Paracables Short Term Call : Target Rs 55

 

Script Name : Paracables

CMP Price   : Rs44.25

Target Price : Rs 60

Time Frame : 1 Month(Short Term)

Potential Upside : More than 20%

 

About the Company

Paramount Cables  is proud to have reached a major milestone to its alre ady growing track record. The Company has been awarded ISO 9001 and 14001 by Moody International, bearing eloquent testimony to the stringent quality that is the hallmark of Paramount products. The certification is but one more guarantee that our clientele can be rest assured of total satisfaction.

Paramount caters to a wide range of industries with an equally wide range of technologically advanced cables, cords and wires for Telecommunication, Railways, Space Research, Thermal & Nuclear Power Plants, Petrochemical, Fertilizers, Steel, Electronics and various other industries.

Incorporated in 1978, the Company swiftly established a name for itself and embarked on an exponential growth trajectory. Visionary diversification began with the move into special cables in the early '80s, supported by a dedicated team of technocrats and experts.

Paramount Cables has always laid major emphasis on keeping abreast with the latest international developments, focusing and adapting technology to create multi-faceted, need-based products for utilization in various spheres of industrial activity.

 

 

 

 

Paracables Fundamentals

 

Fundamentals

Market Capitalization  ( Rs cr ) 358.73 Book Value 19.57 Debt / Equity 1.14 P/E 9.45 Dividend Yield % 0.94 EPS 4.49 Return on Net Worth 22.53 Current Ratio 4.57 Quick Ratio 2.90 Interest Cover 6.78

 

 

 

Interworld Digital:-The 2rs penny stock with multibagger potential

 

Suggested to members some months ago.A long way to go

Scripscan-Interworld Digital Ltd
Code-532072
CMP-2 (FV-1)
Target-4
Duration-12 months.


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-To achieve its object of setting up fully featured Digital Cinema Model, the Company has engaged famous film Director, Mr. Partho Ghosh, for producing and directing various feature film under consideration and M/s Cyberlogy (India) Pvt. Ltd. for setting up a Network Operating Centre in Mumbai for the Company and for also arranging various other activities.

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".




Regards,
ARUN
9432577255
I can be reached at arunanalyst@rediffmail.com

Panoramic Universal - Long Term call

Script Name : Panoramic Universal

CMP: 120

"Panoramic Universal Ltd is poised to make a splash in the Indian hotel industry. The flagship company of the Panoramic group plans to acquire 20 properties in the country over the next three years as part of a total investment of Rs 1,000 crore in the hospitality sector. "

This was what the Hindubusiness Line has to say almost an year ago about the company.
HinduBusinessLine Article

Nearly an year down the line, the financial performance of the company has grown better and better, however the stock price has lagged behind probably because of huge exposure to the US markets.

Panoramic Universal Ltd is the flagship company of the Panoramic Group. The group has business interests in Hotels and Information Technology. Panoramic Universal owns and operates five hotels in the US, one in New Zealand and three hotels in India at Goa, Shirdi and Malvan, i.e.

* Holiday Inn, Hudson, Ohio, USA 239 rooms USD 6.5 mn
* The Georgian Resort, New York, USA 164 rooms USD 7.5 mn
* Quality Inn, New York, USA 142 rooms 4.25 mn
* Comfort Inn, North Carolina, USA 126 rooms USD 3.95 mn
* United Inn, North Carolina, USA 125 rooms USD 2.8 mn
* Sai Motels, New Zealand 22 rooms USD 3.5 mn
* Hotel Sai Sahavas, Shirdi, India 46 rooms USD 2 mn
* Graciano Cottages, Goa, India 22 rooms, USD 1 mn
* Hotel Sagar Kinara, Malvan, India 16 rooms USD 0.75 mn

The value of the above mentioned Hotels turns out to be nearly Rs 85 per share.

Following is the Annual Report of the company: Annual Report 06-07


Add to it, the company plans to invest nearly 1000 crores by 2009 in the hospitality sector, which turns out to be nearly 750 rupees per share. Add to this the IT segment of the company which contributed an EPS of nearly Rs 5 per share last year.

In 3-4 years, the stock has the potential to give atleast 5-6 times returns.

Vinati Organics: -Undervalued star

 

Weekly note to members on 3rd december 2007(control print and vinati was suggested the same day)



Scripscan:Vinati Organics Ltd
Code:524200
Cmp:100
Target:160
Duration:6-9 months
Traded on:BSE


Introduction:Vinati Organics is engaged in the business of producing IBB (Iso Butyl Benzene) and ATBS (2-Acrylamido 2 Methylpropanesulfonic Acid).

Why i like the counter?

1)The company with a capex of about Rs.35crs is presently expanding its ATBS facilities from 3k MT to 8k MT and the same is expected to be completed by June 2008.This expansion will make the company the world's second largest producer of ATBS.ATBS is a specialty monomer used in oilfield and mining chemicals, water-treatment, acrylic fiber, personal care, emulsions, adhesives etc. The world demand for ATBS is growing steadily and is expected to increase 2 to 3 fold with the production of enhanced oil recovery polymers.The company is in the process of finalizing long-term supply agreements for ATBS with worlds largest buyers based in USA and Europe.

2)The company has entered into a long-term supply agreement with BASF, USA, world's lamest producer of Ibuprofen. The company has increased its Isobutyl benzene (IBB) manufacturing capacity to 14000 TPA and is the world's largest producer with 70% market share.IBB is one of the key raw materials for making Ibuprofen.The supply agreement warrants BASF to buy majority of its IBB requirements from the company up to 2011. The contract can be renewed for additional three years and is expected to contribute up to Rs 240 crore in revenue in the first five years. As per the contract the monthly selling price of IBB is adjusted based on monthly world prices of key raw materials and exchange rate, thus minimizing the company's exposure to these variables.The production and supplies have ramped up since July and the coming quarters should reflect all the developments.

3)The company is planning to convert its ATBS production facility into an Export Oriented Unit from a Domestic Tariff Area.It is understood that the process would get completed by these year itself.It means that the profits from the sale of ATBS could be tax-free for the next couple of years.

4)ATBS/Na-ATBS&TBA:At present except the company there are only 2 other major producers of these monomers in the world.As suppliers of these products are limited,customers remain very keen to work for a new source of supply.All the major users of these products are based in Europe or U.S.A.,thus they prefer to enter into annual contracts.

5)The company falls on the vagaries of currency fluctuation as it exports its products mostly.At present on some cases its passing the extra costs to its customer.Going forward,The Company is aiming at minimizing foreign currency exposure by entering in to forward contracts and negotiating currency risk-sharing deals with customers.

6)Crude oil is one of the prime inputs for the products of the company and in the last few months it increased significantly.Vinati on to a certain extent was able to pass the hike to its customers. Incase of IBB,Vinati has a long term price escalation clause with BASF.On the ATBS front the company faces competition in terms of dollar pricing from majors like Lubrizol.The company though is confident of maintaining margins in this specialty monomer by passing the price fluctuation to its customers.

7)On asking the management about their new product application,they clarifies by saying "We are working on projects such as producing the versatile and high value monomer Tertiary Butyl Acrylamide (TBA.TBA is a high margin product for us and realization per kg is in the range of $5.We have already sent samples to various customers and we expect trial orders to begin soon".Tertiary Butyl Acrylamide or TBA finds its application mainly in the making of hair gel and water treatment polymers.

8)The company recently rewarded its shareholders by issuing them 1 free shares for every 2 shares held.These certainly entails a lot of conviction in the company as it shows the confidence of the management in the growth prospects of the company.

Conclusion:The company is expected to end the year with sales of about 150crs.Profits could be around 15crs resulting an EPS over 15rs.At present price of 100 its just quoting at 6.6 times its fy08 earnings.With escalating product prices,industry leadership,enhanced capacity utilization,new long-term contracts and roubust business prospects,Vinati organics may just prove to be another of my scrips which satiates ones desires through tremendous capital appreciation in the coming days.



Regards,
ARUN
9432577255
I can be reached at: arunanalyst@rediffmail.com

Trading Secrets

 

Expect losses. If you have an excellent system you have a 60% chance of a winning trade. That means you have a 40% chance of a losing trade. Therefore, you have a 0.4^4 = 3% chance of having four losing trades in a row. If you have 33 trades in a year, then the chances of getting four losing trades during the year are 33*.03 = 0.99. In other words, it is almost a promise that you will have four losing trades in a row during the year. Further you will have 13 losing trades during the year. Therefore it is possible to have four losing trades in a row, a small winner, and then five more losing trades in a row - with still four more trades scattered throughout the year. Remember that these events happen with good trading strategies. The secret is to find a good trading system and stick with it.

Secret 2
Use simple trading systems. Trading systems can be robust only if there is a high number of trades in backtest history. You should have at least 30 backtest trades for each variable parameter in your trading system. Use of recent, relevant, data forces the trading system to be simple.


Secret 3
Rely on backtest history, preferably out-of-sample tests, to assess both risk and reward. Monte Carlo analysis is helpful to establish risk and reward probabilities because only data reflecting recent market activity is relevant to trading system rules.


Secret 4
Have sufficient capitalization to support your trading. Your minimum futures account size should be the sum of the required margin plus the expected maximum intraday drawdown.


Secret 5
There is no secret to trading success. It is a matter of having adequate preparation, of applying sound principles, using prudent cash management, and having the fortitude to sustain your trading through adversity

Short Term Picks : Market Calls

Brokerage reports for Dec 24th - stocks to buy

PYRAMID SAIMIRA THEATRE
Reco price: Rs 417
Target price: Rs 736
Current market price: Rs 420
Upside: 75.23%
Brokerage: IL&FS Investsmart

Pyramid Saimira Theatre (PSTL), a leading exhibitor based in South India is expected to emerge as India's largest fully integrated media company with business interests in production, distribution and exhibition.

PSTL has successfully demonstrated its ability to enhance revenues and realise operating efficiencies while ramping up at a fast pace. The company's revenues and net profit are expected to record a CAGR of 151 per cent and 254 per cent respectively through FY07-09E. IL&FS Investsmart has put a BUY recommendation with a target price of Rs 736.

The stock at the recommended price of Rs 417 is valued at PE multiple of 18 times FY08 and 9 times FY09E estimated earnings.

 

GMR INFRASTRUCTURE
Reco price: Rs 235
Target price: Rs 358
Current market price: Rs 236
Upside: 51.7%
Brokerage: Emkay Share and Stock Brokers

GMR Infrastructure has recently announced the placement of 165.23 million shares at a price of Rs 240 to QIB's. The company has raised Rs 396.6 crore through the issue and would result in the equity base being expanded by 9.08 per cent post dilution.

The funds raised from this issue would be utilised for capital expenditure of its various projects. The fair value for GMR Infrastructure is based on the DCF value for each of the projects.

Though the equity dilution does not in any way change the fair value of the company, the per share value stands reduced on account of the increase in the equity capital. We revise our target price to Rs 358. The target price is based on the embedded value of each of the projects.

 

VARUN SHIPPING
Reco price: Rs 87
Target price: Rs 106
Current market price: Rs 83
Upside: 27.7%
Brokerage: Angel Broking

Varun Shipping is one of the safest bets in the shipping industry, given higher stability in its revenues. Further, Varun Shipping has been consistently declaring dividends over the past many years.

The company is expanding its asset base and business operations in the offshore support services segment to explore newer opportunities in energy. Varun Shipping had allocated $400 million for expansion of fleet. Of this, it spent $320 million in the last one year with the addition of five vessels.

Most of the vessels acquired over the last 3-4 quarters are expected to contribute fully to the revenue 2HFY2008 onwards. At recommended price of Rs 87, Varun Shipping is trading at 5.8 times and 5.3 times FY2009 and FY2010 estimated earnings. The brokerage puts a buy recommendation with a 12-month target price of Rs 106.

 

HERO HONDA
Reco price: Rs 702
Target price: Rs 745
Current market price: Rs 693
Upside: 7.5%
Brokerage: Religare

According to the brokerage, Hero Honda is aggressively capturing market share in economy and premium segment. This is further expected to improve its market share to 18 per cent in the near term in the premium segment.

Also, on the back of attaining high degree of localisation of components and with the expectation that prices of nickel, aluminium will remain soft, EBIDTA margins are expected to improve.

Further, the company has indicated that it has lined up its new product and variant launches for motorcycle and scooters till FY10.

The brokerage house has increased its revenue and margin estimates on the back of recent developments in the company. With the revised estimates, the target has been raised to Rs 745. At the recommended price the stock is valued at 15.4 times FY08 and 13.7 times FY09 estimated earnings.

 

CORE PROJECTS AND TECHNOLOGIES
Reco price: 400
Target price: NA
Current market price: 412
Upside: NA
Brokerage: ICICIdirect

Core Projects and Technologies a pure IT company with interests in verticals such as education, logistics and healthcare, is set to capitalise on the education boom across the globe with its strong product portfolio.

The company has successfully acquired seven companies in the past two financial years across various verticals and products. This has helped the company triple its revenues in FY07 with the acquired companies contributing more than 65 per cent to revenues (Rs 194 crore) and net profit (Rs 33.37 crore).

The company's inorganic growth strategy has helped it to penetrate newer geographies and cross-sell products and solutions to new clients. The company is expected to continue to grow inorganically and acquire companies having strong products in the US and UK.

Core Projects has signed an agreement with the CHL at NASA's space centre for delivering educational content exclusively to the Asia-Pacific region.

The company has also signed a MOU with IL&FS and the Indira Gandhi National Open University (IGNOU) to create education content. At the recommended price of Rs 400, the stock trades at 55 times FY08 and 29.3 times FY09 estimated earnings.

Post Oversubscription Figures I P O

BGR Energy Systems Limited

Final Oversubscription Figures.

BGR Energy Systems Limited
QIB : 161.67 Times
HNI : 153.01 Times
Retail : 46.72 Times
Overall : 119.49 Times
Appls : 828,957

 

Transformers & Rectifiers (India) Limited

Final Oversubscription Figures

Transformers & Rectifiers (India) Limited
QIB : 110.53 Times
HNI : 122.06 Times
Retail : 58.52 Times
Overall : 91.32 Times
Appls : 348,809

 

Figures of eClerx Services Limited

Final Oversubscribtion Figures of eClerx Services Limited.

QIB : 36.85 Times
HNI : 42.72 Times
Retail : 13.97 Times
Overall : 30.58 Times
Appls : 83,471

 

Brigade Enterpriseses Limited

Final Oversubscription Figures of Brigade Enterpriseses Limited

QIB : 15.36 Times
HNI : 4.81 Times
Retail : 5.58 Times
Overall : 11.31 Times
Appls : 180,353

 

Manaksia Limited

Final Oversubscription Figures.

