These are some of the companies which i feel has bottomed out.These are pretty interesting companies with decent busienss models and good fundamentals.So check them out.
1)Aishwarya Telecom:-In my earlier note i said it for no reason desrves a price of 136rs.Just look at the bechara now,quoting at 28rs.Surely bargain hunters would opt for it sooner or laters.So though not 136 but a mere 28 is very feasible for one to have a token position.
2)Asian electronics:-Market i feel has discounted all bad news of the company.Asian electronics at present level of 70 is a good buy.Within the next 6 months asian should rebound bigtime.Battle to regain its lost glory has already begun.
3)Futura polysters:-The court recently sanctioned the demerger scheme.So one is surely entitled to get innovasnyth technologies now.Futura polyster is a steal at present levels of 22.A great buy.
4)Jai corporation:-A huge sucess story being beaten down badly though for some reasons.But still jai corporation doesnt deserve a price of 280.Several funds opted for it,a great company with a solid aggresive,vision oriented owner.He has taken oath to take the company beyond ones reach.A good value buy.
5)Jaiprakash assocaites:I feel pity for these company,a superb company being misunderstood so badly.At 150rs its a must have in anyones core portfolio.You are also entitled to get free shares of JP Infratech.
6)Kemrock industries&exports:-One of my hot favourites of yesteryears.Superb result,great aggresive management.The company supplies its products to the biggies like boeing and all.At 300 i would definately book it for my portfolio.
7)Punj lloyd:-People who feel larsen&toubro is beyond your reach please dont get disapointed.The next larsen in making,the company with over 20000crs of order book is just quoting at 210 levels.Exit out flop ones in the basket to replicate it with a sucess,punj lloyd.
8)Saag rr infra:-The company ended the fiscal with 66crs of topline.It has got a robust order book position of over 410crs.So huge revenue visibility,sunrising sector coupled with great outlook makes it a super buy.The company is quoting at 38rs.
9)Valuemart Info Technologies Ltd:-To start with the company is quoting at "3"rs presently.To conclude-checkout its promotor-the real man with an amazing mind.He has taken a lot at 6rs now its hi-time you book it at the earliest.Valuemart info is a great but at the curent level of rs 3.
10)Walchandnagar Industries Ltd:-My 2nd 50 bagger,my darling,my walchandnagar.Dont be jealous guys though not a 50 bagger but walchandnagar still has the potential to do an encore from the present levels of 200.A quality company at much of a discount.
Monday, July 7, 2008
Mental mistakes in stock markets
[Cause of recent fall in indian stock markets/motilal oswal brokerage and recomendation/zandu pharma news and reason for sharp upmove/10 mistakes which should be avoided/how to be a good stock picker/how to make money through trading/investors make money while traders loose big/what are the nifty levels to watch out for/support and resistance for nifty and sensex/deepak mohoni and prakash gaba bakwas tips/good advisors of indian stock markets/under owned and over owned stocks]
Stock indices have had a huge fall recently.The price cut has been particularly severe in the midcap segment,i.e,in stocks that have a low capital base and relatively low liquidity.It may be the time to step back a bit,book your losses on them and look for fresh oppurtunities in attractively valued stocks that have got pounded despite decent fundamentals.Picking good stock is the key to succesful investing in bull markets.Over-owned stocks pose a higher risk of loss when the markets turn down.
There are so many common mental mistakes investors make,that often lead to losses.Some of these avoidable errors are:-
1)Overconfidence-This can lead to complacency and over exposure.It is the most common mistakes investors make when they are making profits.In equities you can never throw caution to winds.
2)Herd-like behaviour driven by a desire to be part of the crowd or an assumption that the crowd is right-If midcaps are rising people buy these stocks without even knowing anything about the companies.There are so many companies in our markets which only exists on paper,they moves with the winds or faces some unscrulpous activites,the simple gullible investors gets in at the top and that leads to a paralysis when the price suddenly falls and as soon as that happens you are stuck badly unable to take a call on the stock.Look whats happening now.
3)Excessive aversion to loss=Inability to book a loss when an investment goes wrong is the single biggest cause for losses to investors.Unless a stock has been bought on strong conviction of long term value,those who make investments for quick gains must learn to exercise stoploss.
4)Fear of uncertainity-This leads to inaction.If we book profits and the stock still moves higher,we feel bad.Therefore if a stock is moving up most investors refuse to book gains.And many a time this ultimately leads to losses.
5)Fear of making an incorrect decision and feeling stupid-This too leads to inaction.People often opt for inaction when faced with fear of making a wrong choice.However little do they realise that not acting in time too is a choice that they made unknowingly.
6)Reluctance to admit mistakes-This is another behaviourial pattern that leads to incorrect decisions.In markets,we are loathe to admit that we made a wrong decision.However admitting a mistake and taking corrective measures often saves a lot of money.
7)Following tips of self-proclaimed advisors aware of nothing-In a bull market so many self proclaimed analyst grows,they wud just name the company backed by nothing,the scrip moves up 10% and bang he is the next big bull that we all are looking for.This is another classical behavioural patern.Now simple investors would opt for that scrip without having any confidence or conviction and as soon as the price falls down,the villain is there to catch hold of.
8)Exiting out great scrips at lower levels and buying companies which exists on paper at highs-I get a lot of mails in my mailbox daily pertaining to these point,Arunji i entered your suggested great multibagger at these levels, it came down 20% from my level, so in fear i sold out,now it has more than doubled/tripled what to do?Buying into a scrip means you are actually buying a business.Its so hard to start a business and to run it,i mean just feel it, u have to have an office,plants,machiniries,employees so many hassles.But buying a single scrip of any company means you are the owner of a great business.That company is liable to share everything with you,you being the owner of that firm.But investors hardly cares about it..Do u?
9)Failing to accurately assess their investment time horizion-Most investors make investments for the short term but when the trade turns into a loss,they stick to it claiming that it was a long term call.This could often lead to huge losses.
10)Forgetting the powerful tendency of regression to the mean-This is the most important lesson for all investors.All stock prices must ultimately revert to their long term averages.All sharp run ups on dubious companies comes to an end in an most unpleasant manner.
Stock indices have had a huge fall recently.The price cut has been particularly severe in the midcap segment,i.e,in stocks that have a low capital base and relatively low liquidity.It may be the time to step back a bit,book your losses on them and look for fresh oppurtunities in attractively valued stocks that have got pounded despite decent fundamentals.Picking good stock is the key to succesful investing in bull markets.Over-owned stocks pose a higher risk of loss when the markets turn down.
There are so many common mental mistakes investors make,that often lead to losses.Some of these avoidable errors are:-
1)Overconfidence-This can lead to complacency and over exposure.It is the most common mistakes investors make when they are making profits.In equities you can never throw caution to winds.
2)Herd-like behaviour driven by a desire to be part of the crowd or an assumption that the crowd is right-If midcaps are rising people buy these stocks without even knowing anything about the companies.There are so many companies in our markets which only exists on paper,they moves with the winds or faces some unscrulpous activites,the simple gullible investors gets in at the top and that leads to a paralysis when the price suddenly falls and as soon as that happens you are stuck badly unable to take a call on the stock.Look whats happening now.
3)Excessive aversion to loss=Inability to book a loss when an investment goes wrong is the single biggest cause for losses to investors.Unless a stock has been bought on strong conviction of long term value,those who make investments for quick gains must learn to exercise stoploss.
4)Fear of uncertainity-This leads to inaction.If we book profits and the stock still moves higher,we feel bad.Therefore if a stock is moving up most investors refuse to book gains.And many a time this ultimately leads to losses.
5)Fear of making an incorrect decision and feeling stupid-This too leads to inaction.People often opt for inaction when faced with fear of making a wrong choice.However little do they realise that not acting in time too is a choice that they made unknowingly.
6)Reluctance to admit mistakes-This is another behaviourial pattern that leads to incorrect decisions.In markets,we are loathe to admit that we made a wrong decision.However admitting a mistake and taking corrective measures often saves a lot of money.
7)Following tips of self-proclaimed advisors aware of nothing-In a bull market so many self proclaimed analyst grows,they wud just name the company backed by nothing,the scrip moves up 10% and bang he is the next big bull that we all are looking for.This is another classical behavioural patern.Now simple investors would opt for that scrip without having any confidence or conviction and as soon as the price falls down,the villain is there to catch hold of.
8)Exiting out great scrips at lower levels and buying companies which exists on paper at highs-I get a lot of mails in my mailbox daily pertaining to these point,Arunji i entered your suggested great multibagger at these levels, it came down 20% from my level, so in fear i sold out,now it has more than doubled/tripled what to do?Buying into a scrip means you are actually buying a business.Its so hard to start a business and to run it,i mean just feel it, u have to have an office,plants,machiniries,employees so many hassles.But buying a single scrip of any company means you are the owner of a great business.That company is liable to share everything with you,you being the owner of that firm.But investors hardly cares about it..Do u?
9)Failing to accurately assess their investment time horizion-Most investors make investments for the short term but when the trade turns into a loss,they stick to it claiming that it was a long term call.This could often lead to huge losses.
10)Forgetting the powerful tendency of regression to the mean-This is the most important lesson for all investors.All stock prices must ultimately revert to their long term averages.All sharp run ups on dubious companies comes to an end in an most unpleasant manner.
Sunday, June 29, 2008
Cairn Energy-BUY
Recently a freind of mine who works as an analyst in ubs forwarded me their coverage on cairn energy.Its an interesting report and if cairn comes out with numbers as per UBS estimates-Expect huge upsides on the counter.
Scripscan:Cairn india ltd
CMP:260
Target:374
Traded in:Nse-bse
[Cairn india ltd news,views and analysis/Oil exploration company/turning it on/buy call given by ubs/major beneficary of high crude oil prices/upcoming results/great future prospects/going to do wonders/target price/Hidden gem/Great bet to own/what to do with cairn energy ltd?]
Upgrading to Buy on revision of UBS crude oil prices:We upgrade our rating on Cairn India to Buy (from Sell) and price target to Rs374 (from Rs246) on the back of the upward revision to UBS forecasts for crude oil price. UBS revised the oil price forecasts for all years from CY08 and including the long-term forecast. Given our new explicit oil price forecasts till CY12, we believe the current price reflects a long-term oil price of only $48/bbl.
UBS raises the oil price forecasts including long-term forecast:UBS has raised the oil price forecast to US$ 113.5/120/116/135/155 per barrel in 2008/09/10/11/12 respectively primarily driven by the expectation of supplies falling short of demand substantially pulling down spare capacities. UBS has also raised its long-term oil forecast from $73/bbl to $95/bbl from 2013, on the expectations of higher cost inflation in key upstream projects and GlobalOilCo.
Raising earnings estimates for Cairn India:Driven by the new higher forecasts for crude oil, we raise the earnings estimates for Cairn India in CY08/09/10 by 209%/110%/73% to Rs 1.4/14.0/74.6 respectively. We do not revise any of our assumptions on productions costs in doing so.
Valuation:We change our rating to Buy and raise our target price to Rs 374. Our price target is based on our NAV estimate for Cairn India's E&P assets. We use a DCF to value CIL's stake in Rajasthan, Ravva and Cambay blocks. For the remainder of CIL's assets, we use EV ($)/boe. We also factor in exploration upside by assuming net unrisked reserves of 550 mmboe adjusted by a risk weight of 20%.
Source:UBS
Scripscan:Cairn india ltd
CMP:260
Target:374
Traded in:Nse-bse
[Cairn india ltd news,views and analysis/Oil exploration company/turning it on/buy call given by ubs/major beneficary of high crude oil prices/upcoming results/great future prospects/going to do wonders/target price/Hidden gem/Great bet to own/what to do with cairn energy ltd?]
Upgrading to Buy on revision of UBS crude oil prices:We upgrade our rating on Cairn India to Buy (from Sell) and price target to Rs374 (from Rs246) on the back of the upward revision to UBS forecasts for crude oil price. UBS revised the oil price forecasts for all years from CY08 and including the long-term forecast. Given our new explicit oil price forecasts till CY12, we believe the current price reflects a long-term oil price of only $48/bbl.
UBS raises the oil price forecasts including long-term forecast:UBS has raised the oil price forecast to US$ 113.5/120/116/135/155 per barrel in 2008/09/10/11/12 respectively primarily driven by the expectation of supplies falling short of demand substantially pulling down spare capacities. UBS has also raised its long-term oil forecast from $73/bbl to $95/bbl from 2013, on the expectations of higher cost inflation in key upstream projects and GlobalOilCo.
Raising earnings estimates for Cairn India:Driven by the new higher forecasts for crude oil, we raise the earnings estimates for Cairn India in CY08/09/10 by 209%/110%/73% to Rs 1.4/14.0/74.6 respectively. We do not revise any of our assumptions on productions costs in doing so.
Valuation:We change our rating to Buy and raise our target price to Rs 374. Our price target is based on our NAV estimate for Cairn India's E&P assets. We use a DCF to value CIL's stake in Rajasthan, Ravva and Cambay blocks. For the remainder of CIL's assets, we use EV ($)/boe. We also factor in exploration upside by assuming net unrisked reserves of 550 mmboe adjusted by a risk weight of 20%.
Source:UBS
Friday, June 27, 2008
Market outlook and Ennore coke-The new kid on the block
[Near term market outlook/cheap and attractive valuations/Investors make money traders loose money bigtime/stock tips to mulitply your money/sensex to hit 10000 levels?]
Market Outlook:So what should investors do now? I believe that the recent correction from 17,600+ levels was very much warranted, the fact that this was primarily a liquidity-driven rally, and was, in many cases,totally out of sync with ground realities.Therefore, with the correction,i have become much more comfortable with the valuations that many stocks are now trading at. At the end of the day, am of the belief that over the long-term, stock prices move in tandem with fundamentals.Therefore, the best way to make money in equities is to invest in fundamentally strong companies having good management capabilities, a strong market positioning and good future prospects. Most importantly, of course, buy such stocks at good valuations, of which there are many stocks at current levels. At the end of the day, it is the process of investing that will multiply your money in the long-term. Happy investing!
[Ennore Coke Ltd news,views and analysis/small player/results/future prospects/bagged orders/Analsyt buy call/valuations/ fundamentals and technicals of Ennore Coke Ltd/can be a great buy if performs/Target price/penny stock idea/multibagger potential/coke play/sunrising business/belongs from the sriram group/What should be done with Ennore Coke Ltd]
Scripscan:Ennore Coke Ltd
Code:512369
Cmp:29
Story:-The new coke kid is on the block for you guys now.Ennore coke is an unique story and has already been a great favourite to some operators.The scrip in the present market condition fell drastically from the recent highs of 70 rs.Some times back the company has been taken over by great business minded guys having long experience in the coal and coke trade business.Now it belongs to the 16000crs shriram group.If market rumuors are to be beleived then the company is going to do wonders in the coming days.The buzz in the bourses is that the company is going to report a turnover of over 30crs from nothing last year.The Raw material (Prime Quality metallurgical coal) supply has been tiedup with a foreign company.The company has also signed a MOU with Eco securities Mumbai for Carbon credits.The coke prices is expected to reach new highs which is expected to provide further push to the bottomline of the company.Since there are not many direct coke plays many investors are betting on it as a steel end-user proxy play.Though it should be keenly watched how the things materilizes but already the company seems to be finding lot of takers among the investors fraternity.So if you have got a brave heart filled with lot of risks apetite,Go for it.
Market Outlook:So what should investors do now? I believe that the recent correction from 17,600+ levels was very much warranted, the fact that this was primarily a liquidity-driven rally, and was, in many cases,totally out of sync with ground realities.Therefore, with the correction,i have become much more comfortable with the valuations that many stocks are now trading at. At the end of the day, am of the belief that over the long-term, stock prices move in tandem with fundamentals.Therefore, the best way to make money in equities is to invest in fundamentally strong companies having good management capabilities, a strong market positioning and good future prospects. Most importantly, of course, buy such stocks at good valuations, of which there are many stocks at current levels. At the end of the day, it is the process of investing that will multiply your money in the long-term. Happy investing!
[Ennore Coke Ltd news,views and analysis/small player/results/future prospects/bagged orders/Analsyt buy call/valuations/ fundamentals and technicals of Ennore Coke Ltd/can be a great buy if performs/Target price/penny stock idea/multibagger potential/coke play/sunrising business/belongs from the sriram group/What should be done with Ennore Coke Ltd]
Scripscan:Ennore Coke Ltd
Code:512369
Cmp:29
Story:-The new coke kid is on the block for you guys now.Ennore coke is an unique story and has already been a great favourite to some operators.The scrip in the present market condition fell drastically from the recent highs of 70 rs.Some times back the company has been taken over by great business minded guys having long experience in the coal and coke trade business.Now it belongs to the 16000crs shriram group.If market rumuors are to be beleived then the company is going to do wonders in the coming days.The buzz in the bourses is that the company is going to report a turnover of over 30crs from nothing last year.The Raw material (Prime Quality metallurgical coal) supply has been tiedup with a foreign company.The company has also signed a MOU with Eco securities Mumbai for Carbon credits.The coke prices is expected to reach new highs which is expected to provide further push to the bottomline of the company.Since there are not many direct coke plays many investors are betting on it as a steel end-user proxy play.Though it should be keenly watched how the things materilizes but already the company seems to be finding lot of takers among the investors fraternity.So if you have got a brave heart filled with lot of risks apetite,Go for it.
