Sensex

Sunday, September 30, 2007

$$ DreamGains !! $$ FW: PowerYourTrade Trading Calls

 

 

From: mailer9-bounces@mailman3.moneycontrol.com [mailto:mailer9-bounces@mailman3.moneycontrol.com] On Behalf Of PowerYourTrade
Sent: 01 October 2007 08:51
To: alerts@poweryourtrade.com
Subject: PowerYourTrade Trading Calls

 

Trading Calls for 01st October 2007

Ashwani Gujral

Buy RNRL with a stop loss of Rs 75 for target of Rs 135.

Buy RNRL with a stop loss of Rs 75 for target of Rs 135.

Disclosure: Neither me, nor my family nor our clients have any position in the above stock. However we run a substantial newsletter, chatroom and money mgmt business and this can change at any time in the future.

Buy Reliance Capital with a stop loss of Rs 1474 for target of Rs 1874.

Buy Reliance Capital with a stop loss of Rs 1474 for target of Rs 1874.

Disclosure: Neither me, nor my family nor our clients have any position in the above stock. However we run a substantial newsletter, chatroom and money mgmt business and this can change at any time in the future.

 

 

Rajat K Bose

Buy Alstom Projects with a stop below 824, target 846 and 860.This is a day trading recommendation.

Buy Alstom Projects with a stop below 824, target 846 and 860.This is a day trading recommendation.

Note: Either on the long side or on the short side if at any moment a counter is not moving beyond an initial or interim target to the final target book profits. Once initial target is crossed, you can use that as your trailing stop-loss level.

Notes:

·  All prices relate to the NSE, unless otherwise mentioned.

·  Calls are based on the previous trading day's price activity.

·  The call is valid for the next trading session only unless otherwise mentioned.

·  Stop-loss levels are given so that there is a level below/above, which the market will tell us that the call has gone wrong. Stop-loss is an essential risk control mechanism; it should always be there.

·  Trading involves considerable risk. Trade at your own risk to the extent you are comfortable. The analyst shall not be responsible for any losses incurred for acting on these recommendations.

Disclosure:The analyst and his family do not have any trades in the securities recommended above at the time of giving this recommendation. His newsletter clients have been recommended the same along with other picks. Traders are requested to adhere to the stop losses very strictly; they are given to be implemented, not ignored. Do not chase a security and take a position where you would be uncomfortable with the stop-loss level. Take a position only when you feel that the risk-reward ratio looks comfortable and favourable for the trade.

 

 

E Mathew

Buy Reliance Energy with a stop loss of Rs 1120 for a short-term target of Rs 1350.

Buy Reliance Energy with a stop loss of Rs 1120 for a short-term target of Rs 1350.

Disclaimer: - I, my family members and my group companies do not have any position what so ever in RELIANCE ENERGY & RANBAXY LABORATORIES. These stocks have been recommended to our clients and they may be holding long or short positions in these stocks.

Mathew Easow and matheweasow.com gives an unbiased and competent picture of trading opportunities and it does that to the best of its abilities. However, prices can move up as well as down due to number of factors, all of which are impossible for anyone to foresee. THEREFORE, Mathew Easow and matheweasow.com cannot accept any responsibility for any investment decision or trading decision taken by readers and clients on the basis of information contained herein.

Short Term Target Means – Approximately 3 Months.

Medium Term Target Means – Anything between 7 – 9 Months.

Long Term Target Means – Anything above 1 Year.

Please follow stop losses very strictly and do not take positions where one is uncomfortable with the stop loss level. Above all Buy or Sell the stock only when the risk - reward ratio vis–a–vis the stop loss is favourable for taking a position. Individual traders should book profit depending on their risk capacity and need not wait for the targets.

Buy Ranbaxy Laboratories with a stop loss of Rs 418 for a short-term target of Rs 504.

Buy Ranbaxy Laboratories with a stop loss of Rs 418 for a short-term target of Rs 504.

Disclaimer: - I, my family members and my group companies do not have any position what so ever in RELIANCE ENERGY & RANBAXY LABORATORIES. These stocks have been recommended to our clients and they may be holding long or short positions in these stocks.

Mathew Easow and matheweasow.com gives an unbiased and competent picture of trading opportunities and it does that to the best of its abilities. However, prices can move up as well as down due to number of factors, all of which are impossible for anyone to foresee. THEREFORE, Mathew Easow and matheweasow.com cannot accept any responsibility for any investment decision or trading decision taken by readers and clients on the basis of information contained herein.

