutual Funds are usually long term investment vehicle though there some categories of mutual funds, such as money market mutual funds which are short term instruments.
What is meant by a Stock Exchange?
The Securities Contract (Regulation) Act, 1956 [SCRA] defines ‘Stock Exchange' as any body of individuals, whether incorporated or not,
constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. Stock exchange could be a regional stock exchange whose area of operation/jurisdiction is specified at the time of its recognition or national exchanges, which are permitted to have nationwide trading since inception. NSE was incorporated as a national stock exchange.
What is an ‘Equity' Share?
Total equity capital of a company is divided into equal units of small denominations, each called a share. For example, in a company the total equity capital of Rs 2,00,00,000 is divided into 20,00,000 units of Rs 10 each. Each such unit of Rs 10 is called a Share. Thus, the company then is said to have 20,00,000 equity shares of Rs 10 each. The holders of such shares are members of the company and have voting rights.
What is a ‘Debt Instrument'?
Debt instrument represents a contract whereby one party lends money to another on pre-determined terms with regards to rate and periodicity of interest, repayment of principal amount by the borrower to the lender. In the Indian securities markets, the term ‘bond' is used for debt instruments issued by the Central and State governments and public sector organizations and the term ‘debenture' is used for instruments issued by private corporate sector.
What is a Derivative?
Derivative is a product whose value is derived from the value of one or more basic variables, called underlying. The underlying asset can be equity, index, foreign exchange (forex), commodity or any other asset. Derivative products initially emerged as hedging devices against fluctuations in commodity prices and commodity-linked derivatives remained the sole form of such products for almost three hundred years. The financial derivatives came into spotlight in post-1970 period due to growing instability in the financial markets. However, since their emergence, these products have become very popular and by 1990s, they accounted for about two- thirds of total transactions in derivative products.
What is a Mutual Fund?
A MutualFund is a body corporate registered with SEBI (Securities Exchange Board of India) that pools money from individuals/corporate investors and invests the same in a variety of different financial instruments or securities such as equity shares, Government securities, Bonds, debentures etc. Mutual funds can thus be considered as financial intermediaries in the investment business that collect funds from the public and invest on behalf of the investors. Mutual funds issue units to the investors. The appreciation of the portfolio or securities in which the mutual fund has invested the money leads to an appreciation in the value of the units held by investors. The investment objectives outlined by a Mutual Fund in its prospectus are binding on the Mutual Fund scheme. The investment objectives specify the class of securities a Mutual Fund can invest in. Mutual Funds invest in various asset classes like equity, bonds, debentures, commercial paper and government securities. The schemes offered by mutual funds vary from fund to fund. Some are pure equity schemes; others are a mix of equity and bonds. Investors are also given the option of getting dividends, which are declared periodically by the mutual fund, or to participate only in the capital appreciation of the scheme.
What is an Index?
An Index shows how a specified portfolio of share prices are moving in order to give an indication of market trends. It is a basket of securities and the average price movement of the basket of securities indicates the index movement, whether upwards or downwards.
What is a Depository?
A depository is like a bank wherein the deposits are securities (viz. shares, debentures, bonds, government securities, units etc.) in electronic form.
What is Dematerialization?
Dematerialization is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form and credited to the investor's account with his Depository Participant (DP).
Saturday, October 10, 2009
Small Cap Growth Stock To buy - ABM Knowledgeware
readers asked me my opinion on a small cap stock, which is relatively unheard of, ABM Knowledgeware.
ABM Knowledgeware Ltd., listed in Bombay Stock Exchange, is one of the very few IT companies in India with exclusive focus on E-governance since 1998
Within seven years of its foray into the E-governance space, ABM achieved the distinction of winning the prestigious award of “The Best Technical Organisation in E-Governance” in India adjudged by the Ministry of Information and Communication Technology, Govt of India and IIT Delhi.
What makes ABM stand out is its exceptional track record of successful project implementation, sustenance over extended duration and delivering Return-on-Investment for all the Stakeholders. In fact, ABM is one of the few companies in India which possesses IPRs for its various proven and sustained E-gov solutions. This journey of ABM is populated by several Milestones signifying growth of ABM in this very challenging and tough market segment.
Recently the Company has been conferred on the prestigious NASSCOM EMERGE 50 LEADER Award by NASSCOM in a glittering Award ceremony held in New Delhi on August 28, 2009. This recognition has been given to ABM in the category of Emerge Domestic Market- exclusively for the emerging IT Companies to showcase their unique value proposition and create a distinct niche for themselves.
If you look at the company's financials and results, it is growing at fairly high growth rates. Company's sales turnover has been grownig almost more than 50% for past three years.
Mar 2007 : 18.21 CR.
Mar 2008 : 31.05 Cr.
Mar 2009 : 44.21 Cr.
Although reported net profit has been at same levels for 2008 and 2009 (6.28 and 5.94 Crores resply), net profit growth was phenomenal for 2007 to 2008 (1.1 to 6.28 Crores!).
Company has increased it's dividend from Rs. 0.50 to Rs. 1.00 this year. Dividend yield seems moderate.
Promoter holdings are at 60%, so at good levels for a good stock. There are few institutional investors too in the stock.
The field in which company operates, e-Governance, is a separate niche in which there are very few companies which operate and provide software solutions to government/municipal institutions in India. The e-Governance domain is increasing at moderate speed as government and municipal institutions are awakening to realise the power of IT.
So is ABM Knowledgeware a stock to buy? .
It's 52 week low: Rs. 9.30 and CMP Rs. 44.50. I would certainly advice not to buy stocks of ABM right away but keep watch on it and add in moderate quantities at big deeps when in correction mode. As usual, do not bet your entire money on one stock. Diversify your portfolio. 5 - 10% of your portfolio is what I would suggest you to invest in small cap stocks like ABM. Investment horizon needs to be of few years (maybe 4 - 5 years),No doubt it is a small cap growth stock.
ABM Knowledgeware Ltd., listed in Bombay Stock Exchange, is one of the very few IT companies in India with exclusive focus on E-governance since 1998
Within seven years of its foray into the E-governance space, ABM achieved the distinction of winning the prestigious award of “The Best Technical Organisation in E-Governance” in India adjudged by the Ministry of Information and Communication Technology, Govt of India and IIT Delhi.
What makes ABM stand out is its exceptional track record of successful project implementation, sustenance over extended duration and delivering Return-on-Investment for all the Stakeholders. In fact, ABM is one of the few companies in India which possesses IPRs for its various proven and sustained E-gov solutions. This journey of ABM is populated by several Milestones signifying growth of ABM in this very challenging and tough market segment.
Recently the Company has been conferred on the prestigious NASSCOM EMERGE 50 LEADER Award by NASSCOM in a glittering Award ceremony held in New Delhi on August 28, 2009. This recognition has been given to ABM in the category of Emerge Domestic Market- exclusively for the emerging IT Companies to showcase their unique value proposition and create a distinct niche for themselves.
If you look at the company's financials and results, it is growing at fairly high growth rates. Company's sales turnover has been grownig almost more than 50% for past three years.
Mar 2007 : 18.21 CR.
Mar 2008 : 31.05 Cr.
Mar 2009 : 44.21 Cr.
Although reported net profit has been at same levels for 2008 and 2009 (6.28 and 5.94 Crores resply), net profit growth was phenomenal for 2007 to 2008 (1.1 to 6.28 Crores!).
Company has increased it's dividend from Rs. 0.50 to Rs. 1.00 this year. Dividend yield seems moderate.