Simple thinking and simple suggestion for all
[Warren buffet story and tips/Whitney Tilson/broker tips/panic buying and selling/market volatility/diverse analyst views/udayan mukherjee and his stock market knowledge/Peter Bernstein/what to buy what to sell which time to buy and what no to buy/Arbitrage on Stocks permitted??/SBI - Is it good to enter for long term?/KLG CAPITAL SERVICES and its reason for huge upmove/When is 23000 level of sensex expected?]
Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ.Once u have ordinary intelligence,what u need is the temperament to control the urges that get other people into trouble in investing"-Warren Buffet.
Coming from the legendary investor,this piece of advice should serve as the guiding post for all those who want to be successful investors in equities.The world"s most successful investor believes that emotions play a major role in influencing investors into making grave errors which are then compounded by taking further rash actions.This creates the kind of market fluctuation that we are now witnessing.
Sometimes back i read an article, i assume its a couple of years ago when i was 17,it struck me a lot..It was by Whitney Tilson,which said "Peter Bernstein in "Against the Gods" states that evidence reveals repeated patterns of irrationality,inconsistency and incompetence in the ways human beings arrives at a decisions and choices when faced with uncertainty.
It means that when we are faced with uncertainty,like in the stock markets where different opinions exists,the decision making is often irrational and inconsistent and such errors are most likely repeated by individuals. While after every debacle most investors seems to believe that they have now learnt their lesson,but many of them repeats the same mistakes.
Almost everyone in the equity markets makes huge mistakes.They often buy dud stocks,Invests on rumours despite knowing that it is not advisable,refuse to sell when prices fall etc.Examples are in numberable check in our very own orkut stocks community itself.However only those who are able to avoid repeating their mistakes are ones who succeeds.Such individuals are very,very few.This also reinforces the buffet advice that it does not need extra brilliance to make profitable investment decisions but it needs a lot of discipline.
I know these article of mine would find a lot of people who would be influenced after going through the full coverage.But to be very frank and honest most would find it like an ind ultion.Still i am making these points because i believe that we are headed for volatile times in equity markets over the next few months.Even a bit of discipline and caution may prove to be a world of good for all.Times would come where investors would be torn between fundamentals and strong newsflow.High crude prices,over expensive valuations,FII trend will create uncertainty.The indices could swing wildly as bulls and bears will slug it out according to their faith.
Amidst all this,investors could swing between extremes of panic buying and selling.In such times,it would be important to remember Buffets"s advice."Avoid herd mentality and keep your own counsel.
Extra labouring over market volatility,diverse analyst opinions and unsolicited broker advice would confuse investors.It would be important that they maintain balance and avoid panic reactions while buying or selling.
Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ.Once u have ordinary intelligence,what u need is the temperament to control the urges that get other people into trouble in investing"-Warren Buffet.
Coming from the legendary investor,this piece of advice should serve as the guiding post for all those who want to be successful investors in equities.The world"s most successful investor believes that emotions play a major role in influencing investors into making grave errors which are then compounded by taking further rash actions.This creates the kind of market fluctuation that we are now witnessing.
Sometimes back i read an article, i assume its a couple of years ago when i was 17,it struck me a lot..It was by Whitney Tilson,which said "Peter Bernstein in "Against the Gods" states that evidence reveals repeated patterns of irrationality,inconsistency and incompetence in the ways human beings arrives at a decisions and choices when faced with uncertainty.
It means that when we are faced with uncertainty,like in the stock markets where different opinions exists,the decision making is often irrational and inconsistent and such errors are most likely repeated by individuals. While after every debacle most investors seems to believe that they have now learnt their lesson,but many of them repeats the same mistakes.
Almost everyone in the equity markets makes huge mistakes.They often buy dud stocks,Invests on rumours despite knowing that it is not advisable,refuse to sell when prices fall etc.Examples are in numberable check in our very own orkut stocks community itself.However only those who are able to avoid repeating their mistakes are ones who succeeds.Such individuals are very,very few.This also reinforces the buffet advice that it does not need extra brilliance to make profitable investment decisions but it needs a lot of discipline.
I know these article of mine would find a lot of people who would be influenced after going through the full coverage.But to be very frank and honest most would find it like an ind ultion.Still i am making these points because i believe that we are headed for volatile times in equity markets over the next few months.Even a bit of discipline and caution may prove to be a world of good for all.Times would come where investors would be torn between fundamentals and strong newsflow.High crude prices,over expensive valuations,FII trend will create uncertainty.The indices could swing wildly as bulls and bears will slug it out according to their faith.
Amidst all this,investors could swing between extremes of panic buying and selling.In such times,it would be important to remember Buffets"s advice."Avoid herd mentality and keep your own counsel.
Extra labouring over market volatility,diverse analyst opinions and unsolicited broker advice would confuse investors.It would be important that they maintain balance and avoid panic reactions while buying or selling.
Several ways of picking stocks
[Several ways of picking stocks in indian stock markets/value investors and growth investors/fundamental approach and technical analysis/Who is managing the company/where the sensex company stands/bottom of market/Market Rumour/inflation numbers/Technical Analysis of Market with Charts/TRADING IN DELISTED SHARE SCRIPTS /sensex at 10000,SHANKAR SHARMA SAYS SO/what is GARP investing/How market can recover ???/motley Fool"s theory/what is discounted cash flow/PE and PEG ratio/dividend yield of the company/how to choose a company/current assets and current liabilities/how wealth can be created/bse,nse,nifty/how long will bear market continue/personal finance and investments/human psycology and irrational behaviour/relation between trader and investor,earnings growth and dividend yield]
When one thinks of personal finance and investments,stock is the first thing which strikes the mind for quick accumulation of wealth.Its quite explicable the first love for stocks as stock market is the most exilerating place to delve in.If any one stands at the Flore of the stock markets and observe the scrolling up and down of stocks,he may feel of the anxiety surrounding in its environment.But on the financial merry-go-round rise,we all want to experience the ups without the downs.
Though,the world of stocks sounds interesting and pleasing,yet,it would be unwise to jump into these without any knowledge or understanding of the subject.Here i will explore the stock picking techniques based on the tested and pr oven theories of investments.The criteria for the selection of stocks are based on so many factors that it is nearly impossible to construct a formula that will predict success.There is no watertight system,which assure you arriving at a rate of interest that is greater than the markets overall average.
At this point,you may ask yourself why stock picking is so important.Why worry so much about it?Why spend hours doing it?The answer is simple-Wealth.A good stock picker can increase his personal wealth exemplarily.Mind you even your"s truly of 19 years has struggled a lot over the years in applying theories in stock picking.
Any stock is picked on the basis of company's creditability over a period of time.The quantitative aspects of a company,such as profits,balance sheets and report on its agm are easy enough to find.However one can never guess on the qualitative aspects of any company such as company's staffs,its competitive advantages,its reputation and so on?One ma find such sort of in formations highly intangible that cannot be measured.The divergence between tangible and intangible aspects of any company makes the task of stock picking highly off-centered and instinctive process.
Human element is considered to be highly irrational and when this human element gets involved into the volatile stock markets,it can turn out to be a highly dangerous place to play on the bourses.Emotions are an integral part of human element,which are highly unpredictable just like the bourses on the bourd.And when emotions becomes overbearing it can turn the confidence into fear.During such time,it is the emotions only which can either make one flourish or devastate depending upon his state of mind.
The credential of any company is known by its management and the way it functions.Ultimately,it is the people at the strategic decision making positions determines the fate of any company.A strong management plays a crucial factor in the success or failure of any company.To assessthe strength of management and company,investors can simply ask the standard five stuffs-Who,where,what,when and why.
Who is managing the company?
You must know about the management structure of the company and also must keep a close eye on the persons positioned in that structured.If you opt for a company which has got college dropout aspirants like me decent trouble awaits you for sure.Lolz,jokes apart.Do a proper research work about who is the companys ceo,cfo etc.The educational qualification and professional experiences of the people appointed at the highest position in the company must also be verified.The purpose behind is to see whether they are competent enough for the post held by them.
What the company does and how it makes money?
Another important factor to consider about while analyzing a company"s qualitative factors is it products and services.Whats the actually activity of a company?In other words,the company earns its profits from which source?Knowing how a company's activities will be profitable is fundamental to determining the worth of an investment.Try to explore the growth potential of the company.Any customary company in a great industry can provide a solid return,while in a poor industry it is likely to shrink your portfolio.Market share is another important factor.Assessing a company from a qualitative standpoint and determining whether you should invest in it are as important as looking at its sales and earnings.
Where the company stands?
An important factor to look upon-where the company is standing within the industry.Whether the company have any positive points that provides an edge to the company over its competitors.A company's fundamental helps one to pick up a good stock as it enables to find out the "intrinsic value of any company.If the intrinsic value is more than the current share price,your analysis is showing that the stock is worth more than its price and that makes sense to buy the stock.
When does the management take decision?
Now what is the philosophy of management?It is the style in which management intend to manage the company.You can get a glimpse of the style of management by looking at its past performances or going through the annual report"s MD&A section.If a company is showing negative results,one of the actions taken is management restructuring.Which is often termed as "change in management structure" due to poor results.But if a company performs continuously poor then its a warning sign to switch over to other investment options.Altough restructuring may be due to the poor performance of the management,it does not necessarily mean that the company is going through a downfall.Management restructuring might be a positive sign,which shows that the company is endeavouring hard to change its outlook for good cause.
Why?
Finally,an investor must investigate over the capabilities of managers appointed t decision making levels.Never hesitate to ask questions like does this person's the qualities you believe are needed to make someone a good manager for this company?Has he or she has been hired because of past successes and achievements or has he or she acquired the position through questionable means,such as self appointment after inheriting the company?
Merely knowing the strength of company and its management is not enough to guarantee a success in investing.There are certain theories to be looked upon before taking any final decision.If any decision is taken without considering these theories and principles,the investor may end up with losses.
Greater fool"s theory
A company is worth the sum of its discounted cash flows.This means that a company is worth all of its future profits added together.Though several analysts evaluate it by their own means but to me its just what got defined now.Now its up to you to go with me-the teenager kid or not.Anyways the continuation of DCF-These future profits must be discounted to account for the time value of the money.One of the assumption of the DCF theory is that people are rational,nobody would buy a business for more than its future DCF.Since a stock represent ownership in a company,this assumption applies to the stock markets.Now you may ask,why do then stocks exhibit volatile movements as it doesn't make sense for stock price to fluctuate so much when the intrinsic value is not changing every minute?Well the the fact is that many people do not view stocks as represention of DCFs,but as trading vehicles.Misanthropists have labelled it as the "Greater fool"s theory".Since the profit on a trade is not determined by a company's value but about speculating whether you can sell it to some other investor(the fool.On the other hand,the trader would say that investors relying solely on fundamentals are leaving themselves on the mercy of the market instead of observing the trend and the tendencies.
Value investing:-
Stocks carrying strong fundamentals attract value investors the most.A strong fundamental may include earnings,dividends,book value and cash flow-that are selling at a bargain price,given their quality.Value investing doesn't mean just buying any stock that fall off and therefore seems"bargain basement priced".Vale investors have to do their homework and be confident that they are picking a company that is cheap given its high quality.A value investors considers the supremacy of a company to double up his profits.He believes in forseeing the company's potential rather making profit through trading.He does not care much about the external factors affecting the company but determines the worth of the underlying value of its assets.The factors like market volatility or day to day price fluctuations are not coherent to the company and therefore are not seen to have any effect on the value of the business in the long run.
While the efficient market hypothesis claims that prices are always reflecting all relevant information therefore are already showing the intrinsic worth of the companies,value investing relies on a premise that opposes that theory.Value investors also disagree with the principle that high beta necessarily translates into a dicey investment.A high beta does not scare off value investors.As long as they are confident in their intrinsic valuation,an increase in downside volatility may be a good thing.
Growth investing:-
Growth investing could be defined By contrasting it to value investing.Value investors look for stocks that are trading for less than their apparent worth.Growth investors focus on the future potential of a company,with much less emphasis on its present price.Unlike value investors,growth investors opt for companies which are trading higher than their intrinsic worth-but this is done with the belief that the company's intrinsic worth will grow and therefore will exceed their current valuations.Growth investors are concerned with a company's future growth potential,but there is no absolute formula for evaluating this potential.Growth investors use certain methods or criteria as a framework for their analysis,but these methods must be applied with a company's particular situation in mind.
The first question a growth investor should ask is whether the company,based on annual revenue,has been growing in the past.Projected 5 year growth rate of at least 15-20%,although 25% or more is ideal for investors like me.These projections are made by analysts,the company or other credible sources.When a growth investor sees an ideal growth projection,he or she before trusting this projection,must evaluate its creditability.This requires knowledge of the typical growth rates for different sizes of companies.There are many examples of companies with staggering growth in sales but less than stupendous gains in profits.High annual revenue growth is good,but if EPS has not increased proporitinately,its likely due to a decrease in profit margin.By putting side by side a company's present profit margins to its past profit margins and its competitor profit margins,a growth investor is able to gauge quite accurately whether or not management is controlling costs and revenues and maintaining margins.A good rule of thumb is that if a company surpasses its previous five year average of pre-tax profit margins as well as those of its industry,the company may be a good growth candidate.
Screening for value stocks
Altough value stocks can be located anywhere,they are often located in industries that have recently fallen on hard times or are currently facing market overreaction to a piece of news affecting the industry in the short term.Keep in mind that these are the guidelines used by value investors and these are not hard and fast rules.
Share price should be no more than 2/3 of intrinsic worth.
Look at companies with PE ratios at the lowest 10% of all equity securities.
PEG should be less than 1
Stock price should be no more than tangible book value
There should be no more debt than equity(D/E Ratio<1)
Current assets should be 2 times current liabilities
Dividend yield should be at least 2/3 of the long term AAA bond yield.
Earnings growth should be at least 8% per annum compounded over the last 8-10 years
The PE and PEG ratios
Value investing is not simply about investing in low PE stocks.Its just that stocks that are underrated will often reflect through a low PE ratio,which should simply provide a way to draw a distinction between companies within the same industry.Another popular gauge for valuing a company's intrinsic worth is the PEG ratio.It is calculated as stocks PE ratio divided by its projected year-over-year earnings growth rate.In other words,the ratio measures how cheap the stock is while taking into account its earnings growth.If the company's PEG ratio is less than 1,it is considered to be undervalued and is a growth pick for value investor.
An investor should also use margin of safety concept which is simply the practice of leaving room for error in the calculations of intrinsic worth.If the stocks intrinsic value were lower than that of what the investor estimates,the margin of safety should avert investor from paying too much of the stock.
In the nutshell,an investor should try to look at basic principles of investment and should not be carried away by biases like windfall gain but rather concentrate on the company's fundamentals,its management and other theories guiding towards right investment.
Remember that’s its your money at stake-so pick stocks wisely.
When one thinks of personal finance and investments,stock is the first thing which strikes the mind for quick accumulation of wealth.Its quite explicable the first love for stocks as stock market is the most exilerating place to delve in.If any one stands at the Flore of the stock markets and observe the scrolling up and down of stocks,he may feel of the anxiety surrounding in its environment.But on the financial merry-go-round rise,we all want to experience the ups without the downs.
Though,the world of stocks sounds interesting and pleasing,yet,it would be unwise to jump into these without any knowledge or understanding of the subject.Here i will explore the stock picking techniques based on the tested and pr oven theories of investments.The criteria for the selection of stocks are based on so many factors that it is nearly impossible to construct a formula that will predict success.There is no watertight system,which assure you arriving at a rate of interest that is greater than the markets overall average.
At this point,you may ask yourself why stock picking is so important.Why worry so much about it?Why spend hours doing it?The answer is simple-Wealth.A good stock picker can increase his personal wealth exemplarily.Mind you even your"s truly of 19 years has struggled a lot over the years in applying theories in stock picking.
Any stock is picked on the basis of company's creditability over a period of time.The quantitative aspects of a company,such as profits,balance sheets and report on its agm are easy enough to find.However one can never guess on the qualitative aspects of any company such as company's staffs,its competitive advantages,its reputation and so on?One ma find such sort of in formations highly intangible that cannot be measured.The divergence between tangible and intangible aspects of any company makes the task of stock picking highly off-centered and instinctive process.
Human element is considered to be highly irrational and when this human element gets involved into the volatile stock markets,it can turn out to be a highly dangerous place to play on the bourses.Emotions are an integral part of human element,which are highly unpredictable just like the bourses on the bourd.And when emotions becomes overbearing it can turn the confidence into fear.During such time,it is the emotions only which can either make one flourish or devastate depending upon his state of mind.
The credential of any company is known by its management and the way it functions.Ultimately,it is the people at the strategic decision making positions determines the fate of any company.A strong management plays a crucial factor in the success or failure of any company.To assessthe strength of management and company,investors can simply ask the standard five stuffs-Who,where,what,when and why.
Who is managing the company?
You must know about the management structure of the company and also must keep a close eye on the persons positioned in that structured.If you opt for a company which has got college dropout aspirants like me decent trouble awaits you for sure.Lolz,jokes apart.Do a proper research work about who is the companys ceo,cfo etc.The educational qualification and professional experiences of the people appointed at the highest position in the company must also be verified.The purpose behind is to see whether they are competent enough for the post held by them.
What the company does and how it makes money?
