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T
I
M
E
S
A TIME COMMUNICATIONS PUBLICATION
VOL. XVII No. 10
Monday, January 21 – 27, 2008
Pages 24
Stay away
as nervous & cautious sentiment prevails
By Sanjay R. Bhatia
The markets displayed a negative trend amidst intermediate bouts of volatility and choppiness on the back of weak global
cues last week. As indicated in the last issue, negative cues acted as a trigger for the markets to fall. The volumes recorded
have been low while the breadth of the market has remained weak during the course of the week. Traders and
speculators were seen unwinding their positions in frontline index
heavyweights and mid-cap and small cap stocks. Incidentally, FIIs
remained net sellers both in the cash and derivatives segments.
Domestic institutional investors, too, were net sellers.
With signs of the US economy reeling under recession took a toll on
global market sentiment. Global markets reacted violently to the
cues emanating from the US economic indicators, which have taken
toll of Indian markets too. Crude oil has remained range bound due
to the news flow. The earnings season so far has met the market
expectations. However, FIIs continued to sell Indian equities
aggressively. This along with the liquidity problems caused by the
ongoing IPOs has been a double whammy for the Indian markets.
Now, it is important that FII selling subsides and some buying
emerges at lower levels for any sustainable rally to unfold. It is equally important that markets consolidate and stabalise
for the downslide to end. The market sentiment is likely to remain nervous and cautious and selling pressure will be
witnessed at every opportunity. Stock specific action will continue amidst intermediate bouts of volatility and choppiness
due to the earnings season. Global cues along with the crude prices would continue to drive the Indian market trend.
Technically, the Sensex has support at the 18,737 and 18,526 levels. On the upside, the Sensex faces resistance at 19,050
followed by 19,250 followed by the 19,700 level. On the Nifty, 5600 followed by 5519 levels are important support levels.
On the upside, Nifty faces resistance at 5906 followed by 6050 level.
Investors should stay away.
1
Power packed bear hug
By Fakhri H. Sabuwala
Anil Ambani of ADAG would be preparing for the Mumbai marathon but his group ADAG in general and Reliance
Power in particular was at the winning post of the marathon on the bourses last week. The largest ever IPO so far
completing its subscription in matter of minutes makes Anil heave a grand sigh of relief. "This is the beginning of my
group", he says with a little joy and more with anger and adds further "Reliance Power's subscription is a fitting answer
to all my detractors… to shut them up".
But the power packed punch at the primary market became a power packed bear hug at the secondary market for the
whole market in general and the power segment in particular.
What does this indicate? Was the rally in the power stocks only till Reliance Power would get a warm response? Looks
like it. Or else, how does one justify the fall across the board in power stocks like BHEL, ABB, Siemens, Tata Power,
CESC, NTPC, Neyveli Lignite, PTC or Power Grid. Suddenly the fall at the market raised doubts about robust listing of
this IPO and whether it will be in a position to give a return of Rs.400 or Rs.450 as denoted by the premium in the grey
market.
It is common knowledge that most of the applicants of this IPO were for getting a pro-rata allotment and make handsome
returns going by the grey market premium available on listing. The huge number of demat accounts opened especially for
participating in this issue and the huge subscription flowing in is a contemporary version of hot money. This fact alone
could precipitate into the grey market premium evaporating in thin air. Just by blowing the trumpet of raising the market
cap of Reliance Energy multifold in last two years does not underwrite the great listing of Reliance Energy and if this IPO
does not give handsome short-term returns, the power IPOs of tomorrow and day after are doomed. The promoters of
Jaypee Power, Sterlite Power or Videocon Power may be keeping their fingers crossed!
The bear hug was so real that it punctured the sentiment midway, the fall of over 700 points intra-day on Wednesday, 300
points intra-day fall on Thursday and 687 points on Friday signals how the market is shaping up. The cues from
developed countries and the fear of recession gripping the USA shall pull down the Sensex and Nifty further. Global
selling is the order of the day both in the cash as well as the F&O markets. FIIs are main sellers and hesitancy can also be
seen amongst the local players too. The over 2% loss on the Dow Jones and Nasdaq on Thursday could well be a signal to
the beginning of the recessionary trend in the west. So till then just drive slow.
Market surrenders for correction
TRADING ON TECHNICALS
By Hitendra Vasudeo
Overall, the market lost its strength. Its few attempts for a breakout in the past one month have failed. A breakout was
witnessed but it was a weak breakout without any follow up and without any broad market strength. After reviewing
the breakout in the last few updates, we had indicated and desired a follow up, which was not witnessed.
Simultaneously, the broad market lost strength as the Sensex made new high at 21000 plus mark.
We had indicated about the Sensex resistance from a long term trend-line taken from the high of 6249 (January 2004) and
12671 (May 2006). The trend-line has proved too much to handle as the overhead supply continued on a sustained basis.
Subsequently, the Sensex violated the support trend-line taken from the low of 17171 and 18162. Last time, when the
Sensex fell to a low of 18886, it took support on the same trend-line and rallied to 21000 plus mark. The same trend-line
remains and a revised trend-line taken from 17171 and 18886 is taken along with the earlier trend-line. Both these trend-
lines held well for 2 days on Wednesday and Thursday before surrendering the important trend-line. As a result of this,
an important pattern formation emerged – a rising wedge or
terminal triangle. A breakdown of the support trend-line
confirms an intermediate corrective phase with pull back
attempts to create lower tops for the short-term. The higher
bottoms of 18886, 18162 and 17171 will be under test in weeks to
come for next couple of months. These higher bottoms would
provide an opportunity for accumulating frontline index based
stocks, which provide psychological comfort. Recovery from
either of these higher bottoms would be led by the frontline
stocks.
The Sensex has violated the 50 day moving average. As a result,
the Sensex will try to move near the 200 day moving average.
The 200 day EMA and 200 day SMA are placed at 17087 and
16490 respectively. In days to come, the moving average can
climb near the level of 17171. As a broad strategy, irrespective of
a loss or profit, the pull-back rally must be used to exit long positions and fresh long positions broadly on index based
stocks can be considered around the 200 day moving averages. Check if any support is witnessed around the 200 day
averages and buying has to come in large volumes by forming Hammer, Engulfing Bull, and Piercing Line or Morning
Star candlestick patterns.
Last week, the Sensex, opened at 20918.23 and attained a high at 20985.62. Further, the Sensex crashed to a low of 18930.42
to close the week at 19013.70 and thereby showed a net fall of 1795 points on a week-to-week basis. The highest weekly
fall with an Engulfing Bear candlestick pattern suggests that we have possibly formed an intermediate top. And only after
testing the correction levels, we could find the index making attempts to pull back or cross the top in its own time.
Weekly resistance will be at 19643-20356. Weekly support will be at 18300 and 16200.
2
Sensex Wave Analysis
WEEKLY UP TREND STOCKS
Wave I-2594 to 3758
Wave II-3758 to 2904
Wave III- Internals as
follows:
Wave 1- 2904 to 6249
Wave 2-6249 to 4227
Wave 3-4227 to 12671
Wave IV- 12671 to 8799
Wave V- Internals as
follows:
Wave 1-8799 to 14724
Wave 2-14724 to 12316
Wave 3-12316 to 21206.
Wave 4-21206 to 18930
(current ongoing move)
3
If this count holds true,
Let the price move below Center Point or Level 2 and when it move back above Center Point or Level 2 then buy
with what ever low registered below Center Point or Level 2 as the stop loss. After buying if the price moves to
Level 3 or above then look to book profits as the opportunity arises. If the close is below Weekly Reversal Value
then the trend will change from Up Trend to Down Trend. Check on Friday after 3.pm to confirm weekly reversal
of the up Trend.
Last
Center
Relative
Weekly
Up
Close
Point
Strength Reversal Trend
Scrips
Level 1 Level 2
Level 3 Level 4
Value
Date
Stop
Loss
Buy
Price
Buy
Price
Book
Profit
Book
Profit
AKRUTI NIRMAN
1291.90 932.7
1165.4
1271.5
1398.1
1630.8
74.7
1205.7
28/12/07
EDUCOMP SOLUT 4853.85 3204.3
4353.3
5001.6
5502.2
6651.2
74.0
4634.4
23/11/07
BOMBAY DYEING
942.00 711.0
865.0
942.0
1019.0
1173.0
69.8
902.3
28/12/07
BANK OF INDIA
405.85 224.2
345.2
405.6
466.2
587.2
69.7
391.0
28/12/07
HINDUJA TMT
795.00 646.7
743.7
789.3
840.7
937.7
64.9
769.8
28/12/07
then expect correction of
the rise from 12316 to
21206. The correction
levels are placed at 17810-
16761-15712. The first
correction level of 17810
on the Sensex can be
tested in days to come, if
the above wave count
holds true.
WEEKLY DOWN TREND STOCKS
Broad Market Review
The CNX Mid-Cap 200
had a last rising leg from
5420
to
9781.
The
correction level of this
rise is placed at 8115-
7600-7084. Expect the Mid
Cap index to crash to these levels before making any attempts for a pull-back. The trend-line support around 8000 can be
an added support.
Let the price move above Center Point or Level 3 and when it move back below Center Point or Level 3 then sell
with what ever high registered above Center Point or Level 3 as the stop loss. After selling if the prices moves to
Level 2 or below then look to cover short positions as the opportunity arises. If the close is above Weekly Reversal
Value then the trend will change from Down Trend to Up Trend. Check on Friday after 3.pm to confirm weekly
reversal of the Down Trend.
Last
Center
Relative
Weekly Down
Close
Point
Strength Reversal Trend
Scrips
Level 1 Level 2
Level 3 Level 4
Value
Date
Cover
Short
Cover
Short
Sell
Price
Sell
Price
Stop
Loss
AUROBINDO PHAR 410.70
302.0
382.4
434.6
462.9
543.3
18.79
490.93
04/01/08
PATNI COMPUTER 260.30
189.0
241.9
276.4
294.8
347.7
21.85
304.67
20/12/07
INFOSYS TECHNO 1464.00 1264.0
1411.0
1505.0
1558.0
1705.0
25.67
1633.75 11/01/08
TCS
904.40
769.8
869.7
934.8
969.6
1069.5
27.35
994.65
04/01/08
MARUTI SUZUKI
840.00
718.3
806.3
860.7
894.3
982.3
27.63
922.00
20/12/07
BSE Small Cap index had a rally from 7385 to 14239 in the last few months. The correction levels are placed at 11627-
10818. Either of these levels would be tested before making any attempts for a pull-back.
BSE Mid Cap's rally was from 6031 to 10245 and correction levels are placed at 8640-8143-7645. Any halt to the Mid-cap
fall can be from either of these levels. We need to see the market react to these levels. Any attempt of a pull-back rise or
reversal can be from either of these levels.
CNX Nifty Junior, the correction levels are placed at 11108-10458-9807.
The broad market indices have lost steam in the last few weeks, which damaged the sentiment much earlier than the
Sensex slide. It is possible that the broad market stocks could fall faster to the correction level and show quicker recovery
than frontline stocks.
World Market Review
Dow Jones Ind.Average (DJIA) has turned bearish pattern with a Head and Shoulder formation. The neckline has been
violated and bleeding can be witnessed further. It has already reacted significantly from the peak but now has violated
the neckline. As s result of this breakdown from the level of 12700-12500 support, the price implication of this breakdown
can take the DJIA down to 11706-11109 range in days to come from current close of 12159 (17/01/08). Pull-back attempts
could be witnessed any time but that can only create a bull trap to create lower top. Resistance will be in the range of
12500-12700 the neckline range area and the ascent of the neckline can take the price further up to generate resistance.
FTSE which could represent more or less the European subcontinent is around its important support of 5870-5820. Below
5800, FTS can also come crashing down. Once again pull-back can be witnessed to create lower top in the range of 6200-
6300 before surrendering the support of 5800.
Nikkei (225 Spot Index),
which had witnessed
underperforming returns
on its rise from 7603-
(April'03)
to
18282
(July'07) is already into
the correction phase
much earlier than the
DJIA could peak out in
this world bull run,
testing the correction
level
of
14243-12997-
11745. The low last week
was 13365 and first signs
of a world pull-back rally
could be generated if the
Nikkei starts maintaining
above 14225 in weeks to
come.
Hang Seng which had a
tremendous rally in the
last 4-5 months from
19386 to 31958 was
already
into
the
corrective phase and has
completed the 61.8%
retracement of the rise
from 19386 to 31958
which was at 24240 and
the low last week was
23957 to close the week at
25201.
Important world market
indices suggest that more
bleeding is likely but
minor pull-back rally
could be witnessed. The Indian market was outperforming when important world indices were correcting but now it
looks that world indices could dip and show minor pull-back whereas the Indian market can bleed just a little more
before creating the ground for a pull-back. Early pull-back rally in world markets might help the Indian market to some
extent but we could find the Indian market creating a lower top in the short-term.