Promoter holdings are at 60%, so at good levels for a good stock. There are few institutional investors too in the stock.
The field in which company operates, e-Governance, is a separate niche in which there are very few companies which operate and provide software solutions to government/municipal institutions in India. The e-Governance domain is increasing at moderate speed as government and municipal institutions are awakening to realise the power of IT.
So is ABM Knowledgeware a stock to buy? .
It's 52 week low: Rs. 9.30 and CMP Rs. 44.50. I would certainly advice not to buy stocks of ABM right away but keep watch on it and add in moderate quantities at big deeps when in correction mode. As usual, do not bet your entire money on one stock. Diversify your portfolio. 5 - 10% of your portfolio is what I would suggest you to invest in small cap stocks like ABM. Investment horizon needs to be of few years (maybe 4 - 5 years),No doubt it is a small cap growth stock.
Indian Stock Markets May Burst - Rakesh Jhunjhunwala
Big bull Rakesh Jhunjhunwala feels the Indian stock markets, currently on an upward rally,may "burst" in a month or two.
"If you see the formation of the indexes, all the stocks are going up, indexes are going up. (There are) minor corrections at every point. You cannot have this kind of a rise...(a) peak without burst. I think the burst will come within one or two months," Rare Enterprises, Partner, Rakesh Jhunjhunwala said at the Private Equity International India Forum 2009, here today.
Indian capital markets have been heading northward led by robust liquidity positions and on the belief that economic recovery has begun.
However, Jhunjhunwala said that "I have a right to be wrong and I may change my opinion very fast."
He said that the future of Indian markets depended on the performance of the Indian economy and the international scenario.
"I think economic growth in India is going to be between 12-14 per cent over the next 5-7 years. I think the factors that are guiding this growth are irreversible, whether it is skills, tolerance, democracy, demographics," Jhunjhunwala said.
"And if growth in corporate profits is going to be a percentage of nominal GDP growth which it is worldwide, I don't see any reason why corporate profits should not grow between 15-17 per cent compounded," he added.
However, there is still some pain left for the western economies which have not yet witnessed the peak of the economic slowdown.
"As far as the economic slowdown goes, I think we have not (yet) seen the peak. I think the next 2-3 years for the western world are going to be far slower than for the rest," Jhunjhunwala said.
According to him, even though India places significant importance on foreign fund inflows, the amount of local money invested in the markets in the last five-years has been far greater than foreign money.
The Dalal Street guru said he has decided not to invest in start-up companies "because you have to nurture them and bringing them to size is a bit of a painful process".
"This year, I think Rs 2,500-3,000-crore local money will come and in two years maybe Rs 6,000 crore. I am bullish. The flow of money is going to go through the roof," he said.
Rakesh Jhunjhunwala also said he does not expect India to hike interest rates before March next year.
"If you see the formation of the indexes, all the stocks are going up, indexes are going up. (There are) minor corrections at every point. You cannot have this kind of a rise...(a) peak without burst. I think the burst will come within one or two months," Rare Enterprises, Partner, Rakesh Jhunjhunwala said at the Private Equity International India Forum 2009, here today.
Indian capital markets have been heading northward led by robust liquidity positions and on the belief that economic recovery has begun.
However, Jhunjhunwala said that "I have a right to be wrong and I may change my opinion very fast."
He said that the future of Indian markets depended on the performance of the Indian economy and the international scenario.
"I think economic growth in India is going to be between 12-14 per cent over the next 5-7 years. I think the factors that are guiding this growth are irreversible, whether it is skills, tolerance, democracy, demographics," Jhunjhunwala said.
"And if growth in corporate profits is going to be a percentage of nominal GDP growth which it is worldwide, I don't see any reason why corporate profits should not grow between 15-17 per cent compounded," he added.
However, there is still some pain left for the western economies which have not yet witnessed the peak of the economic slowdown.
"As far as the economic slowdown goes, I think we have not (yet) seen the peak. I think the next 2-3 years for the western world are going to be far slower than for the rest," Jhunjhunwala said.
According to him, even though India places significant importance on foreign fund inflows, the amount of local money invested in the markets in the last five-years has been far greater than foreign money.
The Dalal Street guru said he has decided not to invest in start-up companies "because you have to nurture them and bringing them to size is a bit of a painful process".
"This year, I think Rs 2,500-3,000-crore local money will come and in two years maybe Rs 6,000 crore. I am bullish. The flow of money is going to go through the roof," he said.
Rakesh Jhunjhunwala also said he does not expect India to hike interest rates before March next year.
Thursday, October 08, 2009
Prism Cement Limited
About The Company
Prism Cement Limited is an ISO 9001:2000 certified company promoted by the Rajan Raheja Group. It operates one of the largest single kiln cement plants in the country at Satna, Madhya Pradesh. Equipped with state-of-the-art machinery and technical support from F.L Smidth & Co A.S Denmark, the world leaders in cement technology
About The Financial Results
Prism Cement @52/-is the first major company to announce its results for the first quarter ended 30th September 2009. And the performance was disappointing to say the least, which was amply reflected in the share price yesterday. The stock closed 6.59% lower.
For Q2FY10, the performance on a QoQ is bad while that on a YoY is trailblazing. This indicates two things – The good tidings which it saw in Q1, on account of higher realisations and increased demand was not repeated in Q2. Secondly, YoY performance appears so good due to the base effect, so it is not really time to bring out the bugle and blow the sound of victory.
Net sales, QoQ was down 15% at Rs.229.65 crore while on a YoY was up 41%. EBIDTA was down 49% on a QoQ at Rs.61.85 crore but YoY it was up by a whopping 95%. Net profit was down 53% at Rs.34.97 crore on a QoQ but YoY, it left mouth open with a 133% rise.
Prism’s annual production capacity stands at 2.5 million tonnes, where 80% is sold in UP and Madhya Pradesh. It has undertaken a 2 mtpa brownfield clinker expansion at Satna, to be commissioned in the second half of FY10 and also a 3 mtpa green field clinker expansion at Kurnool, Andhra Pradesh, to be commissioned by the second half of FY11. These will together take capacity to at least 7.5 million tonnes by 2011. This is just another addition to the situation of glut already expected in the sector.
Q2 is usually a lean period for cement as its monsoon when all construction slows down. September is when dispatches are at their lowest. So to some extent, it can also be blamed on the weather. Also prices in September, on an average, dipped Rs 5 a bag across the country. Many new capacities have gone on stream and this has already started putting pressure on the price.
About The Stock
My personal opinion on this stock with regard to its’ price performance in short to long term on basis of Fundamental analysis , Technical analysis and exclusive multi bagger reliable news sources are exclusively reserved for the registered member with detailing of the same. Only registered member have right to email me mentioning the name and date of registration to ask for the same.
Disclosure : I do not feel any need of giving any disclosure over here , my personal portfolio are always shared with the members.
Prism Cement Limited is an ISO 9001:2000 certified company promoted by the Rajan Raheja Group. It operates one of the largest single kiln cement plants in the country at Satna, Madhya Pradesh. Equipped with state-of-the-art machinery and technical support from F.L Smidth & Co A.S Denmark, the world leaders in cement technology
About The Financial Results
Prism Cement @52/-is the first major company to announce its results for the first quarter ended 30th September 2009. And the performance was disappointing to say the least, which was amply reflected in the share price yesterday. The stock closed 6.59% lower.
For Q2FY10, the performance on a QoQ is bad while that on a YoY is trailblazing. This indicates two things – The good tidings which it saw in Q1, on account of higher realisations and increased demand was not repeated in Q2. Secondly, YoY performance appears so good due to the base effect, so it is not really time to bring out the bugle and blow the sound of victory.
