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T
I
M
E
S
A TIME COMMUNICATIONS PUBLICATION
VOL. XVII No. 24 Monday, April 28 – May 4, 2008 Pages 16
Cautious but positive sentiment to prevail
By Sanjay R. Bhatia
Last week, the markets have displayed a positive trend amidst intermediate bouts of volatility and choppiness due to
derivative segment expiry. Sustained and broad based buying was witnessed amidst positive breadth of the market and
higher volumes during this trading week. Traders and speculators were seen building fresh positions but were also seen
booking profits at higher levels. Incidentally, FIIs remained net buyers in the cash as well as the derivatives segment.
Mutual Funds, too, were net buyers during the course of the week.
Profit booking was evident at higher levels as market sentiment
remained tentative due to concerns on inflation and rising crude oil
prices. The global cues have remained mixed, with crude once again
spiking due to lower US inventory data. Global markets have more or
less remained positive but the US economy continued to emanate mixed
economic signals. Inflation rate increased again to touch 7.33% for the
week ended 12
th
April 2008 as against the 7.14% recorded on 5
th
April
2008. The volumes recorded have shown improvement along with fund
flows. With results season ending the markets will await cues from the
meteorological department on the monsoon forecast along with the
global cues.
Now, it is important that the fund flows improve and follow up buying continues to emerge at higher levels. Corporate
results have more or less been on expected lines, however, inflation continues to remain a cause for concern and the RBI
monetary policy is, therefore, an important event on 29
th
April 2008 followed by the US Federal Reserve meeting on 29-30
April 2008. The market sentiment may, therefore, remain cautious and tentative at higher levels with a positive bias. Any
negative outcome from these meetings will trigger a short term correction on the bourses.
Technically, both the benchmark indices are nearing their 200-day SMA and are likely to successfully test it in the next
few trading sessions. On the upside, the Sensex faces resistance at the 17,300 and 17,600 levels but has support at the
16,608 and 16,372 levels. On the upside, the Nifty faces resistance at the 5156 and 5225 levels whereas 5025, 4899 and 4647
are its important support levels.
Traders and speculators can buy Gujarat Gas with a stop loss of Rs.242 and a target price of Rs.300.
1
How was the harvest?
By Fakhri H. Sabuwala
When it's harvest season, the quality and quantity of the crop matters. So it is at Dalal Street when corporate farmers pick
up the sickle to cut their produce and analysts comment on the quality and quantity of the harvest. This time, the market
was looking forward to the Q4 results as the only factor that could pull the market out of the lull it was in. Even before the
results season could march in, the prophets of doom forecast ample negative surprises to justify the weak and dull
sentiment. So far (touch wood!), its not been so.
As usual, Infosys heralded the season. And despite being under pressure, it had no option but to productively utilise the
surplus to distribute a generous dividend, which managed to convert the negative sentiment to conservative optimism on
the back of supportive guidance. This announcement changed the mood in Dalal Street and the IT sector, which was at
the receiving end for last many months, came out of the woods.
HCL Technologies, the next from this segment to follow, did not have much to blow its trumpet about but basked in
Infy's optimism. Satyam could weather the western storm much better than its peers because of better guidance and had
put in place measures several years back when it began working on a new model of outsourcing itself, which included
placing the right resources deep among customers and diversifying into other geographies and verticals. Today, Satyam
has just 61% of its revenues coming from the US. It is building up its presence in other markets and new outsourcing
locations. It is tapping verticals that have growth potential such as business software implementation, which contributes
45% of its revenues. For FY09, it forecasts a revenue growth of 26% and cross a revenue milestone to Rs.10,670 cr.
TCS Ltd. reported the slowest profit growth in three years after the rupee's record rally eroded sales from overseas and
delayed orders from some clients. Its top five clients in the banking and financial services sector deferred contracts
exacerbating investors' concern about the slowdown in the US, its largest market.
Reliance, another heavyweight both on the Nifty and the Sensex, reported profits that missed the analysts' estimates for
the first time in nine quarters. It is for the first time that the Reliance share has fallen so much in the last fifteen quarters.
The rising curde oil prices raised the cost of making petrochemicals used in plastics.
Axis Bank's Q4FY08 net profit of Rs.361 cr. is up by 71%YoY (year on year), core operating revenues stood at Rs.1287 cr.
up 85%. Net interest income during the quarter was Rs.828 cr. up 89% from Q4FY07. This was backed by its increased
advances and investments coupled with a higher share of demand deposits. Its fee income is up Rs.415 cr. up 67% YoY.
Net NPAs, as a proportion of net customer assets, decreased to 0.36% from 0.61% with capital adequacy ratio up at 14%
from 12%.
Biocon, India's largest biotech company, reports a 13% increase in profits for FY08 but the announcement of a 1:1 bonus
has raised hopes that the current year will be much better to maintain its pace of growth and returns to shareholders.