EXIT LIST
Scrip
Last Close Sell Price Sell Price Sell Price Stop loss Target
Monthly Relative
Strength (RS)
BHARTI AIRTEL
874.00
892.6
915.0
937.4
1010.00
702.6
31.66
KALPATARU POWER TRAN
1626.00
1679.6
1710.0
1740.4
1839.00 1421.6
36.48
CUMMINS INDIA
344.10
368.8
378.8
388.7
421.00
284.3
37.23
TELEVISION EIGHTEEN
411.10
473.1
497.3
521.5
599.80
268.0
37.31
AREAVA T & D INDIA
2018.00
2234.0
2312.5
2391.0
2645.00 1569.0
37.57
THERMAX
732.00
787.4
806.0
824.6
885.00
629.4
39.59
MADRAS CEMENTS
3779.00
4047.6
4155.0
4262.4
4610.00 3137.6
40.22
SKF INDIA
401.50
429.3
439.0
448.7
480.00
347.3
40.87
BHARAT ELECTRONICS
1822.00
1941.3
1985.0
2028.7
2170.00 1571.3
41.36
PIDILITE INDUSTRIES
169.20
172.7
177.3
181.8
196.50
134.2
42.05
SUN PHARMACEUTICAL I
1088.00
1128.5
1146.0
1163.5
1220.00
980.5
42.59
INDIA CEMENTS
251.95
274.8
282.5
290.1
314.90
209.9
42.61
MICO (MOTOR IND.CO.)
4579.00
4817.4
4900.0
4982.6
5250.00 4117.4
42.8
MARICO
65.25
71.7
73.9
76.1
83.25
53.0
43.8
MOTHERSON SUMI SYSTE
100.20
108.2
111.2
114.2
123.90
82.7
43.81
IFCI
77.20
85.2
88.0
90.8
99.95
61.2
44.55
PHOENIX MILLS
2240.00
2306.0
2349.5
2393.0
2534.00 1937.0
45.05
NAGARJUNA CONSTRUCTI
291.85
318.5
328.9
339.3
372.80
230.7
45.55
SESA GOA
3215.00
3462.2
3559.0
3655.8
3969.00 2642.2
45.64
GRASIM INDUSTRIES
3341.00
3464.8
3534.5
3604.2
3830.00 2873.8
45.68
STERLITE INDUSTRIES
882.00
953.4
978.5
1003.6
1085.00
740.4
45.92
GODREJ INDUSTRIES
332.90
392.7
413.0
433.3
499.00
220.7
46.39
IVRCL INFRASTRUCTURE
490.95
516.3
527.5
538.7
575.00
421.3
46.84
GILLETE INDIA
989.00
1135.8
1187.0
1238.2
1404.00
701.8
46.97
CASTROL INDIA
275.45
311.2
322.4
333.6
369.80
216.4
47.27
TATA STEEL
782.00
839.5
861.0
882.5
952.00
657.5
47.36
JUBILANT ORAGANOSYS
330.55
339.1
345.0
350.8
369.90
289.2
47.51
ALSTOM PROJECTS INDI
896.00
958.3
982.5
1006.7
1085.00
753.3
47.85
TATA CHEMICALS
340.15
371.7
383.0
394.3
431.00
275.7
48.25
GSFC (GUJ.STATE FERT
281.35
313.1
324.0
334.9
370.00
221.1
48.28
UNITED BREW.(HOLDING
1079.00
1148.6
1177.5
1206.4
1300.00
903.6
48.32
MRF
6128.00
6558.4
6700.0
6841.6
7300.00 5358.4
48.48
Currency Market Review
Yen against the Dollar had tested the important support of $109-108 some time back. It witnessed a pull-back to $114.65.
The low last week was $105.90. Yen strengthening is not desired as that could hamper the rising bull cycle for the near
term. It looks that if the Yen is able to sustain below $109, then a slide for the dollar down to $102-101 cannot be ruled
out. If that happens, then markets the world over could see slides.
Euro/Dollar situation shows that the Euro has been firm against the Dollar generally. Immediate important support at
1.4568 and a fall below 1.4568 could bring about weakness for the Euro.
Rupee/Dollar equation shows support for the Dollar around 39.26-39.10 would be witnessed. It looks that the Rupe is just
holding above the support zone and a fall below the support zone can bring about weakness for the dollar and strength
for the Rupee. Chance of the Rupee gaining strength is possible. Minor jerk of weakness to 39.475-39.67 can be witnessed
before strengthening below 39.26.
Tug of War between Dollar – Yen and Dollar – Euro could decide the strength and weakness for the Rupee for near term.
Bias can be for Rupee strength.
Strategy for the week
Look for weaker relative strength stocks to exit on slightest spurts or recovery of 38% - 61.8% to the last weeks fall.
TOWER TALK
4
* Although most players have turned bearish for the short-to-medium-term, the market may surprise everyone with
sharp pullback and continue to make new highs thereafter.
* Bihar Tubes counter may see some action this week as it acquires a 60,000 MTPA steel tubes & pipes plant in Bangalore
and enhance its capacity by 50% to 1,85,000 MTPA.
* Cockerill Maintenance & Ingenierie of Belgium has acquired 54% stake in Flat Products and has made an open offer at
Rs.517. A risk free bet at current levels. Just buy and hold for a year.
* Artson Engineering is hitting upper circuits providing a good opportunity to book profits. Buy it back at lower levels in
future.
* With a lot of positive news about the paper industry, paper scrips are likely to remain in action. Rama Paper is one of
the best and safe bets in current market.
* China's stake in India will rise and that will lead to Tata, Birla & Ruia looking eastwards to establish joint ventures
there.
* Cals Ltd., a Z category stock, is locked in the upper circuit. Insiders believe it is a gold mine and the mine is just
discovered.
* Kaveri Telecom and Orchid Chemicals have become analysts' favourite and are perceived as multi-baggers.
* Bank stocks were on a marathon track till now. But the race has seemingly ended for the time being.
* Dhanalakshmi Bank is an attractive investment opportunity considering its long-term prospects and attractive rights
issue at a very low premium.
* Cybele Industries has announced a 30 acres residential and commercial project in Chennai .At Rs.37 it is a cheap stock
in the small cap real estate space.
* Bombay Dyeing could go the same way as Century Textiles in view of its real estate holdings.
* SUN TV has steadily increased the reach of its FM station Apart from being a virtual monopoly in the southern TV
space, the group has also launched Sun Direct a DTH brand. At the current level, the stock looks cheap considering its
reach in all spheres of visual media. It also has footprint in Tamil print media.
* Ennore Coke Ltd. has completed its coke project and commercial production is likely from February 2008. Given the
rising prices of met coke, this scrip could be a multibagger.
* Kohinoor Broadcasting which took over the Rs.100 cr. Tagore Theatres is soon launching a Hindi news channel.
* Promoters of BNK Capital Markets are planning to increase their stake shortly through purchase or preferential issue.
The company is faring well and has a major holding CESC Ltd.
* The grey market premium on IPOs weakened last week with Reliance Power at Rs.225/230, Future Capital at
Rs.490/500, J Kumar at Rs.15/17, Cords Cable at Rs.15/17, KNR Construction at Rs.22/24, On Mobile at Rs.60/65, Bang
Overseas at Rs.32/35 and Emaar MGF at Rs.305/310.
* Proxy IPO application forms for Rs.1 lakh retail applications are quoting Rs.1600/1700 for J Kumar Infraprojects,
Rs.1400/1500 for Cords Cable, Rs.1600/1700 for KNR Construction, Rs.1700/1800 for On Mobile, Rs.2200/2300 for
Emaar MGF and Rs.1700/1800 for Bang Overseas.
By Saarthi
BEST BETS
Indo Asian Fusegear Ltd. (Code: 532658)
Rs.168.65
From a modest beginning in 1958, Indo Asian Fusegear Ltd. (IAFL) has grown into a multi-product, multi-location
company specializing in manufacturing and marketing a wide range of high-tech electrical products used for distribution,
protection, control and conservation of electrical energy. In is the first company in India to introduce miniature circuit
boards in homes, to produce residual current-operated circuit breakers with internationally recognized CB certification to
manufacture energy efficient compact fluorescent lamps and the only one to produce ROHS (Restriction of Hazardous
Substances) compliant i.e. less mercury CFLs. Broadly, the company deals in two segments - switchgear and lighting of
which the former contributes around 80% revenue and the balance 20% comes from the lighting segment. Under the
switchgear division, it produces hundred of products such as MCB, MCCB, RCB, distribution boards, SPD, HRC fuses,
cubicle switch, onload changeover, rewireble switches, feeder pillars, modular switches, wiring accessories etc. It also
manufactures special application products like time switches, contactors, MPCB, relays, plug & socket etc. In the lighting
category, it deals in CFL, FTL (Fluorescent Tubular Lamps), domestic luminaires and commercial luminaires. Notably,
IAFL is the largest manufacturer of CFLs and MCB's in India. Besides, it is among the largest exporter of circuit protection
equipments and CFLs to European countries including UK, Germany, Middle East, South Africa, Sri Lanka and Australia.
As of today, exports contribute about 20% of total sales.
IAFL has eight plants across Punjab, Haryana, UP, HP and Uttrakhand out of which five are dedicated for switchgear
production, two for lighting business and one for wires & cable. Importantly, its new CFL and switchgear plant in the tax
free zone of Haridwar with a capacity of 10 and 15 million units respectively has started production only recently. With
5
6
the commencement of these facilities, the company has enhanced its production capacities substantially and expects to
grow at a CAGR of 7580% over the next 2/3 years. It has entered into various technical and strategic tie-ups with
international majors like Indo Kopp, Nordex Lighting, Theben, Woertz, Lovata Electric etc. Notably, its brands like Indo
Asian, Indo Kopp, Ecolite & Hausmann are associated with as quality and are very well accepted not only in the domestic
market but globally as well. To complement this demand, the company has a wide geographical market coverage
including 30 offices across India, over 850 distributors with over 35000+ electrical retail outlets and overseas offices in
Dubai & Germany. To tap the nearby countries, the company has made some arrangement with the local players to
distribute its products in Nepal and Srilanka. Earlier, it made a tie up with Brilliant AG-Germany for marketing its
complete range of modern style indoor and outdoor lighting equipments, fittings & accessories in India.
As a part of diversification, IAFL is venturing into the cables & wires manufacturing business and has recently promoted
a subsidiary to implement its Rs.100 cr. project in phases. Further, it has set up another wholly owned subsidiary to
undertake power distribution projects on behalf of state electricity boards, corporations and utilities on franchise basis
and has already secured two contracts for a period of three years aggregating to Rs.50 cr. from the electricity board of
Madhya Pradesh for distributing power in Jabalpur. Meanwhile, the company has set up a JV (51:49) with Simon-Europe
to manufacture and market high quality wiring accessories, building automation and intelligent switching systems
especially for industrial and commercial use. This will be one of its kind in India and is being set up in Uttrakhand at an
initial project cost of Rs.30 cr. and is estimated to commence operation by mid 2008. Moreover, it is also putting up a
facility in Saudi Arabia - in joint venture with Saudi National Glass for manufacturing of CFLs and high intensity
discharge lamps (HID Lamps) at an investment of Rs.20 cr.
In short, to leverage the burgeoning opportunities in the Indian and global power industry, IAFL has aggressively
ramped up its production capacity and is diversifying into emerging business opportunities like home & building
automation products, power distribution projects & wires/cable business. It is at the inflexion point and will report
bumper results for FY09 on the back of higher capacity and improved capacity utilization. Meanwhile for FY08, on a
conservative basis it is estimated to clock a turnover of more than Rs.300 cr. with PAT of Rs.20 cr. i.e. an EPS of Rs.14 on
its current equity of Rs.14.60 cr. But it has the potential to post an EPS Rs.24 for FY09. The company is, however, looking
to raise nearly Rs.200 cr. through the equity route to fund its future growth plans which may dilute its equity
substantially going forward. Despite this, investors are advised to buy at the current level for a target price of Rs.250 (50%
appreciation) in 9-12 months.
Lloyd Electric & Engineering Ltd. (Code: 517518)
Rs.174.25
Lloyd Electric & Engineering Ltd. (LEEL) was incorporated in 1988 primarily as a backward integrated unit of Fedders
Lloyd Corporation, a leading group company that manufactures coils for air conditioners. It specialises in custom design
and manufacture of heating and cooling coils including 'U' bend and return bend tubes for heat exchanger coils, system
tubing, header line etc and sheet metal items for air-conditioning and refrigeration applications. Over the years, it has
emerged as India's largest manufacturer of evaporator and condenser (E&C) coils with around 60% market share. E&C
coils are critical components in AC manufacturing next only to the compressor and account for approximately 20% of the
cost of manufacture. Of late, the company has got itself forward integrated into the lucrative business of contract
manufacturing of window/split air conditioners for various multi-national companies in India. Thus company is an OEM
supplier to almost all AC manufacturers in India and its clientele includes Samsung, Electrolux, Carrier, Haier, Voltas,
Blue Star, LG, Hitachi, Whirlpool, Diakin to name a few. Importantly, LEEL has also ventured into manufacturing of roof
mounted packaged units i.e. packaged AC for railway coaches on turnkey basis which includes designing,
manufacturing, supplying, installation and maintenance. Hence it has set up service stations all over India at New Delhi,
Mumbai, Chennai, Bangalore, Hyderabad, Lucknow, Jaipur, Guwahati and Kolkata for maintaining the AC package units
installed on railway coaches. Presently, LEEL derives roughly 60% revenue from coils, 30% from contract manufacturing
of ACs and the balance 10% from the railways.