Net sales, QoQ was down 15% at Rs.229.65 crore while on a YoY was up 41%. EBIDTA was down 49% on a QoQ at Rs.61.85 crore but YoY it was up by a whopping 95%. Net profit was down 53% at Rs.34.97 crore on a QoQ but YoY, it left mouth open with a 133% rise.
Prism’s annual production capacity stands at 2.5 million tonnes, where 80% is sold in UP and Madhya Pradesh. It has undertaken a 2 mtpa brownfield clinker expansion at Satna, to be commissioned in the second half of FY10 and also a 3 mtpa green field clinker expansion at Kurnool, Andhra Pradesh, to be commissioned by the second half of FY11. These will together take capacity to at least 7.5 million tonnes by 2011. This is just another addition to the situation of glut already expected in the sector.
Q2 is usually a lean period for cement as its monsoon when all construction slows down. September is when dispatches are at their lowest. So to some extent, it can also be blamed on the weather. Also prices in September, on an average, dipped Rs 5 a bag across the country. Many new capacities have gone on stream and this has already started putting pressure on the price.
About The Stock
My personal opinion on this stock with regard to its’ price performance in short to long term on basis of Fundamental analysis , Technical analysis and exclusive multi bagger reliable news sources are exclusively reserved for the registered member with detailing of the same. Only registered member have right to email me mentioning the name and date of registration to ask for the same.
Disclosure : I do not feel any need of giving any disclosure over here , my personal portfolio are always shared with the members.
Small Cap Value Stock To Buy - Seamec
A small cap stock to buy recommended in Investor guide of Economic Times.
MUMBAI-BASED Seamec @180 owns and operates four multi-support vessels that are used for maintenance of offshore oilfields. French oilfield services and engineering major Technip owns 75% stake in the company, with 13.7% of the equity held by public and the rest held by institutional and corporate investors.
The companys four vessels are currently deployed with Rana Diving from Italy, Indias Dolphin Offshore, Condux SA in Mexico and Dulam International of Dubai.
Seamecs performance in 2007-08 was shaky:
hit by accidents, dry-docking of vessels, rising crew costs and the aftershocks of the global economic crisis on the oil industry. Although partial pressure on charter rates remains, the business scenario has considerably improved in 2009. The companys four vessels have been continuously deployed during the first half of 2009, and the company expects them to be busy till the end of this financial year, boosting its profits. In the last few years, while its peers have been busy leveraging their balance sheets and pursuing rapid growth, Seamec has been highly conservative, preserving cash and staying debt-free .
GROWTH DRIVERS:
Seamec expects to report sizable profits for the quarter ended September 30, 2009, on the back of continuous deployment of its vessels. The company reported a net loss of Rs 12.3 crore in the quarter ended September 30, 2008. It is now scouting for an acquisition for which it has built a war chest over the years. The company has been conserving cash for the purpose it hasnt paid dividend for 12 years now. Seamec last acquired a cable-laying vessel in June 2006.
The company had Rs 63.50 crore in its books for the year ended December 31, 2008, and received Rs 26.40 crore towards insurance claims during the year. When cash flows from operations in the current year are added to these figures, Seamec is expected to end 2009 with a cash balance of about Rs 200 crore. This should be sufficient for the company to purchase another vessel next year without a debt component.
FINANCIALS:
In the last 10 years, Seamecs profits have grown at an attractive compounded annual growth rate (CAGR) of 24.7%, while net sales have risen 10.6%. The company has been debt-free for a few years now. The business of maintaining offshore oilfields also comes with a compulsory holiday every vessels needs to be dry-docked in alternate years which results in additional expenses and loss of revenues. So, a year of higher profits is followed by a year of dip in profits. Since Seamecs balance sheet will record higher profits in 2009, an investor should expect erosion in profits in 2010. If the company buys a new vessel next year, this trend could be arrested.
VALUATIONS:
Seamecs scrip is trading at just 3.8 times its earnings for a year now less than twice its book value that makes it a substantially cheaper buy compared to offshore support companies such as Dolphin Offshore, Garware Offshore and Aban Offshore. The company is expected to end 2009 with a net profit of Rs 194 crore, at which the estimated price-to-earnings (P/E) multiple works out to 3.2. On the current asset base, the profit for 2010 is forecast at Rs 165 crore, at which the forward P/E stands at 3.8.
RISK FACTORS:
A stronger rupee or weaker charter hire rates of multi-support vessels could have a negative impact on the companys performance. Also, the company is looking at acquiring another vessel, but the execution of a deal and the deployment of the vessel are uncertain events.
MUMBAI-BASED Seamec @180 owns and operates four multi-support vessels that are used for maintenance of offshore oilfields. French oilfield services and engineering major Technip owns 75% stake in the company, with 13.7% of the equity held by public and the rest held by institutional and corporate investors.
The companys four vessels are currently deployed with Rana Diving from Italy, Indias Dolphin Offshore, Condux SA in Mexico and Dulam International of Dubai.
Seamecs performance in 2007-08 was shaky:
hit by accidents, dry-docking of vessels, rising crew costs and the aftershocks of the global economic crisis on the oil industry. Although partial pressure on charter rates remains, the business scenario has considerably improved in 2009. The companys four vessels have been continuously deployed during the first half of 2009, and the company expects them to be busy till the end of this financial year, boosting its profits. In the last few years, while its peers have been busy leveraging their balance sheets and pursuing rapid growth, Seamec has been highly conservative, preserving cash and staying debt-free .
GROWTH DRIVERS:
Seamec expects to report sizable profits for the quarter ended September 30, 2009, on the back of continuous deployment of its vessels. The company reported a net loss of Rs 12.3 crore in the quarter ended September 30, 2008. It is now scouting for an acquisition for which it has built a war chest over the years. The company has been conserving cash for the purpose it hasnt paid dividend for 12 years now. Seamec last acquired a cable-laying vessel in June 2006.
The company had Rs 63.50 crore in its books for the year ended December 31, 2008, and received Rs 26.40 crore towards insurance claims during the year. When cash flows from operations in the current year are added to these figures, Seamec is expected to end 2009 with a cash balance of about Rs 200 crore. This should be sufficient for the company to purchase another vessel next year without a debt component.
FINANCIALS:
In the last 10 years, Seamecs profits have grown at an attractive compounded annual growth rate (CAGR) of 24.7%, while net sales have risen 10.6%. The company has been debt-free for a few years now. The business of maintaining offshore oilfields also comes with a compulsory holiday every vessels needs to be dry-docked in alternate years which results in additional expenses and loss of revenues. So, a year of higher profits is followed by a year of dip in profits. Since Seamecs balance sheet will record higher profits in 2009, an investor should expect erosion in profits in 2010. If the company buys a new vessel next year, this trend could be arrested.
VALUATIONS:
Seamecs scrip is trading at just 3.8 times its earnings for a year now less than twice its book value that makes it a substantially cheaper buy compared to offshore support companies such as Dolphin Offshore, Garware Offshore and Aban Offshore. The company is expected to end 2009 with a net profit of Rs 194 crore, at which the estimated price-to-earnings (P/E) multiple works out to 3.2. On the current asset base, the profit for 2010 is forecast at Rs 165 crore, at which the forward P/E stands at 3.8.
RISK FACTORS:
A stronger rupee or weaker charter hire rates of multi-support vessels could have a negative impact on the companys performance. Also, the company is looking at acquiring another vessel, but the execution of a deal and the deployment of the vessel are uncertain events.