Another important factor to consider about while analyzing a company"s qualitative factors is it products and services.Whats the actually activity of a company?In other words,the company earns its profits from which source?Knowing how a company's activities will be profitable is fundamental to determining the worth of an investment.Try to explore the growth potential of the company.Any customary company in a great industry can provide a solid return,while in a poor industry it is likely to shrink your portfolio.Market share is another important factor.Assessing a company from a qualitative standpoint and determining whether you should invest in it are as important as looking at its sales and earnings.
Where the company stands?
An important factor to look upon-where the company is standing within the industry.Whether the company have any positive points that provides an edge to the company over its competitors.A company's fundamental helps one to pick up a good stock as it enables to find out the "intrinsic value of any company.If the intrinsic value is more than the current share price,your analysis is showing that the stock is worth more than its price and that makes sense to buy the stock.
When does the management take decision?
Now what is the philosophy of management?It is the style in which management intend to manage the company.You can get a glimpse of the style of management by looking at its past performances or going through the annual report"s MD&A section.If a company is showing negative results,one of the actions taken is management restructuring.Which is often termed as "change in management structure" due to poor results.But if a company performs continuously poor then its a warning sign to switch over to other investment options.Altough restructuring may be due to the poor performance of the management,it does not necessarily mean that the company is going through a downfall.Management restructuring might be a positive sign,which shows that the company is endeavouring hard to change its outlook for good cause.
Why?
Finally,an investor must investigate over the capabilities of managers appointed t decision making levels.Never hesitate to ask questions like does this person's the qualities you believe are needed to make someone a good manager for this company?Has he or she has been hired because of past successes and achievements or has he or she acquired the position through questionable means,such as self appointment after inheriting the company?
Merely knowing the strength of company and its management is not enough to guarantee a success in investing.There are certain theories to be looked upon before taking any final decision.If any decision is taken without considering these theories and principles,the investor may end up with losses.
Greater fool"s theory
A company is worth the sum of its discounted cash flows.This means that a company is worth all of its future profits added together.Though several analysts evaluate it by their own means but to me its just what got defined now.Now its up to you to go with me-the teenager kid or not.Anyways the continuation of DCF-These future profits must be discounted to account for the time value of the money.One of the assumption of the DCF theory is that people are rational,nobody would buy a business for more than its future DCF.Since a stock represent ownership in a company,this assumption applies to the stock markets.Now you may ask,why do then stocks exhibit volatile movements as it doesn't make sense for stock price to fluctuate so much when the intrinsic value is not changing every minute?Well the the fact is that many people do not view stocks as represention of DCFs,but as trading vehicles.Misanthropists have labelled it as the "Greater fool"s theory".Since the profit on a trade is not determined by a company's value but about speculating whether you can sell it to some other investor(the fool.On the other hand,the trader would say that investors relying solely on fundamentals are leaving themselves on the mercy of the market instead of observing the trend and the tendencies.
Value investing:-
Stocks carrying strong fundamentals attract value investors the most.A strong fundamental may include earnings,dividends,book value and cash flow-that are selling at a bargain price,given their quality.Value investing doesn't mean just buying any stock that fall off and therefore seems"bargain basement priced".Vale investors have to do their homework and be confident that they are picking a company that is cheap given its high quality.A value investors considers the supremacy of a company to double up his profits.He believes in forseeing the company's potential rather making profit through trading.He does not care much about the external factors affecting the company but determines the worth of the underlying value of its assets.The factors like market volatility or day to day price fluctuations are not coherent to the company and therefore are not seen to have any effect on the value of the business in the long run.
While the efficient market hypothesis claims that prices are always reflecting all relevant information therefore are already showing the intrinsic worth of the companies,value investing relies on a premise that opposes that theory.Value investors also disagree with the principle that high beta necessarily translates into a dicey investment.A high beta does not scare off value investors.As long as they are confident in their intrinsic valuation,an increase in downside volatility may be a good thing.
Growth investing:-
Growth investing could be defined By contrasting it to value investing.Value investors look for stocks that are trading for less than their apparent worth.Growth investors focus on the future potential of a company,with much less emphasis on its present price.Unlike value investors,growth investors opt for companies which are trading higher than their intrinsic worth-but this is done with the belief that the company's intrinsic worth will grow and therefore will exceed their current valuations.Growth investors are concerned with a company's future growth potential,but there is no absolute formula for evaluating this potential.Growth investors use certain methods or criteria as a framework for their analysis,but these methods must be applied with a company's particular situation in mind.
The first question a growth investor should ask is whether the company,based on annual revenue,has been growing in the past.Projected 5 year growth rate of at least 15-20%,although 25% or more is ideal for investors like me.These projections are made by analysts,the company or other credible sources.When a growth investor sees an ideal growth projection,he or she before trusting this projection,must evaluate its creditability.This requires knowledge of the typical growth rates for different sizes of companies.There are many examples of companies with staggering growth in sales but less than stupendous gains in profits.High annual revenue growth is good,but if EPS has not increased proporitinately,its likely due to a decrease in profit margin.By putting side by side a company's present profit margins to its past profit margins and its competitor profit margins,a growth investor is able to gauge quite accurately whether or not management is controlling costs and revenues and maintaining margins.A good rule of thumb is that if a company surpasses its previous five year average of pre-tax profit margins as well as those of its industry,the company may be a good growth candidate.
Screening for value stocks
Altough value stocks can be located anywhere,they are often located in industries that have recently fallen on hard times or are currently facing market overreaction to a piece of news affecting the industry in the short term.Keep in mind that these are the guidelines used by value investors and these are not hard and fast rules.
Share price should be no more than 2/3 of intrinsic worth.
Look at companies with PE ratios at the lowest 10% of all equity securities.
PEG should be less than 1
Stock price should be no more than tangible book value
There should be no more debt than equity(D/E Ratio<1)
Current assets should be 2 times current liabilities
Dividend yield should be at least 2/3 of the long term AAA bond yield.
Earnings growth should be at least 8% per annum compounded over the last 8-10 years
The PE and PEG ratios
Value investing is not simply about investing in low PE stocks.Its just that stocks that are underrated will often reflect through a low PE ratio,which should simply provide a way to draw a distinction between companies within the same industry.Another popular gauge for valuing a company's intrinsic worth is the PEG ratio.It is calculated as stocks PE ratio divided by its projected year-over-year earnings growth rate.In other words,the ratio measures how cheap the stock is while taking into account its earnings growth.If the company's PEG ratio is less than 1,it is considered to be undervalued and is a growth pick for value investor.
An investor should also use margin of safety concept which is simply the practice of leaving room for error in the calculations of intrinsic worth.If the stocks intrinsic value were lower than that of what the investor estimates,the margin of safety should avert investor from paying too much of the stock.
In the nutshell,an investor should try to look at basic principles of investment and should not be carried away by biases like windfall gain but rather concentrate on the company's fundamentals,its management and other theories guiding towards right investment.
Remember that’s its your money at stake-so pick stocks wisely.
Tuesday, June 17, 2008
Southern Online Bio Technologies:-Perform or perish
Scripscan:Southern Online Bio Technologies Ltd
Cmp:28
Bse code:532669
[Southern Online Bio Technologies Ltd news,views and analysis/small internet and biodiesel player/results/future prospects/bagged orders/Analsyt buy call/high valuations/ fundamentals and technicals of southern online bio/can be a great buy if performs/Target price/What should be done with Southern Online Bio Technologies Ltd]
Story:They say, more than a tonne of dirt needs to be shifted to find every single carat of diamond. The same applies to the vast universe of small companies.It is a daunting proposition to sift through an endless list of sectors and industries in the hope of hitting on some gems.The stock which am gonna discuss today has been hyped immensely as the next star performer.So lets check it out buddies:-
Company:Southern online biotech has been providing a wide spectrum of services, which includes basic services like Internet access, E-mail and value added services such as Add on hours.The Company presently provides Internet Services as a Licensed ISP by connecting through Bharti Broadband Backbone,.The Company's services include the following:
* Dial up Services through PSTN
* Web Hosting
* Server Co-Location
* VOIP Services
* Leased Line services (Terrestrial and RE links)
* Dedicated Servers
* Networking Solutions
BIODIESEL PROJECT:The Company's Biodiesel Unit has been established at Samsthan Narayanpur Village & Mandal, Nalgonda District with 40,000 liters per day capacity with an investment of Rs.25.72 crores and the the Company has commenced the sale of Biodiesel from july last year.It has been supplying biodiesel to various well reputed customers like IDEA Cellular, L&T, Airtel, Kirloskar Oil Engines, Toyota Kirloskar, TNT Express couriers, Giatech, Southern Rocks & Minerals etc,.The Company has further plans to upgrade the current Biodiesel unit from 12500 TPY to 25000 TPY,over a period of 3 years.It is also planning to set up a unit of 250 Tons per day capacity at Vizag to have presence in the Global markets.The project cost of the proposed Biodiesel plant is Rs. 75.00 Cr.
Now a question is inevitable,Yeh "BIODIESEL" kya hota hain bhai?
Ans)Well Biodiesel (methyl esters) is a renewable liquid fuel produced from new or used vegetable oils or animal fats.It is typically made by a chemical process called esterfication, transesterification which relies on an alcohol, such as methanol, and a catalyst. It can also be made from Pongamia,Jatropha, cottonseed, peanut, canola (a variety of rapeseed),sunflower oils, waste animal fats,and used cooking oil.
Conclusion:Southern online bio has been quite consistent over the last 5 years as far its topline and bottomline is concerned.The company is striving for more with its full strength.Sales may bloster further but margin pressure would countine to remain.I doubt whether there are more unique plays like southern online bio.An interesting company operating in the field of two sunrising sectors with huge potential.But it should be prudent to note that bio-diesel is still a huge hyper and many small companies which were touted to be dark horses came and at present are struggling for their existence.Dollex,ascent exim,ikf to name a few such companies.It has bagged some recent orders for its biodiesel stuffs and it expects to bag few more in the coming days.On the internet and its allied business i doubt its ability to compete and cope with much bigger players.So risk and returns both seems to be looming large on the company.Only thing which can shape it up in the coming years would be the management"s vision and ther calculated efforts,if any at all.Dilution of equity is again something which am never comfortable talking of but its in nascent stages of a huge boom period,so i give my nod on it.Its of no doubt that because of the potential and prospects,Southern online bio would always be in the reckoning and will find its place in the portfolio of several risk savvy takers but performing bigtime in the bourses may only happen after the deliveration of robust set of numbers.
Cmp:28
Bse code:532669
[Southern Online Bio Technologies Ltd news,views and analysis/small internet and biodiesel player/results/future prospects/bagged orders/Analsyt buy call/high valuations/ fundamentals and technicals of southern online bio/can be a great buy if performs/Target price/What should be done with Southern Online Bio Technologies Ltd]
Story:They say, more than a tonne of dirt needs to be shifted to find every single carat of diamond. The same applies to the vast universe of small companies.It is a daunting proposition to sift through an endless list of sectors and industries in the hope of hitting on some gems.The stock which am gonna discuss today has been hyped immensely as the next star performer.So lets check it out buddies:-
Company:Southern online biotech has been providing a wide spectrum of services, which includes basic services like Internet access, E-mail and value added services such as Add on hours.The Company presently provides Internet Services as a Licensed ISP by connecting through Bharti Broadband Backbone,.The Company's services include the following:
* Dial up Services through PSTN
* Web Hosting
* Server Co-Location
* VOIP Services
* Leased Line services (Terrestrial and RE links)
* Dedicated Servers
* Networking Solutions
BIODIESEL PROJECT:The Company's Biodiesel Unit has been established at Samsthan Narayanpur Village & Mandal, Nalgonda District with 40,000 liters per day capacity with an investment of Rs.25.72 crores and the the Company has commenced the sale of Biodiesel from july last year.It has been supplying biodiesel to various well reputed customers like IDEA Cellular, L&T, Airtel, Kirloskar Oil Engines, Toyota Kirloskar, TNT Express couriers, Giatech, Southern Rocks & Minerals etc,.The Company has further plans to upgrade the current Biodiesel unit from 12500 TPY to 25000 TPY,over a period of 3 years.It is also planning to set up a unit of 250 Tons per day capacity at Vizag to have presence in the Global markets.The project cost of the proposed Biodiesel plant is Rs. 75.00 Cr.
Now a question is inevitable,Yeh "BIODIESEL" kya hota hain bhai?
Ans)Well Biodiesel (methyl esters) is a renewable liquid fuel produced from new or used vegetable oils or animal fats.It is typically made by a chemical process called esterfication, transesterification which relies on an alcohol, such as methanol, and a catalyst. It can also be made from Pongamia,Jatropha, cottonseed, peanut, canola (a variety of rapeseed),sunflower oils, waste animal fats,and used cooking oil.
Conclusion:Southern online bio has been quite consistent over the last 5 years as far its topline and bottomline is concerned.The company is striving for more with its full strength.Sales may bloster further but margin pressure would countine to remain.I doubt whether there are more unique plays like southern online bio.An interesting company operating in the field of two sunrising sectors with huge potential.But it should be prudent to note that bio-diesel is still a huge hyper and many small companies which were touted to be dark horses came and at present are struggling for their existence.Dollex,ascent exim,ikf to name a few such companies.It has bagged some recent orders for its biodiesel stuffs and it expects to bag few more in the coming days.On the internet and its allied business i doubt its ability to compete and cope with much bigger players.So risk and returns both seems to be looming large on the company.Only thing which can shape it up in the coming years would be the management"s vision and ther calculated efforts,if any at all.Dilution of equity is again something which am never comfortable talking of but its in nascent stages of a huge boom period,so i give my nod on it.Its of no doubt that because of the potential and prospects,Southern online bio would always be in the reckoning and will find its place in the portfolio of several risk savvy takers but performing bigtime in the bourses may only happen after the deliveration of robust set of numbers.
Monday, June 16, 2008
Carnation Nutra Analogue Foods:-Make your portfolio a healthy 1
ScripScan:Carnation Nutra Analogue Foods
Code:531335
CMP:93
[Carnation Nutra Analogue Foods news,views and analysis/owner of nutralite brand/results/future prospects/acquired by cadilla/Analsyt buy call/cheap and attractive valuations/Solid fundamentals/great buy/Target price/What should be done with carnation nutra]
Background:Carnation Nutra is a company belonging to the Cadila Group. Cadila Group acquired the compny and thereafter came out with an open offer in the month of May 06at a price of Rs.150 per share.Cadila group currently owns 61% equity in the company.
Introduction:Carnation Nutra Analogue Foods is a manufacturer of table margarine, which sells under the brand Nutralite.Nutralite is the largest selling margarine in India with a market share of 60%.Margirine is made from refined vegetable oils and is priced comparatively cheaper to butter.Hence,making it an attractive option for general masses.Further,Nutralite can replace butter in all applications and can be used for cooking, baking, frying, and as a spread on bread, toasts, biscuits etc. Hence, there are tremendous growth prospects for the product. Carnation is targeting urban health conscious middle class segment. The company is also operating in regular diary products like butter, processed cheese & pizza cheese.As of today the margarine market is very small in India and whatever growth has achieved by the company is with zero advertising.Now the company has started aggressive marketing campaign of Nutralite including advertising on various Television Channels and distribution of samples of Nutralite free with packs of Sugar Free.
Outlook:The company has a nation-wide presence & has the second largest market share in up-markets of Maharashtra, Delhi & Gujarat after Amul.As the health awareness among Indian populace is at a never before high, the product has also shown extreme consumer interest which is only expected to increase from here.It has a strong distribution across India with several distributors.Carnation is also considering exports aimed at Middle East & African nations.
Conclusion:The market for Margirine is extremely tiny compared to butter and that will help it to register exponential growth in the years to come.The company is a debt-free entity.Carnation nutra has shown strong consitency in its topline and bottomline over the last many years.The management is aiming for a more than 80% bottomline jump in the current fiscal.The company is expected to continue with its robust growth in the coming years.Valuations at the current level looks cheap with a forward 09 P/E ratio of around 6.5.Everbody is aware of the cadila"s product "Sugar free",there is every reason cadila with its brand building experience can set the same stage for nutralite. So considering at the solid pedigree,bright prospects,huge growth,booming industry,ambitious initiatives,export potential,CARNATION NUTRA MAY JUST PROVE TO BE THE NEXT BIG THING.
Code:531335
CMP:93
[Carnation Nutra Analogue Foods news,views and analysis/owner of nutralite brand/results/future prospects/acquired by cadilla/Analsyt buy call/cheap and attractive valuations/Solid fundamentals/great buy/Target price/What should be done with carnation nutra]
Background:Carnation Nutra is a company belonging to the Cadila Group. Cadila Group acquired the compny and thereafter came out with an open offer in the month of May 06at a price of Rs.150 per share.Cadila group currently owns 61% equity in the company.
Introduction:Carnation Nutra Analogue Foods is a manufacturer of table margarine, which sells under the brand Nutralite.Nutralite is the largest selling margarine in India with a market share of 60%.Margirine is made from refined vegetable oils and is priced comparatively cheaper to butter.Hence,making it an attractive option for general masses.Further,Nutralite can replace butter in all applications and can be used for cooking, baking, frying, and as a spread on bread, toasts, biscuits etc. Hence, there are tremendous growth prospects for the product. Carnation is targeting urban health conscious middle class segment. The company is also operating in regular diary products like butter, processed cheese & pizza cheese.As of today the margarine market is very small in India and whatever growth has achieved by the company is with zero advertising.Now the company has started aggressive marketing campaign of Nutralite including advertising on various Television Channels and distribution of samples of Nutralite free with packs of Sugar Free.