Earlier LEEL was operating through two manufacturing facilities at Bhiwadi in Rajasthan and Kala-Amb in Himachal
Pradesh. But from FY07, it commenced operation at its new plant in Dehradun (Uttarankhand) with an installed capacity
of 2,00,000 coils and 2,00,000 air conditioners. Thus its total manufacturing capacity stands enhanced to 12,25,000 coils
whereas its assembling capacity has doubled to more than 4,00,000 ACs. The biggest positive for the company is that it
enjoys 10 year excise duty and income tax exemption for its Kala-Amb and Dehradun facilities and would be paying sales
tax at a concessional rate. To expand its product range further, the company is now diversifying to produce roll bond and
frost free coils for refrigerators and has tied up with a Korean company, Hanyung Alcobis for the same. With this, it
would become the first manufacturer in India, as the entire requirements of these coils are generally met by imports
mainly from Korea. To maintain its future growth, LEEL is in the process of setting up a greenfield plant near JNPT port
on Mumbai-Pune highway with an initial capacity to produce 2,00,000 frost-free refrigeration coils, 4,00,000 AC coil and
2,00,000 units of air conditioners. It has already acquired 25 acres land and is looking to start the plant by mid 2009.
Meanwhile, LEEL has signed a MoU with Air International Transit Pty Limited, an Australian company, for designing,
manufacturing and supplying of AC package units to the metro rail in India.
The company is actively pursuing Delhi Metro Rail Corporation (DMRC) Phase 1 extension and Phase 2 for the metro
coach air conditioners and expects to get substantial orders. Besides, the company is also exploring the possibilities of
export of coils and components for the new metros coming overseas.
To fund its expansion plan, the company has been regularly raising capital through the equity route through GDRs or
preferential allotment of shares/warrants. After raising Rs.50 cr. by allotment of 40 lakh shares at Rs.125, the company
has recently allotted 50 lakh warrants to be converted at Rs.225 per share to raise Rs.100 cr. It is further contemplating to
raise Rs.200 cr. through the QIB route which may lead to 40% equity dilution. However, in a continuing climate of
economic buoyancy, the domestic market for Heating, Ventilation, Air-conditioning and Refrigeration industry (HVACR)
is growing at a healthy pace. Secondly, with the increase in disposable income, change in lifestyle and easy availability of
finance at low interest rate has led to a sharp growth in the air conditioner segment. Fundamentally, the company is
doing exceedingly well and has recorded 40% growth in the topline as well as bottomline for H1FY08 and is expected to
end FY08 with sales of Rs.650 cr. with PAT of Rs.58 cr. i.e. EPS of Rs.19 on its current equity of Rs.31 cr. However, the
frequent equity dilution may cap the upside potential of its share price. Still, investors are recommended to buy it at
current level with a target price of Rs.275 (60% appreciation) in 15 months.
ABG Shipyard Ltd.: For the long-term
ANALYSIS
By Devdas Mogili
ABG Shipyard Ltd. (ABGSL) is a 23-year old Surat based company established in 1985. It is the flagship company of the
ABG group constructs a variety of marine ships including bulk carriers, deck barges, interceptor boats, anchor handling
supply ships, diving support ships, tugs and offshore vessels. The company's shipyard is located at Magdala, near Surat,
Gujarat. Kamlesh Kumar Agarwal is the Chairman while Rishi Kumar Agarwal is the Managing Director of the company.
ABGSL has state-of-the-art manufacturing facilities including a 'Shiplift Facility' with a capacity of 4,500 tonnes, side
transfer facilities, CNC plasma cutting and steel processing machinery. The shipyard has multiple building berths, two
Dry Docks, two jetties and covered fabrication shops equipped with modern CNC based fabrication machinery. The
'Shiplift Facility' provides the yard operational flexibility enables it to simultaneously build on a modular basis and repair
up to 23 ships.
Presently, the yard can construct ships of a maximum length of 155 metres (mt.) and up to a maximum weight of 20,000
DWT. The company also has indoor facilities to build aluminium ships of 80 mt. in length. It is in the process of setting up
a modern ship building facility at Dahej, 150 km. from the existing yard, which will help it strengthen its presence in the
global ship building industry and enable it to build larger and more complex ships.
ABGSL has successfully delivered 2 Interceptor Boats of upto 45 knots speed in aluminium hull with Water Jet Propulsion
to the Indian Coast Guard; 2 x 4000 DWT Cement Carriers for Cement Ambuja International, Mauritius; 4 x 50T Bollard
Pull SRP Tugs for Wijsmuller, Holland, an A.P.Moller & Co. company.
The 'Shiplift Facility' enables the yard to simultaneously build and repair many vessels and gives the yard tremendous
logistical advantage and flexibility. ABGSL has executed many prestigious shipbuilding and ship-repair contracts against
stiff international competition for both the export and domestic markets. All these vessels have performed very well thus
establishing its reputation for building and delivering vessels of the best quality at competitive prices and delivery
periods.
Its Ship Repair Division has successfully repaired and refurbished Dredgers, Ethylene Carriers, Bulk Carriers, Offshore
Supply Vessels (OSVs) and Coast Guard Vessels. ABGSL also has a subsidiary, Crossocean Ship Repair Ltd. at the FZE,
UAE.
Acquisition: Further, the company has signed a MoU for acquisition of Vipul Shipyard (Vipul) situated adjacent to the
company's existing shipyard at Magdalla Port, District-Surat, Gujarat, which will result in augmenting its resources for
further consolidation of shipbuilding capacity in the growing segments of offshore, coastal shipping and other avenues
of shipbuilding.
Orders: ABGSL has bagged several big repeat orders of over Rs.1000 cr. from existing International customers taking its
total order book position to Rs.8277 cr. Lamnalco Ltd., Cyprus, has placed repeat orders for 2 vessels amounting to $34.20
million, which will be a 53 M LOA 80T B P Azimuthing Production Support Vessel. The vessel is designed to be used for
tow/move derrick/lay barge/rigs, tanker handling and berthing with push/pull capability, anchor handling duties,
move equipments and materials between barge and shore, external fire fighting, maintenance and pollution control, etc.
The company has till date constructed and delivered 7 vessels to Lamnalco and another 5 vessels are under construction.
Maridive and Oil Services S.A.E. Egypt, has placed repeat orders for additional 2 vessels amounting to $46 million, which
will be a 72M LOA 13OT B P Anchor Handling Tug/Supply Vessels. The twin screw vessel is for operation in
7
unrestricted waters and is designed for multi-purpose roles such as anchor handling, towing, transport pipes, fresh water,
diesel oil, bulk cement, stores, materials and equipments, move men and materials between platforms and shore, evacuate
casualties, external fire fighting and anti pollution control etc.
Expansion: The company is now setting-up a new shipyard with state-of-the-art manufacturing facilities including two
400 mt. long new building dry-docks with a provision to build all kinds of vessels upto 1,20,000 DWT at Dahej.
Clientele: The company's clientele includes Pacific First Shipping Pte, Singapore, Essar Shipping & Logistics, Vroon
Offshore B.V., Netherlands, Lamnalco Ltd., Cyprus and Gujarat Ambuja Cements to name a few.
Performance: During FY07, the company has successfully delivered 6 vessels taking the total up to 95 vessels delivered so
far by the company. It has posted a turnover of Rs.709.77 cr., an increase of about 29.56% as compared to Rs.547.85 cr. in
FY06. It recorded a net profit of Rs.116.29 cr. as against Rs.83.68 cr. in FY06 showing a rise of 38.97%.
Financial Highlights:
(Rs. in lakh)
Latest Results: ABGSL
has come
out with
exceedingly
attractive
results for Q3FY08. It
clocked a total income of
Rs.276.94 cr. with a net
profit of Rs.47.11 cr.
netting a basic/diluted
EPS of
Rs.9.25.
The
annualized EPS works out
to Rs.37.
Particulars
QE 31/12/07
QE 31/12/06
YE 31/03/07
Net Sales/Income
27496.43
17758.05
70436.09
198.17
90.38
541.36
Other Income
Total Income
27694.60
17848.43
70977.45
(818.48)
(404.20)
(2411.05)
a. Inc/Dec in Stock
b. Raw Materials
16326.63
10593.89
44670.12
671.01
367.39
1485.76
c. Employees Cost
d. Other Expenditure
3159.56
1942.58
7158.00
198.06
152.45
592.98
e. Depreciation
Total Expenditure
19536.77
12652.11
51495.81
991.58
692.58
2668.30
Int & Other Charges
Exceptional Items
-
-
-
7166.24
4503.73
16813.34
PBT
Provision for taxation
Financials: The company
has an equity base of
Rs.50.92 cr. with a book
value of Rs.105.31. It has
an ROCE of 28.46% while
RONW is 24.10%. Its debt
equity ratio is attractively
placed at 0.53.
811.94
358.42
1940.00
Current tax
MAT
-
-
(1000.00)
1624.59
1208.95
4131.17
Deferred Tax
FBT
17.96
6.37
38.58
-
-
74.52
Earlier Year Adjustments
Profit After Tax
4711.75
2929.99
11629.07
5092.18
5092.18
5092.18
Paid up equity (FV: Rs.10)
Reserves & Surplus (Exc Rev Reserves)
-
-
48531.76
Basic/Diluted EPS (Rs) not annualized
9.25
5.74
22.84
Share Profile: The shares with a face value of Rs.10 are listed and traded on the BSE under the B1 segment. Its share price
touched a 52-week high of Rs.1045 and a low of Rs.301. At its current market price of Rs.871, it has a market capitalization
of Rs.4439.87 cr.
Dividends: The company has been paying dividends as shown below:
FY06 - 12%; FY07 - 15%.
Shareholding Pattern: The promoter holding in the company is 56.90% while the balance 43.10% is held by non-corporate
promoters, institutions and the Indian public. Several mutual funds have evinced keen interest in the counter. Funds like
Kotak, UTI, Sundaram, Tata. HDFC, HSBC, LIC MF, Franklin India, Deutsche Investment Opportunity Fund, Sahara,
BOB and Chola Funds have added the company's shares to their various schemes.
Prospects: According to estimates, the global shipbuilding industry is a US $20 billion industry. Currently, the
shipbuilding industry is dominated by South Korea, Japan and China with a combined market share of around 77%. India
has less than 1% market share, which is expected to grow in coming years by leveraging its cost competitiveness.
Presently, the Indian Shipyards are having a share of around 0.4% of the estimated 297 million DWT. Replacement
demand is driving the growth of the shipping segment with demand for tankers, containerships and dry bulk ships
whereas replacement demand coupled with increasing demand for offshore vessels on the back of Oil & Gas
companies driving the growth of the offshore segment, which needs Anchor Handling Tug Supply, Platform supply
vessels, Pollution control vessels, Oil Rigs etc.
According to research estimates, India's order book is estimated to grow by 4 times in the next 5 years. Given the robust
demand coupled with government initiatives and labour cost advantage, India is all set to gain sustained growth in
shipbuilding. Low cost labour drives the advantage in favour of Asian countries to countries like India.
With various port projects and investments envisaged in the National Maritime Development Policy (NMDP), the Indian
Government has unveiled initiatives to boost the shipping sector. Allowing 100% FDI in the sector, introduction of
Tonnage Tax and developing the coastline and envisages the addition of 2,400 mercantile ships under the proposed
'Sagarmala' project.
8
Further, the Gujarat Government has decided to come up with a comprehensive shipbuilding policy to encourage
shipbuilding and ship repairing industry in the State. The incentives under the proposed policy would definitely give
an edge to the companies operating in the state over the companies in other states.
The government initiatives coupled with increased ship replacement demand will, therefore, create new opportunities for
the shipbuilding industry.
Conclusion: ABGSL is the largest private sector shipbuilding yard in India with the state-of-the-art manufacturing
facilities. It is the recipient of All India Trophy for Highest Exporters in Recognition of outstanding Contribution to
Engineering Export from the Government of India - Ministry of Commerce.
At the current market price of Rs.872, its share price is discounted around 29 times which may look stretched. But, taking
into consideration its expansion plans, strong order book position and bright future for the shipbuilding industry, the
share may be added to ones portfolio for medium-to-long-term gains.
Markets across the globe tumble
MARKET REVIEW
By Ashok D. Singh
Although the initial batch of Q3FY08 results announced by corporate India was more or less in line with market
expectations, fears of the recession in USA hit markets across the globe. Citigroup posted first-ever quarterly loss and
disappointing US holiday shopping numbers fuelled fears that the world's largest economy was heading into a recession.
Pessimism about the US economy further mounted after Intel Corp the world's largest chip maker, posted earnings and a
profit forecast that disappointed investors.
BSE Sensex tumbled 1,813.75 points or 8.71% to 19,013.70 for the week ended 18 January 2008. The NSE Nifty declined
494.8 points or 7.98% to 5,705.30 for the week. The Sensex declined on all the five trading sessions in the week.
BSE Mid-Cap index declined 544.77 points or 5.77% to 9,893.71 in the week. BSE Small-Cap index slipped 533.57 points or
4.2% to 12,160.45.
The market ended a volatile session in the red with Sensex losing 99.40 points or 0.48% to 20728.05 on Monday, 14
January 2008. Index heavyweights ICICI Bank and Infosys Technologies drifted lower. The market breadth was positive.