Wednesday, October 07, 2009
CALS Refineries - Multibagger Penny Stock To Buy .. Is It?
Cals Refineries is one stock making rounds nowadays in penny stocks circle a lot. It was first suggested to me by Mr. Sreenivas. Sreenivas is from Bank of Oman and is an avid growth stock investor for long term investment horizon. He even called me up to discuss the same passionately. :) There were few others after this who asked me about Cals Refineries so I decided to research a bit about this and here is the stock research report with my opinion.
Background
Cals Refineries Limited was incorporated on the 25th of July, 1984 as a private limited company. On 22nd September, 1992 the company was converted into a public limited company and is now listed on the Bombay Stock Exchange (BSE) under the Scrip Code 526652.
With the energy sector playing a pivotal role in global economies, the company aims to actively participate in it's growth in India as well as in international markets.
Cals Refineries Limited, in the first phase of a mega project, is establishing a 4.8 MMTPA (100,000 BPD) refinery at Haldia, India.
Comparison with existing refineries in India
* Reliance Industries (33 million tonne)
* Essar Oil (7.5 million tonne)
* Reliance Petroleum setting up 29 million tonne
* MRPL (10.5 million tonnes)
* Chennai Petroleum (9.5 million tonnes)
* Bongaigaon Refinery (2 million tonnes)
Management of CALS Refineries
Chairman of Cals Refineries, Mr. M.S. Ramachandran, was Chairman of Indian Oil Corporation (I.O.C.), India’s largest Oil & Gas company. Mr. M. S. Ramachandran has over 38 years of experience in the Oil and Gas industry. He was Chairman of Indian Oil Corporation (I.O.C.), India’s largest Oil & Gas company. He helped the government to implement various policies that would attract private players into the Oil & Gas sector.
At I.O.C., he redirected the organization around key business lines with greater commercial focus and market facing capabilities. During his tenure, Mr. Ramachandran increased sales growth from USD 25 Billion to USD 34 Billion, which increased the net profit of company from USD 0.65 Billion to USD 1.2 Billion, raising the company’s Fortune ranking from 223 to 189.
Crude Oil supply
Cals Refineries Ltd has signed a deal with oil major BP for up to 5 million tonnes of crude a year for a refinery. So the supply of crude is already guarenteed.
Upstream Integration
Spice Energy, the parent company of CALS has another subsidiary, Spice Exploration, which has operations in Africa and Indonesia from where crude could be made available.
Signed with customers for finished products
Cals Refineries has signed a deal with oil major BP to buy up to 100,000 bpd crude for its refinery. As per the deal, 60,000 bpd is confirmed, the balance of 40,000 is optional.
Additionally, Cals Refineries Ltd has signed a memorandum of understanding (MoU) with Bharat Petroleum Corporation (BPCL) for petro products off-take from CALS. The MoU has been signed in order to off-take the part of petroleum products by BPCL from CALS in its first phase which is a 100,000 BPSD crude oil refinery after accounting for the products committed to British Petroleum (BP) and the entire petro products from CALS in the second phase of expansion which is another 100,000 BPSD refinery at Haldia, West Bengal.
Some calculations and stock price estimation
CAPACITY OF REFINERY = 4.8 MMTPA (Million Metric Tonnes Per Annum)= 100000 Barrels Per Day (Approximately) = 36500000 Barrels Per Annum
Gross Refining Margin (GRM) Per Barrel is 10$ = 500Rs Approx.
Approx. Annual Profit = 36500000 * 500 RS = 1825 Crores
EPS at above nis. = 1824/794 = 2.3 **794 crores is total Equity of CALS Refineries
Average P/E ratio of Indian Refining Sector would 15
Share Price = 15 *2.3 = 34.50 Rs.
So if everything goes as per calculation in phase 1 and company manages to produce as estimated, around Rs. 30 - 40 could be the stock price range.
They have plans of capacity expansion for second and third phase as well. I am not sure about the numbers.
CMP of the stock: 0.68 Rs.
If you are investing in stock markets and not in Bank FD's/bonds/Kisan Vikas Patra, you have the appetite to take risks in your investments. ;)
So you decide how much money you can loose comfortably by investing in penny stock and invest that amount in CALS Refineries. ! this must have been your immediate reaction after reading this statement but this is what my true opinion is!
A negative note to make
Cals refineries promoters hold only 0.11 percent share in this company and Shares held by Custodians and against which Depository Receipts have been issued 83.98 percent (custodian name is The Bank of Newyork Mellon DR) so public share holding is 99.89 percent and there are a huge equity capital of cals refineries.
Total 7,931,300,000 shares of Cals refineries held by general public.
As I have read in Business Standard news article, promoters do hold a big chunk of equity (almost >70%) which is held by custodians for issue of depository receipts at the moment.
I am not recommending you to buy stocks to invest in CALS refineries but I am asking you to take a bet in this counter. If it goes well, you would gain a lot, if you loose, never mind.
Few of the penny stocks that made such magic are:
ABAN OFFSHORE - 6.00 Rs to 5393 Rs
KS OILS - 0.50 paise to 142 Rs
MERCATOR LINES - 0.40 paise to 184 Rs.
COUNTRY CLUB- 0.42 paise to 222 Rs
PANTALOONS RETAIL- 2.23 Rs to 875
JAI CORPORATION- 16 Rs to 1079 Rs
You never know.....
Background
Cals Refineries Limited was incorporated on the 25th of July, 1984 as a private limited company. On 22nd September, 1992 the company was converted into a public limited company and is now listed on the Bombay Stock Exchange (BSE) under the Scrip Code 526652.
With the energy sector playing a pivotal role in global economies, the company aims to actively participate in it's growth in India as well as in international markets.
Cals Refineries Limited, in the first phase of a mega project, is establishing a 4.8 MMTPA (100,000 BPD) refinery at Haldia, India.
Comparison with existing refineries in India
* Reliance Industries (33 million tonne)
* Essar Oil (7.5 million tonne)
* Reliance Petroleum setting up 29 million tonne
* MRPL (10.5 million tonnes)
* Chennai Petroleum (9.5 million tonnes)
* Bongaigaon Refinery (2 million tonnes)
Management of CALS Refineries
Chairman of Cals Refineries, Mr. M.S. Ramachandran, was Chairman of Indian Oil Corporation (I.O.C.), India’s largest Oil & Gas company. Mr. M. S. Ramachandran has over 38 years of experience in the Oil and Gas industry. He was Chairman of Indian Oil Corporation (I.O.C.), India’s largest Oil & Gas company. He helped the government to implement various policies that would attract private players into the Oil & Gas sector.
At I.O.C., he redirected the organization around key business lines with greater commercial focus and market facing capabilities. During his tenure, Mr. Ramachandran increased sales growth from USD 25 Billion to USD 34 Billion, which increased the net profit of company from USD 0.65 Billion to USD 1.2 Billion, raising the company’s Fortune ranking from 223 to 189.
Crude Oil supply
Cals Refineries Ltd has signed a deal with oil major BP for up to 5 million tonnes of crude a year for a refinery. So the supply of crude is already guarenteed.
Upstream Integration
Spice Energy, the parent company of CALS has another subsidiary, Spice Exploration, which has operations in Africa and Indonesia from where crude could be made available.
Signed with customers for finished products
Cals Refineries has signed a deal with oil major BP to buy up to 100,000 bpd crude for its refinery. As per the deal, 60,000 bpd is confirmed, the balance of 40,000 is optional.