Short Term Target Means – Approximately 3 Months.

Medium Term Target Means – Anything between 7 – 9 Months.

Long Term Target Means – Anything above 1 Year.

Please follow stop losses very strictly and do not take positions where one is uncomfortable with the stop loss level. Above all Buy or Sell the stock only when the risk - reward ratio vis–a–vis the stop loss is favourable for taking a position. Individual traders should book profit depending on their risk capacity and need not wait for the targets.

 

 

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Saturday, September 29, 2007

$$ DreamGains !! $$ Buy El Forge : BSE 531144 : CMP 77 : Target 171

DreamGains Financial Services

Text Box: Recommendation: Very Strong Buy
Year Low & High: 57.15 & 113
Book Value: 30.06
P/E: 9.03 Times
Expected EPS: Rs. 20+
Targets: 88 / 148 & 171
www.dreamgains.com                                                                                                                                    October 1st 2007, Monday

Company Name: El Forge Limited                                                                           
BSE Code: 531144
BSE Price: 76.85

Industry: Casting & Forging
EPS: 8.51
Market Cap: 65.55 Crore

Introduction
Incorporated in 1934, El Forge is one of the leading forging manufacturers in South India with over 38 years of experience in metal forming. The company manufactures and markets carbon, alloy and stainless steel forges for the automotive component and process industries. It also has machining capabilities, which have now evolved into a thrust area for the company. ELF supplies both forging and machining components to OEMs (Ashok Leyland) and Tier-I suppliers (MICO, Rane TRW, Sundaram Clayton, Lucas).

It has four manufacturing facilities, one each at Chromepet, Gummudipundi and Thurapakkam in Chennai and one at Hosur in Tamil Nadu. The company currently has an installed capacity of producing 18,200 MT per annum. In a bid to expand its markets in Europe, it recently acquired a majority stake in UK-based Shakespeare Forging, SFL, which registered a turnover of £4.5 million in FY05.

Investment rationales

Excellent business model

ELF has a well diversified client portfolio and a suitably de-risked business model. Its major clients are MICO, Greaves and Ashok Leyland, who cumulatively account for 37% of the revenues. Thus, the company’s client concentration risk is relatively lower than a majority of the auto ancillary companies in India. This lends ELF a competitive edge and shores up its growth prospects going forward.

Domestic growth on the fast track

ELF is likely to sustain its strong domestic growth trajectory considering its impressive client portfolio. In particular, we expect the company to benefit immensely from the buoyant future prospects of its biggest client - MICO, which generates approximately 20% of ELF’s revenue. ELF has been servicing MICO for over 30 years now, forging a strong relationship in the process. In order to build on this relationship and ensure customer satisfaction, the company has set up a machine shop facility at Chromepet division fully dedicated to executing orders received from MICO.

Overall, we expect ELF’s domestic revenues to accelerate at a CAGR of 20.4% over FY06-09E, propelled by the increasing demand from the automobile industry, buoyant growth prospects of its clients and the broad-based product portfolio.

Exports to be the key driver

Exports have been the primary driver of ELF’s growth in the last three years, stepping up at a CAGR of 40% during FY02-05. The company now intends to leverage on the relationships built with major global clients over the years. It has also recently acquired a UK-based forging company, Shakespeare Forging, SFL, and is looking to tap SFL’s existing client base for the export of its products.

Going forward, we expect ELF’s exports to grow at a CAGR of 56.4% over FY05-09E from Rs 181.6 million in FY05 to Rs 695.8 million in FY09E. This amounts to an estimated 38.8% of net sales in FY08E up from 22.5% in FY05.

Scaling up the value chain

ELF is moving up the value chain by shifting its focus to machined components, which offer relatively higher margins (20-22% as against 12-14% for forged products). The company intends to raise the share of machined components to 50% of its revenues in the next three to four years from the current 20%. This will prove highly value accretive for the company and is expected to expand operating profit margins from 12.9% in FY05 to 15.2% in FY08E. Consequent to this, the operating profit is projected to witness a CAGR of 37.3% over FY05-09E as against a net sales growth of 30.3%.

cid:image002.png@01C8020F.A93B9B40


Cost hikes transferable to clients

In the past, ELF has been able to pass on the increased cost of raw materials to clients by virtue of its superior services and sturdy client relationships. Thus, its operating profit margins have remained stable in the last two to three years, despite the high volatility in prices of steel, a key raw material for the company. ELF’s ability to transfer its increased cost burden to clients places it at an advantage to peers, who are forced to absorb the price hikes themselves and thus face margin pressure.