Despite a strong response to the Rs.11,000-cr. IPO of Reliance Power, the market fell sharply with 30-share BSE Sensex
shedding 476.96 points or 2.30% to 20,251.09 on Tuesday,15 January 2008 as heavyweights faced selling pressure. All the
sectoral indices on BSE were in red. Banking, FMCG and power stocks were worst hit.
The Sensex lost 382.98 points or 1.89% to 19,868.11 on Wednesday, 16
th
January 2008 as the prospects of a recession in the
United States triggered a sell-off in global markets. The market remained subdued for the day although it made some
recovery from its lows in the late trade. The market breadth was weak.
The market slipped again for the fourth straight session with Sensex declining 167.29 points or 0.84% to 19,700.82 on
Thursday, 17 January 2008, giving up early gains as index heavyweights Reliance Industries and ICICI Bank declined. RIL
dipped after it reported Q3FY08 results, which were boosted by one-off gains. The market breadth was strong.
The Sensex plunged 687.12 points or 3.49% to 19,013.70 on Friday, 18 January 2008, in a broad-based decline. Reliance
Industries, ICICI Bank and DLF, plunged. All the sectoral indices on BSE were in the red. BSE oil & gas and realty indices
were the worst hit in the fall. Small-caps and mid-cap stocks sank.
On Friday, 11 January 2008, SEBI gave its go-ahead for the launch of long duration options on the popular Sensex and
Nifty indices with tenures up to three years. At present, maximum duration for any F&O contract is three months.
SEBI has also proposed a 25% first-day price
band for IPOs up to Rs.250 cr., to enable
steady and sustained price discovery over a
period of time. SEBI has invited public
comments on the imposition of circuit filters
on the first day of listing of shares. At present,
stock exchanges do not impose price bands on
the day of listing of IPOs. And, after the day
of listing, there is a regular price band of 20%.
The Sensex tumbled 1,813.75 points to
19,013.70 last week. The market will be closely
watching US markets at a time when US
recession worries loom large on global
markets. The Q3FY08 results announced so
far have been in line with market expectations
and it would be looking closely at Q3 results
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9
of ONGC, Satyam Computer Services, Grasim Industries, HDFC Bank, Dr. Reddy's Laboratories and BHEL which are
expected this week.
There might be some liquidity drain from the secondary market as the mega IPO of Reliance Power which ended on 18
January 2008 received an overwhelming response. Meanwhile as per reports, state-owned telecom services provider
BSNL reportedly plans to launch India's biggest initial public offer to raise about Rs.40,000 cr. (over $10 billion).
Investor greed wrecks the market
MARKET
By G. S. Roongta
The stock market kept on drifting lower and lower throughout last week despite all the high hopes generated in late
December 2007 about the new year. This was based on the assumption that the good corporate results announced to be
from 10
th
January 2008 onwards would act as a trigger and take the markets higher than the highs seen in the last quarter
of 2007.
Since the Indian economy was strong on every front, it was only natural to assume that fresh allocations made in the
beginning of calendar year 2008 would take the markets to higher levels on the back of encouraging corporate results.
Because of this, the punters pushed the indices higher and higher ignoring a very basic fact that it is not only a buyers
market to lead it in any manner they like. I was very amused when I saw the thousand point rises on the
Sensex attained so casually like the ball thrown in the air in a football game as if recording thousand
point gains was child's play!
Money Times' readers may recall that I had taken such rises very seriously and wrote several times
sarcastically that punters were busy celebrating Diwali, Christmas and New Year all together even the
fireworks on the bourses. The 1000 point rise appeared to have become routine and a leading TV channel
would celebrate the event with cake cutting, balloons and other festive symbols little realizing that this
was not a normal market gait and this frequent rise is bound to have repercussions because you cannot
keep aside the popular saying that what goes up must come down. So if the market is now reversing, it should surprise
none.
G.S. Roongta
The BSE Sensex, which had hit 21,207 the week before closed at 19,013.70 on Friday, 18
th
January 2008 taking a toll of 1814
points within the week. So should the market be really considered a children's game wherein you play to your whims and
fancy ignoring the hard reality. The popular business channel should own responsibility as their experts telecast
repeatedly stated that the BSE Sensex may hit 22K and 24K thereafter based on their experience and research based
analysis. Such experts are watched by lakhs of small investors who get carried away by their fanciful and cosmetic
pronouncements as if making money in the stock market is as easy plucking a fruit from a tree!
Indeed, the loss of 1500 points made till Thursday, 17
th
January 2008 means a loss of investors' wealth of Rs.1,00,000 cr.
within a short span of 5 trading days. Doesn't this mean that one can build mountains out of mole hills on the bourses
and which can collapse like a pack of cards rather than a solid asset that cannot be easily destroyed.
And investors in India are really so greedy and gullible that they do not use common sense while making investment
decisions and squander their hard earned money. I have never been able to understand this herd mentality when
investors throw away caution to the winds and act on someone else's fancy and cosmetic promises. This is more than
evident by the frenzy for the Reliance Power IPO, which was subscribed 73 times and which is likely to be issued at
Rs.450 per share, which is the upper price band of the offer. The greedy investors have begun to believe that its promoters
have a magical skill to spin their money and multiply it fifty times at one stroke even before the start of production or
even earlier. Can any company offer returns to shareholders till its production starts and goods are sold in the market?
Reliance Power may take at least 3 years to return value at the level of the price at which it is issuing shares today.
This is a repeat of Reliance Petroleum, which made its public issue 3 years back at Rs.60 per share but has yet to come into
production. Meanwhile, the humungous funds thus collected roll out can be utilized elsewhere and boost the wealth of
the issuer company or its promoter. The Reliance Petroleum stock after falling below the issue price in the first year
touched a high of Rs.300 and now trades at Rs.200. Can anyone tell me what fundamentals justify this sharp fluctuation in
its share price since the company is yet to announce its production? This picture is no different from that of Reliance
Natural Resources Ltd. (RNRL), which has been the darling of the market for the past 3-4 months without any activity to
boast of.
These examples give a true picture of the strange functioning of stocks based on unrealistic perceptions of punters and
investors who get carried away by media hype without applying their mind and measure every such promise on a
realistic scale. If they did so, they would know that they are merely chasing shadows wasting their time, energy and
money. Such stories are in realm of speculation and best left to traders who are not concerned with the fundamentals and
merely guided by the share price movements.
10
Strange are the conceptions of the stock market, which leads stock prices to go high and dry and for which there is no
reasonable comparison or calculation. NTPC, which is a well established 5-decade old company and generates 28,000 MW
of power, which Reliance Power hopes to match at peak capacity some 5 years later, is available at nearly half the price of
the Reliance Power IPO price. This is because there is no public fancy for NTPC whereas Reliance Power has been built on
media hype and sold on the magic of market capitalization as demonstrated by the stocks from the Relaince stable.
A similar market concept prevailed when Tata Steel bought Corus, the Anglo-Dutch global steel giant. Marketmen felt
that the deal was too costly and that Tata Steel will not be able to generate enough funds to service such a huge debt. As a
result, the Tata Steel stock was hammered down to as low as Rs.280 after its takeover of Corus. But within a year, the
whole perception changed and Tata Steel now rules 3 times higher at Rs.980.
There are hundreds of such examples of stocks quoting excessively high or low based on wrong market perceptions and
the havoc it plays with stock prices and which can work on either side. Smart investors, however, should enter when
prices are hammered well below the justifiable levels or sell when quoting exceedingly high given the company's
fundamentals.
I recall my recommendations on Bellary Steels, Gulshan Polyols and several others at a very nascent price of Rs.6/7 for a
Rs.10 paid-up share some 2/3 years back. These stocks were based on the future perception of their working over a 2-3
year horizon. Regrettably, many investors who bought these stocks got tired after a few months and started complaining
before they exited at small gains or minor losses. Have they cared to check that Gulshan Polyols is trading over Rs.600
and Bellary Steels is trading at Rs.15 for Re.1 paid-up i.e. Rs.150 for a Rs.10 paid-up share! The editor of this weekly
knows how many people phoned him to enquire about both these shares.
About 10 days ago, a reader phoned up to enquire what he should do about 40,000 shares of Bellary Steels that he had
bought on my recommendation. While I was happy to learn that this investor had such faith in me and the patience to
hold it for so many years I advised him to sell two-thirds of the holding right away and he should be extremely happy as
the share fell into a lower circuit filter till the end of last week.
This brings me to my recommendation of Essar Shipping, which is well known to all Money Times readers because of the
hue and cry it created in this column. Those who complained should now willingly come forward and express their regret
as a token of self realization. This is because after such a blatant accusation against my ability to pick winners early, I have
stopped highlighting such pearls, which I could locate at the bottom in the vast ocean of stocks. If readers have no
patience and are happy with minor gains on a daily basis, why should I unnecessarily strain myself and gift items that are
not valued.
At this juncture, let me disclose that when I started writing around 1986-87, I had decided to recommend only
fundamentally strong scrips and not like the jot potato chips, which are sold at every nook & corner. Today, I'm proud to
say that I have achieved over 95% success with nearly 500 stocks that I have recommended so far. Your editor is a witness
because he has always been editing my articles from the very first day.
L&T, Shri Dinesh Mills, Raipur Alloys, Modern Steels, Aptech, Elecon Engineering are among the few of my fancied
stocks from which I have never backed out and keep on revising their future evaluations. These stocks have provided 30
to 50 times higher valuation than what investors are paying today for Reliance Power or Kishore Biyani's Future Capital
Holdings.
But the question arises why one should pay 50 times more today when it does not have that much worth. It is like
murdering or killing the high value stocks on the back of excellent working and growing fundamentals over decades as
compared to a brand newcomer that only talks big and has yet to prove its worth. Divesting such high breed stocks to
apply for such hyped IPOs is nothing short of
murder!
Hence the market conviction and perception
for values is very difficult to understand and
none can claim to be the master as gimmicks
in the market will always attract followers
even though they lack investment logic.
On the one side, the government does not
want to encourage speculation but such
rampant speculation is taking place under its
nose. This speculation is driven by rumours
and grey market premium, which was quoted
at Rs.450, the same as the issue price, in all the
leading TV channels and pink papers. The
lure of this 100% gain on listing is what led to
this frenzy in the Reliance Power IPO guided
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by greed and short-term profits for which the stock market has become notorious. Only time will tell the real story.
Just as mid-caps and small-caps that were fancied a week back have now collapsed, the valuation of Reliance Power, too,
can go wrong in three years. Whether it lists around Rs.1000 or not is not that important as its ability to hold on to this
level over the next three years.
The stock market will always be there and there will be opportunities to buy good stocks at right prices but foolish acts
will only lead to losses that can never be made up.
"Consolidation is a healthy sign for any equity market"
FROM THE FUND MANAGER'S DESK
says Sanjay Sinha, Chief Investment Officer of SBI Mutual Fund in an exclusive interview with Money Times (MT).
MT: What is your view on the market in the long term? Do you think a correction is inevitable in
the short run?
Market participants have begun the year 2008 with a sense of cautious optimism. The Sensex has
come down from its all time high. The Indian equity market growth is driven by increasing
domestic participation and incessant foreign fund flows. Foreign fund flows would continue to
be strong as very few other markets offer a sound combination of a fast growing economy driven
by strong fundamentals and resilience to US economic slow down. Continued supply of quality
paper and strengthening of domestic institutional investors shall provide the required stability
and depth to the market. We may continue to witness some kind of correction when the funds
are churned from one investment zone to another. In our opinion the appetite for Indian equities would sustain over the
long term and also the buoyancy in the stock market. Profit booking is an essential part of investment strategy and
corrections in the short term give the market time to consolidate which is a healthy sign for any equity market.
MT: What are your expectations from the budget and how do you think it will augur for the markets?
We expect this budget to be one that would drive economic growth further with many measures like moderation of
corporate taxes, higher budgetary allocation for infrastructure development, facilitation of greater private public
participation in more areas. Corporate Tax Collections witnessed robust 42% YTD YoY growth against expectations of
17% YoY growth. This makes a strong case for moderation of tax structure by the Govt. We think this budget would take
the reforms process further by giving more clarity on FDI, SEZ policies, etc. We may also see some steps to curb exchange
rate volatility and short term capital inflows. We also expect some more initiative to put our forex reserves to better use.
All in all, we expect the budget to support consumption, agriculture, health, education and infrastructure development.
MT: You are overweight on Industrial Manufacturing and Energy Sectors in most of your schemes. What is your strategy
with respect to them.
Our economic growth has been driven by infrastructure spending, capital formation, and domestic consumption and
these factors would continue to be the main drivers of growth in the future. The XIth Five Year Plan mentions that to
sustain 9% GDP growth over the next 5 years, investment in infrastructure should grow from the current 5% of GDP to
9% of GDP. It also states that US $500 billion needs to be invested in the infrastructure build-up. Private capex as a % to
GDP has grown from 16% in 2002 to more than 27% in 2007 and the trend would continue. The share of gross fixed
capital formation is less than 30% of GDP and has grown at 16% YoY.