Additionally, Cals Refineries Ltd has signed a memorandum of understanding (MoU) with Bharat Petroleum Corporation (BPCL) for petro products off-take from CALS. The MoU has been signed in order to off-take the part of petroleum products by BPCL from CALS in its first phase which is a 100,000 BPSD crude oil refinery after accounting for the products committed to British Petroleum (BP) and the entire petro products from CALS in the second phase of expansion which is another 100,000 BPSD refinery at Haldia, West Bengal.
Some calculations and stock price estimation
CAPACITY OF REFINERY = 4.8 MMTPA (Million Metric Tonnes Per Annum)= 100000 Barrels Per Day (Approximately) = 36500000 Barrels Per Annum
Gross Refining Margin (GRM) Per Barrel is 10$ = 500Rs Approx.
Approx. Annual Profit = 36500000 * 500 RS = 1825 Crores
EPS at above nis. = 1824/794 = 2.3 **794 crores is total Equity of CALS Refineries
Average P/E ratio of Indian Refining Sector would 15
Share Price = 15 *2.3 = 34.50 Rs.
So if everything goes as per calculation in phase 1 and company manages to produce as estimated, around Rs. 30 - 40 could be the stock price range.
They have plans of capacity expansion for second and third phase as well. I am not sure about the numbers.
CMP of the stock: 0.68 Rs.
If you are investing in stock markets and not in Bank FD's/bonds/Kisan Vikas Patra, you have the appetite to take risks in your investments. ;)
So you decide how much money you can loose comfortably by investing in penny stock and invest that amount in CALS Refineries. ! this must have been your immediate reaction after reading this statement but this is what my true opinion is!
A negative note to make
Cals refineries promoters hold only 0.11 percent share in this company and Shares held by Custodians and against which Depository Receipts have been issued 83.98 percent (custodian name is The Bank of Newyork Mellon DR) so public share holding is 99.89 percent and there are a huge equity capital of cals refineries.
Total 7,931,300,000 shares of Cals refineries held by general public.
As I have read in Business Standard news article, promoters do hold a big chunk of equity (almost >70%) which is held by custodians for issue of depository receipts at the moment.
I am not recommending you to buy stocks to invest in CALS refineries but I am asking you to take a bet in this counter. If it goes well, you would gain a lot, if you loose, never mind.
Few of the penny stocks that made such magic are:
ABAN OFFSHORE - 6.00 Rs to 5393 Rs
KS OILS - 0.50 paise to 142 Rs
MERCATOR LINES - 0.40 paise to 184 Rs.
COUNTRY CLUB- 0.42 paise to 222 Rs
PANTALOONS RETAIL- 2.23 Rs to 875
JAI CORPORATION- 16 Rs to 1079 Rs
You never know.....
LEARNING SECTION-----The cognitive process of acquiring skill
How to benefit from the top and bottom in the markets?
Now-a –days all of us are calculating in our mind how much we would have earned if we
had sold some of our holdings in January (Sensex at 21000) and bought some good
quality undervalued stocks now (Sensex at 16800).
The questions is how we could have identified before the markets fell that markets are
near their peak and sold at least a part of our portfolio to lock in some profits and keep
cash in handy for buying after the fall.
Indicators of a top in markets are:
Everyday people are present either in broker’s office or in front of the trading
terminals at exactly 10:00 AM.
We look at our portfolios at least 3-5 times a day and calculate each time how
much we have earned that day.
Everyday many unknown penny stocks hit upper circuit of 10% or 20% making
new 52 week high.
There is no effect of any bad news on a particular company, sector or market as
applicable.
Suddenly you find analysts recommending stocks which you have never heard of.
You go to a party /social gathering and you find everybody discussing about
stocks most of the time.
People generally shy of equities and no knowledge of equity markets like
gardeners or drivers start investing aggressively.
When you tell somebody that you made a profit of 20- 30 % in equities this year
and people feel sorry for you as they expect returns to be at least 70—80% .
Companies which are loss–making and out of business start to rise unexpectedly.
Analysts dump the traditional valuation methods and find new ones to justify the
rise of markets (Example china trading at higher valuation then India so markets
should go up or value of land assets should be included in the price etc.).
Suddenly you find number of shares being traded on exchanges dramatically
increasing (It actually happened in October-December 2007 quarter when this
figure went up from 1000 to 2500).
You have 40-50 stocks in your portfolio and still feel that you should buy few
more.
You are not happy with the stock exchanges for putting an upper circuit filter of
5%, 10% or 20% each day on the individual stocks.
Indicators of a bottom in stock markets are:
People do not want to have a look at their portfolios at all for many days.
Everyday many unknown penny stocks hit lower circuit of 10% or 20% making
new 52 week low.
There is no effect of any good news on a particular company, sector or market as
applicable.
Suddenly you find analysts recommending people to stick with blue chips only.
You go to a party /social gathering and you find everybody discussing why people
should stay away from stock markets.
Suddenly you find number of shares being traded on exchanges dramatically
decreasing.
Learning of the week:
While it is impossible to exactly identify the top and bottom of the markets we can have a
sense that we are near the top by using above signs as indicator and have some cash
(5-20% recommended) in our portfolio. Similarly we can start buying good qualityundervalued
stocks when we find markets are near their bottom.
Now-a –days all of us are calculating in our mind how much we would have earned if we
had sold some of our holdings in January (Sensex at 21000) and bought some good
quality undervalued stocks now (Sensex at 16800).
The questions is how we could have identified before the markets fell that markets are
near their peak and sold at least a part of our portfolio to lock in some profits and keep
cash in handy for buying after the fall.
Indicators of a top in markets are:
Everyday people are present either in broker’s office or in front of the trading
terminals at exactly 10:00 AM.
We look at our portfolios at least 3-5 times a day and calculate each time how
much we have earned that day.
Everyday many unknown penny stocks hit upper circuit of 10% or 20% making
new 52 week high.
There is no effect of any bad news on a particular company, sector or market as
applicable.
Suddenly you find analysts recommending stocks which you have never heard of.
You go to a party /social gathering and you find everybody discussing about
stocks most of the time.
People generally shy of equities and no knowledge of equity markets like
gardeners or drivers start investing aggressively.
When you tell somebody that you made a profit of 20- 30 % in equities this year
and people feel sorry for you as they expect returns to be at least 70—80% .
Companies which are loss–making and out of business start to rise unexpectedly.
Analysts dump the traditional valuation methods and find new ones to justify the
rise of markets (Example china trading at higher valuation then India so markets
should go up or value of land assets should be included in the price etc.).
Suddenly you find number of shares being traded on exchanges dramatically
increasing (It actually happened in October-December 2007 quarter when this
figure went up from 1000 to 2500).
You have 40-50 stocks in your portfolio and still feel that you should buy few
more.
You are not happy with the stock exchanges for putting an upper circuit filter of
5%, 10% or 20% each day on the individual stocks.
Indicators of a bottom in stock markets are:
People do not want to have a look at their portfolios at all for many days.
Everyday many unknown penny stocks hit lower circuit of 10% or 20% making
new 52 week low.
There is no effect of any good news on a particular company, sector or market as
applicable.
Suddenly you find analysts recommending people to stick with blue chips only.
You go to a party /social gathering and you find everybody discussing why people
should stay away from stock markets.
Suddenly you find number of shares being traded on exchanges dramatically
decreasing.
Learning of the week:
While it is impossible to exactly identify the top and bottom of the markets we can have a
sense that we are near the top by using above signs as indicator and have some cash
(5-20% recommended) in our portfolio. Similarly we can start buying good qualityundervalued
stocks when we find markets are near their bottom.