Boosting operational efficiency

ELF is undergoing a major reallocation of its manufacturing facilities, in order to rev up operational performance. The company currently has units spread across four locations in South India. Now, it plans to route its services solely through two main units - a new facility at Sriperumbudur (Chennai) and the existing unit at Hosur (Tamil Nadu), while disposing of the other three units at Chromopet, Thurapakkam and Gummidipoondi.

The new Sriperumbudur unit will be a state-of-the-art facility that will arm the company with superior technology necessary to meet higher-end client requirements. This facility will have six new press lines supported by induction heaters, and is expected to commence operations next month. The other unit at Hosur is also likely to be modernised in order to provide customers with value-added services.

The consolidation of facilities will improve manufacturing efficiencies through better outlay, handling and control. These measures will also improve asset utilisation levels leading to enhanced operational profits.

Focus on quality & process development

ELF is targeting higher productivity by making improvements in products and processes, developing new products, achieving high value addition and enhancing quality. The company has also set up a new team of skilled professionals to improve operational efficiencies. We believe these measures will help ELF meet the targets set by it, both in terms of quantity and quality.

Capacity to increase by 28%

ELF plans to raise its capacity to 23,200 MTPA from the existing 18,200 MTPA by FY07. The capital expenditure for its expansion-cum-modernisation programme is likely to be around Rs 400 million, which will spill over from FY05 to FY07. As a part of the financing process, the company had issued debentures last year which have now been converted into equity shares amounting to Rs 59 million.

ELF will also take a loan of Rs 220 million from banks while the balance Rs 121 million will be funded through internal accruals. We believe that the company will comfortably complete its ongoing expansion cum-modernisation project as per schedule.

 

cid:image003.png@01C8020F.A93B9B40cid:image004.png@01C8020F.A93B9B40

 

Acquisition to create strong synergies

In July 2005 ELF acquired a 74% stake in UK-based forging company Shakespeare Forging, SFL, for a consideration of £3,50,000 (Rs 27 million). This will be paid in two instalments, partly through cash and partly through the issue of equity shares. As per the agreement, ELF will further acquire the balance 24% equity in SFL after three years (by July 2008).

Earnings to grow at 51% CAGR over FY05-09E

Considering all the parameters, we expect ELF’s net profit to post a CAGR of 45.4% over FY05-09E on a standalone basis, with a sustainable ROE of 35%. On a consolidated basis, the revenues are likely to grow at a CAGR of 36% over FY05-09E, while net profit is expected to grow at a CAGR of 51% during the same period. This translates to standalone EPS of Rs 18.4 and consolidated EPS of Rs 20.7 in FY08-09.

 

Investment concerns

We believe ELF carries a high foreign currency risk considering its strong reliance on export-driven growth.”

ELF manufactures smaller-weight forged components, and is thus exposed to competition from unorganised forging manufacturers. China is also a major threat in the international market, but this is somewhat offset by India’s technical manpower edge.

Automobile OEMs, global as well as domestic, are under increasing pressure to reduce input costs and improve their margins. In such a scenario, auto component vendors have a limited ability to pass on increases in input costs; this exposes them to volatility in raw material prices.

MICO to expand aggressively in India

The Bosch group (MICO’s holding company) has recently announced ambitious business expansion plans for the Indian market. The group proposes to invest Rs 18 billion in India between CY05 and CY08. A significant chunk of this investment is likely to be utilised for the expansion of the company’s automotive activities.

We are therefore positive about MICO’s growth prospects and expect its sales to grow at a 17% CAGR over CY05-07, on the back of an expected surge in demand for diesel cars/utility vehicles, and the requirement for compliance with Euro III norms in India.

cid:image005.png@01C8020F.A93B9B40



About SFL

Shakespeare Forging, UK is primarily engaged in the auto ancillary business as a drop forger, and has an annual turnover of around £4.5 million. It also supplies forged components to mining companies, which is a relatively high margin business as compared to the auto ancillary segment.
A bulk of SFL’s products is manufactured in the UK and the balance is offshore.

Due to the unfavourable business climate for manufacturing in the UK, especially in auto ancillaries (due to high employment cost and overheads), SFL’s turnover has declined and it has been running into losses for the past few years. The rationale behind the acquisition was the shifting of the manufacturing base to India through ELF, with SFL concentrating on the stocking, sales, marketing and manufacture of select high value-add products. We believe this step will benefit both companies.