These sectors are less sensitive to interest rates unlike consumer durables and others. We feel that in high interest rates
scenario, capital formation may get delayed by some period but not abandoned. In addition to this, Government's thrust
supports the development with other resource avenues like FDI, priority funding, etc. Better earnings visibility comes
from order backlogs of various companies in these sectors. We believe the healthy pace of investment is sustainable over
longer duration owing to the current infrastructure deficit and capacity utilization ratios in excess of 85% in many key
sectors/ We would continue to be bullish on the sectors which are primary to Indian economic growth, have better
earnings visibility and are driven by domestic factors.
MT: The markets are expected to witness a flood of IPOs. Do you see some interesting opportunities? What would your
strategy be as regards MF allocation in the primary and secondary markets?
Almost Rs.45,000 cr. were raised through IPO in 2007. We expect in 2008 it would be substantially higher with quite a few
mega issues. In addition to this there would be follow-on offers from many corporates to meet their expansion plans.
There would be many interesting opportunities in infrastructure, financial, energy and manufacturing industries. We will
be keen to participate in only those IPOs which are attractively valued.
MT: The markets and equity mutual funds have seen an unabated uptrend in the last few years. Would you advise retail
investors some profit booking? Kindly suggest a strategy as regards the same.
Currently the Sensex is at 21-22x of one year forward earning which is not a cheap valuation. We feel that the valuation
concerns may ease as Indian markets record better earnings growth. Key industries are witnessing sustained growth in
revenues and better profitability for elongated period. Valuations of export related sectors have already corrected and
12
there would be limited downside from current levels. Another growth driver in the nature of foreign fund inflows would
continue as there are very few other markets that provide a credible alternative to BRIC economies, especially India and
China. We believe that equities would continue to give better returns than many other investment avenues and need to
be the core part of investors' portfolio. Equity investment is a long term investment vehicle and unnecessary churning or
frequent profit booking many a time reduces potential returns and may not be cost efficient for retail investors.
MT: Anything else you would like to highlight for the benefit of the investors?
Mutual Funds are able to monitor corporate performance and many other factors which are conducive or negative for
equity market growth. We are better equipped to enter or exit in stocks and manage them as a portfolio. Retail investors
necessarily need to delegate fund management to special vehicles like mutual funds because of inherent advantages of
professional management and pooling of savings. Profit booking is a regular phenomenon of investment strategy
whenever valuations run ahead of fundamentals and can be done in a very cost efficient way by mutual funds. To reap
the maximum benefits of equity investments it has to be disciplined, long-term, professionally and not sentimentally
managed.
- By Devangi Bhuta
MUTUAL FUNDS
New Fund Offers
Two new offerings
By Devangi Bhuta
(1) Reliance Natural Resources Fund
(NFO Closes – 30
th
January 2008, Minimum Investment: Rs.5000)
Objective: The objective of the scheme would be to seek long term capital appreciation by investing primarily in the
equity and equity related instruments of companies in the domestic market that predominantly focus on the energy
sector.
Analysis: The energy sector for the scheme broadly includes oil & gas, power and any other energy related generators,
distributors or ancillary companies. The power sector has recently come into the limelight and has potential in the long-
term on the back of the huge demand-supply gap. Thee government's thrust by way of budgeted outlays enhances its
visibility. Power transmission and distribution companies will benefit by the higher power generated and the
government's ambitious plans of 'power for all' by 2012. Domestic demand but also exports have been revenue drivers
for power equipment and transformer companies, and provide good growth opportunities.
With the India growth story, demand for oil & gas is bound to rise although subsidies have pruned the growth of oil
marketing companies. Nevertheless, they remain attractive bets in the long term. In the medium term, big IPOs in the
energy and power sector are expected which will raise the prospects of this sector. With a huge domestic population and
huge export opportunities, the demand for agri industry products is expected to remain strong. Further, the growth of
organized retail space will augment the agri sector's prospects. On the flip side, government regulations and lack of
infrastructure can hamper the growth of these segments. However, there is potential in the long term for both these
industries and the India growth story has a direct correlation with the performance of this scheme.
The past performance of the fund house appears to be good.
(2) AIG Infrastructure and Economic Reform Fund
(NFO – Closes on 31
st
January 2008, Minimum Investment: Rs.5000)
Objective: The investment objective of the scheme is to generate long-term capital appreciation from a diversified
portfolio of predominantly (at least 65%) equity and equity-related securities of companies engaged in the economic
development of India by investments in infrastructure and unfolding economic reforms.
Analysis: Its exposure to Infrastructure companies encompasses power, oil & gas, telecom, water, housing, real estate,
construction, roads, ports, airports, shipping & ship building, logistics, etc. and sectors that will benefit from the
development in infrastructure as such but not limited to cement, metals, capital goods, banking & financial services.
Economic reform oriented companies include those which benefit from the on-going liberalisation in the Indian economy
including relaxation in foreign exchange controls, FDI in banking and financial services and any other industry or sector
where there is a trend to move towards a freer market based model like retail, media & entertainment, mining, etc
Although a thematic scheme, its exposure spans across many sectors and the test for the fund manager appears to be in
selecting the right stocks at a good price. It would be important to study the investment strategy here in terms of growth
and review the value picks and resultantly the churn ratio.
The fund house is relatively new and it is too early to comment on its performance.
13
14
By Saarthi
STOCK WATCH
Q3 results have started flowing in and as usual companies with encouraging results will outperform others. In such a
scenario, Eastern Silk Industries Ltd. (Code: 590022) (Rs.249.45) looks good. For Q3FY08, sales have jumped by 35% to
Rs.169 cr. and net profit also has hot up by 40% to Rs.25.50 cr. posting a quarterly EPS of a whopping Rs.16. It is among
the few integrated players in textiles to register an OPM & NPM of more than 20% and 10% respectively. It has recently
completed the expansion programme at its Anekal's Unit 2 facility thereby taking the total fabric manufacturing capacity
to 18.5 lakh metres from 14 lakh metres per annum. It is also setting up made-up plant at Bommasandra near Bangalore
with an installed capacity of 1500 sets per day with at an investment of Rs.18 cr. For entire FY08, it is estimated to register
sales of Rs.600 cr. with PAT of Rs.80 cr. This translates into an EPS of Rs.51 on its equity of Rs.15.80 cr. For future growth,
the company is looking to make some foreign acquisition for which it may raise Rs.240 cr. through FCCB/GDR route. It is
also contemplating to split the face value of its share to Rs.2 from Rs.10, which will improve the liquidity going forward.
A good bet in the textiles space.
*****
Recently, JK Lakshmi Cement Ltd. (Code: 500380) (Rs.168.70) came out with decent Q3FY08 results. Its sales improved
by 25% to Rs.282 cr. but net profit grew by only 10% to Rs.61 cr. due to higher interest cost and depreciation. But if we
consider year to date figures upto December 2007, it has recorded 40% rise in sales to Rs.816 cr. and 75% increase in PAT
to Rs.203 cr. Interestingly, its nine months profit has already surpassed the entire FY07 profit of 178 cr. by a huge margin.
To maintain its growth, the company is further expanding its capacity to 5 million tonnes from 3.4 million tonnes by
October 2008. On the other hand, it is betting high on its ready mix concrete (RMC) business as it has great potential with
high margins. Accordingly for FY08, it is estimated to clock a turnover of Rs.1100 cr. with net profit of Rs.250 cr. which
translates into EPS of Rs.44 on its current equity and EPS of Rs.41 on its diluted equity of Rs.61 cr. For future, it is
contemplating to set up a greenfield cement plant near Bhilai, Chhattisgarh, with a capacity to produce 2.5 million tonnes
and hence is looking to apply for limestone mining lease. A solid buy.
*****
After its Q3FY08 results, the share price of Kamanwala Housing Construction Ltd. (Code: 511131) (Rs.163) has tumbled
down sharply as they don't look so encouraging when compared to Q3FY07 results. Its revenue declined by massive 75%
to Rs.16.50 cr. whereas profit declined by only 20% to Rs.5 cr. But being in the real estate & construction sector and
following the revenue model on sale of agreement basis, the company is bound to post erratic and lumpy results on
quarterly basis. Hence the picture changes for the combined nine months figures. Till now in this fiscal, it reported flat
revenues to the tune of Rs.67.50 cr. but profit shot up 80% to Rs.15 cr. on the back of rising real estate prices. The company
is operating mainly in Mumbai and has few good residential projects in Malad & Santacruz and huge commercial project
in Bandra Kurla complex. It has several projects lined up for future in Andheri, Mahim, Goregaon etc. and even in
Hyderabad. Recently, it also bought 10,000 sq. mt. land in Turbhe for Rs.15 cr. To sum up, the company is available fairly
cheap at a market cap of less than Rs.100 cr. It can easily appreciate 50% from hereon.
*****
Few days back Vakrangee Software Ltd. (Code: 511431) (Rs.249) also came out with stunning Q3FY08 results. It recorded
100% growth in topline as well as bottomline to Rs.60 cr. and Rs.13.50 cr. respectively thereby posting an EPS of Rs.7 for
the quarter. Effectively, it has already registered an EPS of Rs.17 for the nine months ending 31
st
December 2007. Last
year, the company imported the world's fastest printing system - Kodak Versamark VT3000, which can print customized
design from page to page. This machine has not only helped the company to execute all election commission related work
in house but also enabled it to get more business from the emerging opportunities like printing documents (including
bills) for telecom companies, electricity supply companies, retail groups etc. Recently, it has entered into a strategic
alliance with Eastman Kodak company to offer mass customisation and personalisation of customer communication
practices in India and has been granted with the Kodak Gold Plus accreditation status. Although there was been news of
the company losing the Nasik, Aurangabad and other regional businesses, it's still a good bet as company has bid for new
orders worth Rs.2500 cr. through its alliance with Eastman Kodak Co. It is expected to report total revenue of Rs.200 cr.
with profit of Rs.41.50 cr. for FY08 i.e. EPS of Rs.21 on its current equity and EPS of Rs.19 on its diluted equity of Rs.21.40.
For FY09, it has the potential to post an EPS of Rs.25 on its diluted equity. Accumulate at declines.
FIFTY FIFTY
Caveat Emptor: Investors seeking to invest in NFOs may note that the level of the market at which these schemes will
be deploying their funds is more relevant compared to the smaller per unit cost. These schemes may commence
deploying funds around the presentation Budget 2008-09 and investors may be better off entering the schemes after
listing in view of the volatile market conditions till the budget.
By Kukku
Investment Calls
* Mysore Paper (Rs.10.80) - Founded in 1936, Mysore Paper Mills has its paper manufacturing plant at Bhadravati in
Karnataka, a captive plantation and a sugar factory. The paper sector is doing well in view of firm prices and investors
can look for investment in this company with a long-term view as a turnaround is expected over the next 18 months.
The company is into two products with paper contributing around 86% of sales and sugar contributing the balance 14%.
It has Rs.350 cr. for modernization plans of the paper mill and Rs.120 cr. plan for the sugar mills.
Restructuring & Revival: The government had appointed M/s. Price Waterhouse Coopers (PWC) as the Transaction
Consultant for working out a Restructuring & Revival proposal and its report is under the consideration by the
Government. PWC has also, interalia, proposed investments of the order of Rs.470 cr. to revive the company either by the
Government or by induction of a strategic partner.
Captive Forestry: The Forest Wing has harvested captive plantations raised in Forest lands, Non-forest lands and K.P.C
areas over an extent of 3071 hectares and a 178126 MT of pulpwood was supplied to the mills, which is the highest
quantity supplied so far in a year since 1991-92 when the Mill started receiving pulpwood from the captive source. It has
accumulated carbon credits by its operations.
With the expected revival package by the introduction of strategic investor and with paper prices remaining firm, its stock
is likely to become good turnout story over long run. At the current price of Rs.11, there is virtually no downside risk.
Investors can accumulate this stock on dips.
* Jetking (Rs.340.55) has reported encouraging first half results with its bottomline moving up sharply from Rs.3 cr. to
5.07 cr. on increased capital of Rs.3.94 cr. resulting from the bonus issue. The company issued bonus shares twice in the
last three years. Last year dividend payout was 140% and it has already declared 100% interim dividend for current year.
For FY08, the company is expected to earn net profit of Rs.9 cr., which very likely to go up to Rs.12/13 cr. next year
leading to an attractive EPS of Rs.33/38. The company is likely to pay 50% of net profit as dividend.
Investors are advised to keep adding this growth stock to their portfolio for strong capital appreciation and good
dividend yield.
The stock has been strongly recommended from Rs.70 onwards in this column and reached Rs.433 as ex-bonus yearly
high, which works out to Rs.1732 almost 25 times growth excluding dividends.
The stock has already reacted from its high of Rs.433 to Rs.330 level where downside is very little. Investors can add
this stock on reactions around Rs.320/340 level for good long-term growth.
Market Guidance
* Hikal (Rs.467.60) - Net profit rose 62.64% to Rs.14.80 cr. in Q3FY08 as against Rs.9.10 cr. during Q3FY07. Sales rose
54.04% to Rs.85.80 cr. in Q3FY08 as against Rs.55.70 cr. during Q3FY07. If first three quarter results are any indications,
full year EPS is likely to be around Rs.32/34 level. Stay invested.
* PSL Ltd. (Rs.448.35) results are encouraging; investors can continue to hold the stock.