Kiran Mazumdar-Shaw in her statement said "We are on the springboard for a major jump. While in the short-term, the
focus would be on generics and insulin, in the medium-term it shall be on bio-similars and drug discovery programme."
For shareholders, this is the first gift after its high priced public issue.
Last but not the least, the market players are taking note of the results announced and reacting accordingly. They are also
paying attention to the programmes of companies and base their moves on them. Little wonder, some scrips have gained
over 50% to 60% from their recent lows and hold a greater promise for tomorrow. The golden harvest reaped encourages
one to pick up the likes of Moser Baer, Finolex Industries, KEI Industries, RPL, SAIL, Hindalco, Sona Koyo, Subros, JP
Hydro, BHEL, BEML, L&T, Grasim, Orchid, Ranbaxy, Sun Pharma, IFCI etc.
First pull-back level attained
TRADING ON TECHNICALS
By Hitendra Vasudeo
In last week's update, we had expected the Sensex to test the
pull-back levels. Last week, the Sensex opened with a gap up
against the previous week's closing. The Sensex opened at
16611.41 and maintained a low at 16589.45. Further, it remained
steady and choppy for most part of the week. The price
movements were uncertain on the Sensex until the last 1 ½ hour
on Friday, 25
th
April 2008 when the Sensex zipped to a high of
17150.92 before it closed at 17125.98 and thereby posted net
weekly gains of 664 points on a week-to-week basis.
The Sensex is now on the verge of testing the first pull back level
of the fall from 21206 to 14677. The 0.382, 0.500 and 0.618 levels
are placed at 17171, 17942 and 18712 respectively. The high
registered last week was 17150 and we are on verge of testing it.
Initial weekly resistance will be at 17150 and 17307. The 200 day EMA and SMA are placed at 16889 and 17379. The 3-
point, 1.27 and 1.618 retracements levels of the rise from 14677 to 16452, projected up from the higher bottom of 15321,
which gives levels of 17575 and 18193. The parallel channel comprises the 3 points 15532, 14677 and 18895. The upper
channel value is around17968 and is falling every day by 100 points.
If the market continues its upward movement, then we could find the Sensex testing the higher range of 17942 at least and
may be to 18712 to an outer extent.
2
Support will be at 16800-
16500-16400. We had
indicated in the last few
weeks that if the low of
15300 is not violated then
we could see an upside
towards 16500 at least.
Now that the Sensex has
crossed and closed above
the level of 16500, not
only has it crossed 16500,
but has almost tested the
first
pull-back
retracements level of
17171.
WEEKLY UP TREND STOCKS
As we head towards the
retracement levels, stop
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
REI AGRO
1512.00 1214.7
1424.7
1547.3
1634.7
1844.7
82.2
1502.5
28/03/08
CAIRN
255.55
228.7
247.7
258.9
266.7
285.7
74.0
248.0
28/03/08
ESSAR OIL
280.55
227.2
263.1
281.6
299.0
334.9
68.9
251.1
28/03/08
ITC
212.75
198.2
207.7
212.1
217.2
226.7
68.7
207.2
28/03/08
RELIANCE
2625.00 2435.7
2560.7
2621.3
2685.7
2810.7
67.6
2533.5
28/03/08
WEEKLY DOWN TREND STOCKS
loss following becomes
equally important now. If
the Sensex fails to sustain
at
the
pull-back
retracement levels, then it
can slide down to a lower
range and back to the low
of
14677.
Therefore,
observe stop loss to avoid
getting trapped in case of
failure of any further
moves.
Sensex Wave Analysis
Wave I-2594 to 3758
Wave II-3758 to 2904
3
Wave III- Internals as
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
THERMAX
504.80
453.0
489.5
510.8
526.0
562.5
29.12
515.14
07/03/08
HT MEDIA
141.85
128.2
138.0
144.0
147.8
157.6
30.12
143.81
29/02/08
KALPATARU POWE 1083.00 994.3
1056.3
1091.7
1118.3
1180.3
33.98
1100.75 11/04/08
POWER FINANCE 157.10
142.5
152.4
157.7
162.4
172.3
34.10
157.04
17/04/08
INDIA CEMENTS
174.30
141.0
165.2
180.4
189.5
213.7
34.61
180.16
17/04/08
follows:
PUNTER'S PICKS
Wave 1- 2904 to 6249
Wave 2-6249 to 4227
Wave 3-4227 to 12671
Wave IV- 12671 to 8799
Wave V- 8799 to 21206
Wave A-21206 to 14677
Wave B-14677 to 17150
(current ongoing move)
If the correction of the fall
from 21206 is expected to
unfold into Zig-Zag A-B-
C formation, then the
pull-back rise can go up
to
17170 levels and
exceed towards 18712
maximum. The movement may get terminated in the range of 17172-17942-18712 to surrender the gains and move down
to 14677-14100.