Outlook:The company has a nation-wide presence & has the second largest market share in up-markets of Maharashtra, Delhi & Gujarat after Amul.As the health awareness among Indian populace is at a never before high, the product has also shown extreme consumer interest which is only expected to increase from here.It has a strong distribution across India with several distributors.Carnation is also considering exports aimed at Middle East & African nations.
Conclusion:The market for Margirine is extremely tiny compared to butter and that will help it to register exponential growth in the years to come.The company is a debt-free entity.Carnation nutra has shown strong consitency in its topline and bottomline over the last many years.The management is aiming for a more than 80% bottomline jump in the current fiscal.The company is expected to continue with its robust growth in the coming years.Valuations at the current level looks cheap with a forward 09 P/E ratio of around 6.5.Everbody is aware of the cadila"s product "Sugar free",there is every reason cadila with its brand building experience can set the same stage for nutralite. So considering at the solid pedigree,bright prospects,huge growth,booming industry,ambitious initiatives,export potential,CARNATION NUTRA MAY JUST PROVE TO BE THE NEXT BIG THING.
Thursday, June 12, 2008
Ridiculious stuffs of stock markets
[Indian stock markets and normal behavior of people/huge targets for nothing/Multibaggers/Quiting from market/How to make up the huge losses/which company to buy/what are the prospects of sensex companies/Psus safe bets/Good dividend yield paying companies/learn and earn/make your fortune from stock markets/never blame our markets/you are responsible for all your losses]
Below given are some funny stuffs noted by me.Most are happening words of general investors though the majority fails to make any head or tails out of them.So here we go:-
1)Buy the "Script"-One of the age-old word which undoubedtly got chanted a billion times and am sure the reader reading it now has got it wrong too.Its "SCRIP" buddies and not a 'script'-We dont talk about films during the utterence of that word rite?Then why the hell that wrong word gets pronounced time and again?Grow up people.
2)Guy gives a target of 20% up and says it to be a "Multibagger"-Another ridiculios stuff which i noticed a hell lot of times.Multi means 5 so therefore a multibagger is a 5 bagger-100 to 500 for a scrip is a multibagger but 100 to 120 as that guy assigned is a mere outperformer.At most, it can be said to be a scrip with a multibagger potential nothing else.So make sure you make the multibagger word applicable again only when it has got the potential to be so.
3)Target 1000 present price 80 duration 6 months-Very common 'proverb' though the price and the duration can vary from person to person.Now tell me why do you beleive such stuffs?If the guy giving the call was so confident then he wouldnt have bothered to pass the call to you-He in no time would have sold his everything for the sake of having a chunk of that counter,isnt it?Kind peoples are hard to get folks, its a selfish world.Make sure you dont get into such absured stuffs.
4)[Notional gain of 5000-Isse kya hoga][Notional loss of 1000-Main Barbad hogaya]-Lolz-Just giggled,breathed now let me procced on.How many of you posses that quality?Not satisfied irrespective of how big the profits are,very depressed with tiny losses.Also, Please remember notional profits or losses are just profits/losses on books,its not been realized yet.So till you book the profit or loss just shut your mouth.hehehe........
5)I am leaving the market,how many of you are following me-Its a fresh recent topic i saw in a social networking website.You have sold everything that you owned and you are on with your 'outrageous' speeches.These are pretty obvious stuffs after getting poundings on your stock market commitments.But just give it a thought-You have invested,done all the hard works,got into a decent company which is set to perform big time but mayhem came amidst and rattled the markets-Your company nosedived as just people like you panicked and exited without giving it a second look.Why to sell and why to leave?After darkness comes the day,dar ke age jeet hain-wont these words come to your mind?.If you are suffereing from heavy losses its only because of your own fault.Never blame the markets...mind it.
Below given are some funny stuffs noted by me.Most are happening words of general investors though the majority fails to make any head or tails out of them.So here we go:-
1)Buy the "Script"-One of the age-old word which undoubedtly got chanted a billion times and am sure the reader reading it now has got it wrong too.Its "SCRIP" buddies and not a 'script'-We dont talk about films during the utterence of that word rite?Then why the hell that wrong word gets pronounced time and again?Grow up people.
2)Guy gives a target of 20% up and says it to be a "Multibagger"-Another ridiculios stuff which i noticed a hell lot of times.Multi means 5 so therefore a multibagger is a 5 bagger-100 to 500 for a scrip is a multibagger but 100 to 120 as that guy assigned is a mere outperformer.At most, it can be said to be a scrip with a multibagger potential nothing else.So make sure you make the multibagger word applicable again only when it has got the potential to be so.
3)Target 1000 present price 80 duration 6 months-Very common 'proverb' though the price and the duration can vary from person to person.Now tell me why do you beleive such stuffs?If the guy giving the call was so confident then he wouldnt have bothered to pass the call to you-He in no time would have sold his everything for the sake of having a chunk of that counter,isnt it?Kind peoples are hard to get folks, its a selfish world.Make sure you dont get into such absured stuffs.
4)[Notional gain of 5000-Isse kya hoga][Notional loss of 1000-Main Barbad hogaya]-Lolz-Just giggled,breathed now let me procced on.How many of you posses that quality?Not satisfied irrespective of how big the profits are,very depressed with tiny losses.Also, Please remember notional profits or losses are just profits/losses on books,its not been realized yet.So till you book the profit or loss just shut your mouth.hehehe........
5)I am leaving the market,how many of you are following me-Its a fresh recent topic i saw in a social networking website.You have sold everything that you owned and you are on with your 'outrageous' speeches.These are pretty obvious stuffs after getting poundings on your stock market commitments.But just give it a thought-You have invested,done all the hard works,got into a decent company which is set to perform big time but mayhem came amidst and rattled the markets-Your company nosedived as just people like you panicked and exited without giving it a second look.Why to sell and why to leave?After darkness comes the day,dar ke age jeet hain-wont these words come to your mind?.If you are suffereing from heavy losses its only because of your own fault.Never blame the markets...mind it.
Wednesday, June 11, 2008
Pioneer Embroideries:-Going to rock soon
Scripscan:-Pioneer Embroideries Ltd
Cmp:70
Target:150
Return expected:115%
Duration:9-12 months
[Pioneer Embroideries Ltd news,views and analysis/ Retail venture news and real estate/owner of hakoba brand/results/future prospects/Land bank/Analsyt buy call/cheap and attractive valuations/Solid fundamentals/great buy/Target price/What should be done with Pioneer Embroideries Ltd?]
Story:Pioneer Embroideries Limited (PEL) is one of the largest players in the embroideries Et laces segment in the world.It is also India's largest manufacturer-exporter of embroideries and bobbin laces.It has got seven embroidery manufacturing units located at Mumbai, Sarigam, Naroli, Haryana, Bangalore, Navi Mumbai and Coimbatore.The company has been struggling to put on good results due to higher interst and depriciation costs but overall the turnover has been on a continuos rise.Now i like the story mostly becuase it has got a big retail and a small real estate presence.For the real estate segment the company has already signed a development agreement with Suntech Realty and it’s coming up in Borivali,Mumbai.It has also got real estates in Bangalore, in Coimbatore,Delhi and few other places as well.Plenty of you have heard the name of the retail store"Hakoba" isnt it?Its a subsidary of the company and is called Hakoba Lifestyle Limited where it owns 85% and 15% being with BCCL.The company presently has 64 outlets in 35 cities of india.The company is planning to increase the retail stores to 200 by fy09.The retail segment contributed 43crs of reveue in fy07 and the same is expected to increase at a tremendous speed going forward.At present prices of 70rs its market cap should be around 84crs.The mumbai property alone is worth 50crs,if i add up all the real estates the same would total up to 70-75crs.The company is the leader in its field with 7 manufacturing units, so the rest of the market cap gets added there.So what about the 200 hakoba stores by 09?Chow guys...You are getting them for free...64 outlets generated 43crs of revenues..how much 200 stores can?Put up the calculator and calculate coz in the scrip price of 70 it hasnt been calculated yet.Go for it guys.
Cmp:70
Target:150
Return expected:115%
Duration:9-12 months
[Pioneer Embroideries Ltd news,views and analysis/ Retail venture news and real estate/owner of hakoba brand/results/future prospects/Land bank/Analsyt buy call/cheap and attractive valuations/Solid fundamentals/great buy/Target price/What should be done with Pioneer Embroideries Ltd?]
Story:Pioneer Embroideries Limited (PEL) is one of the largest players in the embroideries Et laces segment in the world.It is also India's largest manufacturer-exporter of embroideries and bobbin laces.It has got seven embroidery manufacturing units located at Mumbai, Sarigam, Naroli, Haryana, Bangalore, Navi Mumbai and Coimbatore.The company has been struggling to put on good results due to higher interst and depriciation costs but overall the turnover has been on a continuos rise.Now i like the story mostly becuase it has got a big retail and a small real estate presence.For the real estate segment the company has already signed a development agreement with Suntech Realty and it’s coming up in Borivali,Mumbai.It has also got real estates in Bangalore, in Coimbatore,Delhi and few other places as well.Plenty of you have heard the name of the retail store"Hakoba" isnt it?Its a subsidary of the company and is called Hakoba Lifestyle Limited where it owns 85% and 15% being with BCCL.The company presently has 64 outlets in 35 cities of india.The company is planning to increase the retail stores to 200 by fy09.The retail segment contributed 43crs of reveue in fy07 and the same is expected to increase at a tremendous speed going forward.At present prices of 70rs its market cap should be around 84crs.The mumbai property alone is worth 50crs,if i add up all the real estates the same would total up to 70-75crs.The company is the leader in its field with 7 manufacturing units, so the rest of the market cap gets added there.So what about the 200 hakoba stores by 09?Chow guys...You are getting them for free...64 outlets generated 43crs of revenues..how much 200 stores can?Put up the calculator and calculate coz in the scrip price of 70 it hasnt been calculated yet.Go for it guys.
Sunday, June 8, 2008
Indian stock markets:-Increase Your Conviction buddies
[Indian stock markets/Sensex nifty crashes/all companies to double in 1 month/Looks good on the charts/Company has got an order/They are planning an expansion and diversification/Won some export orders/Big Bull and big operator is buying/rakesh jhunjhunwala and manekar buying into it/CDR/OTS done/Going for GDR/FCCB/market has bottomed or not/brokers suggestion/Double your money from free stock tips]
So Sensex over the last few months crashed from 21,200 to a level of 15,500 now, all investors have lost money like never before.The more the money one had made in this bull run, the bigger the hit one has taken because appetite for risk also went up. People kept on putting more money as the market went up. But this time, magnitude was much bigger, profits were huge and so were the losses.Most investors are set back by 18-24 months.
However, all doomsayers who are predicting markets to crash to 10000 level would prove wrong and as i anticipate markets would stabilize at 14500-15000 levels. However,investors should lower their expectations and should not expect same bumper returns as in 2006-07.Moreover,there may be profit booking at every rise.Partly, investors are also to be blamed for picking stocks at any price (upon hearsay) without looking at fundamentals of the company or at the valuations.This time, investors should try to avoid following mistakes:
1)It will double in 1 month:If it were so, why tipster will tell you to make so much money?Instead, he himself will beg,borrow or steal to have enough money and buy entire quantity of such scrip for himself.
2)Looks good on the chart:Intraday or short term traders may sometimes make money on this basis.However,it is a strict No No for long term investors.One should remember that no business enterprise runs on charts.Hence, how business of share investing can run on charts?
3)Company has got an order:One should verify what is the execution period of such an order, when and how much it will contribute to company's topline and bottomline? Sometimes,bigger the order,lower the profit margin.
4)They are planning an expansion:Expansion of production capacity necessarily does not mean expansion of bottomline also.Whether big investment in new capacity will yield judicious returns?Whether there is enough demand to meet expanded capacity? In the past,many big companies became BIFR case after their mad expansion.
5)Won some export orders:Such order will constitute how much of total turnover in percentage terms?Did management clarify whether export orders are more remunerative or less remunerative?Export orders do not necessarily translate into higher profits.
6)Big Bull is buying:Did they ever tell you what big bull is selling?
7)Big Operator is buying:By the time such news reaches you,such operator has already turned into a seller and most probably,you are buyer of his sold quantities.
8)CDR/OTS:In many many cases,companies became significant due to siphoning off funds by the promoters.What is the guarantee that promoters will not again siphon off the funds after CDR?Many companies became CDR case due to inefficiencies and they will continue to remain inefficient even after CDR.
CDR means better future for those companies which were genuinely suffering due to bad market conditions and promoters have genuine reputation.However, investors tend to pick any CDR case company without realizing that perhaps this was the only CDR case in that industry in which most other companies were faring well.
9)Going for GDR/FCCB: Most of the company's stock price falls sharply after GDR/FCCB issue.It clearly shows that share price was being ramped up before such issue.Hence, investors should avoid to buy such scrips at peak valuations just before GDR.
10)Brokers tells you to average the scrip.It is advisable to average the scrip only if price has come down due to bad sentiment.However, in many cases, price is coming down due to expected lower performance in view of which lay investor is not aware. It is like betting again and again, more and more on a losing horse.Instead, investors can make up for their mistakes by investing additional money only in some other companies which are doing better.
No one can exactly say whether market has bottomed or not? Investors should see whether the market will be higher than current level 6 to 12 month hence. If answer is yes, start investing.
Equity is a long term instrument and if there is nothing wrong with the Indian companies you want to invest in, or the Indian economy and country as a whole, and if market is going down due to technical factors, investors should not panic, and wait.If, some FII are selling today,tomorrow, other FII will come to buy. There is no problem for long term investors.We should change our views only if fundamentals change.
Finally, if, Indian economy is doing well and if Indian Equities are attractive,I feel that it is not due to Rahu-Ketu (politicians-bureaucrats) but INSPITE of them. Things are happening due to perseverance, intelligence, tolerance, hardwork and ambition of Indian citizens who deserve the real credit for nation building.
So Sensex over the last few months crashed from 21,200 to a level of 15,500 now, all investors have lost money like never before.The more the money one had made in this bull run, the bigger the hit one has taken because appetite for risk also went up. People kept on putting more money as the market went up. But this time, magnitude was much bigger, profits were huge and so were the losses.Most investors are set back by 18-24 months.
However, all doomsayers who are predicting markets to crash to 10000 level would prove wrong and as i anticipate markets would stabilize at 14500-15000 levels. However,investors should lower their expectations and should not expect same bumper returns as in 2006-07.Moreover,there may be profit booking at every rise.Partly, investors are also to be blamed for picking stocks at any price (upon hearsay) without looking at fundamentals of the company or at the valuations.This time, investors should try to avoid following mistakes:
1)It will double in 1 month:If it were so, why tipster will tell you to make so much money?Instead, he himself will beg,borrow or steal to have enough money and buy entire quantity of such scrip for himself.
2)Looks good on the chart:Intraday or short term traders may sometimes make money on this basis.However,it is a strict No No for long term investors.One should remember that no business enterprise runs on charts.Hence, how business of share investing can run on charts?
3)Company has got an order:One should verify what is the execution period of such an order, when and how much it will contribute to company's topline and bottomline? Sometimes,bigger the order,lower the profit margin.
4)They are planning an expansion:Expansion of production capacity necessarily does not mean expansion of bottomline also.Whether big investment in new capacity will yield judicious returns?Whether there is enough demand to meet expanded capacity? In the past,many big companies became BIFR case after their mad expansion.
5)Won some export orders:Such order will constitute how much of total turnover in percentage terms?Did management clarify whether export orders are more remunerative or less remunerative?Export orders do not necessarily translate into higher profits.
6)Big Bull is buying:Did they ever tell you what big bull is selling?
7)Big Operator is buying:By the time such news reaches you,such operator has already turned into a seller and most probably,you are buyer of his sold quantities.
8)CDR/OTS:In many many cases,companies became significant due to siphoning off funds by the promoters.What is the guarantee that promoters will not again siphon off the funds after CDR?Many companies became CDR case due to inefficiencies and they will continue to remain inefficient even after CDR.
CDR means better future for those companies which were genuinely suffering due to bad market conditions and promoters have genuine reputation.However, investors tend to pick any CDR case company without realizing that perhaps this was the only CDR case in that industry in which most other companies were faring well.
9)Going for GDR/FCCB: Most of the company's stock price falls sharply after GDR/FCCB issue.It clearly shows that share price was being ramped up before such issue.Hence, investors should avoid to buy such scrips at peak valuations just before GDR.
10)Brokers tells you to average the scrip.It is advisable to average the scrip only if price has come down due to bad sentiment.However, in many cases, price is coming down due to expected lower performance in view of which lay investor is not aware. It is like betting again and again, more and more on a losing horse.Instead, investors can make up for their mistakes by investing additional money only in some other companies which are doing better.
No one can exactly say whether market has bottomed or not? Investors should see whether the market will be higher than current level 6 to 12 month hence. If answer is yes, start investing.
Equity is a long term instrument and if there is nothing wrong with the Indian companies you want to invest in, or the Indian economy and country as a whole, and if market is going down due to technical factors, investors should not panic, and wait.If, some FII are selling today,tomorrow, other FII will come to buy. There is no problem for long term investors.We should change our views only if fundamentals change.