* NELCO Ltd. (Rs.176.65) - Knowledgeable investors are accumulating. Stay invested.
* Western India Shipyard (Rs.41.80) stock will be relisted with 2 paid-up value. Long-term investors should continue to
hold the stock.
* Charge Chrome/Ferro Chrome prices are
very firm, investors are advised to stay
invested in Ferro Alloys Ltd. (Rs.40.05), which
is expected to come out with encouraging
results. Around Rs.20/42 level, the stock looks
attractive as it has reacted from Rs.59 level.
Nav Bharat Venture (Rs.252) is another stock
also in to same field to get good benefit.
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* Rohit Ferro Tech (Rs.101.35) - Ferro-chrome
prices, which were around Rs.45/46 per kg
are now around Rs.66 per kg while in Q3FY08
average price was around Rs.55. For Q3FY08,
sales are expected above Rs.130 cr., which
should shoot up further to Rs.180 cr. for
Q4FY08 PAT margins can improve further to
11-11.5%. The company is expected to show
good profits. Stay invested for better targets.
Add in case it reacts to Rs.90/95.
* English Indian Clay (Rs.3278.30) - was
15
recommended around Rs.1725 level in this column about a month back. Stock has already shot up by almost 100% where
20-25% profit booking is advised and can be switched to Hindustan National Glass or Indian Hume Pipes.
* Mahican Projects - As per survey report its mine reserves are likely to be around 250 million tonnes. The company has
commenced extraction of coal from the first mine on a minimal scale and is expected to scale up from FY09 onwards.
Based on the current estimates of coal reserves and scaling up of excavation, there shall be good value unlocking for the
company. Informed sources have arrived at a value of above Rs.400 per share. There is likely placement of shares to some
QIP. Stay invested for better targets for the remaining quantity.
* Sujana Towers (Rs.194.90) has enhanced its tower manufacturing and structural steel capacities at a cost of Rs.85 cr.
invested over FY06 to FY08. Post expansion, the tower manufacturing capacity has increased from 28,000 TPA to 1,28,000
TPA, operational from March 2007. The heavy structural steel capacity has also been raised to 70,000 TPA and can raise
up to 85,000 TPA depending upon the desired product mix. The company is expected to report very encouraging results.
Stay invested for better targets.
* Net profit of Prating Industries rose 69.11% to Rs.11.06 cr. in Q3FY08 as against Rs.6.54 cr. during Q3FY07. Sales rose
81.26% to Rs.149.52 cr. in Q3FY08. The results are in line with expectations. Investors should hold on to this stock for good
long-term targets.
By V.H. Dave
EXPERT EYE
A mutual fund analyst strongly recommends the share of Kamanwala Housing Construction Ltd. (KHCL) (Code:
511131) (Rs.163) with a price target of Rs.280 in the medium term. He projects an EPS of Rs.45 in FY08 and Rs.60 in FY09.
The share is currently available at a P/E of 4.5 on FY08E.
Engaged in the real estate business since 1984, KHCL is engaged in housing construction activities and has completed
many prestigious residential and commercial complexes. Apart from the construction business, the company has a 60,000
TPA capacity mini steel plant at Nashik, Maharashtra.
During FY07, KHCL posted 649% increased revenue of Rs.83 cr. and registered 2458% higher net profit of Rs.12.8 cr. and
recorded an EPS was Rs.24.
Although net profit declined by 22% to Rs.5.1 cr. on 74% lower income of Rs.16.6 cr. during Q3FY08, the results for
Q3FY08 are not strictly comparable with Q3FY07 as it was a turnaround quarter. However, margins during Q3FY08 have
gone up substantially.
During the first 9 months of FY08, its revenue declined marginally by 4% to Rs.67.5 cr. However, its net profit shot up by
83% to Rs.15 cr. from Rs.8.2 cr. in the previous corresponding period.
KHCL has a small equity of just Rs.5.3 cr. and with reserves of Rs.34.3 cr., the book value of the share works out to Rs.75.
The promoters hold 45% in its equity capital, PCBs 20%, foreign holding is 2% leaving 33% with the investing public.
Its highly middle class oriented residential project at Malad (West), Mumbai for 2,03,000 sq. ft. FSI has a value of Rs.30.3
cr. The project has commenced and will provide the company necessary liquidity for further progress.
KHCL has bought Vallabh Terrace, a residential property at Opera House of about 15,000 sq. ft. for Rs.76 cr. for
redevelopment/upliftment and subsequent conversion of tenancy rights into ownership rights. It is in an important
location in Central Mumbai and the construction work at this project has already commenced.
Work has also commenced on a residential project of 60,000 sq ft. at Santacruz (West), in the western suburbs of Mumbai
that will be developed into luxurious residential flats and will be surrounded by corporate offices. The land cost of the
project is Rs.35 cr.
Another commercial/residential project for Rs.41 cr. is located at Versova, Andheri (West), Mumbai for 1,00,000 sq. ft. and
is likely to begin construction after the architectural plans are approved by the concerned authorities.
Its commercial project at the Bandra-Kurla Complex (BKC) in Bandra (East), Mumbai, having land cost of Rs.57 cr. known
as 'Pinnaacle Corporate Park' is under progress and is expected to be completed in the scheduled time. The project
comprises of 75,000 sq. ft. of which 43,000 sq. ft. has already been sold.
KHCL has also entered into joint venture agreements for construction and development of various projects. It has entered
into a joint venture agreement with 20% share with Prajay Engineers Syndicate & others for the development of 35 acres
of land in Hyderabad for which it has contributed Rs.6.5 cr. initially. The said project, being large in size, will take 2/3
years for development and is expected to earn good revenue for the company.
KHCL has also negotiated a joint venture project of Rs.15 cr. for 40,000 sq ft. with 50% share at Mahim (West), Mumbai.
It has also acquired land of 10, 010 sq. mt. at Turbhe, Navi Mumbai for its new projects and another 2 acres plot for
development at Hyderabad for Rs.1.6 cr. The project shall be developed into commercial/residential buildings. Since
Hyderabad is one of top IT centres, the project shall be very remunerative.
Its commercial projects in the BKC and Santacruz and residential project in Malad will surely help improve its cash
inflows and strengthen the financial position. These projects will enhance the image of KHCL in the construction space as
Mumbai is the financial capital of India and BKC is considered to be the most prestigious business centre in India today.
16
17
This area has been planned as the financial hub and is mostly occupied by many bank headquarters, NABARD, IL&FS,
National Stock Exchange, the Diamond Bourse, MNCs and other corporates together with Central and State Government
Departments whereas most BPOs are located in Malad.
KHCL is in the process of undertaking a series of new projects to shore up its presence in new locations. It has started to
develop slum rehabilitation projects for the middle income group. Mumbai has more than 60% of its area under the
control of the Slum Development Authority. The important feature of the slum areas for development is that they are
located in the heart of the city and marketing is not an issue. Once KHCL undertakes such projects, it will attract a lot of
business regularly for another 25 years in Mumbai.
KHCL's continuous initiatives to expand its land bank, its increasing presence in newer locations, its tie-ups with other
reputed builders and its quality projects will boost its revenue & profitability in coming years.
For FY08, KHCL is likely to report a net profit of Rs.24 cr. on an income of Rs.100 cr. and its EPS would work out to Rs.45.
During FY09, net profit is expected to be around Rs.30 cr., which would give an EPS of Rs.57.
The share of KHCL, is trading at a P/E of 4.58 on FY08 estimated EPS of Rs.45 and 2.9 on FY09 projected EPS of Rs.57, is
recommended with a medium-term target of Rs.315 and Rs.400 in the long-term on a conservative P/E of 7 against
industry average P/E of 56. The 52-week high/low of the share has been Rs.314/87.
*****
Some funds have started accumulating the shares of LIC Housing Finance Ltd. (LICHF) (Code: 500253) (Rs.344) in view
of its excellent FY08 results, wherein an EPS of Rs.47 is expected. The share trades at a forward P/E of just 8.1 (on FY08
earning per share of Rs.47) as against HDFC's forward P/E of 37 on FY08 estimated EPS of Rs.75.
Incorporated in 1989, LICHF promoted by Life Insurance Corporation of India (LIC) (40.5% stake), is the second largest
housing finance company in the country. The company floated its first public issue in 1994, which was followed by a GDR
issue in 2004. The company recently promoted a wholly owned subsidiary namely, LICHF Care Homes Ltd. LICHF also
holds 39.3% stake in LIC Mutual Fund and has also inked an agreement to enter into the credit card business along with
its parent company LIC, Corporation Bank and GE Money.
The company is engaged mainly in granting housing loans to individuals and provides finance to agencies engaged in
construction of houses/flats for residential purposes. It has the largest reach in the country with a network of 6 regional
offices, 115 operating offices covering almost 450 locations and an office in Dubai and Kuwait. Its marketing and
distribution channels of 4,073 home loan agents, 794 direct sales agents (DSAs), 423 customer relations agents (CRAs)
coupled with its strong brand identity (LIC) helps it seize upcoming business opportunities in terms of good volume
growth and a large client base.
During Q3FY08, its income went up by 37% to Rs.552 cr. and net profit shot up 38% to Rs.106 cr. During the first 9 months
of FY08, net profit has advanced by 42% to Rs.269 cr. on 37% higher revenue of Rs.1542 cr.
Its capital adequacy ratio stands at 15% as on 31
st
December 2007. The gross NPAs (non performing assets) declined from
3.56% as on 31
st
December 2006 to 2.77% as on 31
st
December 2007. Net NPAs stood at 1.61% as on 31
st
December 2007. It
aims to achieve net NPAs below 1% by March 2008.
The promoters hold 40.5% in its equity capital, foreign holding is 30.8%, corporate holding is 6.1%, Mutual funds and
institutions hold 9.5% leaving only 13.1% with the investing public.
The company optimises the advantage of its low cost funds. Out of the total liability, nearly 40% are fixed for 10 years
with a reset clause every year and the rest are floating. The company keeps on swapping the fixed liabilities using interest
rate swaps.
LICHF plans to open an office in UAE during the year. It started its operations in Kuwait four months back and is starting
to pick-up business there. It also launched a special fixed deposit schemes in May 2007 and targets to raise Rs.1,000 cr.
through fixed deposits.
While retail forms a major chunk of its disbursements (around 95%), the company is very aggressively targeting growth
among developers and the corporate sector. The disbursement to developers & corporates stood at Rs.377 cr. so far in
H1FY08 as against Rs.67 cr. in FY07.
The company is very hopeful of achieving Rs.500 cr. disbursement target to corporate/developers in FY08 and may
therefore consider an upward revision of the overall disbursement target. The margins are higher by 150 basis points in
loans to developers/corporate segment.
The company has forayed into real estate venture funds through strategic investment of Rs.50 cr. in Kotak Real Estate
Fund and Rs.10 cr. in Unitech-CIG Fund: both have tenures of 7 years.
It has also increased the strength of its home loan agents, DSAs and home loan counselors by more than 20%. It has
enhanced corporate tie-ups with reputed organisations in the country for granting loans to their employees.
LICHF plans to raise Rs.300-400 cr. in the next two months by issuing fresh shares by w
ay of private placement of shares to FIIs and promoters, by the end of March 2008 to meet the company's business
growth. The placement is expected to be at a price of Rs.450+ if market reports are to be believed.
The disintegration of joint families, emergence of nuclear families, surge in urbanisation, rising income levels and
shortages of housing units are demographic variables that would throw up enormous opportunities to LICHF, which has
a singular approach business model (home financing). Further, the government policy that is pro-housing in turn would
benefit LICHF going forward.
The decrease in the average age of borrowers, increasing urbanisation, strong demand for housing loans, good business
growth and optimum funding mix, increasing NIM (net interest margin), its low loan to value ratio, increasing focus on
healthy asset base, faster recovery and its forthcoming placement at a high price are strong positives for the prospects of
the company.
Traditionally, Q4 results are always better for LICHF. During FY08, net profit is likely to touch Rs.400 cr. on an income of
Rs.2150 cr., which would give an EPS of Rs.47. During FY09, revenues are expected to be over Rs.2900 cr. with a net profit
increasing to Rs.520 cr. and the EPS could work out to Rs.61.
The LICHF share trading at a P/E of 8.1 on FY08 estimated EPS of Rs.47 and 6.3 times its FY09 estimated EPS of Rs.61 is
strongly recommended with a medium-term target of Rs.564 and a long term-target of Rs.700.
*****
The shares of Shri Lakshmi Cotsyn Ltd. (SLCL) (Code: 526049) (Rs.157) are being accumulated by persons in the know
and some corporates in anticipation of excellent results for FY08. Market grapevine has it that SLCL is likely to post an
EPS of Rs.55 in FY08 (June end) and Rs.75 in FY09.
Incorporated in 1988, as Galaxy Indo-Fab, is a Kanpur-based company with three manufacturing facilities in Fathephur
and Malwan, Uttar Pradesh and Sonepat, Haryana. SLCL has a domestic distribution network of 1000 agents across the
country for domestic sales besides supplying defence-related items such as bullet-proof jackets and bullet-proof helmets
to defence establishments. Apart form timely expansion it has forayed into the manufacture of denim, terry towels, home
furnishing and bottom-weight fabrics. SLCL is equipped with latest state-of-the-art looms from Italy for weaving of wider
fabrics, and PLC controlled processing machines from Switzerland, Germany and Austria.