Manaksia Limited
QIB : 13.70 Times
HNI : 2.72 Times
Retail : 5.08 Times
Overall : 8.98 Times
Appls : 80,394

 

Aries Agro Limited

Final Oversubscription Figures.
Aries Agro Limited
QIB : 8.16 Times
HNI : 8.51 Times
Retail : 6.46 Times
Overall : 7.62 Times

Ispat to fund expansion plans via equity route

 

Source : CNBC-TV18

Ispat Industries has a debt of about Rs 6500 crore. However, the company has plans for expansion, for which it wants to take the equity route. Speaking to CNBC-TV18, Anil Sureka, ED Finance said that they expect debt to come down by close to Rs 800 crore over the next four quarters. He added that they will finance their capex plans via promoters, internal accruals and convertible instruments.


Talking about the company's expansion plans, Sureka said they will up their HR coil capacity to 3.6 mt and will also add a blast furnace. A 4.5 mt pellet plant and a one mt coke over battery has also been planned. They will also be setting up a 1200 MW power plant costing about Rs 5000-5500 crore in Chhatisgarh

Sureka clarified that LN Mittal has showed no interest in Ispat Industries. According to him, steel prices will improve further on raw material pressures.

Excerpts of CNBC-TV18's exclusive interview with Anil Sureka:



Q: Before we talk about your expansions, just talk to us a little bit about what you are doing on the capital side. You've got nearly Rs 7,000 crores of debt. How much of that are you in a position to repay over the next four quarters? Would you need to raise any equity to finance some of these expansion plans? Just give us a layout.
A: Today you must have seen that our company has given a notice to the stock exchange for giving a warrant to the sponsors and that meeting will be taking place on December 22. This is basically to raise the equity side and the expansion scheme which of which we are now are in the implementation process, most of the money will be raised through the equity rated instrument only. That is also the way we are going to correct our debt equity ratio.



Q: Could you throw some numbers here? How much money would be pumped in by the promoters specifically, what their stake would go up to, whether you would issue any equity to non-promoter shareholders and what the debt will come down to in the next four quarters?
A: In the next four quarters the debt will come down by close to Rs 800 crore. How much equity we allot to sponsors will be decided in the board meeting only. Normally in a year we can give 5% equity voting rights to the sponsors. So it will be within that range.



Q: Where does your total debt stand at right now?
A: It is actually Rs 6500 crore.


Q: There are all kinds of rumours circling the market and you would be the best person to address them. Is it true that the Mittal family is showing any kind of interest in Ispat and you are in any sort of talks with them for some kind of stake sale?
A: This company belongs to the Mittal family only, Pramod and Vinod own the company.



Q: We are talking about Lakshmi Mittal's family out here?
A: No I don't thinkso, there is no such thing.



Q: Along with the debt reduction, what kind of capacity addition plan is it that Ispat has over the next four-six quarters?
A: We have planned that we'll increase the HR coil capacity to 3-3.6 million tonne and we are also adding a blast furnace to support the capacity. We have also planned a pellet plant of roughly 4.5 million tonne. These are the major capex plan we have launched.

In addition to these, we have also launched a coke oven battery of 1 million tonne capacity. That will be in a separate SPV and it will be in a joint venture. All other projects will be in Ispat Industry.


Q: Could you give us a timeline of when this coke oven and the pellet plant would be up and running? What is the total investment that is required for all these expansions that you are talking about?
A: The coke oven will cost roughly Rs 900 crore and the pellet plant and the 3.6 million tonne blast furnace it will cost roughly Rs 1600 crore. The timeline for the pellet plant is roughly 27-months, coke oven is about 24-months and the other project between 12-16 months time.



Q: What kind of pricing do you see steel holding over the next four-six months as you go through the process of cleaning out debt and expanding capacity as well?
A: The steel prices will further improve, that is the industrial view because there is a lot of pressure on raw materials also. Raw material prices are going up and everybody knows that next year, the way things are happening in the iron ore business, industrially also the prices will go up.

Everybody is expecting that there will be a bit of upward movement in the raw material and that it should be the same in the HR finish goods also.



Q: Give us some details on the power project in Chhattisgarh. What kind of investment it would entail, by when you expect to commence work out there and what the capital investment structure is out there?
A: First I would like to address the 110-megawatt power plant which is already in the construction. This will be commissioned by November 2008. This is based on the blast furnace gases at Dolvy and it will meet roughly 30% of the requirement of the steel plant. So that will bring down the cost of power substantially.

Now coming to Chhattisgarh, we have signed an MoU with the government of Chhattisgarh for setting up a power plant of 1200 megawatt. It should cost around Rs 5000-5500 crore. Presently we are in the process of tying up the fuel, once that is tied up, then we will do the other activities too like the environmental clearances of the sector, etc parallel to that. But this will all be in a separate company, not in Ispat Industry.



Q: Just to ask that question again, since it keeps cropping up, are you sure that Lakshmi Mittal and Vinod Mittal have had no discussions about any kind of a joint development plan or expansion plan under the Ispat umbrella in India?
A: To my knowledge I am 100% sure.



Q: One word as well on what exactly you might look at in this equity route to raise finances?
A: One, we are talking to the sponsors. This week we will have a meeting for the allotment of warrant to them and the Board will decide. The other is we are raising finances for this Rs 1600 capex that we have planned. This will be mostly support by the sponsors, it will be a combination - sponsors, intellectuals or maybe some convertible instruments.

Q: But no more debt will be loaded on balance sheet, right?
A: The debt burden will not be much, we are trying to bring down the debt.

Control Print:-Continuation of unnoticed land bank stories

 

Some land bank stories still available at market.Let me present you them.When the market realises these stories,the value can be tremendous.It would be prudent to note that the below mentioned scrip is not just a land play.The company posses decent fundamentals, solid prospects,bright outlook and huge potential.


Control Print India Ltd
Code:522295
CMP:60

Triggers:

1)Market Value of its quoted investments works out to around 18crs.

2)Videojet:Some times back the company decided to end distribution arrangement of Videojet.Due to termination of distribution agreement, CPIL is likely to get Rs. 25 - 27 crs. as one-time payment.

3)Company owns 1.50 acre land in Mumbai which was bought for just Rs. 50 lakhs.Current Market Value of this land is around 40 crs.

However, company is not selling this land. It is planning to make commercial space approx. 1 lakh sq. ft. Construction cost for the same will be less than 25 crs. However, market value of this commercial space can be 120 - 150 crs. Company has still not finalized whether this property will be sold or will be leased.Even if it is given on lease, it can fetch nearly Rs. 25 crs. p.a. as lease rent.

Valuations:The company at prsent price of 60rs is trading at just 4.5x FY08E EPS.



Regards,
ARUN
I can be reached at: arunanalyst@rediffmail.com

Marg construction

Marg Construction is a South based realty company, engaged in property development and infrastructure development like SEZ and Sea port.



· The present equity of the company is Rs.20.63 crores, with face-value of Rs.10 per share. This is after a preferential allotment of 12.20 lakh shares to promoters, 2 lakh shares to Benett Coleman & Co. and 6.80 lakh shares to non-promoters. Of this, promoters stake is 51%, MF,Banks and FIIs at about 15%, while remaining 34% with the public.



· The company is developing Karaikal Port near Pondicherry by its wholly owned subsidiary Karaikal Port Pvt. Ltd. This subsidiary has also entered into an MoU with Pembinaan Redzai Sah Bhd a Malaysian company, for development and management work of this port, as also has recently purchased a cutter suction Dredger which can work on draught of 5 meters to 25 meters depth. Karaikal is one of the four regions of Pondicherry and is 300 kms south of Chennai and about 135 kms. from Pondicherry. The port is being developed in three phases with total investments of Rs.1,000 crores. The first phase is of Rs.416 crores, and shall be operational by end 2008, 2nd phase would start in Jan. 2009 with outlay of Rs.250 crores and third phase thereafter with outlay of Rs.350 crores. The port is on 600 acres land with a concession period of 30 years.



· The company has estimated total cost of development of 1st phase of the port at Rs.416 crores, for which, Rs.302 crore loan has been sanctioned by various banks and financial institutions. Work on development of the port has commenced.



· The company has acquired 4.40 acres of land at Old Mahabalipuram Road, near Chennai for a residential project.

 

· The company is developing an SEZ on 312 acres of land in Kancheepuram near Mahabalipuram through its wholly owned subsidiary New Chennai Township Pvt. Ltd.



· Another SEZ on 300 acres of land, for service sector, is also being developed in Kancheepuram near Mahabalipuram.



· Developing one more SEZ at Tirupati for which land acquisition process has been initiated.



· Developing Serviced Airport at Kancheepuram through its wholly owned subsidiary Marg Business Park P. Ltd.



· For FY 07, total income of the company was placed at Rs.142 crores with PAT of Rs.29.90 crores, resulting in an EPS of Rs.18.



· For quarter ending September 07, topline was at Rs.49 crores with PAT of Rs.6.60 crores. Based on this performance, the company should be able to post a 30% growth in FY 08, over its FY 07 performance.



· The present market capitalization of the company is about Rs.650 crores, which is very low. Post listing of Mundra Port, the company would get vastly re-rated because of its Karaikal Port, near Pondicherry.



· The share is presently ruling at Rs.510 {upper circuit everyday} and can rise to Rs.1,000 levels in the next 12 months. Those who have long term view, can buy the stock, purely from investment angle.

Empee Distilleries

Empee Distilleries is engaged in manufacturing IMFL (Indian Made Foreign Liquor) products with one Distillery located in Kanchipuram District at Tamil Nadu with capacity of 30.24 lakh cases per annum another and in Palakkad District of Kerala with an installed capacity of 30 lakh cases per annum.



· The company is developing part of its 20.88 acres freehold property located at Sriperumbudur, Kanchipuram District, into 12.23 lakh sq. ft. of residential space and 3 lakh sq. ft. of basement. This project was approved by DTCP in March 2007 and hence eligible for deduction under Section 80-IB of the Income Tax Act. This would make the company eligible for 100% tax exemption on the profits to be earned from development of this property. The project has 840 flats and estimated selling price is around Rs.2,850 per sq. ft. in addition to realization of Rs.1,000 per sq. ft. for basement. Considering cost of construction and development of Rs.1,500 per sq.ft., this would translate into a profit of Rs.195 crores which would get realized in the next three years by September 2010. Remaining 2.38 acres of land would be used for setting up godown for storage of bottle and 1.53 acres for commercial use.



· The company also owns 13 acres 10 cents land at Poonamalle Taluk in Tiruvallur Dist., 13 acres 3 cents in Gummidipundi Taluk in Tiruvallur District and 10,260 sq. ft. land in Kancheepuram Dist. as also 15 acres land at Kuthumbakkam near Chennai. These properties would get developed after about 12 months, over the next 4 -5 years, which would result in total area of above 25 lakh sq. ft.



· The company, for the year ending 30th September 07, posted net sales of Rs.626.11 crores, other income of Rs.11.80 crores, with EBITDA of Rs.37.15 crores, PBT of Rs.29.86 crores and PAT of Rs.20.10 crores resulting into an EPS of Rs.14.15 on pre-issue equity of Rs.14.20 crores. On post issue equity of Rs.19.00 crores, EPS works out to Rs.10.60.

 

· The company is now expanding capacity its Tamil Nadu Distillery from 20 KLPD to 70 KLPD with capacity to handle 5 lakh cases per month, from present 3.20 lakh cases per month. The company is also setting up 60 KLPD grain based Distillery with capacity of 8.40 lakh cases per annum at Nellore in A.P. and a distillery in Karnataka for 12 lakh cases per year. This would give presence to the company in all four Southern states.



· All these are estimated to cost Rs.182 crores including Rs.31.07 crores for development of 2 lakh sq. ft. To finance this, the company issued 48 lakh equity shares at Rs.400 per share in November 07 and mobilized Rs.192 crores. All these expansions and new establishment would commence production from March 2008 to March 2009.



· The company hopes to have a topline of about Rs.1,100 crores with PAT of atleast Rs.48 crores. Of this PAT, realty division would give Rs.12 crores, IMFL Business Rs.32 crores and Power Rs.4 crores. This would result into an EPS of Rs.25 for FY 08, ending 30th September.



· For FY 09, ending 30th September, topline would be close to Rs.1,600 crores with PAT of Rs.148 crores of which Realty would give Rs.70 crores, IMFL Business Rs.72 crores and Power Rs.6 crores. This would result into an EPS of Rs.78.



· Realty would give PAT of close to Rs.100 crores in FY 10, ending 30th September, which alone would translate into an EPS of Rs.53 with IMFL giving close to Rs.84 crores and Power Rs.6 crores, resulting into an EPS of Rs.48 from core business. Thus EPS would be in excess of Rs.100 in FY 10.

 

· The present equity of the company is Rs.19.00 crores, of which, 75% is held by the promoters while 25% by Public. The selling pressure from QIB in recently concluded IPO seems to have completed with no selling pressure seen form last couple of days.



· The company would have parallel and equal flow of bottomline from realty business, on regular basis, from FY 09, ending September, for the next 5 – 7 years. This would give huge cash flow and EPS jump, resulting in higher valuation to the company.



· The company had issued shares at Rs.400 per share, which is now ruling at Rs.310, discounting FY 08 earning by about 13 times and FY 09 earning by about 4 times. Due to strong visibility of earnings for the next couple of years, the share has huge upside potential.



· The market has not correctly assessed the earnings potentials of its core business and huge value unlocking from its realty business. The IMFL companies are having PE of over 30 while Realty companies have PE of close to 15 times. The share falls in both the categories with big IMFL capacity, present in two states to be expanded in four Southern states, with substantial developable area near Chennai.



· The share qualifies an excellent buy at Rs.320 with potential to rise by 100 per cent in 9 – 12 months, with virtually no downward risk.

38 steps to becoming a trader

MAYUR GALA......

 

They are as follows:

1. We accumulate information - buying books, going to seminars and
researching.
2. We begin to trade with our 'new' knowledge.
3. We consistently 'donate' and then realise we may need more
knowledge or information.
4. We accumulate more information.
5. We switch the commodities we are currently following.
6. We go back into the market and trade with our 'updated' knowledge.
7. We get 'beat up' again and begin to lose some of our confidence.
Fear starts setting in.
8. We start to listen to 'outside news' and to other traders.
9. We go back into the market and continue to 'donate'.
10. We switch commodities again.
11. We search for more information.
12. We go back into the market and start to see a little progress.
13. We get 'over-confident' and the market humbles us.
14. We start to understand that trading successfully is going to
take more time and more knowledge than we anticipated.

Nov 25

MAYUR GALA......

MOST PEOPLE WILL GIVE UP AT THIS POINT,
AS THEY REALISE WORK IS INVOLVED.