Tuesday, October 06, 2009
DCM Shriram Industries - A Good Small Cap Value Stock With Sugar Play
Belonging to erstwhile DCM Group, DCM Shriram Inds@140 is a diversified conglomerate with diversified interests in Sugar, Chemicals and Rayon Tyre Cord Fabrics.
1)Company has 12,000 TCD capacity in Sugar Division. It also has cogen power plant of which 12 MW is sold outside.
2)In Chemical Division, Company is producing Extra Neutral Spirit which is supplied to liquour industry. Last year, company installed super distillation plant which enabled it to produce high quality alcohol for premium segment.
3)Company is one of the leading producers of Rayon Tyre Cord Fabrics in India, part of which is for exports.
Rationale for stock recommendation
Due to boom in sugar prices, its sugar division is performing extremely well. Further, despite rise in molasses prices, even chemical division is reporting improved performance due to buoyant demand. Due to huge demand from fast growing Tyre Industry, Tyre Cord Division is also doing extremely well. Company is likely to report all time high profit in 09-10.
Last year, company was in limelight due to aborted takeover attempt by Delhi based brokerage firm.Company has reported extremely good results for year ended March 2009.
1)Topline grew by 43% to 798 crs
2)PAT stood at Rs 39.64 crs (against loss in previous year), turnaround of 44crs
3)EPS stood at 22.78. Stock is trading at 5.18xFY09 EPS
Company has reported Super-fabulous results for Q1:
1. Topline has flared by 50%
2. PBT has zoomed by 6700%
3. Despite big income tax provision, PAT has polevaulted by 13500%.
4. Q1 EPS is 11.60
Conclusion:
At present, sugar scrips have reached very high valuations as sugar prices continue to rise. P.E. Ratio of Sugar Industry is more than 18 due to very high P.E. Ratio (35 for Shree Renuka, 20 for Triveni Engineering) of some bigger players. However, P.E. Ratio of 5 for DCM Shriram is extremely low considering that company has other divisions also which reduces risks associated with cyclical sugar business.
STOCK IS TRADING AT JUST 3.00X FY10E EPS. DEFINITELY THE CHEAPEST STOCK IN SUGAR INDUSTRY.Even if company has a low P.E. Ratio of 6, its share price should be Rs. 237/-, based upon FY10E EPS.Promoters had taken preferential offer at Rs. 90/-.A good small cap stock to buy at dips.
1)Company has 12,000 TCD capacity in Sugar Division. It also has cogen power plant of which 12 MW is sold outside.
2)In Chemical Division, Company is producing Extra Neutral Spirit which is supplied to liquour industry. Last year, company installed super distillation plant which enabled it to produce high quality alcohol for premium segment.
3)Company is one of the leading producers of Rayon Tyre Cord Fabrics in India, part of which is for exports.
Rationale for stock recommendation
Due to boom in sugar prices, its sugar division is performing extremely well. Further, despite rise in molasses prices, even chemical division is reporting improved performance due to buoyant demand. Due to huge demand from fast growing Tyre Industry, Tyre Cord Division is also doing extremely well. Company is likely to report all time high profit in 09-10.
Last year, company was in limelight due to aborted takeover attempt by Delhi based brokerage firm.Company has reported extremely good results for year ended March 2009.
1)Topline grew by 43% to 798 crs
2)PAT stood at Rs 39.64 crs (against loss in previous year), turnaround of 44crs
3)EPS stood at 22.78. Stock is trading at 5.18xFY09 EPS
Company has reported Super-fabulous results for Q1:
1. Topline has flared by 50%
2. PBT has zoomed by 6700%
3. Despite big income tax provision, PAT has polevaulted by 13500%.
4. Q1 EPS is 11.60
Conclusion:
At present, sugar scrips have reached very high valuations as sugar prices continue to rise. P.E. Ratio of Sugar Industry is more than 18 due to very high P.E. Ratio (35 for Shree Renuka, 20 for Triveni Engineering) of some bigger players. However, P.E. Ratio of 5 for DCM Shriram is extremely low considering that company has other divisions also which reduces risks associated with cyclical sugar business.
STOCK IS TRADING AT JUST 3.00X FY10E EPS. DEFINITELY THE CHEAPEST STOCK IN SUGAR INDUSTRY.Even if company has a low P.E. Ratio of 6, its share price should be Rs. 237/-, based upon FY10E EPS.Promoters had taken preferential offer at Rs. 90/-.A good small cap stock to buy at dips.
Saturday, October 03, 2009
comming ipo
Hathway Cables files DRHP for IPO
Author: admin Filed under: IPO Date: Oct 1,2009
Hathway Cables has filed a draft red herring prospectus (DRHP) for an initial public offer (IPO), reports CNBCTV18.
Shree Ganesh Jewellery plans IPO, files DRHP
Author: admin Filed under: IPO Date: Oct 1,2009
With its plans to increase its operations and reach, Shree Ganesh Jewellery House Limited, one of the largest manufacturers and exporters of handcrafted gold jewellery, has planned to hit the capital market to raise funds through an initial public offering (IPO) for which it has filed DRHP with SEBI.
Glenmark to raise Rs 575cr via generics arm IPO: Sources
Author: admin Filed under: IPO Date: Oct 1,2009
Glenmark Generics filed a draft red herring prospectus (DRHP) yesterday, reports CNBCTV18 quoting sources. Glenmark Pharma would raise Rs 575 crore via Glenmark Generics initial public offer (IPO).
PCI Limited IPO – Files for DRHP with SEBI
Author: admin Filed under: DRHP, IPO, SEBI Date: Oct 1,2009
About PCI Limited
PCI limited which was also known as Prime Chemfert Industries Pvt. Ltd. (later renamed PCI Ltd.).They are a diversified multi activity company primarily in the business of providing hi-tech power equipments,
They are a diversified multi activity company primarily in the business of providing hi-tech power equipments, systems and test instrumentation which find applications in power and energy, telecom, railways, aviation, aerospace, and other allied industries.Over the years, the Prime Group has surged through continuous expansion, diversification and transformation of its initial venture into a varied field of Hi-tech Instrumentation for testing, measuring and condition monitoring, Capital Goods, Precision Engineering, Geo-technology, Information Technology, Power Generation, Lease-Finance, Imports and Exports.
About PCI Limited IPO
Public Issue 5,000,000 equity shares of face value Rs. 10
Retail Portion Atleast 1,750,000 equity shares of face value Rs. 10 each at a premium of Rs. [●] for cash
QIB Portion Atleast 2,500,000 equity shares of face value Rs. 10 each at a premium of Rs. [●] for cash
Issue Outstanding
Equity Shares outstanding prior to the Issue 13,782,749 equity shares of face value Rs. 10 each
Equity Shares outstanding after the Issue 18,782,749 equity shares of face value Rs. 10 each
PCI Limted IPO allotment Can be seen here when the IPO allotment is ready.
Sahara Prime City IPO – Files for DRHP with sebi
Author: admin Filed under: DRHP, IPO, SEBI Date: Oct 1,2009
About Sahara City Homes
Sahara city homes is Chain of high quality township across 217 cities ,These townships have been planned on 100 to 300 acre (40.47 hectare to 121.41 hectare) of land depending on the city. 55% – 60% of its total land area is open & surrounded by breathtaking ambience, laden with greenery.
Sahara City Homes is a hub for all the assured facilities of security, health, education, well-connected transport and communication. It also has fully developed infrastructure with an easy access to all the amenities providing leisure and happiness, amusement and pleasure, boost of energy and eternal peace to its residents.