ELF to be a major beneficiary of MICO’s expansion plans

We expect the company to benefit immensely from the buoyant future prospects of its biggest client —MICO, which generates approximately 20% of ELF’s revenues. ELF manufactures flanges (approximately 28,000 pieces) for MICO and has set up a machine shop facility at its Chromepet division fully dedicated to executing orders from this client.

The Bosch group (MICO’s holding company) has recently announced ambitious business expansion plans for the Indian market. The group proposes to invest Rs 18 billion in India between CY05 and CY08. A significant chunk of this investment is likely to be utilized for the expansion of the company’s automotive activities. This leaves us optimistic about MICO’s growth prospects and we expect its sales to grow at a 17% CAGR over CY05-07, on the back of an expected surge in demand for diesel cars/utility vehicles, and the requirement for compliance with Euro III norms in India.

Exports to be a key driver

We expect ELF to leverage on the relationships built by its acquired company — UK based Shakespeare Forging, SFL — and to tap SFL’s existing client base for the export of its products. We see the share of exports rising to 22% of revenues in FY07 and 35% in FY09.

cid:image006.png@01C8020F.A93B9B40


Moving up the value chain

ELF is moving up the value chain by focusing on machining components, which offer relatively higher margins (20-22% as against 12-14% for forged products). We expect the share of machined components to rise from 23% of revenues in FY06 to 35% by FY09. This will help the company to elevate its operating profit margin.

Focus on quality & process development

ELF is targeting higher productivity by making improvements in products and processes, developing new products, achieving high value addition and enhancing quality. The company has also set up a new team of skilled professionals to improve operational efficiencies. We believe these measures will help the company meet its targets, both in terms of quantity and quality.

Expansion plans on schedule

ELF has made a total investment of Rs 270 million in FY06 for its expansion-cum-modernisation programme. The company plans to invest an additional Rs 130 million in FY08 in order to raise its manufacturing capacity to 23,200 MTPA.

As a part of the financing process, ELF had issued debentures last year which have now been converted into equity shares amounting to Rs 59 million. ELF will also take a loan of Rs 220 million from banks while the balance Rs 121 million will be funded through internal accruals. We believe that the company will comfortably complete its ongoing expansion-cum-modernisation project as per schedule.

Reallocation of manufacturing facilities

ELF is undertaking a major reallocation of its manufacturing facilities in order to rev up operational performance. The company currently has units spread across four locations in South India. It now plans to route its production solely through two units — a new facility at Sriperumbudur (Chennai) and the existing unit at Hosur (Tamil Nadu), while disposing of the other three at Chromopet, Thurapakkam and Gummidipoondi. We expect the new Chennai facility to be operative by the end of September ’06.

Valuation

At the current market price of Rs 77, the stock is discounting its FY07E earnings by 6.0x and FY07E cash earnings by 5.2x on a standalone basis. On the EV/EBIDTA basis, the stock’s enterprise value is discounting its FY08E EBIDTA by 4.4x. On a consolidated basis, the stock is discounting its FY08E earnings by 5.5x. ELF’s valuations are attractive even on a comparative basis. It is trading at a 50-60% discount to peers and to the industry average. We believe this gap is unjustified.

ELF is a small-cap stock with a lot of steam left in it. The company is at the inflexion point and has the potential to grow tremendously. We believe that ELF’s aggressive plans are reasonable and will be achieved on schedule. Further, the acquisition of SFL has given it a strong platform to develop its market in Europe.

And the company’s plan to shift focus to machining components is a welcome step. We therefore initiate coverage on ELF with a Buy recommendation with a target of Rs 171 in a 12-month timeframe.

We Recommend a Strong Buy On El Forge For Medium To Long Term.

Important Disclaimer: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.