SLCL is emerging as a big supplier for the
Defence departments and to various State
Governments, Ministry of
Railways,
Ministry of Home Affairs, and para military
forces.
April – June 2007
EBG Quarterly Performance:
100% once again
18
During the year ended 30
th
June 2007, SLCL
registered 67% increased sales of Rs.603 cr.
and registered 156% higher net profit of
Rs.41 cr. giving an EPS of Rs.27.4. During
Q2FY08, sales have gone up by 84% to
Rs.232 cr. and net profit by 73% to Rs.16.3
cr. During H1FY08 ending 31
st
December
2007, its sales surged by 106% to Rs.466 cr.
and net profit jumped by 116% to Rs.31.3
cr.
During April – June 2007, which is the third quarter of the fourth year of
'Early Bird Gains' (EBG) – the investment newsletter that spots multi-
baggers, it has scored 100% success with all 15 recommendations
recording an appreciation.
EBG has, therefore, consistently, maintained quality while the bonus
issues in excess of 30% highlight the confidence of its recommendations.
Issue
Dated
For the year ending 30
th
June 2008, SLCL is
likely to post sales of Rs.950 cr. and earn a
net profit of Rs.81 cr., which would give an
EPS of Rs.55. Net profit is likely to move up
to Rs.110 cr. on sales of Rs.1250 cr., which
would fetch an EPS of Rs.75 in FY09.
Its equity capital is just Rs.14.8 cr. and with
reserves of Rs.164 cr., the book value of the
share works out to Rs.121. The promoters
hold 35% in the equity capital, foreign
holding is 5%, Reliance Capital holds 9%,
mutual funds 3% leaving 13% with the
investing public.
The company carried out three phase wise
expansions at a cost of Rs.389 cr. for which
funds were raised through a blend of
equity and loans. It recently raised FCCB of
Rs.40 cr. ($10 million) for its garment
Highest
price since
recom.
Growth
%
Buy
Price
Scrip
04/04/07
Panama Petrochem
129.00
270
109
11/04/07
Rolta India
335.90
780
132
18/04/07
Metalman Industries
18.19
47
158
25/04/07
Indag Rubber
31.00
113
264
02/05/07
Paradyne Infotech
116.45
440
279
09/05/07
Pochiraju Inds. Ltd.
22.60
64
183
16/05/07
Asian Oilfield Services
73.95
446
503
23/05/07
Hanung Toys & Textiles
165.50
300
81
23/05/07
XL Telecom & Energy
119.30
595
400
30/05/07
Bharat Gears
73.00
89
22
06/06/07
Kanpur Plastipack
22.75
34
49
13/06/07
Deepak Fertilisers
89.30
178
99
13/06/07
MSP Steel & Power Ltd.
19.15
89
365
20/06/07
Bihar Tubes Ltd.
103.65
222
114
27/06/07
Astral Poly Technik Ltd.
105.00
235
123
EBG for sure profits
division at Roorkee which includes garments in retail portfolio of company-owned stores. It hopes to set up company-
owned showrooms after its Roorkee project gets commissioned in March 2008.
To fund the immediate expansion of Rs.300 cr., the company is likely to issue warrants to the promoters and by way of
internal accruals. The company is in the process of raising Rs.160 cr. through the qualified institutional placement route.
SLCL will venture into retailing of its terry towels and bed linen under the brand name Shri Lakshmi. The first store is
being launched in Delhi, followed by stores in Chennai, Ludhiana, Chandigarh and Kanpur among other cities.
The company intends to use its existing dealer base and open stores on a franchisee basis at an investment of Rs.1 cr. per
outlet. It will not offer its entire range of products in the retail outlets to avoid direct competition with established dealers.
The company has expansion plans envisaging an investment of Rs.500 cr., which includes setting up of 500 retail stores,
enhancement in capacity from 3,000 tonnes terry towel to 15,000 tonnes terry towel and a 12 MW power project. The
expenditure would be financed through term loans under TUFS and equity.
The company has formed a joint venture with UK-based company Armet Armoured Vehicles. SLCL holds 49% equity in
the said joint venture company whereas Armet Armoured Vehicles, UK holds 51% equity. The manufacturing unit of the
joint venture company set up at Malwa, district Fatehpur, Uttar Pradesh.
The main business of this joint venture is to carry on the business of defence vehicles and manufacturing of armour plates,
panels, helmets, ballistic body armours etc. together with safety and security related equipments for domestic as well as
foreign markets.
SLCL is planning for a tie-up with major retail chains abroad such as Wal-Mart in USA for terry towel and other cotton-
based textile products that the company manufactures. It is on the major markets of USA, Europe and the UAE.
The Defence market is very vast and beyond defined boundaries. SLCL is dealing with the army not only for the
camouflage fabric uniform and bullet proof jackets but also the technical textile products such as PU coated nylon fabrics,
infra-red fabrics, nuclear bio-chemical fabrics, bullet-proof helmets, glacier tents and fabrics meant for high altitude areas.
Due to its in-house R&D and testing facilities, the company is on the path to capture a major share in the nascent Indian
market and spread its wings globally. SLCL has pending orders of Rs.500 cr. from Walmart, Li, Fungs and others booked
for the next 6 months. Further orders are also in the pipeline.
There is already a huge opportunity in terms of outsourcing for home textiles to the world's biggest market like the
US and EU, which account for 60% of the $70 billion global home textile market. India occupies a competitive
position compared to equally low-cost producing countries, particularly Pakistan and China. A steady improvement in
textile exports is expected from India.
Given the demand for its products, the large orders on hand, its ongoing expansion, its retail foray and huge opportunity
in the textile market gives strong revenue & profitability visibility for SLCL in coming years.
The share of SLCL is traded at Rs.157 discounting its estimated EPS of Rs.55 for FY08 by 3 times and its EPS of Rs.75 for
FY09 by 2.2 times. Even at a conservative P/E of 6 will take its share price to Rs.330 in the medium-term and Rs.450 in the
long-term. Its 52-week high/low of the share has been Rs.204/83.
19
By Nayan Patel
TECHNO FUNDA
Since the last two weeks we have been advising readers to sell small cap and mid-cap stocks. At that time other
chartists/analysts were urging investors to buy but now you can see how the
much small caps & mid-caps have fallen on their faces. Now all these analysts
are advising investors to sell small cap and mid cap stocks while we suggest
readers to buy good small cap and mid caps that have shown good results.
Hydro S&S
BSE Code: 524019
Last Close: Rs.71
Review
- WS Industries recommended last week
at Rs.123 in a highly bearish market
kissed Rs.132 level and is still looking
good for long-term investment.
Last time in the Diwali issue, we recommended this stock to buy at Rs.54 level, thereafter, it kissed Rs.81.90. Now it is
again at Rs.71 and we strongly recommend buying this stock.
This is WS Group company which make poly propylene compound for all big auto companies like Hyundai, Tata Motors,
M & M, Toyota and Suzuki. The company also has full load of clients in furniture, home appliances and electrical goods.
Products like car bumpers have been sent to the home facilities in Korea or Japan for approval.
It has an equity of just Rs.6.53 cr., promoters have 65.34% stake, corporate bodies have 15.65% stake whereas only 19%
shares are with the public.
The company has posted excellent results for the September'07 quarter. Net sales have grown by 18.66% while profit has
gone up to 300%. In the first six months, the company's profit has jumped 80% to Rs.2.85 cr. whereas last year's total
profit was Rs.2.94 cr.
Company is paying 12% dividend and its board will meet on 31
st
January for December'07 quarter result to declare the
interim dividend.
The company will soon begin trial run at its second plant at Jejuri near Pune which will start in April-08. The company is
the second largest supplier to both Suzuki & Tata Motors.
Technically and fundamentally, the stock is looking hot at the current level. Buy with a stop loss of Rs.61. On the upper
side, it will go up to Rs.82 in near future and will cross Rs.100 level in coming days.
Jindal Worldwide Ltd.
BSE Code: 531543
Last Close: Rs.404.10
Last whole week, this stock closed in the upper freeze. Some positive developments are going on in this company and it
will be the best buy in this market. On decline, buy around Rs.380 with a stop loss of Rs.365. On the upper side, it will go
up to Rs.450 in the short-term and will go up to Rs.700 in one year.
Gandhi Special Tube
BSE Code: 513108
Last Close: 231
Company manufactures Seamless tubes. For the September'07 quarter, it declared fantastic numbers. Net sales jumped
more then 22.17% while net profit jumped more than 28.15% and the company declared 40% dividend. Its board will meet
on 23
rd
January to announce December'07 quarter results, stock split and interim dividend.
At the current level, the stock looks safe. Buy with a stop loss of Rs.215. On the upper side, it will go up to Rs.255. Cross
over will take it to Rs.300 level in the next 6 months.
Austin Engineering
BSE Code: 522005
Last Close: 130.45
Company has shown decent growth in the first nine months of FY08. Net sales has grown 12.19% while net profit jumped
22.2% to Rs.4.95 cr. Company has equity of just Rs.3.53 cr., EPS for yhe first nine months is Rs.14.01 and we expect an EPS
of Rs.18-20 in this year, stock is traded at a PE ratio of 7 its forward EPS. Buy at every decline with stop loss of Rs.115. On
the upper side, it can go up to Rs.158 and touch Rs.175 level in next 3-4 months.
Galada Power
BSE Code: 504697
Last Close: 32.55
Short term traders can buy this stock with stop loss of Rs.28. Expect fireworks in this counter, upper side stock can go up
to Rs.43 in the short-term while the stock can go up to Rs.60 in the medium-term.
KNR Constructions IPO opens on 24
th
January
MONEY FOLIO
KNR Constructions Ltd., an infrastructure project development company, will enter the capital market soon with an IPO
of 7,874,570 equity shares of Rs.10 each through the 100% book-building process in the price band of Rs.170 and Rs.180
per equity share. The Bid/Issue opens for subscription on Thursday, 24
th
January and closes on Tuesday, 29
th
January
2008. CRISIL has assigned a CRISIL IPO Grade '3/5' to the proposed IPO.
Incorporated in 1995 by professionals with experience in the field of infrastructure development, KNR Constructions Ltd.
provides engineering, procurement and construction ("EPC") services across various fast growing sectors namely roads &
highways, irrigation and urban water infrastructure management. Its project execution strength primarily is in road
transportation engineering projects namely construction and maintenance of roads, highways, flyovers and bridges
wherever integral to the projects undertaken.
The Company executes infrastructure projects independently as well as through joint venture partners. It works on
various road projects with its joint venture partner, Patel Engineering Ltd. with whom it has business association for the
past 7 years. As on November 30, 2007, it had 25 projects on hand across various states in India covering Uttar Pradesh,
Madhya Pradesh, Assam, Andhra Pradesh, Karnataka, and Tamil Nadu.
The proceeds from this Issue are intended to be deployed for further equity investment in BOT projects and contribution
towards the unsecured loan portion in a BOT Project. The Issue proceeds will also be used for purchase of capital
equipment; and for meeting working capital requirement.
The estimated unexecuted order book position as at November 30, 2007 was Rs.1733.8 cr., which is approximately 5.4
times the operational income of FY07 on a consolidated basis. On a consolidated basis, the Operating Income, EBIDTA
and PAT have grown at a CAGR of 58.38%, 111.88% and 108.22% respectively over FY05 to FY07. The Company's
consolidated income increased to Rs.331.8 cr. in FY07 compared to Rs.111.6 cr. in FY05. Its restated PAT (consolidated)
20
increased to Rs.20.5 cr. in FY07 from Rs.4.1 cr. in FY05. For H1FY08, the consolidated income was Rs.241.5 cr. and the
restated profits were Rs.13.5 cr.
OnMobile Global IPO opens on 24
th
January
OnMobile Global Ltd., a leading provider of telecommunications value added software products and services in India
with an expanding international presence, will enter the capital market with an IPO of 10,900,545 equity shares of Rs.10
each for cash through the Book Building Process in the price band of Rs.425 and Rs.450 per equity share. The Issue/ Bid
will open for subscription between Thursday, 24
th
January and Tuesday, 29
th
January 2008 and the issue will be listed on
the BSE and NSE. The Issue has been graded above average by CRISIL and has been assigned a grade of 4/5.
Bangalore-based OnMobile Global Ltd. developed telecommunication software applications for the mobile
telecommunications industry worldwide. Its products are targeted at end-user telecommunications subscribers with an
increasing focus on capitalising on the convergence between wireless and wireline telecommunications services, media
content distribution, internet, mobile marketing and mobile commerce. It has a broad range of applications that are
delivered by its carrier customers to their end-user subscribers. These products include ringback tones, voice portals,
ringtone
downloads,
subscription
manager,
contests, music messaging,
on-device client software,
mobile
radio,
dynamic
voicemail,
voice
short
messaging service and missed
call alerts which enable
subscribers to personalise
their mobile phones and
thereby
enhance
user
experience.
The objects of the Issue are to
purchase equipment for the
Company's
offices
at
Bangalore, Mumbai and Delhi
and various customer sites, to
meet
working
capital
requirements, repayment of
loan and to fund expenditures
for
general
corporate
purposes.