15. We get serious and start concentrating on learning a 'real'
methodology.
16. We trade our methodology with some success, but realise that
something is missing.
17. We begin to understand the need for having rules to apply our
methodology.
18. We take a sabbatical from trading to develop and research our
trading rules.
19. We start trading again, this time with rules and find some
success, but over all we still hesitate when it comes time to
execute.
20. We add, subtract and modify rules as we see a need to be more
proficient with our rules.
21. We feel we are very close to crossing that threshold of
successful trading.
22. We start to take responsibility for our trading results as we
understand that our success is in us, not the methodology.
23. We continue to trade and become more proficient with our
methodology and our rules.
24. As we trade we still have a tendency to violate our rules and our
results are still erratic.
25. We know we are close.
26. We go back and research our rules.
27. We build the confidence in our rules and go back into the market
and trade.

Nov 25

MAYUR GALA......

28. Our trading results are getting better, but we are still
hesitating in executing our rules.
29. We now see the importance of following our rules as we see the
results of our trades when we don't follow the rules.
30. We begin to see that our lack of success is within us (a lack of
discipline in following the rules because of some kind of fear)
and we begin to work on knowing ourselves better.
31. We continue to trade and the market teaches us more and more
about ourselves.
32. We master our methodology and our trading rules.
33. We begin to consistently make money.
34. We get a little over-confident and the market humbles us.
35. We continue to learn our lessons.
36. We stop thinking and allow our rules to trade for us (trading
becomes boring, but successful) and our trading account
continues to grow as we increase our contract size.
37. We are making more money than we ever dreamed possible.
38. We go on with our lives and accomplish many of the goals we had
always dreamed of.

Nov 25

MAYUR GALA......

Most traders will identify with this list and should be able to place
themselves within these steps. Keep in mind that very few people
progress through these steps in an orderly fashion. Developing your
trading skills is an iterative process. For example, you may reach
Step 13., find that although you were making money, your basic
premise for trading was flawed (you might have been benefiting from
the bull market, rather than your own trading prowess and then have
been rudely awakened when the market entered a bear phase) and you
may drop back to Step 4. and start 'climbing' the steps again.
Having the proper mindset, attitude and psychological makeup becomes
increasingly important as you progress through the steps. The focus
of the earlier steps is on external issues, i.e. developing
proficiency in the mechanics of trading while the focus of the
latter steps (particularly from Step 30, on) is on internal issues,
i.e. improving ourselves mentally and psychologically, maturing as
trader

20 Rules To Stop Losing Money................

MAYUR GALA......

 

1. Don't trust others opinions -
It's your money at stake, not theirs. Do your own analysis, regardless of the information source.

2. Don't believe in a company -
Trading is not investment. Remember the numbers and forget the press releases. Leave the American Dream to Peter Lynch.

3. Don't break your rules -
You made them for tough situations, just like the one you're probably in right now.

4. Don't try to get even -
Trading is never a game of catch-up. Every position must stand on its merits. Take your loss with composure, and take the next trade with absolute discipline.

5. Don't trade over your head -
If your last name isn't Buffett or Cramer, don't trade like them. Concentrate on playing the game well, and don't worry about making money.

6. Don't seek the Holy Grail -
There is no secret trading formula, other than solid risk management. So stop looking for it.

7. Don't forget your discipline -
Learning the basics is easy. Most traders fail due to a lack of discipline, not a lack of knowledge.

8. Don't chase the crowd -
Listen to the beat of your own drummer. By the time the crowd acts, you're probably too late…or too early.

9. Don't trade the obvious -
The prettiest patterns set up the most painful losses. If it looks too good to be true, it probably is.

10. Don't ignore the warning signs -
Big losses rarely come without warning. Don't wait for a lifeboat to abandon a sinking ship.

Nov 25

MAYUR GALA......

11. Don't count your chickens -
Profits aren't booked until the trade is closed. The market gives and the market takes away with great fury.

12. Don't forget the plan -
Remember the reasons you took the trade in the first place, and don't get blinded by volatility.

13. Don't have a paycheck mentality -
You don't deserve anything for all of your hard work. The market only pays off when you're right, and your timing is really, really good.

14. Don't join a group -
Trading is not a team sport. Avoid stock boards, chatrooms and financial TV. You want the truth, not blind support from others with your point of view.

15. Don't ignore your intuition -
Respect the little voice that tells you what to do, and what to avoid. That's the voice of the winner trying to get into your thick head.

16. Don't hate losing -
Expect to win and lose with great regularity. Expect the losing to teach you more about winning, than the winning itself.

17. Don't fall into the complexity trap -
A well-trained eye is more effective than a stack of indicators. Common sense is more valuable than a backtested system.

18. Don't confuse execution with opportunity -
Overpriced software won't help you trade like a pro. Pretty colors and flashing lights make you a faster trader, not a better one.

19. Don't project your personal life -
Trading gives you the perfect opportunity to discover just how screwed up your life really is. Get your own house in order before playing the markets.

20. Don't think its entertainment -
Trading should be boring most of the time, just like the real job you have right now.

What is short-selling in stock markets?

 

What is short-selling?

Short-selling, in the context of the stock market, is the practice where an investor sells shares that he does not own at the time of selling them. He sells them in the hope that the price of those shares will decline, and he will profit by buying back those shares at a lower price. In India, there is no prohibition on short-selling by retail investors. Institutional investors —domestic mutual funds and foreign institutional investors registered with the Securities and Exchange Board of India (Sebi), banks and insurance companies — are prohibited from short-selling and are mandatorily required to settle on the basis of deliveries of securities owned and held by them.

How is short-selling beneficial?

Short-selling is considered an essential feature of the securities market not just for providing liquidity, but also for helping price corrections in over valued stocks. Supporters of short-selling claim its absence distort efficient price discovery, gives promoters the unfettered freedom to manipulate prices and favours manipulators than rational investors. Securities market regulators in most countries, and in particular, all developed securities markets, recognise short-selling as a legitimate investment activity. The International Organisation of Securities Commissions (IOSCO) has also reviewed short-selling and securities lending practices across markets and has recommended transparency of short-selling, rather than prohibit it.

Nov 25

MAYUR GALA......

Are there any drawbacks of short-selling?

Critics of short-selling feel selling, directly or indirectly, poses potential risks and can easily destabilise the market. They believe that short-selling can exacerbate declining trend in share prices, increase share price volatility, and force the price of individual stocks down to levels that might not otherwise be reached. They also argue that declining trend in the share prices of a company can even impact its fund raising capability and undermine the commercial confidence of the company. In a bear market in particular, short-selling can contribute to disorderly trading, give rise to heightened short-term price volatility and could be used in manipulative trading strategies.

Will institutional investors in India be allowed to short-sell securities?

Sebi is working on a proposal to introduce a stock borrowing and lending mechanism. This will allow institutional investors to short-sell by borrowing shares. Under this arrangement, an investor A, who feels that a certain stock is overpriced, borrows those shares for a charge from investor B, who is willing to lend those shares. Investor A then sells those shares in the market, hoping that the price declines so that he can buy cheap and return them to investor B.

Nov 25

MAYUR GALA......

What is the difference between covered short sales and naked short sales?

Covered short sales are those in which the seller arranges for the delivery of shares he has sold by borrowing them. Naked short sales are those in which the seller does not intend to provide for the delivery of shares he has sold. Most international securities market regulators have prohibited naked short-selling and require the client to have documentary evidence of borrowing/tie-up with lenders before executing the sale transaction. This is because naked short sales in huge quantities can destabilise the market.

How does the stock lending and borrowing mechanism function in other markets?

World over, securities lending and borrowing transactions are, by and large, over-the-counter (OTC) contractual obligations executed between lenders and borrowers. International securities market regulators do not directly regulate the lending and borrowing transactions. In many international markets, entities like custodians and depositories run the lending and borrowing scheme and have their own screens for meeting the demand and supply of securities from their clients.

BASICS OF STOCKS - BUT VERY IMPORTANT........

MAYUR GALA......

 

What is a Stock Exchange?

A common platform where buyers and sellers come together to transact in stocks and shares. It may be a physical entity where brokers trade on a physical trading floor via an "open outcry" system or a virtual environment.

What is electronic trading?

Electronic trading eliminates the need for physical trading floors. Brokers can trade from their offices, using fully automated screen-based processes. Their workstations are connected to a Stock Exchange's central computer via satellite using Very Small Aperture Terminus (VSATs). The orders placed by brokers reach the Exchange's central computer and are matched electronically.

How many Exchanges are there in India?

The Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) are the country's two leading Exchanges. There are 20 other regional Exchanges, connected via the Inter-Connected Stock Exchange (ICSE). The BSE and NSE allow nationwide trading via their VSAT systems.

What is an Index?

An Index is a comprehensive measure of market trends, intended for investors who are concerned with general stock market price movements. An Index comprises stocks that have large liquidity and market capitalisation. Each stock is given a weightage in the Index equivalent to its market capitalisation. At the NSE, the capitalisation of NIFTY (fifty selected stocks) is taken as a base capitalisation, with the value set at 1000. Similarly, BSE Sensitive Index or Sensex comprises 30 selected stocks. The Index value compares the day's market capitalisation vis-a-vis base capitalisation and indicates how prices in general have moved over a period of time.

How does one execute an order?

Select a broker of your choice and enter into a broker-client agreement and fill in the client registration form. Place your order with your broker preferably in writing. Get a trade confirmation slip on the day the trade is executed and ask for the contract note at the end of the trade date.

Dec 9 (7 days ago)

MAYUR GALA......

Why does one need a broker?

As per SEBI (Securities and Exchange Board of India.) regulations, only registered members can operate in the stock market. One can trade by executing a deal only through a registered broker of a recognised Stock Exchange or through a SEBI-registered sub-broker.

What is a contract note?

A contract note describes the rate, date, time at which the trade was transacted and the brokerage rate. A contract note issued in the prescribed format establishes a legally enforceable relationship between the client and the member in respect of trades stated in the contract note. These are made in duplicate and the member and the client both keep a copy each. A client should receive the contract note within 24 hours of the executed trade. Corporate Benefits/Action

What is a book-closure/record date?

Book closure and record date help a company determine exactly the shareholders of a company as on a given date.
Book closure refers to the closing of register of the names or investors in the records of a company. Companies announce book closure dates from time to time. The benefits of dividends, bonus issues, rights issue accruing to investors whose name appears on the company's records as on a given date, is known as the record date.
An investor might purchase a share-cum-dividend, cum rights or cum bonus and may therefore expect to receive these benefits as the new shareholder. In order to receive this, the share has to be transferred in the investor's name, or he would stand deprived of the benefits. The buyer of such a share will be a loser. It is important for a buyer of a share to ensure that shares purchased at cum benefits prices are transferred before book-closure. It must be ensured that the price paid for the shares is ex-benefit and not cum benefit.

Dec 9 (7 days ago)

MAYUR GALA......

What is the difference between book closure and record date?

In case of a record date, the company does not close its register of security holders. Record date is the cut off date for determining the number of registered members who are eligible for the corporate benefits. In case of book closure, shares cannot be sold on an Exchange bearing a date on the transfer deed earlier than the book closure. This does not hold good for the record date.

What is a no-delivery period?

Whenever a company announces a book closure or record date, the Exchange sets up a no-delivery (ND) period for that security. During this period only trading is permitted in the security. However, these trades are settled only after the no-delivery period is over. This is done to ensure that investor's entitlement for the corporate benefit is clearly determined.

What is an ex-dividend date?

The date on or after which a security begins trading without the dividend (cash or stock) included in the contract price.

What is an ex-date?

The first day of the no-delivery period is the ex-date. If there is any corporate benefits such as rights, bonus, dividend announced for which book closure/record date is fixed, the buyer of the shares on or after the ex-date will not be eligible for the benefits.

Dec 9 (7 days ago)

MAYUR GALA......

What is a Bonus Issue?

While investing in shares the motive is not only capital gains but also a proportionate share of surplus generated from the operations once all other stakeholders have been paid. But the distribution of this surplus to shareholders seldom happens. Instead, this is transferred to the reserves and surplus account. If the reserves and surplus amount becomes too large, the company may transfer some amount from the reserves account to the share capital account by a mere book entry. This is done by increasing the number of shares outstanding and every shareholder is given bonus shares in a ratio called the bonus ratio and such an issue is called bonus issue. If the bonus ratio is 1:2, it means that for every two shares held, the shareholder is entitled to one extra share. So if a shareholder holds two shares, post bonus he will hold three.

What is a Split?

A Split is book entry wherein the face value of the share is altered to create a greater number of shares outstanding without calling for fresh capital or altering the share capital account. For example, if a company announces a two-way split, it means that a share of the face value of Rs 10 is split into two shares of face value of Rs 5 each and a person holding one share now holds two shares.

What is a Buy Back?

As the name suggests, it is a process by which a company can buy back its shares from shareholders. A company may buy back its shares in various ways: from existing shareholders on a proportionate basis; through a tender offer from open market; through a book-building process; from the Stock Exchange; or from odd lot holders.A company cannot buy back through negotiated deals on or off the Stock Exchange, through spot transactions or through any private arrangement. Clearing and Settlement.

Dec 9 (7 days ago)

MAYUR GALA......

What is a settlement cycle?

The accounting period for the securities traded on the Exchange. On the NSE, the cycle begins on Wednesday and ends on the following Tuesday, and on the BSE the cycle commences on Monday and ends on Friday.At the end of this period, the obligations of each broker are calculated and the brokers settle their respective obligations as per the rules, bye-laws and regulations of the Clearing Corporation.If a transaction is entered on the first day of the settlement, the same will be settled on the eighth working day excluding the day of transaction. However, if the same is done on the last day of the settlement, it will be settled on the fourth working day excluding the day of transaction.

What is a rolling settlement?
The rolling settlement ensures that each day's trade is settled by keeping a fixed gap of a specified number of working days between a trade and its settlement. At present, this gap is five working days after the trading day. The waiting period is uniform for all trades. When does one deliver the shares and pay the money to broker?As a seller, in order to ensure smooth settlement you should deliver the shares to your broker immediately after getting the contract note for sale but in any case before the pay-in day. Simliarly, as a buyer, one should pay immediately on the receipt of the contract note for purchase but in any case before the pay-in day.

What is short selling?
Short selling is a legitimate trading strategy. It is a sale of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers take the risk that they will be able to buy the stock at a more favourable price than the price at which they "sold short."

What is an auction?
An auction is conducted for those securities that members fail to deliver/short deliver during pay-in. Three factors primarily give rise to an auction: short deliveries, un-rectified bad deliveries,un-rectified co. objec.

Dec 9 (7 days ago)

MAYUR GALA......

Is there a separate market for auctions?