Finally, if, Indian economy is doing well and if Indian Equities are attractive,I feel that it is not due to Rahu-Ketu (politicians-bureaucrats) but INSPITE of them. Things are happening due to perseverance, intelligence, tolerance, hardwork and ambition of Indian citizens who deserve the real credit for nation building.
Thursday, June 5, 2008
All about the bull markets and prospects of indian stock markets
Indian stock markets and the prospects of it.
[Indian stock markets and the bull run/how long will the bull run continue/any chances of a bear market/correction in the stock markets/sectors which can perform in the coming days/reforms and the consequences/expensive valuation of the indian stock markets/growth slowing down/monsoon,Liquidity and growth factor/Which are the stock to go for/high gdp growth may not continue/consolidation phase likely/future of the indian stock market/when would the next bull run begin]
Many factors responsible for investors' interest in India are now rapidly receding. After my “Nightmare” article, most people consider me far too cynical and old-fashioned for this raging bull market. Trying to understand my own biases, I felt it would be useful to try and trace the origins of this bull run.
If one goes back to Feb-March 2003, that would in my mind mark the beginning of the current bull cycle from where the market has already given more than 700% over the past 60 months. If one were to accept this as the starting point, how were the conditions then, which enabled this bull run?
First of all, the markets in 2003 were very, very cheap, trading at just about 10 times earnings (an all-time low), interest rates had bottomed and there was tremendous surplus capacity available with Indian industry. Industry had also spent 3-4 years prior to 2003 getting its cost position aligned with global benchmarks, and was thus lean, mean and
well-positioned for any up tick in business. Commodity prices were also just beginning to rise.
Basically everything was set for a huge surge in earnings if economic growth were to accelerate (operating leverage), and this is exactly what happened. We had excellent monsoons in 2003-04, and GDP growth accelerated to over 8 per cent, corporate earnings rocketed, rising by over 40 per cent and the return on equity (RoE) and the return on capital employed (RoCE) expanded as corporate India was able to use its idle capacity.
The strong growth in earnings, coupled with rising RoEs and strong free cash flow attracted the attention of investors globally. These trends were only further reinforced in till end 0f 2007 as economic growth remained strong and corporate earnings vibrant. The strong commodity price environment of the past 5-6 years further reinforced these trends.
Thus, one aspect of the bull story has been the good news on earnings and RoEs, coupled with very cheap valuations. India had the highest earnings growth and RoEs in the emerging markets universe.
The second aspect of the bull run was the feeling in mid-2003 of the country beginning to move in the right direction in terms of economic policies and reforms. This was the period when the previous NDA government was seen to be at its most effective..
We had hopes of serious progress on the power front, with the passing of the Electricity Act and the privatisation of distribution in Delhi. The template to solving the country's power woes seemed to have been established. On roads and private sector involvement in ports, there was tremendous progress. The progress and belief in economic reforms accelerating the growth trajectory of the country were the second part of this bull story. That India had begun its journey to fulfil its economic destiny was a common belief.
The third part of this bull cycle is related to trends in global liquidity and the general move of investors towards emerging markets. Strong global liquidity encouraged investors to look for returns wherever they could find them, and India's price momentum was self-reinforcing.
Now if we examine each of these points today, we get a very different picture.
First, on valuations. Trading at 16-18 times earnings, the markets in India are no longer cheap (among the most expensive in the EM universe). Also it is my humble submission that given the slew of capex announcements and fund raisings, RoEs and RoCEs have peaked for corporate India.
Most of the idle capacity available has been used and growth from here needs companies to set up new capacity. Interest rates can only rise and operating leverage diminish.
Thus, even if GDP growth were to remain strong, the pace of corporate earnings will slow and they can no longer grow at 3-4 times nominal GDP.
Free cash flows for corporate India have already turned negative. Slowing earnings, falling RoEs, and declining free cash flow are normally a recipe for P/E contraction, not expansion.
On the reforms front, the less said the better. Not a single item mentioned previously in this article has been implemented or has any chance of being implemented by the UPA alliance. I cannot understand how anyone can genuinely believe that India has entered a new era of 8.5-9 per cent plus GDP growth in the absence of progress on power reforms and
labour laws, and other structural impediments..Maybe being a lad of 19 am too young to understand all the reforms but I don’t feel I have mistaken much.
If this government does not get its act together on electricity, roads, railways, airports, etc. these infrastructure constraints are bound to eventually short-circuit growth. Does any investor truly believe this government will be able to attack the structural constraints holding back industry?
On the liquidity front also, the party cannot last for ever. Emerging markets have had five good years in relative terms and could easily reverse. Global interest rates are poised to rise and FII inflows into India are at unsustainable levels.
This bull run began with very cheap markets, strongly accelerating earnings, rising RoEs, and the hope that the country was on the right track in terms of structural reforms. The external liquidity environment was also very supportive for investors to buy into a long-term story like India.
Most of these factors have now reversed. Yet the bulls expect markets to keep rising. A period of consolidation is the best case outcome to my mind.I should admit that it was only in 2002 when I was 13 years of age-I entered the world of corporates,the stock market world.The journey has been thoroughly fascinating for me and as I am the only lad from my family in these world, every passing day has been exciting like never before.I have been growing slowly and learning from the markets,my followers and readers etc.Have had a great experience anyways in the midst of an important article shouldnt speak much shits...hhehee..Hopefully market should consolidate before making another big waves in the years to come...keep buying companies which can grow at 60%-80% CAGR for the coming years.I know its tought to find those but trust me they exists..most got covered in these blog of mine,more to find their places.Happy investing folks.
[Indian stock markets and the bull run/how long will the bull run continue/any chances of a bear market/correction in the stock markets/sectors which can perform in the coming days/reforms and the consequences/expensive valuation of the indian stock markets/growth slowing down/monsoon,Liquidity and growth factor/Which are the stock to go for/high gdp growth may not continue/consolidation phase likely/future of the indian stock market/when would the next bull run begin]
Many factors responsible for investors' interest in India are now rapidly receding. After my “Nightmare” article, most people consider me far too cynical and old-fashioned for this raging bull market. Trying to understand my own biases, I felt it would be useful to try and trace the origins of this bull run.
If one goes back to Feb-March 2003, that would in my mind mark the beginning of the current bull cycle from where the market has already given more than 700% over the past 60 months. If one were to accept this as the starting point, how were the conditions then, which enabled this bull run?
First of all, the markets in 2003 were very, very cheap, trading at just about 10 times earnings (an all-time low), interest rates had bottomed and there was tremendous surplus capacity available with Indian industry. Industry had also spent 3-4 years prior to 2003 getting its cost position aligned with global benchmarks, and was thus lean, mean and
well-positioned for any up tick in business. Commodity prices were also just beginning to rise.
Basically everything was set for a huge surge in earnings if economic growth were to accelerate (operating leverage), and this is exactly what happened. We had excellent monsoons in 2003-04, and GDP growth accelerated to over 8 per cent, corporate earnings rocketed, rising by over 40 per cent and the return on equity (RoE) and the return on capital employed (RoCE) expanded as corporate India was able to use its idle capacity.
The strong growth in earnings, coupled with rising RoEs and strong free cash flow attracted the attention of investors globally. These trends were only further reinforced in till end 0f 2007 as economic growth remained strong and corporate earnings vibrant. The strong commodity price environment of the past 5-6 years further reinforced these trends.
Thus, one aspect of the bull story has been the good news on earnings and RoEs, coupled with very cheap valuations. India had the highest earnings growth and RoEs in the emerging markets universe.
The second aspect of the bull run was the feeling in mid-2003 of the country beginning to move in the right direction in terms of economic policies and reforms. This was the period when the previous NDA government was seen to be at its most effective..
We had hopes of serious progress on the power front, with the passing of the Electricity Act and the privatisation of distribution in Delhi. The template to solving the country's power woes seemed to have been established. On roads and private sector involvement in ports, there was tremendous progress. The progress and belief in economic reforms accelerating the growth trajectory of the country were the second part of this bull story. That India had begun its journey to fulfil its economic destiny was a common belief.
The third part of this bull cycle is related to trends in global liquidity and the general move of investors towards emerging markets. Strong global liquidity encouraged investors to look for returns wherever they could find them, and India's price momentum was self-reinforcing.
Now if we examine each of these points today, we get a very different picture.
First, on valuations. Trading at 16-18 times earnings, the markets in India are no longer cheap (among the most expensive in the EM universe). Also it is my humble submission that given the slew of capex announcements and fund raisings, RoEs and RoCEs have peaked for corporate India.
Most of the idle capacity available has been used and growth from here needs companies to set up new capacity. Interest rates can only rise and operating leverage diminish.
Thus, even if GDP growth were to remain strong, the pace of corporate earnings will slow and they can no longer grow at 3-4 times nominal GDP.
Free cash flows for corporate India have already turned negative. Slowing earnings, falling RoEs, and declining free cash flow are normally a recipe for P/E contraction, not expansion.
On the reforms front, the less said the better. Not a single item mentioned previously in this article has been implemented or has any chance of being implemented by the UPA alliance. I cannot understand how anyone can genuinely believe that India has entered a new era of 8.5-9 per cent plus GDP growth in the absence of progress on power reforms and
labour laws, and other structural impediments..Maybe being a lad of 19 am too young to understand all the reforms but I don’t feel I have mistaken much.
If this government does not get its act together on electricity, roads, railways, airports, etc. these infrastructure constraints are bound to eventually short-circuit growth. Does any investor truly believe this government will be able to attack the structural constraints holding back industry?
On the liquidity front also, the party cannot last for ever. Emerging markets have had five good years in relative terms and could easily reverse. Global interest rates are poised to rise and FII inflows into India are at unsustainable levels.
This bull run began with very cheap markets, strongly accelerating earnings, rising RoEs, and the hope that the country was on the right track in terms of structural reforms. The external liquidity environment was also very supportive for investors to buy into a long-term story like India.
Most of these factors have now reversed. Yet the bulls expect markets to keep rising. A period of consolidation is the best case outcome to my mind.I should admit that it was only in 2002 when I was 13 years of age-I entered the world of corporates,the stock market world.The journey has been thoroughly fascinating for me and as I am the only lad from my family in these world, every passing day has been exciting like never before.I have been growing slowly and learning from the markets,my followers and readers etc.Have had a great experience anyways in the midst of an important article shouldnt speak much shits...hhehee..Hopefully market should consolidate before making another big waves in the years to come...keep buying companies which can grow at 60%-80% CAGR for the coming years.I know its tought to find those but trust me they exists..most got covered in these blog of mine,more to find their places.Happy investing folks.
IOL Netcom:-Expectation hurts
Scripscan:IOL Netcom
My views:Read on
Traded in:Bse
[IOL Netcom news,views and analysis/IPTV and its effects/valuations expensive/pathetic results/target price/Bulk deals/Fii selling/Analyst buy call in Iol netcom/reason for the share fall/Future prospects/much better bets available]
Another company which hogs the limelight is undoubtedly IOL Netcom.The company basically provides the much hyped Internet Protocol Television (IPTV).It does so by setting up an IP based content provisioning system and feeding into the broadband networks of BSNL and MTNL.The scrip was fancied as the hottest buy with price targets ranging from 2000-5000rs.Iol had a dream run in the bourses- the counter moved from a level of 3rs in march 05 all the way to a stunning figure of 619 in july 07. Last night i got a mail from a follower of mine who pleaded to give a fundamental check of the company.So here it is:-
1)It hasnt got any owner or promoter,no owner stake nothing.I glanced through the shareholding pattern of the company only to discover huge chunk of holdings by some corporate bodies and Fiis.Now in my approach of stock picking i dont opt for companies with miniscule promoter holdings.I feel promoters do work harder when they have got a larger shareholding.The commitment increases the vision gets better and eventually they becomes the biggest beneficaries of a rise in stock prices.Without shares in your company why would the big guys work?No matter its making profits or losses you being thye host in your company would always draw fat salaries.Again uninspiring stuffs.
2)Monopoly business,stunning potential of the company-Agreed.But its so disgusting to notice the ever rising equity of the company.Every now and then it allots warrants and equity gets blotted.Balance sheet shows not much of debts,i wonder why they are so interested in enhancing the equity.I find no clue folks.Not inspiring at all.
3)I do recollect even some months ago, a buy recomendation from a high following personality in the counter gave this company a high mindshare among investors and, hence, higher expectations. Now when you dont cope up to the expectation you get the dues.Same has happened to the counter inspite of several positive factors the company has failed to deliver numbers infact they been terrible and pathtic.I fail to undestand with the company doing horrendously why investors park their money in the counter?.When you're looking into the abyss, you don't quibble over details isnt it?
4)Several analysts and firms initiated buy on the counter with rich targets.The company missed the revenue and profit target by an immense distance.Maybe the research firm and the analysts worked for some vested interest in the company.Its hi-time our regulator examines how such reports are conjured up to influence simple investors to have a stake in the counter.
In conclusion I can only say it has thoroughly failed to live up to investors expectations.Horrible results with losses increasing at a rapid speed.I reckon the Fiis which bought at a much higer price and exiting now are all P-note stuffs.Who is firing the gun behind the scenes in anyone”s guess. A bull market and hyped-up buy calls can cause even the most cautious among us to turn reckless, and it is useful to remember that you can always buy much better companies with decent promoter holding and robust results.
My views:Read on
Traded in:Bse
[IOL Netcom news,views and analysis/IPTV and its effects/valuations expensive/pathetic results/target price/Bulk deals/Fii selling/Analyst buy call in Iol netcom/reason for the share fall/Future prospects/much better bets available]
Another company which hogs the limelight is undoubtedly IOL Netcom.The company basically provides the much hyped Internet Protocol Television (IPTV).It does so by setting up an IP based content provisioning system and feeding into the broadband networks of BSNL and MTNL.The scrip was fancied as the hottest buy with price targets ranging from 2000-5000rs.Iol had a dream run in the bourses- the counter moved from a level of 3rs in march 05 all the way to a stunning figure of 619 in july 07. Last night i got a mail from a follower of mine who pleaded to give a fundamental check of the company.So here it is:-
1)It hasnt got any owner or promoter,no owner stake nothing.I glanced through the shareholding pattern of the company only to discover huge chunk of holdings by some corporate bodies and Fiis.Now in my approach of stock picking i dont opt for companies with miniscule promoter holdings.I feel promoters do work harder when they have got a larger shareholding.The commitment increases the vision gets better and eventually they becomes the biggest beneficaries of a rise in stock prices.Without shares in your company why would the big guys work?No matter its making profits or losses you being thye host in your company would always draw fat salaries.Again uninspiring stuffs.
2)Monopoly business,stunning potential of the company-Agreed.But its so disgusting to notice the ever rising equity of the company.Every now and then it allots warrants and equity gets blotted.Balance sheet shows not much of debts,i wonder why they are so interested in enhancing the equity.I find no clue folks.Not inspiring at all.
3)I do recollect even some months ago, a buy recomendation from a high following personality in the counter gave this company a high mindshare among investors and, hence, higher expectations. Now when you dont cope up to the expectation you get the dues.Same has happened to the counter inspite of several positive factors the company has failed to deliver numbers infact they been terrible and pathtic.I fail to undestand with the company doing horrendously why investors park their money in the counter?.When you're looking into the abyss, you don't quibble over details isnt it?
4)Several analysts and firms initiated buy on the counter with rich targets.The company missed the revenue and profit target by an immense distance.Maybe the research firm and the analysts worked for some vested interest in the company.Its hi-time our regulator examines how such reports are conjured up to influence simple investors to have a stake in the counter.
In conclusion I can only say it has thoroughly failed to live up to investors expectations.Horrible results with losses increasing at a rapid speed.I reckon the Fiis which bought at a much higer price and exiting now are all P-note stuffs.Who is firing the gun behind the scenes in anyone”s guess. A bull market and hyped-up buy calls can cause even the most cautious among us to turn reckless, and it is useful to remember that you can always buy much better companies with decent promoter holding and robust results.
Monday, June 2, 2008
Aishwarya Telecom:-Dont deserve a price of 136rs
Scripscan:Aishwarya Telecom
Code:511533
June 1st CMP:100
[Aishwarya Telecom news,views and analysis/why to avoid/valuations expensive/works in little margin/target price/stay away and avoid/Single client dependency/Future prospects/much better bets available]
Aishwarya Telecom recently tapped the market and went on to high a of 136rs within few days of its listing.Its presently quoting at 100 rs,so is it worth an investment at present level?Read on.
Aishwarya Telecom is a ISO 9001:2000 Certified company manufacturing Mobile and Broadband Tester.
1)Basically the company has more of trading business.It imports the products from overseas players and the sells the same to its clients.The company has been in the sector for over a decade now but hasnt found the road easy to grow despite the massive demand for the sector.
2)The company gets majority of its revenue from the psu giant BSNL.Though it has been able to offer its product to other non psu companies but these are in very nascent stage.Aishwarya is relatively a small player with revenues of 30crs expected in the present fiscal 08.The company faces stiff competition from market leaders like Agilent Technologies,Rohde & Schwarz etc.It would be prudent to note that these companies have got a long decent relationship with most of the operators,so aishwarya with its small scale would find it tough to come superior to these companies and bag major orders.Also if those companies comes in india to to do business aishwarya may just find it too tough to survive.Looking at the sectorial boom and low cost nature of our country that remains a huge possibility.
3)At present prices of 100 odd its quoting at a PE multiple of 24 its expected 08 earnings.It can be compared with listed player like aplab which trades at a multiple of just 8.Further aplab is a 120crs turnover company with long existence.There are many more players available at a PE multiple of about 6-8 which are the manufacturer and having better pedigrees.Still those companies are struggling to attract better valuations.