About Sahara City Homes IPO
They are filing for DRHP with sebi for IPO of Rs 3,450 crore including a greenshoe option — the proceeds will be channelled into residential and commercial projects. The company’s business plan is focused on developing 88 integrated townships under the ‘Sahara City Homes’ brand name and 15 residential complexes under the ‘Sahara Grace’ brand across 99 cities in India.
sahara city homes IPO Allotment detail will be given when the IPO is over.
Ambience limited IPO – Ambience IPO files for DRHP with SEBI
Author: admin Filed under: DRHP, IPO, SEBI Date: Oct 1,2009
About Ambience Limited
They are a real estate development company in the National Capital Region with in-house construction capabilities,focused on premium developments.
We have a diversified portfolio of completed, ongoing and planned real estate development projects, which include integrated townships; residential projects, including premium and luxury residential apartment complexes; commercial projects, including corporate office towers and retail projects, including shopping malls. We believe we have established a strong brand image and a successful track record in the real estate industry with the completion of innovative, premium and contemporary projects.
About Ambience Limited IPO
They have filed a draft prospectus for a Rs 1,294-crore IPO .
Equity Shares outstanding prior to the Issue : 302,837,500 Equity Shares
Ambience Limited IPO Allotment will be given here when they tell the information of the register , when the ipo is open i will update this infromation.
Lodha Group IPO – Files For DRHP with Sebi
Author: admin Filed under: DRHP, IPO, SEBI Date: Oct 1,2009
About Lodha Group
Established in 1980, Lodha Group is a premier real estate developer headquartered in Mumbai. The Group is currently developing in excess of 29 million sq. ft. of prime real estate over 38 projects in Mumbai, Pune, Lonavala and Hyderabad making it one of the largest developer in the country.
There Company was incorporated as Lodha Developers Private Limited on September 25, 1995. We became a public limited company on July 17, 2009 and the name of our Company was subsequently changed to Lodha Developers Limited. The fresh certificate of incorporation consequent on change of name was granted by the RoC, Mumbai to our Company on August 10, 2009. For details of changes in our Registered Office, see section titled “History and Certain Corporate Matters” on page 117.
Lodha Group Website: http://www.lodhagroup.com/
About Lodha Group IPO
Issue of Equity Shares*** = Rs. 27,900 million
Pre and post-Issue Equity Shares
A) Equity Shares outstanding prior to the Issue : 216,216,000 Equity Shares
Lodha Group IPO allotment Detail can be seen here when the IPO is over : http://www.linkintime.co.in/site/ipo.asp
Author: admin Filed under: IPO Date: Oct 1,2009
Hathway Cables has filed a draft red herring prospectus (DRHP) for an initial public offer (IPO), reports CNBCTV18.
Shree Ganesh Jewellery plans IPO, files DRHP
Author: admin Filed under: IPO Date: Oct 1,2009
With its plans to increase its operations and reach, Shree Ganesh Jewellery House Limited, one of the largest manufacturers and exporters of handcrafted gold jewellery, has planned to hit the capital market to raise funds through an initial public offering (IPO) for which it has filed DRHP with SEBI.
Glenmark to raise Rs 575cr via generics arm IPO: Sources
Author: admin Filed under: IPO Date: Oct 1,2009
Glenmark Generics filed a draft red herring prospectus (DRHP) yesterday, reports CNBCTV18 quoting sources. Glenmark Pharma would raise Rs 575 crore via Glenmark Generics initial public offer (IPO).
PCI Limited IPO – Files for DRHP with SEBI
Author: admin Filed under: DRHP, IPO, SEBI Date: Oct 1,2009
About PCI Limited
PCI limited which was also known as Prime Chemfert Industries Pvt. Ltd. (later renamed PCI Ltd.).They are a diversified multi activity company primarily in the business of providing hi-tech power equipments,
They are a diversified multi activity company primarily in the business of providing hi-tech power equipments, systems and test instrumentation which find applications in power and energy, telecom, railways, aviation, aerospace, and other allied industries.Over the years, the Prime Group has surged through continuous expansion, diversification and transformation of its initial venture into a varied field of Hi-tech Instrumentation for testing, measuring and condition monitoring, Capital Goods, Precision Engineering, Geo-technology, Information Technology, Power Generation, Lease-Finance, Imports and Exports.
About PCI Limited IPO
Public Issue 5,000,000 equity shares of face value Rs. 10
Retail Portion Atleast 1,750,000 equity shares of face value Rs. 10 each at a premium of Rs. [●] for cash
QIB Portion Atleast 2,500,000 equity shares of face value Rs. 10 each at a premium of Rs. [●] for cash
Issue Outstanding
Equity Shares outstanding prior to the Issue 13,782,749 equity shares of face value Rs. 10 each
Equity Shares outstanding after the Issue 18,782,749 equity shares of face value Rs. 10 each
PCI Limted IPO allotment Can be seen here when the IPO allotment is ready.
Sahara Prime City IPO – Files for DRHP with sebi
Author: admin Filed under: DRHP, IPO, SEBI Date: Oct 1,2009
About Sahara City Homes
Sahara city homes is Chain of high quality township across 217 cities ,These townships have been planned on 100 to 300 acre (40.47 hectare to 121.41 hectare) of land depending on the city. 55% – 60% of its total land area is open & surrounded by breathtaking ambience, laden with greenery.
Sahara City Homes is a hub for all the assured facilities of security, health, education, well-connected transport and communication. It also has fully developed infrastructure with an easy access to all the amenities providing leisure and happiness, amusement and pleasure, boost of energy and eternal peace to its residents.
About Sahara City Homes IPO
They are filing for DRHP with sebi for IPO of Rs 3,450 crore including a greenshoe option — the proceeds will be channelled into residential and commercial projects. The company’s business plan is focused on developing 88 integrated townships under the ‘Sahara City Homes’ brand name and 15 residential complexes under the ‘Sahara Grace’ brand across 99 cities in India.
sahara city homes IPO Allotment detail will be given when the IPO is over.
Ambience limited IPO – Ambience IPO files for DRHP with SEBI
Author: admin Filed under: DRHP, IPO, SEBI Date: Oct 1,2009
About Ambience Limited
They are a real estate development company in the National Capital Region with in-house construction capabilities,focused on premium developments.
We have a diversified portfolio of completed, ongoing and planned real estate development projects, which include integrated townships; residential projects, including premium and luxury residential apartment complexes; commercial projects, including corporate office towers and retail projects, including shopping malls. We believe we have established a strong brand image and a successful track record in the real estate industry with the completion of innovative, premium and contemporary projects.
About Ambience Limited IPO
They have filed a draft prospectus for a Rs 1,294-crore IPO .
Equity Shares outstanding prior to the Issue : 302,837,500 Equity Shares
Ambience Limited IPO Allotment will be given here when they tell the information of the register , when the ipo is open i will update this infromation.
Lodha Group IPO – Files For DRHP with Sebi
Author: admin Filed under: DRHP, IPO, SEBI Date: Oct 1,2009
About Lodha Group
Established in 1980, Lodha Group is a premier real estate developer headquartered in Mumbai. The Group is currently developing in excess of 29 million sq. ft. of prime real estate over 38 projects in Mumbai, Pune, Lonavala and Hyderabad making it one of the largest developer in the country.
There Company was incorporated as Lodha Developers Private Limited on September 25, 1995. We became a public limited company on July 17, 2009 and the name of our Company was subsequently changed to Lodha Developers Limited. The fresh certificate of incorporation consequent on change of name was granted by the RoC, Mumbai to our Company on August 10, 2009. For details of changes in our Registered Office, see section titled “History and Certain Corporate Matters” on page 117.