The buy/sell auction for a capital market security is managed through the auction market. As opposed to the normal market where trade matching is an on-going process, the trade matching process for auction starts after the auction period is over.

What happens if the shares are not bought in the auction?

If the shares are not bought at the auction i.e. if the shares are not offered for sale, the Exchange squares up the transaction as per SEBI guidelines. The transaction is squared up at the highest price from the relevant trading period till the auction day or at 20 per cent above the last available Closing price whichever is higher. The pay-in and pay-out of funds for auction square up is held along with the pay-out for the relevant auction.

What is bad delivery?

SEBI has formulated uniform guidelines for good and bad delivery of documents. Bad delivery may pertain to a transfer deed being torn, mutilated, overwritten, defaced, or if there are spelling mistakes in the name of the company or the transfer. Bad delivery exists only when shares are transferred physically. In "Demat" bad delivery does not exist. What are company objections?A list documenting reasons by a company for not transferring a share in the name of an investor is called company objections. Rejection occurs due to a signature difference, or fake shares, or forgery, or if there is a court injunction preventing the transfer of the shares.


What should one do with company objections?

The broker must immediately be notified. Company objection cases should be reported within 12 months from the date of issue of the memo for the original quantity of share under objection.

Dec 9 (7 days ago)

MAYUR GALA......

Who has to replace the shares in case of company objections?

The member who has sold the shares first on the Exchange is responsible for replacing the shares within 21 days of the Exchange being informed. Company objection cases that are not rectified or replaced are normally auctioned.

How does transfer of physical shares take place?

After a sale, the share certificate along with a proper transfer deed duly stamped and complete in all respects is sent to the company for transfer in the name of the buyer. Once the transfer is registered in the share transfer register maintained by the company, the process of transfer is complete.

Equities

What is equity?

Funds brought into a business by its shareholders is called equity. It is a measure of a stake of a person or group of persons starting a business.

What does investing in equity mean?

When you buy a company's equity, you are in effect financing it, and being compensated with a stake in the business. You become part-owner of the company, entitled to dividends and other benefits that the company may announce, but without any guarantee of a return on your investments.

Dec 9 (7 days ago)

MAYUR GALA......

What is fundamental analysis?

The analysis of factual information like financial figures, balance sheet, and other information publicly available is known as fundamental analysis. This information is used to derive a fair price of the share of the company. The faithful fundamentalists believe that the market incorporates all facts relating to the financial performance of the company. But a systematic analysis will ensure a more accurate valuation of the price. Fundamental analysts use tools such as ratio analysis (P/E, MV/BV) and discounted cash flow analysis in order to arrive at the fair value of a company and hence its share.

What are financial ratios?

A ratio is a comparison of two figures. They are culled from the financial statements of a company. These help in assessing the financial health of a company. It could be a ratio between an item from a balance sheet versus another item on the balance sheet. Or it could be a ratio between one figure of the balance sheet with a figure from Profit and Loss account or it could be comparison of one year's figure with a figure from the previous year.For example Return on Equity = Net profit (A Profit and a Loss figure) divided by Net Worth (a balance sheet figure) in percentage terms.

Dec 9 (7 days ago)

MAYUR GALA......

What are the various kinds of financial ratios?

There are many financial ratios. Some of the better known include:
Liquidity Ratios: Liquidity ratio measures the ability of a firm to meet its current obligations. Liquidity ratios by establishing a relationship between cash and other current assets to current obligations give measure of liquidity.e.g. Current ratio [CR] = Current Assets/Current liabilities.A high CR ratio (>2.5) indicates that a company can meets its short term liabilities.

Leverage Ratios: Leverage ratio indicates the proportion of debt and equity in financing the firm's assets. They indicate the funds provided by owners and lenders.e.g -----Debt-equity ratio (D-E ratio) total long term debt/net worth.A high D-E ratio indicates that the company's credit profile is bad.

Activity Ratios: Activity ratios are employed to evaluate the efficiency with which firms manage and run their assets. They are also called turnover ratios.e.g-- Sales Turnover ratio = sales/total assets .A Sales Turnover ratio indicates how much business a company generates for every additional rupee invested.

Profitability Ratios: These ratios indicate the level of profitability of the business with relation to the inputs or capital employed. Some better-known profit ratios include operating profit margin (OPM). Operating profit margin is a measure of the company's efficiency, either in isolation or in comparison to its peers.

Dec 9 (7 days ago)

MAYUR GALA......

What is EPS, P/E, BV and MV/BV?

Earning Per Share (EPS): EPS represents the portion of a company's profit allocated to each outstanding share of common stock. Net income (reported or estimated) for a period of time is divided by the total number of shares outstanding during that period. It is one of the measures of the profitability of common shareholder's investments. It is given by profit after tax (PAT) divided by number of common shares outstanding.

Price Earning Multiple (P/E): Price earning multiple is ratio between market value per share and earning per share.

Book Value (BV): (of a common share) The company's Net worth (which is paid-up capital + reserves & surplus) divided by number of shares outstanding.

Market value to book value ratio (MV/BV ratio): It is the ratio between the market price of a security and Book Value of the security.

What is technical analysis?

Technical analysis is the study of historic price movements of securities and trading volumes.

Technical analysts believe that prices of the securities are determined largely by forces of demand and supply. Share prices move in patterns which are easily identifiable. Crucial insights into these patterns can be obtained by keeping track of price charts, leading to predictions that a stock price may move up or down. The belief is that by knowing the past, future prices can predicted.

 

Dematerialisation

What is Demat?

Demat is a commonly used abbreviation of Dematerialisation, which is a process whereby securities like shares, debentures are converted from the "material" (paper documents) into electronic data and stored in the computers of an electronic Depository (SEE next page).
You surrender material securities registered in your name to a Depository Participant (DP). These are then sent to the respective companies who cancel them after dematerialisation and credit your Depository Account with the DP. The securities on dematerialisation appear as balances in the Depository Account. These balances are transferable like physical shares. If at a later date you wish to have these "Demat" securities converted back into paper certificates, the Depository can help to revive the paper shares.

What is the procedure for the dematerialisation of securities?

Check with a DP as to whether the securities you hold can be dematerialised. Then open an account with a DP and surrender the share certificates.

What is a Depository?

A Depository is a securities "bank," where dematerialised physical securities are held in custody, and from where they can be traded. This facilitates faster, risk-free and low cost settlement. A Depository is akin to a bank and performs activities similar in nature.
At present, there are two Depositories in India, National Securities Depository Limited (NSDL) and Central Depository Services (CDS). NSDL was the first Indian Depository. It was inaugurated in November 1996. NSDL was set up with an initial capital of Rs 124 crore, promoted by Industrial Development Bank of India (IDBI), Unit Trust of India (UTI), National Stock Exchange of India Ltd. (NSEIL) and the State Bank of India (SBI).

Dec 9 (7 days ago)

MAYUR GALA......

Who is a Depository Participant (DP)?

NSDL carries out its activities through business partners - Depository Participants (DPs), Issuing Corporates and their Registrars and Transfer Agents, Clearing Corporations/Clearing Houses? NSDL is electronically linked to each of these business partners via a satellite link through Very Small Aperture Terminals (VSATS). The entire integrated system (including the VSAT linkups and the software at NSDL and at each business partner's end) has been named the "NEST" (National Electronic Settlement & Transfer) system. The investor interacts with the Depository through a Depository Participant of NSDL. A DP can be a bank, financial institution, a custodian or a broker.

Investments: Wat u cant believe, But true...

 

If you had bought 100 shares of Wipro at the rate of Rs 100 per share in 1980, they would be worth Rs 200 crore today.

If you had invested Rs 10,000 in Infosys shares in 1992, you would be richer by Rs 1.5 crore today.

If you had invested Rs 1,000 in Ranbaxy in 1980, you would have got Rs 1.9 crore today!

And not so far back in time, if you had invested Rs 40,000 in Unitech during the lows of 2004, your bank account would see a whopping Rs 1.1 crore today!



Some guy out there knew this. Today, he is laughing all the way to the bank.



So what was the magic strategy that made this guy so rich? Simple.

He bought, he waited



Waited for all those share splits and bonus declarations.

Waited for the company to grow from strength to strength.

Waited even when the shares teetered only to recoup in a few years' time.



Just as a child takes time to realise his/ her full potential, so does an investment need time to reward you handsomely.


Sure, the times are uncertain now. But let that not scare you to sell for a loss.


Patience pays

Look back. You will notice that selling in such times makes no real sense in the longer run. Those who didn't sell their stocks during the May 2006 crash but had, in fact, bought more would be a very happy lot today.


Investing long term is like that: it rewards you handsomely. Always. Exercise patience. As champion broker Rakesh Jhunjhunwala said recently, if you want to learn more about patience, get married!

The way I see it, you don't really need to get married to learn patience. Just look back in time. All these stocks have been multi-baggers for those who stayed on for the long term. They would have fetched you unimaginable returns today.

Open Interest in Share Markets

What is Open Interest.......?

Open Interest is the total number of outstanding contracts that are held by market participants at the end of the day.

It can also be defined as the total number of futures contracts or option contracts that have not yet been exercised (squared off), expired, or fulfilled by delivery.

Open interest applies primarily to the futures market. Open interest, or the total number of open contracts on a security, is often used to confirm trends and trend reversals for futures and options contracts.

Open interest measures the flow of money into the futures market. For each seller of a futures contract there must be a buyer of that contract. Thus a seller and a buyer combine to create only one contract.

Therefore, to determine the total open interest for any given market we need only to know the totals from one side or the other, buyers or sellers, not the sum of both.

The open interest position that is reported each day represents the increase or decrease in the number of contracts for that day, and it is shown as a positive or negative number.

How to calculate Open Interest..?

Each trade completed on the exchange has an impact upon the level of open interest for that day.

For example, if both parties to the trade are initiating a new position ( one new buyer and one new seller), open interest will increase by one contract.

If both traders are closing an existing or old position ( one old buyer and one old seller) open interest will decline by one contract.

The third and final possibility is one old trader passing off his position to a new trader ( one old buyer sells to one new buyer). In this case the open interest will not change.

 

Benefits of monitoring open interest...?

By monitoring the changes in the open interest figures at the end of each trading day, some conclusions about the day's activity can be drawn.

Increasing open interest means that new money is flowing into the marketplace. The result will be that the present trend ( up, down or sideways) will continue.

Declining open interest means that the market is liquidating and implies that the prevailing price trend is coming to an end. A knowledge of open interest can prove useful toward the end of major market moves.

A leveling off of open interest following a sustained price advance is often an early warning of the end to an uptrending or bull market.


Open Interest - A confirming indicator..?

An increase in open interest along with an increase in price is said to confirm an upward trend. Similarly, an increase in open interest along with a decrease in price confirms a downward trend. An increase or decrease in prices while open interest remains flat or declining may indicate a possible trend reversal.

The relationship between the prevailing price trend and open interest can be summarized by the following table.

Price Open Interest Interpretation
Rising Rising Market is Strong
Rising Falling Market is Weakening
Falling Rising Market is Weak
Falling Falling Market is Strengthening

 

Open interest (also known as open contracts or open commitments) denotes the total number of derivative contracts, such as futures and options, that are currently active on:
a specific underlying security, and
that have identical terms.

That is, the total contracts for a specific strike price and expiration date, that have been traded, but have not yet expired, have not yet been closed through a closing transaction, or have not yet been terminated via early exercise. A closing transaction occurs when a counterparty that is long the contract sells, or, conversely, when a counterparty that is short the contract buys.

Open interest is normally used as an indicator with a security but it can also be used with other instruments such as a currency.

Example

For the IBM call option struck at 90 and expiring in January 2007, the total open interest on February 10, 2006 was 10251.

Interpretation

Option traders use open interest as an indication of how actively traded the options in an underlying security may be. For instance, if open interest increases suddenly from one day to the next, it's likely that new information about the underlying security has been revealed, which may indicate a near-term rise in the underlier's volatility. Based on studies carried out in international exchanges,it is found that open interest is maximum near month expiry contracts.

 

Signals from open interest

OPEN interest is an important factor that investors should observe when trading in options. What is open interest?

It refers to the contracts outstanding on a particular day. Suppose the open interest in Satyam September 230 calls is 645 contracts. This means that 645 contracts are due for delivery on expiration of the option on the last Thursday of the month.

Open interest is different from volumes. Suppose you buy one contract of Satyam 230 calls from me, the open interest is one contract, as is the volume in that option.

Now, suppose you immediately sell the 230 calls to another person, the volumes will increase to two contracts. The open interest, however, remains at one! Why?

As you have sold an option that you bought earlier, you are out of the market, while another person has entered for the first time.

So, this new trader is long one contract, while I am still short one contract. Therefore, the open interest is only one contract.

Open interest can be used to read the sentiment in the stock concerned. How?

Observe the open-interest-to-volumes ratio. If this ratio is low but rising, it means that the volumes traded are higher than the open interest. This is an indication that traders are accumulating the option.

In such cases, the rise (change) in open interest over the previous day will be far higher than the rise (change) in volumes.

For instance, open interest may rise from 25 contracts to 100 contracts (300 per cent increase) while volumes may rise from 200 to 400 contracts (100 per cent increase).

Such a signal in a call option may well mean that the stock could move up.

If such a signal occurs in a put option, it may well mean that the stock could move down.

 

What is open interest in the futures and options segment?

Open interest is the total number of outstanding futures and options (F&O ) contracts at any point in time. In other words, these are open or yet to be settled contracts. For instance, if trader X buys 2 futures contract from trader Y(who is the seller), then open interest rises by 2.

If another trader A buys 2 futures contracts from trader B, then the open interest rises to 4. Now, if trader X unwinds his position and the counter party is either Y or B, then the open interest in the system will reduce by that quantity.

But if X unwinds his position, and the counter party is a new entrant, say C, then the open interest will remain unchanged. This is because while X has squared off his position, C's position is still open. The level of outstanding positions in the derivatives segment is one of the parameters widely tracked by the market.


How can one interpret open interest data?

While open interest shows the total number of outstanding contracts, the data is not much of use, if looked at on a standalone basis. In the futures segment, open interest data need to be read along with price changes in the futures contract.

A rise in open interest in a futures contract along with its price indicates bullishness, which means investors are creating long positions. Investors may benchmark the price changes in the futures contract to the underlying (the cash market).

For instance, on Monday, if Nifty futures closes at 3000 and S&P Nifty at 3025, then it is said Nifty futures are trading at a 25-point discount to the cash market index. Let's assume that open interest in the Nifty futures contract on Monday was 1 crore units. Now, on Tuesday, if Nifty futures closes at 3050, S&P Nifty at 3060 (discount reduces to 10 points) and open interest rises to 1.25 crore, then it means, investors have created long positions.