4)Its of anyone"s guess that some operators build positions in the company, result being the high of 136rs after listing.Present huge volumes and flip in the price suggest that they are in a hurry to exit the counter.So if you have a position in the scrip better exit or else chances remains another junk stock may spoil your portfolio for a long period of time.
Code:511533
June 1st CMP:100
[Aishwarya Telecom news,views and analysis/why to avoid/valuations expensive/works in little margin/target price/stay away and avoid/Single client dependency/Future prospects/much better bets available]
Aishwarya Telecom recently tapped the market and went on to high a of 136rs within few days of its listing.Its presently quoting at 100 rs,so is it worth an investment at present level?Read on.
Aishwarya Telecom is a ISO 9001:2000 Certified company manufacturing Mobile and Broadband Tester.
1)Basically the company has more of trading business.It imports the products from overseas players and the sells the same to its clients.The company has been in the sector for over a decade now but hasnt found the road easy to grow despite the massive demand for the sector.
2)The company gets majority of its revenue from the psu giant BSNL.Though it has been able to offer its product to other non psu companies but these are in very nascent stage.Aishwarya is relatively a small player with revenues of 30crs expected in the present fiscal 08.The company faces stiff competition from market leaders like Agilent Technologies,Rohde & Schwarz etc.It would be prudent to note that these companies have got a long decent relationship with most of the operators,so aishwarya with its small scale would find it tough to come superior to these companies and bag major orders.Also if those companies comes in india to to do business aishwarya may just find it too tough to survive.Looking at the sectorial boom and low cost nature of our country that remains a huge possibility.
3)At present prices of 100 odd its quoting at a PE multiple of 24 its expected 08 earnings.It can be compared with listed player like aplab which trades at a multiple of just 8.Further aplab is a 120crs turnover company with long existence.There are many more players available at a PE multiple of about 6-8 which are the manufacturer and having better pedigrees.Still those companies are struggling to attract better valuations.
4)Its of anyone"s guess that some operators build positions in the company, result being the high of 136rs after listing.Present huge volumes and flip in the price suggest that they are in a hurry to exit the counter.So if you have a position in the scrip better exit or else chances remains another junk stock may spoil your portfolio for a long period of time.
Saturday, May 31, 2008
Sahara Housing finance:-Rigging,rigging and rigging
Scripscan:Sahara Housing finance
Code:511533
CMP:210
[Sahara Housing finance news,views and analysis/ political aspect of the company/reason for the sharp upmove/results/future prospects/Shocking valuations/banned by sebi/bad image of the sahara group/better companies available/rumuors of the sahara group housing company merger]
Story:Sahara Housing Fina Corporation Ltd has been such a company which has made people rich and eroded hell lot of money at the same time.From a low of 31rs in june 07 it went to a gigantic high of 1445 rs in dec 07 and subsequently fell back in no time to the present levels of 210.The reason which can be attributed to the mind boggline rise is that the entire unlisted Housing Construction business running into thousands of crore will get merged with Sahara Housing.Mind you no clarification whatsoever has been made by the management during any point of the time.The entire sahara group has been a huge failure be it their amby valley project or the sahara airlines which got sold and even the sahara tv has been a major flop show for them.Its been whispered that the chairman of the group has only got his existence because of the favour of some very shady and out of favour/out of power politicians from UP.It is hard to ascertain whether the rigging up of the Sahara Housing stock was carried out with the money funnell of the now disgraced politicians,who have been associated with a maverick businessman and a rapidly ageing filmstar.Just like the merger rumuor it could be true or just pure drivel.Sahara housing ended the fiscal 08 with a turnover of a mere 12crs and at present levels it commands a market cap of 150 crs.The majority of the shareholding is with the promoter.In a nutshell it can be only said if the buzz vindicates it can certainly be a stock to watch else this is another making of a saggy garbage in the portfolio of retail investors.All those who believe in the Sahara Housing stock may do well to re-evaluate their investment thesis.But who knows maybe the "STUNT JUST GOT PLAYED IN THE GALLERY".
Code:511533
CMP:210
[Sahara Housing finance news,views and analysis/ political aspect of the company/reason for the sharp upmove/results/future prospects/Shocking valuations/banned by sebi/bad image of the sahara group/better companies available/rumuors of the sahara group housing company merger]
Story:Sahara Housing Fina Corporation Ltd has been such a company which has made people rich and eroded hell lot of money at the same time.From a low of 31rs in june 07 it went to a gigantic high of 1445 rs in dec 07 and subsequently fell back in no time to the present levels of 210.The reason which can be attributed to the mind boggline rise is that the entire unlisted Housing Construction business running into thousands of crore will get merged with Sahara Housing.Mind you no clarification whatsoever has been made by the management during any point of the time.The entire sahara group has been a huge failure be it their amby valley project or the sahara airlines which got sold and even the sahara tv has been a major flop show for them.Its been whispered that the chairman of the group has only got his existence because of the favour of some very shady and out of favour/out of power politicians from UP.It is hard to ascertain whether the rigging up of the Sahara Housing stock was carried out with the money funnell of the now disgraced politicians,who have been associated with a maverick businessman and a rapidly ageing filmstar.Just like the merger rumuor it could be true or just pure drivel.Sahara housing ended the fiscal 08 with a turnover of a mere 12crs and at present levels it commands a market cap of 150 crs.The majority of the shareholding is with the promoter.In a nutshell it can be only said if the buzz vindicates it can certainly be a stock to watch else this is another making of a saggy garbage in the portfolio of retail investors.All those who believe in the Sahara Housing stock may do well to re-evaluate their investment thesis.But who knows maybe the "STUNT JUST GOT PLAYED IN THE GALLERY".
GMR Infra:-Why to avoid?
Scripscan:GMR Infra
View:Avoid
Reasons:Read on
[GMR Infra news,views and analysis/why to avoid/valuations expensive/large gestation period for projects/private equity play/no growth in earnings/stay away and avoid/much better bets available]
My view:-In my community a stock which has been a hot subject offlate has been GMR Infrastructure.Its included in the fno segment thereby making it a favourite of both the traders and investors fraternity.I have really got no clue regarding this inclusion of fno mechanism.Valuation wise its horrendoulsy expensive having a forward PE of over 80.People without any idea about the business have been speaking amazing things about the company.Nevertheless its an "infra" stock and our investors are great fans of the word,"infra".So if its attached behind a company name dont lag behind but just go for it.SO in my own language let me dig a bit more and present the same to you guys.It can be a buy for everyone but not for me,why?Read on.
Now the company is executing a number of projects on the basis of PPP,including the Delhi and Hyderabad Airports.Even DIAL and HIAL, are separate concerns partially owned by GMR and the JV partners including india govt and some other institutions.Apart from the 2 Airports, in separate SPVs a number of projects are being put up in the Power and Road Development segment.The Revenues on commencement would accrue to these SPVs and in turn to GMR in proportion to its ownership of a slew of enterprises under its belt. This will make earnings not only extremely volatile, but lumpy depending upon the accounting policy implemented by GMR Infra.It would be prudent to note that the projects are on a BOOT basis, with periods ranging from 15 to 60 years. These are large gestation periods projects with high executional risks and it would take a long time before gmr can even make some money out of them.
Gmr infra is expected to post an EPS of 1.80 paisa in 09 and 2rs in 10.Further equity can get diluted which hasnt been taken into consideration.Being simple gullible investors we opt for companies which have got high growth potential,huge growth in earnings and tiny equities.So that growth comes profits increases multifolds and eps blosters equity being low.God knows why people are sticking to GMR which is discounting its 2 year forward multiple by as high as 75 times.To me stocks like GMR hold no relevance to an individual investor as the companies will show only marginal profits on huge and ever growing equity, that is being constantly raised to bag new projects with minor and majority stakes.
So its not gonna give you a great dividend yield,neither its going cheap valuation wise.These stocks can only suit to momentum players and those which are in the Venture Capital, Private Equity play etc.So will you still buy it?
View:Avoid
Reasons:Read on
[GMR Infra news,views and analysis/why to avoid/valuations expensive/large gestation period for projects/private equity play/no growth in earnings/stay away and avoid/much better bets available]
My view:-In my community a stock which has been a hot subject offlate has been GMR Infrastructure.Its included in the fno segment thereby making it a favourite of both the traders and investors fraternity.I have really got no clue regarding this inclusion of fno mechanism.Valuation wise its horrendoulsy expensive having a forward PE of over 80.People without any idea about the business have been speaking amazing things about the company.Nevertheless its an "infra" stock and our investors are great fans of the word,"infra".So if its attached behind a company name dont lag behind but just go for it.SO in my own language let me dig a bit more and present the same to you guys.It can be a buy for everyone but not for me,why?Read on.
Now the company is executing a number of projects on the basis of PPP,including the Delhi and Hyderabad Airports.Even DIAL and HIAL, are separate concerns partially owned by GMR and the JV partners including india govt and some other institutions.Apart from the 2 Airports, in separate SPVs a number of projects are being put up in the Power and Road Development segment.The Revenues on commencement would accrue to these SPVs and in turn to GMR in proportion to its ownership of a slew of enterprises under its belt. This will make earnings not only extremely volatile, but lumpy depending upon the accounting policy implemented by GMR Infra.It would be prudent to note that the projects are on a BOOT basis, with periods ranging from 15 to 60 years. These are large gestation periods projects with high executional risks and it would take a long time before gmr can even make some money out of them.
Gmr infra is expected to post an EPS of 1.80 paisa in 09 and 2rs in 10.Further equity can get diluted which hasnt been taken into consideration.Being simple gullible investors we opt for companies which have got high growth potential,huge growth in earnings and tiny equities.So that growth comes profits increases multifolds and eps blosters equity being low.God knows why people are sticking to GMR which is discounting its 2 year forward multiple by as high as 75 times.To me stocks like GMR hold no relevance to an individual investor as the companies will show only marginal profits on huge and ever growing equity, that is being constantly raised to bag new projects with minor and majority stakes.
So its not gonna give you a great dividend yield,neither its going cheap valuation wise.These stocks can only suit to momentum players and those which are in the Venture Capital, Private Equity play etc.So will you still buy it?
Modern Dairies:-Rising star in the agro product sector
Scripscan:Modern Dairies Ltd
Cmp:36
Code:519287
[Modern Dairies news,views and analysis/Prospects/big FMCG beneficary/amazing results/attractive valuation/growing at over 100%/Modern Dairies target price/robust business/Great buy/a potential doubler]
Story:-Another company which has got a super prospect.But scrip got hammered,why?No rationality and the result was bogus for most investors.Sales got more than doubled but Np slided.Well look at the EBITDA people,forget it,just add up deprication and interest to net profit and you would see the profit actually got doubled.Its a small company which has earmarked an expansion of 155 crs.Marketcap at present prices would be less than 70crs i assume.Previous year it made exports of less than 20crs this year already the exports have hit around 120crs.The promoters themselves put in 25crs to garner themselves more 15% stake.They could have placed the shares to any FII but they alloted themselves.Now when a promoter buying its own company shares,what can be the indication?Surely there is some great stuffs going on in the company..Promoters bought at 80 odd and at present its 30 odd.Do you feel owning a dairy business at these point of time would be fruitful for you given the above lines?Decide yourself.
Cmp:36
Code:519287
[Modern Dairies news,views and analysis/Prospects/big FMCG beneficary/amazing results/attractive valuation/growing at over 100%/Modern Dairies target price/robust business/Great buy/a potential doubler]
Story:-Another company which has got a super prospect.But scrip got hammered,why?No rationality and the result was bogus for most investors.Sales got more than doubled but Np slided.Well look at the EBITDA people,forget it,just add up deprication and interest to net profit and you would see the profit actually got doubled.Its a small company which has earmarked an expansion of 155 crs.Marketcap at present prices would be less than 70crs i assume.Previous year it made exports of less than 20crs this year already the exports have hit around 120crs.The promoters themselves put in 25crs to garner themselves more 15% stake.They could have placed the shares to any FII but they alloted themselves.Now when a promoter buying its own company shares,what can be the indication?Surely there is some great stuffs going on in the company..Promoters bought at 80 odd and at present its 30 odd.Do you feel owning a dairy business at these point of time would be fruitful for you given the above lines?Decide yourself.
Tuesday, May 27, 2008
Mold-Tek Technologies:-All set to double your money
Scripscan:Mold-Tek Technologies
Ltd Code:526263
cmp:68
Target:90
Duration:1-2 months
[Mold-Tek Technologies news,views and analysis/Prospects/big KPO boom beneficary/amazing results/attractive valuation/growing at over 200%/Mold tek target price/robust business/Demerger to unlock lot of value/Great buy/a potential doubler]
Story:Mold-tek is the leader in Plastic Pail Packaging industry in the country.It is the only supplier to its clients like Reliance Petroleum Ltd,ICI, Emirates Petroleum Ltd.etc.With time the company has diversified into providing structural engineering services for global clients in USA, Canada, Gulf & Europe.The KPO Division is currently providing services to more than 25 US Clients and has aggressive marketing plans to add further 10-15 clients in the current year.To unlock value for its shareholders mold tek is demerging its Kpo and Plastic business and plans to list both companies seperately.The demerger ratio is expected to be 70:30,with plastics packaging accounting for 70% and the remaining 30% would be KPO business.Both the divisons of the company has got tremendous potential and prospects.Go for it.
Techinally:-The scrip has formed a base at 66-67rs i dont feel that would get violated again.Infact after a long time with good volumes it has shown strong movements.I expect the scrip to zoom past 90 mark fairly soon.So both from the fundamentals and from the technical aspect,mold tek is a clear-cut buy.
Ltd Code:526263
cmp:68
Target:90
Duration:1-2 months
[Mold-Tek Technologies news,views and analysis/Prospects/big KPO boom beneficary/amazing results/attractive valuation/growing at over 200%/Mold tek target price/robust business/Demerger to unlock lot of value/Great buy/a potential doubler]
Story:Mold-tek is the leader in Plastic Pail Packaging industry in the country.It is the only supplier to its clients like Reliance Petroleum Ltd,ICI, Emirates Petroleum Ltd.etc.With time the company has diversified into providing structural engineering services for global clients in USA, Canada, Gulf & Europe.The KPO Division is currently providing services to more than 25 US Clients and has aggressive marketing plans to add further 10-15 clients in the current year.To unlock value for its shareholders mold tek is demerging its Kpo and Plastic business and plans to list both companies seperately.The demerger ratio is expected to be 70:30,with plastics packaging accounting for 70% and the remaining 30% would be KPO business.Both the divisons of the company has got tremendous potential and prospects.Go for it.
Techinally:-The scrip has formed a base at 66-67rs i dont feel that would get violated again.Infact after a long time with good volumes it has shown strong movements.I expect the scrip to zoom past 90 mark fairly soon.So both from the fundamentals and from the technical aspect,mold tek is a clear-cut buy.
Remember the following points when investing in the market:-
[Rules of investing in indian stock markets/herd mentality/patience and conviction/dont go by broker tips/avoid margin trading/be a long term investor/find value and make a hell lot of money]
1)Sentiments change overnight as people are emotional.
2)If analysis really workd all the time market would have become very boring.They are interesting because we cannot predict human behaviour.
3)When you get information on a stock find out if market already knows it.Know your level ofinformation ladder
4)Life is never fair.You may find incompetent people being highly successful.Dont feel bad,they are reaping the rewards of their past karma,lolz……
5)You cannot get investment opportunities everyday.5-6 of them in a quarter would be great.
6)Patience is always rewarded.The law of firm is applicable in walks of life.
7)Control your emotions.Do not follow the herd blindly.
8)You never miss the buss in the markets.If you have the money opportunities would always come.Preserve your money and don't forget "cash is the king"
9)Bear markets offer better investment opportunities than bull markets.
10)Avoid margin trading.You are only enriching your broker.Ask your margin trading friends how they are treated in the present market situation.
11)Derivatines are good hedging instruments.Unfortunately they are used as speculative instruments.They only enrich the intermediary at the expense of the investor.Avoid them.
1)Sentiments change overnight as people are emotional.
2)If analysis really workd all the time market would have become very boring.They are interesting because we cannot predict human behaviour.
3)When you get information on a stock find out if market already knows it.Know your level ofinformation ladder
4)Life is never fair.You may find incompetent people being highly successful.Dont feel bad,they are reaping the rewards of their past karma,lolz……
5)You cannot get investment opportunities everyday.5-6 of them in a quarter would be great.
6)Patience is always rewarded.The law of firm is applicable in walks of life.
7)Control your emotions.Do not follow the herd blindly.
8)You never miss the buss in the markets.If you have the money opportunities would always come.Preserve your money and don't forget "cash is the king"
9)Bear markets offer better investment opportunities than bull markets.
10)Avoid margin trading.You are only enriching your broker.Ask your margin trading friends how they are treated in the present market situation.
11)Derivatines are good hedging instruments.Unfortunately they are used as speculative instruments.They only enrich the intermediary at the expense of the investor.Avoid them.