Disclosure: This is just a recommendation, we are not inviting to act or buy or sell any instrument. This is just our research report. You should do your own research and BUY IT.                                                                                                                                                         Sources: Brics PCG Group

 

Friday, September 28, 2007

$$ DreamGains !! $$ FW: Sharekhan Post-Market Report dated September 28, 2007

 

 

From: The Sharekhan Research Team [mailto:marketwatch@research.sharekhan.com]
Sent: 28 September 2007 15:59
To: The Sharekhan Research Team
Subject: Sharekhan Post-Market Report dated September 28, 2007

 

 

 Sharekhan's daily newsletter

Visit us at www.sharekhan.com

 

September 28, 2007

 

Index Performance

Index

Sensex

Nifty

Open

17,152.31

4,996.45

High

17,361.47

5,055.80

Low

17,152.31

4,996.45

Today's Cls

17,291.00

5,021.35

Prev Cls

17,150.56

5,000.55

Change

140.54

20.80

% Change

0.82

0.42

 

Market Indicators

Top Movers (Group A)

Company

Price 
(Rs)

%
chg

Gainers

Adani Enterprises

557.45

12.90

REL

1,205.50

7.90

Tata Steel

850.35

7.02

Sobha Developer

914.50

6.82

SCI

221.50

6.80

Losers

Jet Airways

907.35

-4.95

Cummins India

435.40

-3.13

GMDC

1,085.00

-3.05

TNPL

105.30

-2.68

MTNL

159.90

-2.56

Market Statistics

-

BSE

NSE

Advances

1,377

629

Declines

1,397

506

Unchanged

64

24

Volume(Nos)

62.91cr

91.72cr

 Market Commentary 

Market extends its winning streak

The Sensex maintained its upward bias for the ninth straight session and gained 141 points at close.

The market extended its winning streak for the ninth consecutive session as firm Asian indices and strong buying in frontline stocks helped the sentiment remain 

 

bullish for the better part of the trading session. After accumulating over 1,200 points in the last eight sessions, the Sensex opened marginally above its previous close and rallied sharply to touch the all-time high of 17,361. While, the market remained well above 17,300 mark in the first half, it came off the high as traders booked profits at higher levels. However, resumption of buying at lower levels in banking and metal stocks towards the close saw the Sensex recover from its low. The Sensex finally ended the session with a gain of 141 points at 17,291, while the Nifty added 21 points to close at 5,021.

The market breadth was neutral. Of the 2,838 stocks traded on the BSE, 1,377 stocks advanced, 1,397 stocks declined and 64 stocks ended unchanged. Among the sectoral indices the BSE Metal index jumped 3.28% at 13,945 followed by the BSE Bankex index (up 2.60% at 6,469), the BSE FMCG index (up 1.94% at 2,161) and the BSE HC index (up 1.72% at 3,784).

Most of the heavyweights ended with solid gains, however, select frontline stocks closed with marginal losses. Among the blue chips, Reliance Energy shot up by 7.90% at Rs1,205, Tata Steel soared 7.02% at Rs850, Hindalco surged 4.81% at Rs172 and Tata Motors advanced by 3.68% at Rs778. Cipla added 3.52% at Rs182, SBI moved up 3.43% at Rs1,951, Ranbaxy scaled up 3.33% at Rs434 and ICICI Bank was up 3.29% at Rs1,063. Among the laggards Bharti Airtel dropped 2% at Rs941,ONGC shed 1.42% at Rs958 and Reliance Industries slipped 1.03% at Rs2,296. 

Metal stocks shone in today's trades and closed with strong gains. Sesa Goa vaulted 7.13% at Rs2,524, Tata Steel soared 7.02% at Rs850, Hindlalco surged 4.81% at Rs172 and Jindal Stainless advanced by 3.89% at Rs170. 

Over 4.33 crore Reliance Natural Resources shares changed hands on the BSE followed by IKF Technology (3.01 crore shares), Himachal Futuristic Communication (2.92 crore shares), Nagarjuna Fertilisers (2.80 crore shares) and Ispat Industries (2.34 crore shares).

Sintex Industries clocked a turnover of Rs501 crore on the BSE followed by Reliance Energy (Rs416 crore), Reliance Natural Resources (Rs369 crore), Tata Steel (Rs273 crore) and Reliance Industries (Rs215 crore).

European Indices at 16:15 IST on 28-09-2007

Index

Level

Change (pts)

Change (%)

FTSE 100

6435.40

-51.00

-0.79

CAC 40 Index

5712.08

-21.29

-0.37

DAX Index

7842.98

-10.81

-0.14

Asian Indices at close on 28-09-2007

Index

Level

Change (pts)

Change (%)

Nikkei 225

16785.69

-46.53

-0.28

Hang Seng

27142.47

77.32

0.29

Kospi Index

1946.48

1.20

0.06

Straits Times

3706.23

-8.54

-0.23

Jakarta Composite Index

2359.21

-19.62

-0.82

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