 

In another scenario, if open interest in the contract rises, but price falls, then it indicates that investors are cautious or bearish. In short, investors are creating short positions. Now, in case open interest in the futures contract falls, but its price moves up, it indicates a bullish trend. This situation is a result of covering of short positions. In another scenario where there is a fall in open interest and price too, analysts read it as a bearish signal, as investors are liquidating their long positions .

The above example can be used in these scenarios too. In the options segment, a change in open interest in put or call options enables traders calculate the put call ratio (PCR) — a popular sentiment indicators of options traders worldwide, which is the number of puts divided by the number of calls.


Is open interest the same as trading volumes?

Open interest should not be mistaken for volumes, which is the total number of contracts that have been traded in a trading session. Higher the number of trades in a session, more will the volumes swell, unlike open interest, which drops if a contract is liquidated. Usually, traders use volumes data along with open interest data and prices to derive a more concrete view on the market.


Why do traders get nervous when open interest is higher-than-average , when the market is also at record highs?

Many experienced traders perceive an abnormally high open interest in a rising market as a warning that there could be a reversal in the bullish trend. This is because several of the weaker traders in the market, who had jumped on to the bandwagon when the market was rising , could square up positions at the slightest signs of correction, thereby sparking a self-feeding fall.

Buying Recommendations from Marketcalls

Company:Vijay Shanthi Builders Ltd.
Industry:Construction & Contracting - Housing
CMP:178.65
PE Ratio:26.58
Recommendation :Outperformer

Investment Rationale:good financial growth on in the past few years considering the real estate boom and is expected to continiue in the near term,reputed builders in Chennai where real estate prices are seeing more escalation thereby making future and margins beneficial for the company,already 11 ongoing projects and 2 completed projected under the company's belt,the company recently announced a new project venture valued at 135 crores,the current PE suggest relative undervaluation as far as the real estate companies are concerned.

All this makes the stock a attractive investment opportunity at current levels.

 

 

Company:Spanco Telesystems & Solutions Ltd.
About the Company:Spanco Telesystems and Solutions Ltd.(508976 ) is one of the leading telecom systems integration and IT services company in India. From providing telecom integration services to multinationals, Public Sector Units and India's vast defense sector, Spanco has evolved to extend its expertise into the dynamic space of Business Process Outsourcing and RFID
Industry: IT Enabled Services
CMP:230.40
PE Ratio:14.56
Recommendation:Outperformer
Investment Rationale:strong fundamentals and high topline and bottomline growth in the past few years,the company has the license to operate the various passenger & tourism information services on behalf of Indian Railways over the next 10 years along with BSNL this will ensure steady revenue inflows,high holdings in the company of Reliance,BNP Paribas,Sundaram show its value in the market and hidden potential which big funds are queing to tap,several segments of business and efficient business model give confidence to invest,at current levels the company looks undervalued considering the high EPS growth and a relatively low PE ratio.

Sharekhan Investor's Eye dated December 03, 2007

 

STOCK UPDATE

Jindal Saw            
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs1,018
Current market price: Rs898

Price target revised to Rs1,018

Key points

• Jindal Saw Ltd (JSL), the largest pipe manufacturer in the country, continues to benefit from the huge opportunity in the sector due a surge in E&P activities globally and a strong domestic and export demand.
• At the end of the last quarter, JSL's order book stood at $715 million, which is executable by May/June 2008. Of this, $565 million orders are for Submerged Arc Welded (SAW) pipes while the remaining orders were for ductile iron (DI) and seamless pipes.
• The performance of the company is set to improve further going forward. The US operations had been a drag on company's earnings in the past. With the US division being hived off along with a better product mix due to higher contribution from seamless and DI pipes, the overall profitability of the company is set to improve.
• JSL has a big investment book with investments in various group companies, particularly Jindal Steel & Power and JSW Steel. The total investment value works out to Rs403 per share for JSL. We believe JSL has strong potential for value unlocking and the same is likely to trigger a re-rating of its stock. We value the core business of the company at 11x CY2009E earnings and take the investment value at a 75% discount to its current value.
• The company has an aggressive capital expenditure (capex) plan, as it is expanding its Longitudinal Submerged Arc Welded (LSAW) capacity by another 200,000 tonne by September 2008 and is adding 350,000 tonne to its Horizontal Submerged Arc Welded (HSAW) capacity. The total capex for the same would be Rs250 crore by the end of CY2008. The capacity expansion of the seamless pipes to 250,000 tonnes is also on schedule.
• We maintain our positive outlook on the company considering its leadership position in the industry and the scope for margin expansion. With the sale of the US operations, the company would also be sitting on a huge cash pile, which would partly be used for debt repayments and capacity expansions. We believe the stock is trading at attractive valuations at 17.1x its CY2008E earnings and 10.8x its CY2009E earnings. We maintain our Buy recommendation on the stock with a revised price target of Rs1,018.

New Multibagger: Shiv-Vani Oil

 

Shiv-Vani Oil-Drilling Profits

BSE 522175;

CMP Rs 551

Target: 1000 in 12 months

 

Shiv-Vani Drilling is likely to become one of the prime beneficiaries of the near $ 3 bn Oil Exploration Budget of Ongc over the next 2-3 years. The hunt for Crude Oil is on in right earnest, as the GOI opens ever more larger blocks to foreign and domestic oil explorers both on-shore and off-shore. The Key Mantra these days is Oil Security and beyond Mukta, Panna, Tapti, Lakshmi, Aishwarya and Cairns Mangala on-shore prospects, only the Deen Dayal and Dhirubhai fields in AP offshore have discovered either oil or gas, since Crude was discovered in the Assam-Arakan belt before independence and in the Bombay High segments in then early 70s.

 

Shiv-Vani has 25 onshore rigs under operation with one more getting added in FY08. Additionally, it has 4 offshore vessels and is seeking to acquire jack-up rigs and PSVs, which would diversify its Revenues from just onshore oil exploration to the Offshore Oil, Pipeline Construction, Gas Compression and Allied Services segment especially development of Coal Bed Methane blocks and gasification and re-gasification of Natural Gas as more gas becomes available for transport, in about 8 months from now from the Krishna-Godavari fields. Shiv-Vani is the biggest private sector rig owner and operator in India for on-shore operations with 4 seismic data acquisition equipment, 4 crew boats, 7 compressors, 233 drilling rigs, 425 logistic supply vehicles, that include cranes, bunk houses, trailers, prime movers and forklifts.

 

Shiv-Vani is undergoing a CAPEX of Rs 600 crore, a part of which has been financed through private equity placed with Citigroup Internationational Growth Partnership Mauritius at Rs 375 per share. This CAPEX is being made to prepare Shiv-Vani for the NELP VII which will offer 80 to 85 blocks covering an area of 352,000 sq kms.

 

While Ongc has been accounting for nearly 60 per cent of Shiv-Vani's Revenues, it is the entry of Cairn, Reliance, Videocon and GSPC which is making the field bigger and wider. Earlier this year Ongc had made an attempt to acquire 25 onshore rigs from UPET of Romania, which ultimately did not work out. Now Ongc is trying to acquire 17 Rigs for exploration in the Assam-Arakan Oil belt. Shiv-Vani is likely to be the prime beneficiary of this effort as it possesses the largest number of onshore drilling rigs in the country. Any newsflow on this count will work as a price trigger for Shiv-Vani.

 

Even though FY09 will turn out to be a year of massive growth for Shiv-Vani, but at 16 times FY08 forecast earnings Shiv-Vani Oil appears to be amongst the cheapest plays in the sector when compared to marginal oil drilling players like Garware Offshore and Jindal Drilling which offer just OSVs and 2 Oil Drilling Rigs between themselves.

 

Buy Mangalam Cement with a target of Rs 300: Market Calls

Script Name : Mangalam Cement

CMP           :  Rs192

Target1       :  Rs 250

Target2:      :  Rs 300

Time Frame : 1Month(Target1), 3 Months(Target2)

 

Mangalam Cement Limited was promoted in the year 1978 by the famed House of Shri B.K.Birla, the most eminent and illustrious industrialist of the country. It is a professionally managed and well established cement manufacturing company enjoying the confidence of consumers because of its superior quality product and excellent customer service.

The company has recently commissioned its state-of-the-art new cement plant with German technology for producing 7 lakh tonnes per annum at its existing site at Morak, Distt. Kota in Rajasthan under the name of Neer Shree Cement.

Financials of Mangalam Cement	Quarterly	Annual
Income Statement	(Sep '07)	(Mar '07)
Net Sales	133.48	228.00
Other Income	1.37	1.77
PBDIT	41.18	69.45
Net Profit	27.80	48.04

 

"We initiate coverage on Mangalam Cements Limited (MCL) with a BUY. MCL is a Rajasthan based cement player with an aggregated capacity of 1.5 million tonnes. MCL has repaid its entire long-term debt as on Oct'06 and has undertaken cement capacity expansion by 0.50 million tonnes which is to be commissioned by September'07. It is also setting up 17.5 MW thermal based captive power plant (to be commissioned by Jun'07) which would result in savings in power cost to the tune of Rs 133 per tonne." 

"We expect cement prices to remain firm during FY07E & FY08E since we believe that major capacity additions to come by end FY08E and early FY09E. This would drive MCL to report a 21% CAGR topline growth between FY06- FY08 with EBITDA margins improving from 24% in FY06 to 29.7% in FY08E and PAT increasing at a CAGR of 30% during the period FY06-FY08E. With an expected CAGR of 30% in EPS over FY06-FY08E, we expect ROCE and ROE levels to remain healthy at 28.5% and 36.0% respectively as on FY07E and 41.9% & 55.4% ROCE & ROE respectively for FY08E."

Investment Positives   

"Well positioned in the northern markets where the cement prices are expected to firm up"

"MCL has 2 cement plants in the state of Rajasthan with capacities aggregating to 1.50 million tonnes (capacity utilisation levels of more than 100%) catering to the northern cement markets of Rajasthan, UP, Haryana & Delhi. We expect the cement demand in the North to grow by 12%+ YoY in FY07E & FY08E driven by strong housing demand and infrastructure development in the region. Fresh capacities are expected to come up only by end FY08E and early FY09E hence we expect the cement prices to remain firm during 2 nd  half of FY07 & FY08E respectively." 

Expansion of cement capacity  to 2.0 mn tpa

"MCL has undertaken an expansion plan for increasing its cement capacity from 1.5 mn tonnes currently to 2.0 mn tonnes by September'07 at a capex of Rs 750 million, which is to be entirely financed from internal accruals. This would help the company to service the increasing demand in its existing markets resulting in increased EBITDA margins."

Power costs savings to accrue from FY08E onwards

"The commissioning of a 17.5 MW power plant, would result in savings of power cost by about Rs 133 per tonne. MCL is setting up this 17.5 MW thermal based captive power plant, which would take care of 100% of its power requirement for the 2.0 million tonne cement capacity.  The captive power plant, which will be commissioned in September'07, would save about Rs 2 per unit of power resulting into a savings in power cost by about Rs 160 million. Further, the captive plant would also ensure uninterrupted power resulting in increased operational efficiencies."

MCL has paid back all its long-term debt

"MCL has been able to repay its entire debt of Rs 960 million as on Oct'06. The only loans on the company's books are on account of deffered sales tax loan totaling Rs 93.5 million (interest free) and security deposits from dealers - Rs 70 mn (interest @ 8% p.a). Further, it has tied up for a Rs 525 million loan for funding its capex (Rs 700 million) of 17.5 MW captive power plant. With this the D: E for MCL has become healthy at 0.2 as on FY06 and post expansion we expect the D: E to move up to 0.3 by FY08E."

Cash Generation to remain healthy

"We estimate MCL to report healthy operational cash flows in the next two years that is up to FY08E. We believe that MCL would report cumulative operational cash flows to the tune of Rs 1348.4 mn between FY07-FY08E. These robust cash flows would ensure that the company finances a major portion of its capex and debt servicing initiatives in the next 12-18 months from internal accruals without any equity dilution."

Concerns

"Any slowdown in infrastructure spending and sharp drop in cement prices can affect the profitability of the company." 

Valuation

"At the current price of Rs 208, MCL trades at an EV/EBIDTA of 10.1 x FY07 (6 months period) and 3.3 x FY08 estimated EBITDA of Rs 585.1 million & Rs 1698.9 million respectively. EV/Tonne for FY08 at an increased capacity of 2.0 million tonnes stands at USD 63.5 (including 17.5 MW power plant)."

"The EV/ Tonne of similar smaller cement companies like JK Laxmi (capacity: 3.4 million tonnes) and Mysore Cement (2.1 million tonnes) for FY08 stands at USD 76 & USD 103 respectively. With a debt free status, increased capacity by Q2 FY08 and expected improvement in operational efficiencies post installation of captive power plant we believe that MCL is a good long term investment."

"We recommend a BUY on the stock with a target price of Rs 306 based on DCF valuation. At our target price the stock will be valued at EV/EBITDA of 5.0 x FY08 and PE of 8.4 x FY08 EPS of Rs 36.2. At the target price the company is valued at an EV/Tonne of USD 94.5."

 

SAIL Target : Rs 320 : CMP 277.20

Script Name : SAIL Taget           : Rs 320 CMP             : Rs 277.20 Time Frame : 1 Month     Company Profile

Steel Authority of India Limited (SAIL) is the leading steel-making company in India. It is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power, railway, automotive and defence industries and for sale in export markets.

Ranked amongst the top ten public sector companies in India in terms of turnover, SAIL manufactures and sells a broad range of steel products, including hot and cold rolled sheets and coils, galvanised sheets, electrical sheets, structurals, railway products, plates, bars and rods, stainless steel and other alloy steels. SAIL produces iron and steel at five integrated plants and three special steel plants, located principally in the eastern and central regions of India and situated close to domestic sources of raw materials, including the Company's iron ore, limestone and dolomite mines. The company has the distinction of being India's largest producer of iron ore and of having the country's second largest mines network. This gives SAIL a competitive edge in terms of captive availability of iron ore, limestone, and dolomite which are inputs for steel making. SAIL's wide range of long and flat steel products are much in demand in the domestic as well as the international market. This vital responsibility is carried out by SAIL's own Central Marketing Organisation (CMO) and the International Trade Division. CMO encompasses a wide network of 34 branch offices and 54 stockyards located in major cities and towns throughout India. With technical and managerial expertise and know-how in steel making gained over four decades, SAIL's Consultancy Division (SAILCON) at New Delhi offers services and consultancy to clients world-wide. SAIL has a well-equipped Research and Development Centre for Iron and Steel (RDCIS) at Ranchi which helps to produce quality steel and develop new technologies for the steel industry. Besides, SAIL has its own in-house Centre for Engineering and Technology (CET), Management Training Institute (MTI) and Safety Organisation at Ranchi. Our captive mines are under the control of the Raw Materials Division in Kolkata. The Environment Management Division and Growth Division of SAIL operate from their headquarters in Kolkata. Almost all our plants and major units are ISO Certified.