Thursday, May 22, 2008
Expo Gas Container:-A dark horse
Scripscan:Expo Gas Container
CMP-15
Code-526614
[Expo Gas Container news,views and analysis/multibagger potential/turnaround story/penny stock/settlement with lenders/good trading play/Downside limited/Can buy it]
Introduction:Expo gas Containers limited is an integrated company specialiizing in the field of manufacture of low pressure Gas cylinders,fabrication of equipments like pressurre vessels,heat exchangers,site constrruction of tanks and spheres e.t.c.Its manufacturing facilities are located at Murbad(norrth of mumbai) and are approved by the Chief Controller of Explosives, under Indian Boiler Regulations.
But from the last few years the performance and profitability of the Company was severly affected due to some factors:
High steel prices
Stiff competition
Lack of sources
Huge debt burdern and interest costs
Now if the market talks are beleived to be true then it can very well be the next buzzing one in the bourses.It is said that the company has settled its outstanding debt with IDBI at 60% of the principal amount.The company was granted waiver for 40% principal amount as well as exemption in interest and penal interest.The company is striving very hard to increase its topline and is giving a huge thrusts to market its product in the outside world.
Conclusion:Expo is all set to make a sparkling turnaround in the current year.The management of it is one of better management from its peers.With the economy in a move and with its increasing order book,Expo can regain its lost glory in the coming days.
CMP-15
Code-526614
[Expo Gas Container news,views and analysis/multibagger potential/turnaround story/penny stock/settlement with lenders/good trading play/Downside limited/Can buy it]
Introduction:Expo gas Containers limited is an integrated company specialiizing in the field of manufacture of low pressure Gas cylinders,fabrication of equipments like pressurre vessels,heat exchangers,site constrruction of tanks and spheres e.t.c.Its manufacturing facilities are located at Murbad(norrth of mumbai) and are approved by the Chief Controller of Explosives, under Indian Boiler Regulations.
But from the last few years the performance and profitability of the Company was severly affected due to some factors:
High steel prices
Stiff competition
Lack of sources
Huge debt burdern and interest costs
Now if the market talks are beleived to be true then it can very well be the next buzzing one in the bourses.It is said that the company has settled its outstanding debt with IDBI at 60% of the principal amount.The company was granted waiver for 40% principal amount as well as exemption in interest and penal interest.The company is striving very hard to increase its topline and is giving a huge thrusts to market its product in the outside world.
Conclusion:Expo is all set to make a sparkling turnaround in the current year.The management of it is one of better management from its peers.With the economy in a move and with its increasing order book,Expo can regain its lost glory in the coming days.
Jenson & Nicholson:-The penny stock to rock.
Scripscan:Jenson & Nicholson
Cmp:7
Taget:12
Return expected:50%+
Duration:4-6 months.
Traded in:Nse-bse
[Jenson & Nicholson news,views and analysis/multibagger potential/turnaround story/penny stock/real estates and land play/settlement with lenders/good trading play/Downside limited/Can buy it]
Company:-Jenson & Nicholson is engaged in the business of manufacturing and selling of paints for the decorative and industrial applications in India.The company has got a country wide presence with 33 branches and stock points across the country and manufacturing plants at Naihati,Sikandrabad and Panvel.The company over the years has fallen on bad times and ended fiscal 07 with a small turnover of 24crs.The story is that it has got lucrative real estates in form of its panvel factory land which has been closed.The company has further got some land in naihati where its operation has been suspended.If i add up the too the present marketcap of the company would look too little(Though the mangement denied to figure the exact value of the lands)The company has got lots of debts in its book which ARCIL has taken over aggregating to nearly 39% from IDBI, SBI, UBI, BOB and BOI.On words of the management," They are actively involved in the restructuring process and is likely to take over the remaining debts from other Banks and Institutions".Further AAIFR has appointed SBI Capital Markets Ltd. as Consultants to conduct the TEV study and valuation of assets. It is expected that once the process is complete, total restructuring plan made with the help of ARCIL will be submitted before the BIFR for their final approval.
Conclusion:Lots of developments are expected to happen for the company in the coming days.It is because of the rumours the company went on to hit a high of 26rs in these jan itself before nosediving to the present levels.Technically speaking too the company has got very strong support at rs 7.Downside is very limited but on happening of any of these developments the company is set to hit double digits for sure.
Trading range:7-12 is the trading range for the company.One can accumulate the counter and exit partly at that level.
Cmp:7
Taget:12
Return expected:50%+
Duration:4-6 months.
Traded in:Nse-bse
[Jenson & Nicholson news,views and analysis/multibagger potential/turnaround story/penny stock/real estates and land play/settlement with lenders/good trading play/Downside limited/Can buy it]
Company:-Jenson & Nicholson is engaged in the business of manufacturing and selling of paints for the decorative and industrial applications in India.The company has got a country wide presence with 33 branches and stock points across the country and manufacturing plants at Naihati,Sikandrabad and Panvel.The company over the years has fallen on bad times and ended fiscal 07 with a small turnover of 24crs.The story is that it has got lucrative real estates in form of its panvel factory land which has been closed.The company has further got some land in naihati where its operation has been suspended.If i add up the too the present marketcap of the company would look too little(Though the mangement denied to figure the exact value of the lands)The company has got lots of debts in its book which ARCIL has taken over aggregating to nearly 39% from IDBI, SBI, UBI, BOB and BOI.On words of the management," They are actively involved in the restructuring process and is likely to take over the remaining debts from other Banks and Institutions".Further AAIFR has appointed SBI Capital Markets Ltd. as Consultants to conduct the TEV study and valuation of assets. It is expected that once the process is complete, total restructuring plan made with the help of ARCIL will be submitted before the BIFR for their final approval.
Conclusion:Lots of developments are expected to happen for the company in the coming days.It is because of the rumours the company went on to hit a high of 26rs in these jan itself before nosediving to the present levels.Technically speaking too the company has got very strong support at rs 7.Downside is very limited but on happening of any of these developments the company is set to hit double digits for sure.
Trading range:7-12 is the trading range for the company.One can accumulate the counter and exit partly at that level.
Stock review:-Selan Explorations Technology Ltd
Scripscan:Selan Explorations Technology Ltd
CMP:240
Traded in:Nse-bse
My view:The "Show Stealer"
[Selan Explorations Technology news,views and analysis/Oil exploration company/turning it on/upcoming results/great future prospects/going to do wonders/target price/Hidden gem/Great bet to own]
Industry Structure and Developments:The Government has awarded and signed a number of Production Sharing Contracts with Private Sector Oil Companies for Exploration Blocks under New Exploration Licensing Policy (NELP) and Coal Bed Methane (CBM) Projects.Private Companies and Joint Ventures have contributed significantly in exploitation of existing oil reserves in the country with the striking of huge reserves of oil and gas within the Country. As a result, the domestic crude oil production is continuously improving with significant contributions of crude production from private operators,thus reducing foreign exchange outflow on crude imports.Oil sector today is one of the most prospective sectors where newer growth avenues for business and employment are opening up. India currently produces about 32.19 million tonnes of crude oil annually as against the requirement of 130.11 million tonnes.The balance is imported, making crude oil India's single largest item of import.All these factors make "Selan Exploration" a scrip to be a part of very investors core portfolio.
Why i like it:Selan exploration is set to produce around 130,000 bareels of crude oil from the onshore operating fields of Bakrol,Indrora and Lohar in the current fiscal compared to around 100,000 barrels produced in entire FY07.Further in FY09,Selan is expected to produce over 150,000 barrels of crude oil.Now things entirely changes for the company starting fiscal 09,As against an average price realisation of $ 71 per barrel in FY08, the realisations in FY09 would exceed $ 110-112 per barrel putting FY09 Revenues of Rs 68-70 crores with profits expected to exceed Rs 25crores.
Conclusion:The company recently signed agreements with Indian Oil Corporation to uplift the existing and additional production at the international rates for Crude Oil. The IOC and the State of Gujarat have also agreed to refund the levies on account of Sales Tax and surcharge on Sales Tax.The promoters are raising 30crs alloting themselves 18 lakh shares of Rs 165 each.Promoters in the past have hiked their stake in the company a number of times.Everytimes they does so the company performs bigtime.Selan is expected to clock an EPS of rs 15 in 09.At present prices the valuations looks quite attractive considering the prospects of the oil exploration industry.Seeing the trend of crude ,selan may just avail an increase in per barrel realisations.In case that happens expect the company to post better profits thereby giving more chances of higher capital appreciation.Watch out for the company folks may just become the "Show Stealer".
CMP:240
Traded in:Nse-bse
My view:The "Show Stealer"
[Selan Explorations Technology news,views and analysis/Oil exploration company/turning it on/upcoming results/great future prospects/going to do wonders/target price/Hidden gem/Great bet to own]
Industry Structure and Developments:The Government has awarded and signed a number of Production Sharing Contracts with Private Sector Oil Companies for Exploration Blocks under New Exploration Licensing Policy (NELP) and Coal Bed Methane (CBM) Projects.Private Companies and Joint Ventures have contributed significantly in exploitation of existing oil reserves in the country with the striking of huge reserves of oil and gas within the Country. As a result, the domestic crude oil production is continuously improving with significant contributions of crude production from private operators,thus reducing foreign exchange outflow on crude imports.Oil sector today is one of the most prospective sectors where newer growth avenues for business and employment are opening up. India currently produces about 32.19 million tonnes of crude oil annually as against the requirement of 130.11 million tonnes.The balance is imported, making crude oil India's single largest item of import.All these factors make "Selan Exploration" a scrip to be a part of very investors core portfolio.
Why i like it:Selan exploration is set to produce around 130,000 bareels of crude oil from the onshore operating fields of Bakrol,Indrora and Lohar in the current fiscal compared to around 100,000 barrels produced in entire FY07.Further in FY09,Selan is expected to produce over 150,000 barrels of crude oil.Now things entirely changes for the company starting fiscal 09,As against an average price realisation of $ 71 per barrel in FY08, the realisations in FY09 would exceed $ 110-112 per barrel putting FY09 Revenues of Rs 68-70 crores with profits expected to exceed Rs 25crores.
Conclusion:The company recently signed agreements with Indian Oil Corporation to uplift the existing and additional production at the international rates for Crude Oil. The IOC and the State of Gujarat have also agreed to refund the levies on account of Sales Tax and surcharge on Sales Tax.The promoters are raising 30crs alloting themselves 18 lakh shares of Rs 165 each.Promoters in the past have hiked their stake in the company a number of times.Everytimes they does so the company performs bigtime.Selan is expected to clock an EPS of rs 15 in 09.At present prices the valuations looks quite attractive considering the prospects of the oil exploration industry.Seeing the trend of crude ,selan may just avail an increase in per barrel realisations.In case that happens expect the company to post better profits thereby giving more chances of higher capital appreciation.Watch out for the company folks may just become the "Show Stealer".
Tuesday, May 20, 2008
Interworld Digital Ltd:-The probable multibagger
Scripscan-Interworld Digital Ltd
Code-532072
CMP-2 (FV-1)
Target-5
Duration-12 months.
[Interworld digital news,views and analysis/robust prospect and great story/penny priced stock/multibagger potential/reason for upmove/promoter increasing stake/a great media and entertainment play/a great buy/downside limited upsides huge]
Introduction-Interworld Digital is in the business of development of end-to-end distribution technology and support services for the delivery of digital cinema to theaters worldwide.It provides a complete range of capabilities to serve the emerging digital distribution needs for the motion picture industry based on an open standard that covers all of the stages for taking a movie from a studio master to a theater's digital projection system. This includes compressing, encrypting, and transferring the master onto a deliverable media, delivering the content to the theater-either by physical media or via satellite-for storage scheduling and playback.
Positives of Digital cinema-One of the major revenue-streams for D-Cinema can be in the form of advertisements.It is expensive to copy advertisements to 35mm, and the distribution costs are high. This will limit the market to only large national/international advertisers. By using digital format, it is only necessary to hand in a disc, or down load the content. Distribution can take place centrally from a hub, which will control the running of each individual advertisement for each cinema through a large server, or it can be done by each individual cinema. The reduced cost of distribution, will reduce the advertising costs, and make cinema advertisement more competitive against other media.
Apart from advertising potentially Interworld Digital will enable new revenue opportunities for theater owners by extending their revenue base to include corporate presentations, live events, large-scale training and seminars, and multi-location interactive conferences. But the biggest advantage will come for distribution. Making and distributing copies is a lot easier with digital files than with physical film. Digital copies of a movie save millions by eliminating the cost of creating 100 or 1,000 odd movie prints.
A film print can cost up to Rs 600,00 per print so making 100 prints or for a wide-release movie can cost up to Rs 60 lakh.By distributing them electronically,the cost savings on the distribution to the theater and back alone saves millions of rupees.Apart from this, D-Cinema will be of great benefit to B and C cities where 70% movies are of poor quality (B-grade, C Grade and X movies) or are movies that were released a couple of years back. With D-Cinema, they will able to view A-grade movies simultaneously along with their counterparts in cities.
Negatives-On the downside, the upfront costs for converting theaters to digital are high: up to $150,000. Theatres may be reluctant to switch without a cost-sharing arrangement with distributors.
Prospect-Interworld Digital Ltd is in the market with the first digital movies that will be transmitted to theatres through satellite. In the first phase, Interworld Digital plans to digitise 50 theatres across the country.Movies transported in encoded format, which would have the highest quality of print, would be shown in these theatres. Digitising of movies would render piracy practically impossible for two reasons. One, the quality of the pirated version would be pathetic. And two, a watermark on the theatre screen would show the place and date on which the pirated copy was made.One big gain for producers would be that they would save huge amounts on prints as each print costs about Rs 8000 and they need to make scores of prints to distribute across the country and abroad.
Outlook-As the Indian economy grows and merges further with the global economy, the focus of demand for IT and entertainment services will shift from large deals signed by the large enterprises to increasing number of mid-size and small enterprises signing IT and entertainment services which is expected to be the next phase of growth in the Indian IT and entertainment services market.
Conclusion- Digital technology is already taking over a big chunk of the home entertainment market. Movies might not be able to escape the digital onslaught for long. While digital cinema is yet to take off in a big way in India, it is surely showing prospects of cinema without reels.For viewers, digital projection offers crisp pictures that don't fade or scratch, no matter how many times they are shown. Create the content once and deliver to millions without any generational loss or image degradation.
"Interworld looks to have a bright future ahead.Its quoting at a mere 2rs and upsides can be huge from these level.The promoters too realising the huge potential has been increasing their stakes in the counter.Digital cinema is set to be the next boom for sure and the company having the first mover advantage deserves a better valuation.Interworld basically is following the business model of a Belgium-based company called EVS Belgium.In the US,Dolby Digital is the leader in this industry segment.Being a 2rs counter there is not much to loose but chances are always there that the scrip may just turn out to be the next multibagger."So watch out for it".
Code-532072
CMP-2 (FV-1)
Target-5
Duration-12 months.
[Interworld digital news,views and analysis/robust prospect and great story/penny priced stock/multibagger potential/reason for upmove/promoter increasing stake/a great media and entertainment play/a great buy/downside limited upsides huge]
Introduction-Interworld Digital is in the business of development of end-to-end distribution technology and support services for the delivery of digital cinema to theaters worldwide.It provides a complete range of capabilities to serve the emerging digital distribution needs for the motion picture industry based on an open standard that covers all of the stages for taking a movie from a studio master to a theater's digital projection system. This includes compressing, encrypting, and transferring the master onto a deliverable media, delivering the content to the theater-either by physical media or via satellite-for storage scheduling and playback.
Positives of Digital cinema-One of the major revenue-streams for D-Cinema can be in the form of advertisements.It is expensive to copy advertisements to 35mm, and the distribution costs are high. This will limit the market to only large national/international advertisers. By using digital format, it is only necessary to hand in a disc, or down load the content. Distribution can take place centrally from a hub, which will control the running of each individual advertisement for each cinema through a large server, or it can be done by each individual cinema. The reduced cost of distribution, will reduce the advertising costs, and make cinema advertisement more competitive against other media.
Apart from advertising potentially Interworld Digital will enable new revenue opportunities for theater owners by extending their revenue base to include corporate presentations, live events, large-scale training and seminars, and multi-location interactive conferences. But the biggest advantage will come for distribution. Making and distributing copies is a lot easier with digital files than with physical film. Digital copies of a movie save millions by eliminating the cost of creating 100 or 1,000 odd movie prints.
A film print can cost up to Rs 600,00 per print so making 100 prints or for a wide-release movie can cost up to Rs 60 lakh.By distributing them electronically,the cost savings on the distribution to the theater and back alone saves millions of rupees.Apart from this, D-Cinema will be of great benefit to B and C cities where 70% movies are of poor quality (B-grade, C Grade and X movies) or are movies that were released a couple of years back. With D-Cinema, they will able to view A-grade movies simultaneously along with their counterparts in cities.
Negatives-On the downside, the upfront costs for converting theaters to digital are high: up to $150,000. Theatres may be reluctant to switch without a cost-sharing arrangement with distributors.
Prospect-Interworld Digital Ltd is in the market with the first digital movies that will be transmitted to theatres through satellite. In the first phase, Interworld Digital plans to digitise 50 theatres across the country.Movies transported in encoded format, which would have the highest quality of print, would be shown in these theatres. Digitising of movies would render piracy practically impossible for two reasons. One, the quality of the pirated version would be pathetic. And two, a watermark on the theatre screen would show the place and date on which the pirated copy was made.One big gain for producers would be that they would save huge amounts on prints as each print costs about Rs 8000 and they need to make scores of prints to distribute across the country and abroad.