Lodha Group Website: http://www.lodhagroup.com/
About Lodha Group IPO
Issue of Equity Shares*** = Rs. 27,900 million
Pre and post-Issue Equity Shares
A) Equity Shares outstanding prior to the Issue : 216,216,000 Equity Shares
Lodha Group IPO allotment Detail can be seen here when the IPO is over : http://www.linkintime.co.in/site/ipo.asp
Thursday, October 01, 2009
Ganesh Housing - Mid Cap Stock From Real Estate Sector
Ganesh Housing is an Ahmedabad based real estate company which is amongst the largest land bank owners in Ahmedabad. Last year this company consolidated all its land bank into Ganesh Housing by way of merger of five of the promoter group companies into Ganesh Housing.
This company has two wholly owned subsidiaries; and one of them is setting up an integrated township in Ognaj which is on the outskirts of Ahmedabad and the second subsidiary is setting up a mall cum shopping complex in Ahmedabad. Today the company is sitting on a land bank close to about 650 acres. Most of its development is concentrated among four mega projects. This company is making a155 acre SEZ (Special Economic Zone) on the outskirts of Ahmedabad, and a 450 acre Golf Township at a place called Godhavi which is close to Ahmedabad.
Besides these two projects, this company has two other township projects and about 85-90% of its total development is constituted by these four projects. There are few fundamental factors which make us optimistic on the prospects of Ganesh Housing major one being the investment commitments which the state has received in the Vibrant Gujarat Summit would lead to the growth rate in Gujarat to be much higher than other states.Besides this there is a lot of infrastructure development happening close to Ahmedabad; there is a new international airport which has come up then there is a Dholera Port which is close to Ahmedabad which is been developed by the Adani Group.
Besides this, there is a huge SEZ coming up between Dholera and Ahmedabad so the focus of the growth is centred on Ahmedabad. All this would mean migration of people into Gujarat and all this would need creation of more infrastructures to accommodate those people.Given all these fundamental factors Ganesh Housing being one of the largest land bank owners in the country is well positioned to take this opportunity and there are few concerns about the real estate sector which apply to Ganesh Housing also but every person on the street knows about those concerns.
The positive factor however is that companies are finding customers for their projects at lower prices. Ganesh Housing also lowered prices of one of their projects by about 30% and they have got good response for that project. The negatives with regard to the real estate sectors are getting discounted in the stock price with the price having fallen from about a high of Rs 850 to a current price of close to Rs 135. I believe the negatives are already priced in and any positive sentiment emerging for the real estate stocks and will lead to these concerns going away and this may lead to rerating of the stock of Ganesh Housing.A great stock to buy at lower levels.
This company has two wholly owned subsidiaries; and one of them is setting up an integrated township in Ognaj which is on the outskirts of Ahmedabad and the second subsidiary is setting up a mall cum shopping complex in Ahmedabad. Today the company is sitting on a land bank close to about 650 acres. Most of its development is concentrated among four mega projects. This company is making a155 acre SEZ (Special Economic Zone) on the outskirts of Ahmedabad, and a 450 acre Golf Township at a place called Godhavi which is close to Ahmedabad.
Besides these two projects, this company has two other township projects and about 85-90% of its total development is constituted by these four projects. There are few fundamental factors which make us optimistic on the prospects of Ganesh Housing major one being the investment commitments which the state has received in the Vibrant Gujarat Summit would lead to the growth rate in Gujarat to be much higher than other states.Besides this there is a lot of infrastructure development happening close to Ahmedabad; there is a new international airport which has come up then there is a Dholera Port which is close to Ahmedabad which is been developed by the Adani Group.
Besides this, there is a huge SEZ coming up between Dholera and Ahmedabad so the focus of the growth is centred on Ahmedabad. All this would mean migration of people into Gujarat and all this would need creation of more infrastructures to accommodate those people.Given all these fundamental factors Ganesh Housing being one of the largest land bank owners in the country is well positioned to take this opportunity and there are few concerns about the real estate sector which apply to Ganesh Housing also but every person on the street knows about those concerns.
The positive factor however is that companies are finding customers for their projects at lower prices. Ganesh Housing also lowered prices of one of their projects by about 30% and they have got good response for that project. The negatives with regard to the real estate sectors are getting discounted in the stock price with the price having fallen from about a high of Rs 850 to a current price of close to Rs 135. I believe the negatives are already priced in and any positive sentiment emerging for the real estate stocks and will lead to these concerns going away and this may lead to rerating of the stock of Ganesh Housing.A great stock to buy at lower levels.
Oil India Limited
LOW RISK / HIGH RETURN
HOLDING PERIOD – ONE MONTH PLUS
OIL INDIA
Present Price – Rs.1150
Projected Price – Rs.1300 plus
Oil India Limited is the second largest national oil and gas company in India as measured by total proved plus probable oil and natural gas
reserves and production . The company is primarily engaged in the exploration, development, production and transportation of crude oil and
natural gas onshore in India. The company also process produced natural gas to extract LPG. They are present internationally through the
exploration of crude oil and natural gas in Egypt, Gabon, Iran, Libya, Nigeria, Timor Leste and Yemen. They primarily conduct activities with
respect to domestic producing blocks and exploration activities in their nomination blocks independently. They also conduct exploration activity,
both in India and overseas, through joint venture arrangements and PSCs with other oil companies.
The Company has interests in downstream activities through a 26% equity stake in NRL, a 10% equity stake in BCPL and a 23% equity stake in
DNP Limited. They also hold a 10% equity stake in a 741 kilometer pipeline construction project in Sudan that was completed in 2005. They have
the ability to provide various exploration and production-related services to the oil and gas industry, both domestically and internationally,
including pipeline construction, pipeline consultancy services, drilling and well work-over services, research and development services and
logging services.
This PSU which came out with an IPO has got listed today and gave listing gains to all investors. We are of the view that FIIs would buy it in a big
way and the price expected in the next month could be around Rs.1300.
BUYING IS ADVISED FOR MEDIUM TERM.
HOLDING PERIOD – ONE MONTH PLUS
OIL INDIA
Present Price – Rs.1150
Projected Price – Rs.1300 plus
Oil India Limited is the second largest national oil and gas company in India as measured by total proved plus probable oil and natural gas
reserves and production . The company is primarily engaged in the exploration, development, production and transportation of crude oil and
natural gas onshore in India. The company also process produced natural gas to extract LPG. They are present internationally through the
exploration of crude oil and natural gas in Egypt, Gabon, Iran, Libya, Nigeria, Timor Leste and Yemen. They primarily conduct activities with
respect to domestic producing blocks and exploration activities in their nomination blocks independently. They also conduct exploration activity,
both in India and overseas, through joint venture arrangements and PSCs with other oil companies.
The Company has interests in downstream activities through a 26% equity stake in NRL, a 10% equity stake in BCPL and a 23% equity stake in
DNP Limited. They also hold a 10% equity stake in a 741 kilometer pipeline construction project in Sudan that was completed in 2005. They have
the ability to provide various exploration and production-related services to the oil and gas industry, both domestically and internationally,
including pipeline construction, pipeline consultancy services, drilling and well work-over services, research and development services and
logging services.
This PSU which came out with an IPO has got listed today and gave listing gains to all investors. We are of the view that FIIs would buy it in a big
way and the price expected in the next month could be around Rs.1300.
BUYING IS ADVISED FOR MEDIUM TERM.
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