Major Units     Integrated Steel Plants • Bhilai Steel Plant (BSP) in Chhattisgarh • Durgapur Steel Plant (DSP) in West Bengal • Rourkela Steel Plant (RSP) in Orissa • Bokaro Steel Plant (BSL) in Jharkhand • IISCO Steel Plant (ISP) in West Bengal   Special Steel Plants • Alloy Steels Plants (ASP) in West Bengal • Salem Steel Plant (SSP) in Tamil Nadu • Visvesvaraya Iron and Steel Plant (VISL) in Karnataka   Subsidiary • Maharashtra Elektrosmelt Limited (MEL) in Maharashtra   Joint Ventures SAIL has promoted joint ventures in different areas ranging from power plants to e-commerce.   • NTPC SAIL Power Company Pvt. Ltd A 50:50 joint venture between Steel Authority of India Ltd. (SAIL) and National Thermal Power Corporation Ltd. (NTPC Ltd.), it manages the captive power plants at Rourkela, Durgapur and Bhilai with a combined capacity of 314 megawatts (MW) • Bokaro Power Supply Company Pvt. Limited This 50:50 joint venture between SAIL and the Damodar Valley Corporation formed in January 2002 is managing the 302-MW power generation and 1880 tonnes per hour steam generation facilities at Bokaro Steel Plant. • Mjunction Services Limited A joint venture between SAIL and Tata Steel on 50:50 basis, this company promotes e-commerce activities in steel and related areas. • SAIL-Bansal Service Center Ltd. SAIL has formed a joint venture with BMW industries Ltd. on 40:60 basis to promote a service centre at Bokaro with the objective of adding value to steel. • Bhilai JP Cement Ltd SAIL has also incorporated a joint venture company with M/s Jaiprakash Associates Ltd to set up a 2.2 MT cement plant at Bhilai • SAIL has signed an MOU with Manganese Ore India Ltd (MOIL) to set up a joint venture company to produce ferro-manganese and silico-manganese at Bhilai. Ownership and Management The Government of India owns about 86% of SAIL's equity and retains voting control of the Company. However, SAIL, by virtue of its 'Navratna' status, enjoys significant operational and financial autonomy     Recent Buzz in SAIL   SAIL plans Rs 53K cr capex over next 3-5 yrs     SAIL has planned a capex of Rs 53,000 crore over next 3-5 years, SK Roongta, CMD , SAIL informed CNBC-TV18. SAIL will hike its hot metal capacity to 26 mt, he said. The company's debt-equity ratio is seen at 1:1 for the planned capex. Roongta said that steel demand is likely to grow 10-12% next year also. Roongta, believes that steel prices are at healthy levels currently. He was speaking to CNBC-TV18. Roongta said that steel players are seeing price hike of USD 50-70/tonne in January. The demand growth will slow in case of US recession, he feels.     Q: What is your outlook on prices, given the way the raw material prices are spiking up?   A: Steel prices currently are at quite a healthy rate. But there are certain concerns relating to raw material input prices for the steel industry; especially two major inputs - iron ore and coking coal. The long-term price for the year 2008-09 has to be settled across the globe for these two major raw materials. There are expectations that there will be substantial increases in the prices of both these raw materials, which will push the cost up for every steel producer; anywhere ranging from USD 50 to USD 70 per tonne and obviously that may impact steel prices a little bit.   Q: What does this mean for realizations and volume growth going into the first half or the first couple of quarters of the next calendar year?   A: As far as steel demand in India is concerned, it is growing at a very healthy rate of 10%-12% and we expect that demand will continue to grow at that rate. So volume growth in demand will come for year 2008-09 as well. We expect that this trend will be maintained. So we do not expect any problem with regard to marketability of steel.   Q: How much are you provided for in-house with your own iron ore and coking coal facilities? Would this rise in prices translate into a margin improvement for you? Basically, what kind of margins are you expecting in the first half of 2008?   A: We are provided for full captive use of iron ore for our current production. So any change in the iron ore prices may not impact our costs. But regarding coking coal, to a great extent we depend upon imported coking coal - almost 70% of our needs are imported and we get about 25% from Coal India. We have just about 5% in-house coking coal production. So that is going to certainly impact our cost. Added to that, are the increasing costs of shipping. So these two factors will certainly impact our costs as well. Margins will depend upon how steel prices behave in 2008.   Overall demand is growing. But there are certain concerns relating to economic risks; related to subprime issues in US. If that impacts the US economy and global economy in general, then the rate of growth of steel consumption might slowdown in 2008. So the prices may also be determined by the overall demand in supply and producers may not be able to pass on the entire cost increase.   Q: Specifically with regards to your capacity now, your hot metal capacity  - you are going to hike it to 26 million tonne; what is the outlay in terms of investments in capital expenditure plan that you can lay out for us over the next 24-36 months?   A: We are hiking our hot metal capacity from 14 million to 26 million tonne over the next three-three and a half years and outlay for this entire capacity expansion is going to be of the order of about 50,000 crore or USD 12 billion. That also includes outlay for our sustenance schemes. If we have to continue with the current capacity, we have to do certain minimum investments and also for technological upgradation like converting our semi-finished steel into finished steel, which does not add to capacity expansion, but improves our product mix.   For example, we are still having about one-third of our production through energy inefficient route, which we are going to convert into 100% continuous cost route. So all these three factors put together our outlay will be roughly about 50,000 crore.   Q: Twelve months from now, what is likely to be your capacity, are you likely to see some expansion already in one year and secondly are you likely to tap any resources from the market or the banks in the next twelve months. If so, what kind of instruments and how much?   A: Next twelve months, we are not adding to any nameplate capacity. But we are certainly working on certain internal efficiencies and from the same capacity through better utilization; we can improve our production and productivity. But we are not adding to the new capacities in the next twelve months.   Q: Lastly for the entire capex that you have pointed out for us, what sort of debt-equity ratio will SAIL maintain over the next three years and what are you currently equipped at on the debt equity ratio?   A: I think we have mentioned it in the past also that for the entire capex plan of SAIL, we have planned for a debt equity ratio of 1:1 and we should be able to generate 50% of our required resources internally and we will go for debt for the balanced 50%.

 

 

 

AllSEC Technologies : Target Rs200 : Marketcalls

Script Name : Allsec Technologies

CMP Price : 128

Target  : 200

Time Frame : 6 months

 

Allsec Technologies

 

Allsec Technologies Limited (NSE - ALLSEC), India, is a pure play, third-party BPO Company offering both voice and non-voice services on a blended delivery platform.

Starting out in 1998, Allsec has emerged as a global corporation, servicing veritable corporate majors across the world on a 24/7/365 basis. Balancing rapid growth with an expansion in service offering, Allsec is acknowledged for its expertise in BFSI, Tech Support, Quality Assurance and HR Processing domains.

Allsec acquires 100% equity of KBI, a BPO company based out of Manila, Philippines. KBI is involved in web-page development and related technical support. Allsec proposes to expand this 150 seats operation to 750 seats by Jan 08. The operations in Manila will cater to the needs of existing and proposed customers from the US, Australian and ASEAN markets.

 

Latest News

 

Allsec acquires 100% equity of KBI, a BPO company based out of Manila, Philippines. KBI is involved in web-page development and related technical support. Allsec proposes to expand this 150 seats operation to 750 seats by Jan 08. The total cost of acquisition would be around USD 1.5 million.The operations in Manila will cater to the needs of existing and proposed customers from the US, Australian and ASEAN markets.

 

Summary

 

 

* Allsec Technologies is Trading at the bottom now

*Can See Breakout at any time

*Strong Support at 115

 

 

 

Religare recommends 'buy' on Vijay Retail; target Rs 1,018

MUMBAI: Religare Securities recommends a 'buy' on Vishal Retail with a potential appreciation of 45 per cent.

Vishal Retail is one of the fastest growing retail companies, having opened 70 stores in 49 cities over past five years. The company rolled out 1.3 million square feet of retail space at the end of 2006-07 and plans to add another 5 million square feet over next three years. Of this, it aims to add 1.1 million square feet in 2007-08 and already tied up with real estate developers for 0.8-0.9 million square feet.

Religare expects the new rollouts and steady growth in old stores to enable Vishal to witness 77 per cent revenue CAGR to Rs 3,320 crore over FY07-FY10.

The brokerage has undertaken a comparative valuation of Vishal Retail with Pantaloon Retail and Shoppers' Stop. Although the comparison is not on a like-to-like basis, Religare sees common ground in the growth potential for all these companies.

India's $300 billion retail sector is at a point of inflexion and is estimated to grow at CAGR of 6-7 per cent over 2007-10. According to industry sources, organised retail is estimated to grow at CAGR of 25-30 per cent over 2007-10 to reach $60 billion.

Both existing and new players have announced aggressive expansion plans. Religare estimates that the organised retail sector will receive investments over $20 billion over next five years.

Vishal has highest EBITDA margin amongst peers like Shoppers' stop and Pantaloon retail. The brokerage believes tighter cost control has enabled Vishal to record strong margin expansion, with the EBITDA margin coming in at over 11 per cent for 2006-07.

As a conservative measure, Religare has maintained the existing discount to peers in its valuation based on 2008-09 estimates, thus the target 2008-09 P/E multiple of 22.6 times for Vishal Retail, a 52 per cent discount to its peer. This gives a target price of Rs 1,018 for the stock, which signifies a price-to-sales ratio of 1 times 2008-09.
 

PASARI SPINNING. MILLS BROKE OUT

 

Script Name : Pasari Spinning Mills

Target         :  Rs36-38

Time Frame :  10-15 Days

Potential Upside : More Than 60%

Stop Loss : Rs18

 

Finally long awaited break out took place

Stock has broken its all time high and CMP is 23.90

ALL selling is now stopped ...

Still one can try his luck early in the morning to buy this stock

First TARGET 31
Second Target 35-36
Third Target 40-42

 

Good luck

 

 

 

 

Buy KEI Industries; target of Rs 100: Market Calls

 

Market Calls is bullish on KEI Industries and has recommended buy rating on the stock with a target of Rs 100.

 

Market Calls report on KEI Industries:

 

Investment Rationale

 

The KEI Industries has a market share of 15% selling mainly to institutions & it is targeting a marketshare of 20% in the coming years.

 

KEI Inds.'s books contracts with fixed prices, it has tender based sales. So it quotes raw material costs plus margins, thus its margins are cushioned from increasing costs caused due to the fluactuations in raw material prices.

 

The expansion plans being undertaken will help the company report higher utilisation levels, facilitate better operational controls, translate into significant savings on manufacturing and administrative overheads and most importantly, lay the foundation for taking on and executing high-value EPC projects.

 

Tax rate for the year estimated to be 26% for the current year and the next year. Expect tax rate to come down to 20% after that.

 

Previous quarter the Co. bagged two big contracts worth Rs 25 crore and Rs 19 crore.   

 

Valuation  

 

Backed by strong demand drivers, the cable industry is likely to witness strong volume growth, though the surge in input costs may create some challenges for the industry. However, it is expected the industry will be able to partly pass on rise in raw material cost to customers on account of strong demand.

 

Going forward considering the strong clientele, robust growth over the last few years and with the upcoming expansion plans the Co. is expected to post topline growth of 95% & 50% in FY07 & FY08. The CMP of Rs.74 is discounted 10.08X & 5.48X the estimated forward earnings of Rs.7.34 & Rs.13.48 for FY07 & FY08. We recommend a 'BUY' on the stock estimating an upside of 35% from the current levels (target of Rs 100) over a span of 12-months.       

Kolte-Patil Developers Limited IPO Information

»» Public Issue Open : November 19, 2007 to November 22, 2007
»» Public Issue Type : 100% Book Built Issue (Initial Public Offer IPO )
»» Public Issue Size: 18,812,709 Equity Shares of Rs. 10/-
»» Face Value: Rs. 10/-
»» Public Issue Price: Rs. 125/- to Rs. 145/- Per Equity Share
»» Maximum Subscription Amount for Retail Investor: Rs 100,000/-
»» Listing At: BSE, NSE
»» Lead Manager(s): DSP Merrill Lynch Limited and Edelweiss Capital Limited
»» Registrar : Bigshare Services Pvt Ltd (Ph: +91 22 2847 3747/3474 Email: bigshare@bom7.vsnl.net.in)

 

Incorporated in 1991, Kolte-Patil Developers Limited is a relatively small Pune based real estate development company. As of last year company has developed 25 projects, 22 in Pune and 3 in Bangalore which includes 2 IT Parks. Company has 28 ongoing projects in Pune and Bangalore; 23 are residential and 5 are commercial, IT Parks.

Company is ISO 9001 certified and received the Government of Maharashtra's First Prize for "Best IT Infrastructure in the State of Maharashtra" for our GigaSpace IT Park project in Viman Nagar, Pune.

For 3 of its big projects in Pune company has joint venture with ICICI Venture. ICICI Venture has provided financing for these projects. Company has identified and acquired lands, invested equity, designed and conceptualized the projects and served as project manager and developer for these projects.


Objects of the Issue:
The objects of the Issue are to achieve the benefits of listing on the Stock Exchanges & to raise capital for
Finance land acquisition;
Finance the construction and development costs for some of the proposed projects;
Fund expenditures for general corporate purposes.

Deccan Gold Mines:A real goldmine for you

Deccan gold mines was suggested by me several times over the last 2 years.As i always say patience pays that got vindicated again.Deccan gold from 12 since my recomendation on march 07 closed at 50rs on this friday itself.So another 4 bagger,make it an investment free asset.


ScripScan=Deccan Gold Mines
Price=12
Bse=512068

Exploration History=Exploration for gold gained momentum over the last 50 years when the GSI mapped and prospected many of the greenstone belts where extensive gold mining activity was observed. Such exploration resulted in identifying a number of areas where small and medium size gold deposits exist. Deccan Gold has made applications over several such areas which will be intensively explored upon grant of prospecting-licences to the company

Introduction:Deccan Gold Mines is engaged into the business of gold mining and gold exploration.This company has been promoted by Australian investors through a Mauritius subsidiary, where the promoters hold about 70% stake.As of now,DGM is yet to show any zero revenues and at Rs 80 crore marketcap,the company may look to be highly expensive but It is sitting on some of the most prospective blocks in the country and in case they strike gold, this Rs 80 crore of marketcap will look too small.Deccan gold has got close to about 10,000 square kilometer of blocks in different states like Karnataka, Andhra Pradesh, Rajasthan and Kerala. The company has also done a lot of exploration for the past four years and has received encouraging results from its blocks in Karnataka, particularly the Hutti block and the Shimoga belt block.