For FY07, it recorded net
income of Rs.141.2 cr. with
PAT of Rs.34.9 cr. while for
H1FY08 it posted a net
income of Rs.116.3 cr. with
PAT of Rs.30.5 cr.
21
Cords Cable public
issue opens on 21
st
January
Cords Cable Industries Ltd.
(CCIL), a leading ISO 9001-
2000
certified specialised
cable manufacturer for a
variety of industries, will
enter the capital market with
an IPO of 30,85,000 shares of
Rs10 each for cash at a price
to be decided through a 100%
Winners of 2008!
All the 'Winners of 2007' released on 2nd January 2007 have gained from their recommended
levels to their respective highs.
Their performance till 31
st
December 2007 is also given.
The 3rd edition of 'Winners of 2008' has been released.
Get 'WINNERS of 2008' with yearly levels and quarterly updates for Rs.2000 by email or as a
print publication. Add Rs.100 extra if needed by courier. Book your copy now and remit your
subscription to 'Time Communications (India) Ltd.' C/A No.623505381145. ICICI Bank, Fort,
Mumbai – 400 001 or C/A No. 10043795661, State Bank of India, Fort Market Branch,
Mumbai – 400 001, under email advice us at moneytimes@vsnl.com.'
Scrip
Close
29/12/06
High After
Recco
% Gain
to High
Close
31/12/07
% Gain/Loss
on closing
Reliance Capital
606.40
2649.00
336.84
2589.00
326.95
Bhushan Steel
374.25
1655.00
342.22
1557.00
316.03
SAIL
89.20
292.50
227.91
284.35
218.78
Sesa Goa
1411.00
3941.00
179.31
3799.00
169.24
Mphasis
303.45
339.80
11.98
755.00
148.81
Subash Projects
251.85
499.00
98.13
477.35
89.54
Jain Irrigation System
382.80
766.00
100.10
645.00
68.50
J.B.F.Industries
122.75
208.45
69.82
204.00
66.19
Century Text.& Ind.
740.00
1200.00
62.16
1170.00
58.11
Suashish Diamonds
209.35
320.00
52.85
297.20
41.96
Champagne Indage
551.10
981.00
78.01
764.00
38.63
N.C.L.Industries
59.95
83.65
39.53
82.90
38.28
India Cements
235.10
333.00
41.64
310.30
31.99
Finolex Cables
100.42
122.00
21.49
121.30
20.79
Elder Pharma
366.50
470.00
28.24
420.85
14.83
Ashok Leyland
45.45
55.10
21.23
52.00
14.41
Ipca Laboratories
593.75
794.00
33.73
678.00
14.19
Kesoram Ins
546.95
675.00
23.41
588.00
7.51
Mahindra & Mahindra
906.00
1002.00
10.60
861.00
-4.97
Classic Diamonds
538.00
560.00
4.09
507.35
-5.70
Hinduja TMT
737.00
782.00
6.11
691.00
-6.24
Lupin
612.05
755.00
23.36
567.95
-7.21
Bombay Dyeing
766.00
803.00
4.83
633.70
-17.27
Infosys Technologies
2241.00
2439.00
8.84
1768.00
-21.11
K.S.B. Pumps
676.00
679.00
0.44
465.30
-31.17
Sundaram Clayton
1394.00
1400.00
0.43
861.00
-38.24
Hexaware Tech.
199.65
204.00
2.18
85.85
-57.00
22
book-building process in the price band of Rs.125 and Rs.135 per equity share. The issue will open for subscription on
Monday, 21
st
January and close on Thursday, 24
th
January 2008 and will be listed on the BSE and NSE. This issue has been
graded by CARE and has been assigned the CARE IPO Grade 3/5.
The company was promoted with the objective to cater to the growing requirement for high quality customized cables. At
present, CCIL manufactures cables upto 1.1 KV for various applications covering most segments of users including
industrial, utility and buildings. It caters to a wide spectrum of cable users in various industries like steel, power,
chemical, cement, fertilizer, refineries, telecom, etc. It is pre-qualified and has approvals with most of the large corporates
and well known PSUs. Its clientele includes BHEL, NTPC, Hindalco, ACC, HPCL, GAIL, Tata Steel, Siemens, Honeywell,
L&T, MRPL and others. It is also approved by almost all top Indian consultants any by various international consultants
and companies. It has the BIS certification for all types of cables conforming to IS:1554(I)/1998 ad IS:694-90.
The issue is being made for setting up production facilities, enhancing long-term working capital and general corporate
purposes.
The company's revenues have grown from Rs.16.04 cr. in FY03 to Rs104.29 cr. in FY07 and the net PAT as restated during
the same period has grown from Rs.13.94 cr. to Rs.7.01 cr.
J. Kumar Infraprojects IPO closes on 23
rd
January
J. Kumar Infraprojects Ltd. (JKIL), a civil engineering and infrastructure development company with primary focus on
development of roads, flyovers, bridges, railway overbridges, irrigation projects, commercial and residential buildings,
railway buildings, sports complexes and airport contracts, is entering the capital market with an IPO of 65,00,000 equity
shares of Rs.10 each through a 100% book-building process in the price band of Rs.110 and Rs.120 per equity share. The
Bid/Issue opened on 18
th
January and will close on 23
rd
January 2008. The shares will be listed BSE and NSE and has been
assigned IPO Grade 2 by ICRA.
The company's expertise is in the construction of infrastructure projects like Transportation Engineering, Civil
Construction, Irrigation Projects and Piling work using hydraulic piling rigs and has been most active in Mumbai, Pune,
Aurangabad and Vidharbha region of Maharashtra. It has been awarded contracts by various authorities including:
Maharashtra State Road Development Corporation Ltd., Mumbai Metropolitan Regulatory Development Authority,
Pimpri Chinchwad Municipal Corporation and Mumbai Rail Vikas Corporation in addition to several private sector
companies such as Indiabulls Real Estate Company Pvt. Ltd. and SMC Infrastructures Pvt. Ltd. amongst others.
The promoters and the experienced core team have got a past experience of over 2 decades in execution of different type
of civil engineering projects and has the ability to execute projects within the stipulated time. Over the years, it has
executed complex projects prior to the scheduled completion date and earned bonus for early completion. It completed
the construction of flyover, slip roads and allied works at Seven Hills Chowk, Aurangabad, 19 days ahead of scheduled
date of completion with Rs.19 lakh bonus for early completion. Similarly, it completed the pedestrian subway work at
Rajaram Nagar near Santacruz, Mumbai, 67 days ahead of the stipulated time limit with bonus for early completion.
As on 30
th
November 2007, the company's order book, which includes some uncommenced projects and the unfinished
and uncertified portions of the commenced projects, was Rs.461.15 cr. The proceeds from this Issue are intended to be
deployed for the purchase of capital equipments and for funding working capital requirements.
The company's income from operations has increased by a CAGR of 234.35% over the last 3 full financial years and its
PAT has increased by a CAGR of 471.51% over the same period. The Company posted a total income of Rs.113.36 cr. and
with PAT of Rs.8.01 cr. in FY07. For H1FY08, its total income was Rs.82.36 cr. and the PAT was Rs.7.99 cr.
Ravin Cables plans IPO
Ravin Cables Ltd., a Rs.300 cr. company is planning to set up a new grassroots plant for the manufacture of 6000 Km of
220 KV HV and EHV cables at Pune. The plant, which is estimated to cost around Rs.60 cr. is likely to be ready by
December 2008.
The company is now planning to go public to raise around Rs.100 cr. from the market. Meanwhile, Reliance Mutual Fund
and Franklin Templeton Mutual Fund have picked up a stake in the company. The details of the public issue are being
worked out.
ICICI Prudential AMC launches FMP Series 33 – Plan A
ICICI Prudential AMC today has launched ICICI Prudential Fixed Maturity Plan Series 33 – Plan A. The new Fund Offer
opened on 8
th
January and closes on 8
th
February 2008.
ICICI Prudential Fixed Maturity Plan Series 33 – Plan A is India's first equity linked fixed maturity plan. The fund is a
close ended debt fund to be launched in India that provides an opportunity to gain from equity market linked returns.
The Fund seeks to invest up to 80% of the corpus Equity linked debentures. The balance will be invested in Debt securities
with fixed and floating interest rates, with ratings generally of AA- or above.
Key features of the fund are:
* The structure of the fund is designed so that when equity the market goes up, the fund gives equity linked returns and
when the equity market goes down, the structure of the debenture steps in to keep the investor worry free. There is no
assurance of any capital protection or capital guarantee for investors in this Scheme.
* The Fund provides the advantage of periodic liquidity every 6 months from the date of allotment.
* The Fund has no entry load.
ICICI Prudential Fusion Fund Series – III
The new fund offer opened on 8
th
January and closes on 21
st
February 2008.
ICICI Prudential Fusion Fund Series – III is a 3-year close-ended diversified equity fund designed to invest in companies
across market capitalisation, having long term growth prospects. The fund seeks to generate long-term capital
appreciation by investing predominantly in equity and equity related instruments of companies in Infrastructure, Retail
Consumption and Services through a fusion of the following investment approaches:
* Investment at the pre-IPO stage will allow the Fund to potentially benefit in case of significant capital appreciation
when such companies go public.
* Take stakes in small companies and facilitate their market (investor) communication and benefit as they grow big over
the tenure of the Scheme.
* Companies participating in secular growth opportunities due to explosive growth in demand across Infrastructure,
Consumption and Outsourcing, which potentially offer long-term growth prospects.
* Transition from Mid-cap to Large-cap companies, which have the potential to scale up to take advantage of the growth
opportunities.
* Early identification of companies that are set to transition into a new growth orbit.
* Bottom-up stock picking in companies across market capitalization.
Soma Textiles plans expansion
Soma Textiles and Ind. Ltd, engaged in the manufacture of textile products, manufactures cotton yarn, high-value shirting
fabrics, bottom wear fabrics, and denim fabrics will focus on continuous length dyeing of shirting and bottom weight
fabrics. The company plans major expansion whereby it will introduce soft and flat finishing range for denim fabrics
keeping in view various future market requirements. It is also planning to install polymerizer for developing specialty
finishes on fabrics.
The company has an installed capacity of 55,440 ring spindles, 552 rotors and 476 looms.
The company emphasises on quality and technology upgradation with innovation and customer orientation.
Sujana Universal to enhance capital
The Board of Sujana Universal Ind. Ltd. will allot 4,000,000 equity shares of Rs.10 each and 4,900,000 warrants of Rs.10
each at a premium of Rs.10.50 a share/warrant to the promoters group and others. The above decision was taken at the
board meeting held recently.
The board has recommended the increase of authorised share capital from Rs.115 cr. to Rs.155 cr., by issue of equity
shares/compulsorily convertible warrants by way of preferential allotment to the extent of Rs.9 cr. to the promoters and
non-promoters, and issue of equity shares by way of GDRs etc to the extent of $20 million and make investments.
Maars Software to invest Rs.2000 cr. in infrastructure
Maars Software International Ltd. proposes to enter into joint venture for infrastructure development across India for
developing residential and commercial complexes at an estimated project cost of Rs.2000 cr.
It is also setting up of subsidiary company in the name and style of Maars International Pvt. Ltd. to foray into media,
entertainment and film distribution business with total project outlay of approximately upto Rs.100 cr.
Disclaimer: Investment recommendations made in Money Times are for information purposes only and derived from sources
that are deemed to be reliable but their accuracy and completeness are not guaranteed. Money Times or the analyst/writer does
not accept any liability for the use of this column for the buying or selling of securities. Readers of this column who buy or sell
securities based on the information in this column are solely responsible for their actions. The author, his company or his
acquaintances may/may not have positions in the above mentioned scrip.
23
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Courier (Add Rs.25 per issue as courier charges)
LMC:- Rs.3000 p.m. (By SMS on mobile/internet)
NF:- Rs.1000 p.m., Rs.8000 p.a. (By SMS only)
PSG:- Rs.8000 p.a.. (By email only)
PP:- Rs.2500 p.m, Rs.6000 quarterly, Rs.12000 half yearly, Rs.20000 annually (By email only)
RS Weekly:- Rs.1500 p.m., Rs.12000 p.a.
By email
Courier (Add Rs.25 per issue as courier charge)
DFB:- Rs.2000 p.m. (By email only)
ISM:- Rs.8000 p.a.
By email
Courier (Add Rs.25 per issue if required by courier)
TT:- Rs.1000 p.m., Rs.10, 000 p.a.
By email
By post
Courier (Add Rs.25 per issue as courier
charges)
DBC:- Rs.2000 p.m., Rs.18000 annually (By SMS only)
ET:- Rs.2000 p.m. (By email only)
EBG:- 1 year: Rs.5000, 2 years: Rs.8500, 3 years: 11,000.
By email
By post
Courier (Add Rs.25
per issue as courier charges)
Winners:- Rs.2000 yearly.
By email
By post
Courier (Add Rs.25 per issue as courier charges)
Name (in capital):______________________________________________________________
Address: ______________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
Tel. No.: (O) ___________________ (R) ___________________ (M)___________________
Email ID: ______________________________________________________________________
Are you an Investor
Trader
Broker/Sub Broker
Investment Adviser
Banker
Date & Place _____________
Signature ________________
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