Outlook-As the Indian economy grows and merges further with the global economy, the focus of demand for IT and entertainment services will shift from large deals signed by the large enterprises to increasing number of mid-size and small enterprises signing IT and entertainment services which is expected to be the next phase of growth in the Indian IT and entertainment services market.
Conclusion- Digital technology is already taking over a big chunk of the home entertainment market. Movies might not be able to escape the digital onslaught for long. While digital cinema is yet to take off in a big way in India, it is surely showing prospects of cinema without reels.For viewers, digital projection offers crisp pictures that don't fade or scratch, no matter how many times they are shown. Create the content once and deliver to millions without any generational loss or image degradation.
"Interworld looks to have a bright future ahead.Its quoting at a mere 2rs and upsides can be huge from these level.The promoters too realising the huge potential has been increasing their stakes in the counter.Digital cinema is set to be the next boom for sure and the company having the first mover advantage deserves a better valuation.Interworld basically is following the business model of a Belgium-based company called EVS Belgium.In the US,Dolby Digital is the leader in this industry segment.Being a 2rs counter there is not much to loose but chances are always there that the scrip may just turn out to be the next multibagger."So watch out for it".
Monday, May 19, 2008
Indian stock market outlook
[Indian stock market outlook/Any chances of falling again/Will it hit new high/Indian stocks valuations attractive/effect of US reccesion,inflation and high crude prices/Fii activity/Support and resistance level of indian stock markets/Liquidity flow/Economic growth/Creating indian mnc/Sectors to outperform/16000-18000 range]
Everytime market trades higer, members have got a query-"Is the same trend going to continue?Will the market make another high?If you people get hold of both the aspects, the cause of the bull run and its duration backed by high confidence and conviction,it would be easier isnt it?While in the long term, the market is driven by factors like economic growth, earnings, valuations etc, in the short term, only two factors work — sentiment and moneyflow or liquidity.
Our country is among the top 10 countries in the world to have a trillion-dollar GDP and m-cap simultaneously.It is the 14th largest country globally in terms of m-cap and 12th largest economy in terms of GDP. It is also the fourth largest market in Asia (after Tokyo, Hong Kong and Shanghai), and India's GDP growth rate is the second-fastest globally. The country's per capita income has risen over 7-8% in the past 2-3 years.
We have heard of global multinational companies and the growth stories of them.Now our entrepreneurs are ready to play the global theme with the mindset of creating Indian MNCs. These easily signifies that India has reached global scale and size. The economy is on its way to becoming an economic super power. There will be some speed bumps along the way, but there won't be any U-turns.As is the case globally, when economies undergo this transformation, the equity asset class creates wealth in the economy and outperforms most asset classes. India will witness the same phenomenon; equities will outperform most asset classes over 3-5 years. From a macro perspective, our country can look a bit expensive, but taking into account the growth profile and possibility of value unlocking from balance sheets, it is bound to remain expensive.The idea is to take exposure in the right sectors and stocks.Mind you guys arun would be always there to guide for the same.
India is the classical bottom-up market, where investors can find hundreds of stocks which can generate huge returns over the longer term. Indian equity investment opportunities can be classified into five macro themes:-
(i)Outsourcing-based opportunities-IT, pharma, auto components
(ii)Domestic consumption/lifestyle-based opportunities-FMCG, retail, entertainment
(iii)Infrastructure spending-based opportunities-power,ports,roads, airports,mining,construction
(iv)Agriculture-based opportunities-irrigation,agri processing
(v)Banking and financial services. Allocation in each of these themes can vary, depending on investor profile and time frame.
Greed- and fear-driven sentiments cause market movements in the short term. What happened in feb/ March '08 reflected fear among market participants.As people realised the overselling of equities the fear started receding, backed by strong corporate earnings and domestic and international inflows.Though the market performed well till now post that period, there is a lot of scepticism.We are slowly coming out of the fear stage and moving towards the buying stage.How long it will last is a function of liquidity in the short term, global markets and news flows. There is still room for some upside from here, before another correction sets in.Macro level concerns like the crude prices,inflation will remain and may create an overhang.At the same time, there's enough appetite for corrections to buy Indian paper.The Sensex may remain in the 16000-18000 range in the next quarter.
Everytime market trades higer, members have got a query-"Is the same trend going to continue?Will the market make another high?If you people get hold of both the aspects, the cause of the bull run and its duration backed by high confidence and conviction,it would be easier isnt it?While in the long term, the market is driven by factors like economic growth, earnings, valuations etc, in the short term, only two factors work — sentiment and moneyflow or liquidity.
Our country is among the top 10 countries in the world to have a trillion-dollar GDP and m-cap simultaneously.It is the 14th largest country globally in terms of m-cap and 12th largest economy in terms of GDP. It is also the fourth largest market in Asia (after Tokyo, Hong Kong and Shanghai), and India's GDP growth rate is the second-fastest globally. The country's per capita income has risen over 7-8% in the past 2-3 years.
We have heard of global multinational companies and the growth stories of them.Now our entrepreneurs are ready to play the global theme with the mindset of creating Indian MNCs. These easily signifies that India has reached global scale and size. The economy is on its way to becoming an economic super power. There will be some speed bumps along the way, but there won't be any U-turns.As is the case globally, when economies undergo this transformation, the equity asset class creates wealth in the economy and outperforms most asset classes. India will witness the same phenomenon; equities will outperform most asset classes over 3-5 years. From a macro perspective, our country can look a bit expensive, but taking into account the growth profile and possibility of value unlocking from balance sheets, it is bound to remain expensive.The idea is to take exposure in the right sectors and stocks.Mind you guys arun would be always there to guide for the same.
India is the classical bottom-up market, where investors can find hundreds of stocks which can generate huge returns over the longer term. Indian equity investment opportunities can be classified into five macro themes:-
(i)Outsourcing-based opportunities-IT, pharma, auto components
(ii)Domestic consumption/lifestyle-based opportunities-FMCG, retail, entertainment
(iii)Infrastructure spending-based opportunities-power,ports,roads, airports,mining,construction
(iv)Agriculture-based opportunities-irrigation,agri processing
(v)Banking and financial services. Allocation in each of these themes can vary, depending on investor profile and time frame.
Greed- and fear-driven sentiments cause market movements in the short term. What happened in feb/ March '08 reflected fear among market participants.As people realised the overselling of equities the fear started receding, backed by strong corporate earnings and domestic and international inflows.Though the market performed well till now post that period, there is a lot of scepticism.We are slowly coming out of the fear stage and moving towards the buying stage.How long it will last is a function of liquidity in the short term, global markets and news flows. There is still room for some upside from here, before another correction sets in.Macro level concerns like the crude prices,inflation will remain and may create an overhang.At the same time, there's enough appetite for corrections to buy Indian paper.The Sensex may remain in the 16000-18000 range in the next quarter.
Bartronics India Ltd:-A monopoly business with huge potential
Scripscan:-Bartronics India Ltd
Cmp:217
Target:343
Return expected:55%
Duration:6-9 months
[Bartronics India news,views and analysis/Prospects/big retail boom beneficary/amazing results/attractive valuation/growing at over 100%/bartronics target price/Monopoly business/1000crs company soon/Great buy/a potential doubler]
Story:Bartronics is a market leader in system integration for barcode solutions and has been in this business for last 17 years.Its a pioneer in introducing Automatic Identification and Data Collection (AIDC) technologies like Barcoding, Radio Frequency Identification Device (RFID) and Smart Card which has manifold application in Manufacturing,Service and Retail Industry.Bartronics has a strong client base, with 60% of its orders from repeat customers.The company provides end-to-end solutions in this space, including pilot testing and software integration.The company has a Monopoly position in the Industry as there are hardly any competitor in RFID and AIDC products.Its recent focus on the emerging domains of RFID and Biometrics is likely to augur well.At the present price of 217rs its just quoting at a PE multiple of 7 times its expected fy10 earnings.Bartronics is India's first and only Smart Card manufacturer as of now, having 100% EOU status from Govt. Of India.Giving a PE multiple of even 11 takes the target price to 343rs.The management has confirmed talks with some european companies for acquistion the same hasnt been taken into consideration for the target price.On outcome of any acquistion the story may just anvil much more.Considering all the developments and looking at the huge potential of the retail industry the company is set to go places.A must have in anyones core portfolio.
Cmp:217
Target:343
Return expected:55%
Duration:6-9 months
[Bartronics India news,views and analysis/Prospects/big retail boom beneficary/amazing results/attractive valuation/growing at over 100%/bartronics target price/Monopoly business/1000crs company soon/Great buy/a potential doubler]
Story:Bartronics is a market leader in system integration for barcode solutions and has been in this business for last 17 years.Its a pioneer in introducing Automatic Identification and Data Collection (AIDC) technologies like Barcoding, Radio Frequency Identification Device (RFID) and Smart Card which has manifold application in Manufacturing,Service and Retail Industry.Bartronics has a strong client base, with 60% of its orders from repeat customers.The company provides end-to-end solutions in this space, including pilot testing and software integration.The company has a Monopoly position in the Industry as there are hardly any competitor in RFID and AIDC products.Its recent focus on the emerging domains of RFID and Biometrics is likely to augur well.At the present price of 217rs its just quoting at a PE multiple of 7 times its expected fy10 earnings.Bartronics is India's first and only Smart Card manufacturer as of now, having 100% EOU status from Govt. Of India.Giving a PE multiple of even 11 takes the target price to 343rs.The management has confirmed talks with some european companies for acquistion the same hasnt been taken into consideration for the target price.On outcome of any acquistion the story may just anvil much more.Considering all the developments and looking at the huge potential of the retail industry the company is set to go places.A must have in anyones core portfolio.
Saturday, May 17, 2008
TRF:-A tata group undervalued engineering hidden gem
Scripscan-TRF Ltd
bse code:505854
Cmp-1000
Target-1500
Duration-9 months
Traded in-BSE
[Tata group company/robust prospects/emerging blue chip/undervalued star/trf news/trf analysis/trf future outlook/results]
Introduction:TRF manufactures bulk material handling and processing equipment,bulk
material handling systems coke oven equipment,coal dust injection systems for blast furnaces,coal beneficiation systems and port and yard equipment.It caters to diverse industries from power, metallurgy, chemical, mining and cement segments.TRF operates through four divisions-bulk material handling equipment,BMH systems, port & yard equipment and the EPC division.
Would like to put some points for my bulishness in the scrip:-
1)All the industries that TRF services— power, steel, ports, cement, mines, chemical,fertilisers,and construction —have chalked out huge investment plans.This will directly benefit TRF.Corporate India has already announced hugecapital expenditure for the next 4-5 years
2)As per estimates,Rs 22k crore and Rs 262k crore are to be invested in the power and steel sectors between 2006 and 2015. Of this, Rs 42500 crore will beinvested in material-handling activities in this period.This presents huge potential for TRF, which caters to such industries.Coal and ports are also likely to provide anadditional Rs 5k-crore business to material handling companies over 2006-15.
3)TRF now gets its clients to purchase steel,unlike earlier days when the company procured the raw material.This saves it from the vagaries of volatile steel prices and provides more predictable margin.
4)Tisco's acquisition of Corus opens up new global opportunities for
the company.
5)TRF has chosen SAP as the E.R.P.package,implementation of which is in progress.With the Company going live on SAP,the effectiveness of its key business processes sholud improve further,helping it to retain competitiveness.
6)Trf in its quest for new opportunities to expand its business has signed an agreement with Messrs.KocksKrane,Germany,for supplying Shipyard Cranes and Container Cranes.
Conclusion:In FY09 TRF is expectd to register EPS of Rs 80.At cmp of 1000 itsquoting at a P.E OF 12.5X its 09 estimated earnings.Considering the pedigree quality and the buoyant outlook,a great buy.
bse code:505854
Cmp-1000
Target-1500
Duration-9 months
Traded in-BSE
[Tata group company/robust prospects/emerging blue chip/undervalued star/trf news/trf analysis/trf future outlook/results]
Introduction:TRF manufactures bulk material handling and processing equipment,bulk
material handling systems coke oven equipment,coal dust injection systems for blast furnaces,coal beneficiation systems and port and yard equipment.It caters to diverse industries from power, metallurgy, chemical, mining and cement segments.TRF operates through four divisions-bulk material handling equipment,BMH systems, port & yard equipment and the EPC division.
Would like to put some points for my bulishness in the scrip:-
1)All the industries that TRF services— power, steel, ports, cement, mines, chemical,fertilisers,and construction —have chalked out huge investment plans.This will directly benefit TRF.Corporate India has already announced hugecapital expenditure for the next 4-5 years
2)As per estimates,Rs 22k crore and Rs 262k crore are to be invested in the power and steel sectors between 2006 and 2015. Of this, Rs 42500 crore will beinvested in material-handling activities in this period.This presents huge potential for TRF, which caters to such industries.Coal and ports are also likely to provide anadditional Rs 5k-crore business to material handling companies over 2006-15.
3)TRF now gets its clients to purchase steel,unlike earlier days when the company procured the raw material.This saves it from the vagaries of volatile steel prices and provides more predictable margin.
4)Tisco's acquisition of Corus opens up new global opportunities for
the company.
5)TRF has chosen SAP as the E.R.P.package,implementation of which is in progress.With the Company going live on SAP,the effectiveness of its key business processes sholud improve further,helping it to retain competitiveness.
6)Trf in its quest for new opportunities to expand its business has signed an agreement with Messrs.KocksKrane,Germany,for supplying Shipyard Cranes and Container Cranes.
Conclusion:In FY09 TRF is expectd to register EPS of Rs 80.At cmp of 1000 itsquoting at a P.E OF 12.5X its 09 estimated earnings.Considering the pedigree quality and the buoyant outlook,a great buy.
Delton cables:-A power ancilary play with lot of real estates
Have suggested the company several times at several rates.At 90rs it looks a great bargain.
Scripscan:Delton Cables Ltd
Code:504240
Cmp:90
[Delton cables news/analysis/prospects/land story/huge potential/power ancilary play/hidden gem/good bet to own]
Introduction: This Delhi based company is one the earliest entrant in power cable business. Although company has been growing only steadily despite industry growing tremendously and competitors also grew much bigger. Its financial performance has been reasonable:
Expansion:The company has set up a new Division for the manufacture of Switchgears at Noida.This will enhance the value of the brand 'Delton' and add to the turnover and profitability of the company.It also plans to expand in the segment of power cables and RF cables.
On its core business, scrip is reasonably priced. However, company is sitting on massive surplus assets which, as and well, utilized/sold will unlock huge value for its shareholders
Land play:In Dharuhera, Haryana (Near Hero Honda factory), its plant is situated on approx 12 acre land. At this place, company has surplus land approx 48-52 crs. Prevailing land rates here are 9-10 cr per acre. Thus, market value of this surplus land should be nearly Rs 450-500 crs.It has another factory situated in Faridabad over 2 acre plot. This is prime location and going rates are approx 30 cr per acre.Although, at present, factory is running here. However, looking at huge land value, in future promoters may decide to relocate this factory which can fetch more than 60 cr cash to the company.
No of shares are just 28,80,000 and value of surplus land works out to Rs 1800-1900 per share as against CMP of Rs 90. Floating stock is low due to high promoter holding. Company has also got some land in delhi.
Conclusion:In future, some big builders are bound to offer highly attractive valuations for company's surplus land which promoters may find difficult to refuse.Also its a cashrich company with reserves to the tune of 16.5crs.Even a liberal bonus can be there on the offing.Delton cable is one of the scrips which is qoting at a significant discount to its land value.Even if we give the counter 1/4th of the total land value the price comes at 450rs.Again like my other scrips i give the counter to you members to value it on your own ways.
Scripscan:Delton Cables Ltd
Code:504240
Cmp:90
[Delton cables news/analysis/prospects/land story/huge potential/power ancilary play/hidden gem/good bet to own]
Introduction: This Delhi based company is one the earliest entrant in power cable business. Although company has been growing only steadily despite industry growing tremendously and competitors also grew much bigger. Its financial performance has been reasonable:
Expansion:The company has set up a new Division for the manufacture of Switchgears at Noida.This will enhance the value of the brand 'Delton' and add to the turnover and profitability of the company.It also plans to expand in the segment of power cables and RF cables.
On its core business, scrip is reasonably priced. However, company is sitting on massive surplus assets which, as and well, utilized/sold will unlock huge value for its shareholders
Land play:In Dharuhera, Haryana (Near Hero Honda factory), its plant is situated on approx 12 acre land. At this place, company has surplus land approx 48-52 crs. Prevailing land rates here are 9-10 cr per acre. Thus, market value of this surplus land should be nearly Rs 450-500 crs.It has another factory situated in Faridabad over 2 acre plot. This is prime location and going rates are approx 30 cr per acre.Although, at present, factory is running here. However, looking at huge land value, in future promoters may decide to relocate this factory which can fetch more than 60 cr cash to the company.
No of shares are just 28,80,000 and value of surplus land works out to Rs 1800-1900 per share as against CMP of Rs 90. Floating stock is low due to high promoter holding. Company has also got some land in delhi.
Conclusion:In future, some big builders are bound to offer highly attractive valuations for company's surplus land which promoters may find difficult to refuse.Also its a cashrich company with reserves to the tune of 16.5crs.Even a liberal bonus can be there on the offing.Delton cable is one of the scrips which is qoting at a significant discount to its land value.Even if we give the counter 1/4th of the total land value the price comes at 450rs.Again like my other scrips i give the counter to you members to value it on your own ways.
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