Prospects=The prospects for gold mining in India are very strong based on the following criteria:-

Ancient gold mining activity
Geological environment
Exploration history
Modern exploration

Conclusion=India produces just 3 tonne of gold per annum as compared to 300 tonne, produced by Australia. So there is a huge unexplored potential in the sector. And with Deccan Gold being one of the first players, sitting on the most probable blocks, has got a first mover advantage.Gold mining business is just like the oil exploration business, where there is a high degree of uncertainty involved. Nobody knows whether the amount that is being spent for the exploration process will really yield any results or will have to be written off.But these company is something which can yield windfalls of gains in the long run.At 12 rs its a safe enough scrip to mint money.



Regards,
ARUN
I can be reached at: arunanalyst@rediffmail.com

ETC Networks:"A worthy merger story"

Scripscan-ETC Networks
CMP-150
Traded in:NSE-BSE
Story:Merger story


Business:ETC Networks derives its revenues mostly from commercials and trailers advertisements.The company has couple of free to air satellite television channels: ETC-the music channel and ETC Punjabi(ETC Punjabi was launched on June 2000) –a general channel.ETC Punjabi has forayed into Event Oriented Programs and produces all programs in-house.ETC Punjabi has also bagged exclusive rights for 11 years to telecast Gurbani Live from the Golden Temple,Amritsar.All these developments should significantly boost the revenues for the company in the years to come.

Industry Overview:Shifting consumer preferences, evolving technology and convergence of traditional and new media has brought resurgence in the entertainment and media industry.The recent estimates show that TV penetration has crossed the 110 million household mark, of which 61% homes have cable & satellite connection. This massive reach attracts new players into all segments of media to seize on the multi-million opportunities.

Opportunities in the Entertainment Sector:The introduction of CAS and DTH has come as a boon to the whole industy.The television advertising revenue estimated at Rs. 6600 Crores is expected to grow to Rs. 12,300 Crores by the year 2011.The subscription revenues are expected to touch Rs. 37,800 Crores by the year 2011.The media and entertainment industry expects to touch the landmark figure of Rs. 1,00,000 Crores by 2011. As per FICCI - PwC Annual Media Report, the year 2006 was the turning point for the media industry and it is estimated to be worth Rs. 43,700 Crores.

Recent financials:In Q2FY08,ETC has reported a topline of Rs. 13.50 cr vs Rs. 9.57 cr, a growth of 41.1% y-o-y.It reported a PAT of Rs. 3.42 cr (up 232% y-o-y) and an EPS of Rs. 2.46 versus Rs. 0.69 in the corresponding quarter.Lower programming costs,icreasing advertising revenue from ETC Punjabi and increased exposure time on ETC Music(increased broadcasting of songs,trailers for an additional one hour time)attributed significant jump in sales.

Merger:Very recenly,( November 2, 2007)the merger of ETC with ZILS has been approved by both the companies shareholders.The exchange ratio will be 1 equity share of Rs. 10 each of ZILS for 2 equity shares of Rs. 10 each of ETC.All formalities are expected to be completed by February-march 2008.

"Zee Interactive Learning Systems Limited'(ZILS)"

Business:Zee Interactive Learning Systems Limited'(ZILS) an ISO 9001 certified education provider company and is the education arm of Zee Network. The company was formed in 1999 to create a learning network and deliver a variety education content and solution for range of career and vocation through multiple delivery platforms.ZILS delivers learning solutions and training to various segments of society through its divisions:-

1)Zed CA:Zed Career Academy

2)ZIMA:Zee Institute of Media Arts

3)Kidzee:Play group,Nursery,Activity Center

4)ZICA:Classical and Digital Animation training Academy

5)E-Learning:online education

Aggresive Expansion:ZILS presetly is planing to tap semi-urban and rural centres aggresively with a `grahmin' model Kidzee school.The company is also working on promoting Kidzcare, a daycare facility, and Kidzee High, a full-scale school with CBSE curriculum.ZILS already has signed up for starting 25`Kidzee High' schools and eight of them are going to operate this year.The company had also started a Kidzcare centre in Bangalore and would open one in Hyderabad soon.The annual fee for the kids admitted to Kidzee would be between Rs 6,000 and Rs 36,000 depending on the centres where they are located.With the launch of the company's first Kidzee play school in the city,ZILS hope to start at least 10 such schools in the Coimbatore region over the next 9 months.ZILS has already set up 550 play schools in 260 locations accounting for an annual student strength of 50,000 and these schools employed about 2,000 trained teachers.

Tax Benefits:The merged entity will also avail tax benefits for another few years due to accumulated losses of about Rs.40 cr in ZILS books.Though they would be liable to pay MAT pegged at 11.3%.ETC networks has already provided for tax on a conservative basis in the first two quarters of FY08,which could be reversed later.

Conclusion:It would be prudent to note that,ETC has surplus cash on its balance sheet, to the tune of about Rs. 20 crores which can be utilized for ZILS's business, where the potential is immense.The merged entity is expected to post revenues of around 95crs in 08 with a Profit after tax of around 17crs.Equity would be around 10crs so Eps comes at 17rs for 08.Now for every 2 shares of etc networks one would get 1 shares of ZILS.So real effective price would be 300rs(Etc is quoting at 150rs and one would get 1 shares for every 2 shares held).Even at that price its quoting at just 17.7 times its estimated fy08 earnings.Stocks in the similar category,Computer – Education,like Educomp Solutions, Everonn Systems are quoting at P/E multiples in excess of 60-70 times expected earnings.Even IF we give a P.E of 35 to the merged entity,its coming as a doubler.Well lets leave the valuation to you guys to decide."Altogether a great buy".



Regards,
ARUN
I can be reached at: arunanalyst@rediffmail.com

Info edge:Get a pie of the internet revolution

Info edge was suggested by me at 670rs last year.The prospects looks far more exciting and there can be tremendous upside in the counter even from present levls of 1360rs.


Scripscan=Info Edge (India)
Cmp=1360
Target=2000
Duration=6-9 months
Traded on=BSE-NSE


Business:Info Edge owns some of India's most popular internet properties such as – naukri.com (India's #1 job portal), jeevansathi.com (India's #3 matrimonial portal)and the property portal,99acres.com.The company also owns Quadrangle, an offline division focussed on executive search.

Industry Structure & Developments: Internet is similar in many ways to mass communication media like print,television and radio. Internet however, offers significant advantages over other mediums like speed, interactivity, longer shelf life and ease of access resulting in its proliferation worldwide. Worldwide the internet companies typically earn revenue by charging a fee for providing / exchanging information or for advertising / selling products and services.Info edge businesses are very similar to such businesses worldwide in terms of operations and revenue model.

Internet and computer penetration:India is experiencing a strong growth in internet and PC penetration.The frequent high quality internet users in India are expected to increase from 2.8 million in FY 2007 to 4.3 million by FY 2008 as per estimates of the Internet and Mobile Association of India.The Government has also adopted a number of policies that are promoting internet penetration in India.All these are expected to boost the companys profits and turnover tremendously in the coming years.

Conclusion:The valuation looks stretched at 32x FY09E earnings.However,the company is in the high growth phase with its plans to diversify into providing online classified services in new market segment.INFO EDGE is the only listed pure internet based play with no benchmarks.Abroad, good online businesses get huge valuations,due to their high growth rates and high margins.Info edge has a significant early mover advantage in the online recruitment segment in India.Naukri.com is currently India's No.1 website for online recruitment services, based on the data provided by Comscore. It was also rated as India's 7th most visited website by Alexa.

Considering the robust outlook,strong and experienced management and high potential,Info edge looks all set to rock."GO FOR IT".



Regards,
ARUN
I can be reached at: arunanalyst@rediffmail.com

Mold-Tek Technologies:Spreading its wings

Scripscan:Mold-Tek Technologies Ltd
Code:526263
cmp:125
Target:200
Duration:6-9 months
Traded in:BSE


Introduction:Mold-tek is the leader in Plastic Pail Packaging industry in the country.The company caters mainly to paints and lubes industry.It is only company from India producing injection and blow moulded containers,PET bottles and jars under one roof.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.

Demerger:To unlock value for its shareholders mold tek is demerging its Kpo and Plastic business and plans to list both companies seperately.The demerger is expected to happen by January 2008 and it would be effective from April 2008.The demerger ratio is expected to be 70:30,with plastics packaging accounting for 70% and the remaining 30% would be KPO business.

Platic Business:Mold tek is the only player and market leader with a 38% share in the plastics pail packaging industry.The divison has recently received orders from RPL and Emirates Petroleum,where in the company would be the sole supplier to these companies in the lube sector.The company has also been succesful in adding new clients like ICI and Kirloskar Oil recently.Mold tek is planing to acquire leased premises near its Daman plant to expand its capacity further by 20% at a capex of Rs. 2.5 crs within the next few quarters.It is also planing to provide innovation-packaging solutions for the Pharma,Cosmetic and Food products.With its capacity expansion in Daman plant the revenues and margins are expected to rise considerably.

KPO business:Mold tek"s KPO Division is providing services to more than 25 US Clients and is all set to add 10-15 clients more in the present fiscal.With the company moving into different segments like residential buildings,exploring different lines like Mechanical Engineering and oil platforms, the growth opportunities for KPO business is huge.

Revenue breakup of KPO&Plastic divison of the company:-

KPO Division:Profits up by 71% to Rs.2.69 crores for the 2nd quarter ending 30.09.2007 as against Rs.1.57 crores of last equivalent quarter. Sales up by 89% to Rs.5.00crore from Rs.2.65crore.KPO division Quarter on Quarter (2nd quarter on 1st quarter) growth of sales up by 18% to Rs.5.00crore from Rs.4.23crores and net profits up by 18% to Rs.2.69crore from Rs.2.28crores.The company maintained its profit margins inspite of drop in dollar value during last 6 months. This was achieved through execution of larger structural engineering projects started after the acquisition of Cross Road Detailing Inc in april 07.

Plastics Division:Profits went up by 55% at Rs.0.99 crores against Rs.0.64 crores in previous corresponding quarter.Revenues jumped 4% at Rs.23.12 crores against Rs.22.28 crores.

CRD Acquisition:In april this year,Mold tek acquired the US-based engineering and detailing firm Cross Roads Detailing Inc (CRD) in a $1.3 mn deal.Cross Roads was incorporated in the year 1999 and is providing structural engineering and detailing services to about 20 Fabricators and Builders in USA.On our interaction with the management:these is what they had to say about the acqusition,"The acquisition of Cross Road Detailing Inc has started yielding high value added projects to us. We expect to grow exponentially as we have enhanced the capacity in providing Engineering Services for "High Rise Buildings" for our USA and Canadian clients".Mold tek expects to get orders worth $2.5 million during the fiscal FY08 through its CRD operations.The company expects consolidated sales to rise by Rs. 5-6 crs due to CRD account sconsolidation in FY08.

Merger of Tech Men Tools Ltd:Tech men is engaged into the business of manufacturing small packs having capacity of 500-600 TPA.Tech Men Tools has been merged with the company recently.Tech men posted revenues of 4.5 crs and bottomline of around 45 lacs in 07.The numbers of tech men tools would be reflected in mold tek"s 3rd quarter numbers.Tech men has got a topline clientele of biggies like AsianPaints, Bharat Shell, Tata Coffee, Hyderabad Chemicals etc.

Manpower:The manpower,which was 40 in the year 2005,is now more than 200.Mold-Tek is further planning to double its head count during the current financial year to meet the growing demand for its services.The company is presently constructing a Campus to accommodate 1000 Engineers in Jubilee Hills, Hyderabad, with a total outlay of around Rs. 15.00 crores,Mold-Tek expects to complete the same by Dec,07.

More acquisition:After the strategic acquisition of Cross Road Detailing Inc.(CRD),Mold tek is set to acquire an Ohio-based structural detailing KPO company for a consideration of $2 million.The company plans to raise around $ 6 million from private equity players to fund the acquisition of this KPO firm and a few more companies providing engineering KPO services to high-rise building segment in the US.

Recent financials:Inspite of rupee appreciation and high input costs mold tek performed exceptionally well and came out with robust set of quarterley as well as half-yearly numbers.KPO Division continued its high growth performance by registering increase in sales by 94% during the current half year.Sales went up to Rs.28.12 crores for the 2nd quarter as against Rs. 24.93 crores of last equivalent quarter.Profits escalated to Rs. 3.68 crores as against Rs.2.21 crores of last equivalent quarter.

Concerns:Any delay in the demerger process may affect the stock prices.

Conclusion:Both the plastics packaging and KPO business are doing quite well for the company.Mold tek is expected to close the fiscal with an EPS of around 15rs.The company should get re-rated over the coming few months.Both the divisons of the company has got tremendous potential and prospects.Post demerger,the KPO business is expected to get better valuations and it should attract a P/E of 15-18.The plastic container business can command a P/E of 8-10 times.The both entities combined should atleast quote at a price of above 200 within the next 6-9 months resulting a gain of over 60%.In these sort of market environment its hard to find solid stories which can unfold.Mold-Tek is a scrip which should be a part of every investor"s core portfolio."A great buy".



Regards,
ARUN
I can be reached at: arunanalyst@rediffmail.com

Grauer & Weil (India):Not just the land bank play

Some land bank stories still available at market.Let me present you them.When the market realises these stories,the value can be tremendous.It would be prudent to note that the below mentioned scrip is not just a land play.The company posses decent fundamentals, solid prospects,bright outlook and huge potential.


Name:Grauer & Weil (India)Ltd
Cmp:157
Code:505710


Story:In 2000, company shifted its factory from Mumbai which gave it 10 acre surplus land.Company decided not to sell it. Instead, develop it and lease the space. Company had no background in property development and an American Firm called was hired for designing the Mall. Company already developed 1,25,000 s.f. Shoppertainment Mall. Out of it, 5000 s.f. is occupied by company itself, 67,000 s.f. is leased to Big Bazaar and 37,000 s.f. to Cinemax. This space was leased at just Rs. 36/- per s.f.. Strategy was to start off with big names to pull the crowd and then attract other tenants who will be willing to pay higher rent (present lease rate in this area are Rs. 100-110 per s.f.).

Under Phase-II, Company is developing another 3.00 lakh s.f.. Construction is going at rapid pace and it is likely to be completed by April '08. Company is likely to spend 55 crs. for construction of the same to be generated through borrowings and internal accruals. Company is trying to replicate a Mall called 'Columbo' in Portugal. Company can earn around Rs. 30 crs. as lease rent from Phase-II.

Thereafter, company will have another FSI of 3 lakh s.f.. Once Phase-II is completed, company will start developing balance 3 lakh s.f. under Phase-III likely to be completed in 09-10.

Valuation of Property Business:

a) Going rate of property in this area are Rs. 10,000/- which means existing 1.25 s.f. space is worth Rs. 125 crs.
b) 3 lakh s.f. under construction is worth Rs. 300 crs.

Lease Income:

1) Existing 1.25 lakh s.f. will come for renewal in 2010. Hence, for next 2 years, this property will give income of 5.40 cr. p.a.
2) 3 lakh s.f. of Phase-II should fetch annual lease rent of 30 crs.
3) Similarly, Phase-III should fetch additional lease rent of nearly 60 crs.

IT MEANS, ONCE ALL 3 PHASE ARE COMPLETE, COMPANY CAN EARN ANNUAL LEASE RENT OF100 CRS. AFTER DEDUCTING MUNICIPALITY TAX, MAINTENANCE COST, DEPRECIATION, INTEREST ETC., COMPANY SHOULD HAVE PBT OF MINIMUM 75 CRS. EACH YEAR.


a)Company has already started construction of a new factory in Jammu with capacity of 4000 TPA. This Plant is likely to start production within 6-8 months. Here, cost of production will be lower and significant savings in taxes also.

b) Company has 3 lakh s.f. FSI left for Phase-III. However, as per recent Govt. Notification, FSI can double if, it is used for I.T. Park. Hence, most likely, company will make I.T. Park of 6 lakh s.f. Such a project may cost 130-140 crs. but it can fetch lease rent of more than 60 crs. and market value of more than 600 crs.

Net Value: A conservative valuation of chemical business would be 1.00. Sales of chemical business which means Rs. 172 crs.
Value of Property: (Phase-III not considered) @ Rs. 10,000/- s.f. works out to Rs. 425 crs. Estimated date by March '08 is 70 crs. Thus,Net Value is 527 crs.whereas market cap is just around 210 crs.It is presently quoting at 157 rs.



Regards,
ARUN
I can be reached at: arunanalyst@rediffmail.com

Turnaround : Western India Shipyard Will Scale New Heights Again

CMP: 23.80

Target: Rs 150 in 15 months    

BSE Code: 531217

 

Business Profile :Western India Shipyard
Western India Shipyard (WISL) was incorporated in the Union Territory of Delhi May 1, 1992. WISL is a composite ship and rig repair facility in the private sector. The company has the most advanced multi-dimensional and multi-purpose yard offering modern, streamlined, sophisticated ship and rig repair facilities and services. WISL is strategically located at Goa along the west coast of India. The construction of the `Jock Up Barge` namely, PMC-1 of the value of about Rs 188.1 million by the company for PMC Projects (India), is proceeding smoothly and the vessel is expected to be delivered sometime in Jan-Feb. 2007. The operations of the company`s floating dry-dock of 20,000 TLC capacity was suspended during the period from Jan. 21, 2006 to Feb. 10, 2006 to carry out mandatory repairs for the purpose of maintaining its statutory classification certificates. This had a material impact on the company`s operation and performance for the year ended Mar. 31, 2006.

Financials
The company reported a loss of Rs 21.36 million for the quarter ended Sep. 2006 as against the loss of Rs 24.94 million during the corresponding quarter in the previous year. Sales for this period increased 11.76% to Rs 141.50 million from Rs 126.61 million. WISL, for the year ended Mar. 2006, had reported a 10.70% increase in sales to Rs 427.93 million as against Rs 386.56 million for year ended Mar. 2005. The company incurred a loss of Rs 233.68 million in FY06 as against a loss of Rs 244.22 million in FY05.

Recent Developments
The company wins a major contract from PMC Projects (India), a Adani Group Company, for the construction of `Multi Utility Craft` valuing about Rs 35 million, under the India Flag.

The company wins 3 minor and medium size orders for repairing of 3 vessels namely MV Swatirani, MT Maratha and Pyari Amma valuing Rs 70.00 million totally.

Future Plans
WISL plans for the improvement of systems and ship repair methodology. It also plans to improve interaction with research agencies involved with ship repair and rig repair technology.

 

 

News Item1:

Source: http://www.equitybulls.com/admin/news2006/news_det.asp?id=19146

Western India Shipyard announces Scheme of Compromise and Arrangement

Western India Shipyard Ltd has announced about the Scheme of Compromise and Arrangement between Western India Shipyard Ltd (the "Company") with its Secured Lenders and Shareholders u/s 391 - 394 of the Companies Act, 1956 with ABG Shipyard Ltd as a confirming Party, as under :

"Background and Rationale for the Scheme :

The Company is presently engaged in the business of repairing, servicing, assembling and fitting of merchant ships and other sea going vessels. The Company had obtained various financial assistances / facilities by way of secured and unsecured loans, debentures, overdrafts, guarantees, working capital, etc. from various lenders. The account of the Company is a non-performing asset in the books of some of its lenders in terms of the provisioning guidelines issued by Reserve Bank of India (RBI).

The Company continues to have poor physical and financial performance since inception in spite of various reliefs and concessions extended by its lenders. The Company has entered into a number of debt restructuring efforts with its lenders, including the most recent corporate debt restructuring package by way of the Restructuring Proposal dated January 28, 2005 proposed by the Corporate Debt Restructuring Cell, a voluntary mechanism for Corporate Debt Restructuring (CDR), set up under the aegis of the RBI (the "Debt Restructuring Package"), but continues to remain a non-performing asset in the book of a majority of is its lenders. It has failed to meet its projections, making the various restructuring packages unviable. The Company also does not enjoy working capital limits required for turnover of approximately Rs 70 Crores as per the Debt Restructuring Package. Due to its poor financial performance, the Company has not been able to retire its debts lending to a huge debt burden. As of March 31, 2006, total debts of the Company were Rs 250.1 Crores, against fixed assets of Rs 122.8 Crores. Due to continuous poor performance and recurring huge losses, the net worth of WISL, has completely eroded. The accumulated losses as on March 31, 2006 are Rs 187.1 Crores. The Company faces a real threat of winding up if it continues its current state of affairs.

The Company has 424 permanent employees and around 250 employees on contract basis, whose interests shall be adversely affected if W1SL, is not revived. Taking into consideration the Company's financial position, any revival would require infusion of funds, settlement of debts and resolution of ongoing litigations.

ABG is a company incorporated under the provisions of the Companies Act, 1956 having its registered office at Near Magttalla Port, Dumas Road, Surat - 395 007. ABC is engaged in the business of shipbuilding and ship-repair. ABG has the largest private-sector shipyard in the country and specializes in the construction of medium sized support and defense vessels. The ABG Group is a leading market player in the Indian marine and shipping industry. The group has interest in all major marine and shipping activities, viz. ship-building and ship-repair, owning and chartering of ships and port operations. Pursuant to discussions between the Company, its major secured lenders and ABG. ABG has evinced interest in being involved in a proposal to rehabilitate the Company. Accordingly, the Company is proposing this composite scheme of arrangement with its secured lenders, with ABG as a confirming party, with a view to rehabilitate the Company into a viable and profitable company, wherein ABG's involvement includes a combination of cash infusion into WISL, and acquiring a hares in the Company pursuant to the provisions of this scheme of arrangement. As a step towards rehabilitating the Company, and to demonstrate its commitment thereto, ABG shall, immediately upon filing of the Scheme with the High Court, provide a loan of Rs 25,00,00,000/- to the Company towards urgent business requirements of the Company, and has also agreed to provide technical and marketing expertise through a Service Provider Agreement, to be entered into between ABG and the Company simultaneously or contemporaneously to the filing of this Scheme.

The Scheme provides certain options for the restructuring / one time settlement of the debt of the secured lenders of the Company with the involvement of ABG, along with other matters connected with the compromise and arrangement, including reorganization of share capital of the Company."

Next Multibagger : Himalya International adopted by Reliance Retail

CMP : Rs 23.09

Target: Rs 100 in 15 months

BSE:526899

 

Business Profile
Himalya International (HIL) was incorporated in the year 1992. The company is promoted by Manmohan Malik and Sanjeev Kakkar. It is engaged in mushrooms and vegetables. The plants of the company are located in Paonta Sahib (Sirmaur, Himachal Pradesh).

The company works in close cooperation with CFTRI (Central Food Technological And Research Institute) located in Mysore, India.

HIL provides variety of products including mushroom products, potato products, dairy products and various products related to this. The company sells its products only in Indian market and in the US market.

It is also certified by the United States Department of Agriculture as a member of National Potato Promotion Board.

The company has a wholly owned subsidiary namely, Global Reliance, which takes care of all the shipment work of the company. It started importing food products from US department of agriculture and will market these products in India.

Financials

Himalya International registered a 91.27% growth in net profits to Rs 25.40 million for the quarter ended in September 2007 from a profit of Rs 13.28 million for the quarter ended in September 2006

Net Sales rose 31.88% to Rs 107.68 million for the quarter ended September 2007 from Rs 81.65 million for the quarter ended September 2006.

Recent Developments
13-NOV-07
Himalya International entered into an agreement with Reliance Retail, the largest retail player in the country, for selling its products in domestic market.

09-NOV-07
Himalya International entered into a contract with Dr. Beyer of State College, Pennsylvania, USA for biological consulting for its mushrooms operations and new plans to augment capacity. Under the contract, the company will be provided with latest technology that will boost mushroom yields from current levels by atleast 50%. Dr. Beyer will be paid fixed fee besides rewards based on increased yields. Dr. Beyer will also assist the company for its mega expansion plans of mushroom facilities.


Future Plans
The company decided to convert 100% EOU into DTA under EPCG scheme of the government of India. It has targeted a turnover of Rs 1,000 million by the year 2010.

In order to meet growing demands of foreign food products in India, the company forayed into importing.

Sharekhan Investor's Eye dated November 23, 2007

STOCK UPDATE

Grasim Industries        
Cluster: Apple Green
Recommendation: Buy
Price target: Rs3,950
Current market price: Rs3,627

Price target revised to Rs3,950

Result highlights

• Grasim reported a 25.3% yoy topline growth to Rs2,519.2 crore during Q2FY2008 on the back of robust realisations of the VSF division as well as pick up in the sponge iron and chemicals division.
• The overall EBITDA jumped by 51.3% yoy to Rs805.5 crore driven by a whopping 81% yoy growth in VSF profits which stood at Rs316 crore. The cement division's profits grew by 24.2% yoy to Rs442 crore whereas the sponge iron and chemicals division's profits jumped by 292% to Rs269 crore.
• Overall margins expanded by 550 bps to 32% mainly as the VSF margins expanded by 900 bps to 40%. The cement margins expanded by 110 bps to 32.3%.
• Interest expenses were up 13% yoy to Rs27.2 crore due to higher borrowings in the quarter whereas the depreciation increased by 15.8% yoy to Rs87.5 crore due to part commissioning of VSF expansion in FY2008.
• The other income increased by 14% yoy to Rs57.3 crore thanks to deployment of surplus cash. Consequently, the PAT was up 48.1% yoy to Rs500 crore, beating our expectations
• As we mentioned in our earlier reports, Grasim is expanding its cement capacity by 10.4 MMT including a 4.4 MMT plant at Shambhupura and 4.5 MMT Greenfield plant at Kotputli. The capex is progressing as per schedule whereby the facility at Shambhupura is expected to get commissioned by Q4FY2008 and at Kotputli by Q1FY2009.
• The company is expanding its VSF capacity by 94875 tonne to 366000 tonne including a 63875 tonne expansion at Kharach, Gujarat and 31000 tons at Harihar in Karnataka. Additionally, the company also has announced an Rs.840 crore Greenfield plant of 88000 tons at Vilayat,in Gujarat which is expected to be commissioned in the next 24 months. 
• The VSF division is peaking at the right time for the company in the wake of an expected downturn in the cement cycle in the next one-year. Going ahead the strong volume growth for the VSF business coupled with better realisations and cost control, will drive the cashflows of the company more than offsetting the fall in the cashflows of the cement business. Also, any surprise on the cement prices will only be positive for the company. Consequently, we believe this is one of the most comfortably placed companies in our cement pack. At the current valuations, the stock trades at 13.7x its FY2008E EPS and 15.7x its FY2009E EPS. The company's cement business is trading at valuation of USD 125 on the expanded capacity which is cheap considering the fact that benchmark valuations have gone up as mentioned in earlier reports. Taking cognizance of the cheap valuations of the cement business coupled with the positive outlook for the VSF business, we are upgrading our SOTP price target to Rs3,950 per share.

ICI India        
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs581
Current market price: Rs530

Diwali sales deferred to Q3

Result highlights

• The Q2FY2008 results of ICI India are not comparable on a yoy basis due to divestment of several businesses in FY2007. The net sales for the quarter stood at Rs239.1crore.
• The paints business revenue grew by 5.6% yoy to Rs202.2 crore in Q2FY2008. The growth appears subdued due to high base effect as the festive sales on account of Diwali got deferred to Q3 as against most of it being registered in Q2 of FY2007. Thus we expect the paints division to record handsome growth in Q3FY2008.
• The continued chemical business grew by 21.9% yoy to Rs36.8 crore. Thus the overall revenues of the continued businesses grew 7.8% to Rs239 crore. The discontinued business (surfactant and advanced refinish) had contributed Rs22.8 crore to the company's total revenues in Q2FY2007.
• The PBIT in the paint business declined by 3.8% yoy with a 90 basis-point contraction in the margin to 9%. The PBIT in the continued chemical business grew 41.9% yoy with the margin expanding by 234 basis-points to 16.6%. After the sale of the Uniqema business, the chemical business now contributes only 15.4% to the top line as against 21.7% in Q2FY2007.
• Overall, the operating margin stood at 12.5% against 13% in Q2FY2007. With a higher other income at Rs6.5 crore for the quarter against Rs3.9 crore in Q2FY2007 the adjusted net profit grew by 3.5% yoy to Rs21.3 crore.
• Pursuant to the scheme of buy back, till the end of the quarter the company has bought back 15.87 lakh shares against a target of buying back ~36.7 lakh shares (worth Rs211.06 crore). 
• The outlook for the business remains positive with the company following a strategy of divesting non-paint businesses and focusing more on growing the paints business. Further a cash pile of ~Rs700 crore leaves open inorganic growth opportunities for the company. 
• We have realigned our estimates for FY2008 and FY2009 considering H1FY2008 performance. The buyback of shares and the expected open offer by Akzo make the stock attractive for investors. Thus we expect the stock to remain an outperformer. We shall revisit our numbers and target price on further moves by Akzo Nobel. At the current market price of Rs530, the stock trades at 18x its FY2008E adjusted EPS of Rs29.4 and 16x its FY2009E adjusted EPS of Rs33.1. We maintain our Buy recommendation on the stock with a price target of Rs581.