Note: Positional trade and exit at stop loss or target which ever is earlier. Not an intra-day trade. A delivery
based trade for a possible time frame of 1-7 trading days. Exit at first target or above.
Scrips
BSE
CODE
Last
Close
Buy Price
Buy On
Rise
Stop Loss Target 1 Target 2
Risk
Reward
AARTI INDUSTRIES
524208
35.90
35.10
36.30
34.00
37.7
40.0
0.96
AUTOLINE INDUSTRIES
532797 211.55
209.00
214.00
201.10
222.0
234.9
1.00
CEREBRA INTEGRATED T 532413
40.30
38.05
40.55
33.50
44.9
52.0
0.68
GRUH FINANCE
511288 173.75
165.35
175.50
160.05
185.1
200.5
0.82
HIND. DORR-OLIVER
509627 123.00
118.80
124.75
117.00
129.5
137.3
1.09
RADHA MADHAV
532692
72.15
69.95
73.80
65.30
79.1
87.6
1.01
SAT INDUSTRIES
511076
54.50
52.05
55.35
51.40
57.8
61.7
1.06
TIPS INDUSTRIES
532375
66.05
64.00
66.85
61.35
70.3
75.8
0.89
YASH MANAGEMENT
511601
11.20
10.46
11.50
10.18
12.3
13.6
1.09
If the correction of the fall from 21206 is expected to unfold in a flat pattern formation, then the pull-back rise can go
beyond 18712 and can retrace the entire fall from 21206 to 14677 on the Wave B leg.
Let see how the movement unfolds from hereon and how far it goes up from here.
BUY LIST
Scrip
Last Close Buy Price Buy Price Buy Price Stop Loss Target 1 Target 2
Monthly
RS
SUN PHARMACEUTICAL I
1396.00
1319.78 1295.00 1270.22 1190.00 1529.8
1739.8
55.47
GLENMARK PHARMACEUTI 599.60
561.48
542.47
523.47
461.95
722.5
883.6
49.78
Conclusion
Pull back levels of 17172-
17942-18712 provided the
weekly close remains
above 16371.
Strategy for the week
Rise is being witnessed and the first pull back has been attained. Overall strategy remains to exit on rise to pull back
levels. Traders can maintain a stop loss of 16371 on weekly closing basis for any long positions in the market.
* Even in such days of pessimism, some scrips have covered 50% over ten days at 5% upper circuit each day. What's
cooking?
TOWER TALK
* Voltas and Blue Star are likely to pocket huge central air-conditioning projects of at least a dozen shopping malls and
four SEZs.
* Commodities Exchange may have a sigh of relief as the transaction tax will eventually be scrapped.
* A leading broker recommends Aban Lloyd, Grasim, Tata Motors, L&T, Maruti, Ranbaxy, HUL and Bharti Airtel for
the medium-to-long-term perspective.
* A Shariat Compliant Fund will make huge investments in Indian bluechips, guided by the S&P Sharia Compliant Index
comprising some twelve stocks, Tata Steel, Tata Motors, Tata Communications, BEL, Reliance Communications and
Reliance industries are among them.
* Technically, housing construction scrips seem to have stabilised and are poised for a fresh upward movement. Watch
out for Ansal Housing, Kamanwala Housing, Lok Housing, Kolte Patil etc.
* At almost US $120 per barrel, the rising crude oil price is one of the biggest threats to the Indian economy opines an
economist. He warns investors to remain cautiously optimistic.
* SAAG RR Infra has bagged a massive order worth Rs.288 cr. from ONGC. Catch it if you can.
* Eastern Silk shocked the market by its quarterly results without any explanation for such poor performance. Exit at
rally if you can't book loss now.
* SEAMEC has entered into long-term contract for all of its four vessels at a very robust charter rate. Scrip may continue
its upward momentum.
* Kamanwala Housing has posted very good results with a net profit of Rs.24 cr. on an equity of just under Rs.6 cr. A
value buy.
* With crude oil prices going up day by day, oil exploration and services stocks are excellent defensive stocks even in a
sliding market. Look out for Selan Exploration, Asian Oilfield Services, Alpha Geo among the mid caps.
* Rain Commodities has already gone up substantially from the bottom on expectation of good results which has
materialised. It can be accumulated on declines as profit booking is expected post results announcement.
* ANG Auto and Autoline Industries are two good mid cap auto stocks with good value and strong growth potential.
* Facor Alloys will surprise the market with its performance when the scrip will march to Rs.18 and Rs.40 by Diwali.
Ferro Alloys is likely to touch Rs.36 after announcement of results.
* NEPC India is planning to set up a 3-star hotel and a solar power plant after its Solar Dual Power System created ripples
in the market.
* Knowledgeable marketmen have set high targets for Phoenix International over the next two years because of its high
rental income and setting up of a shoe park in Madras while its associate company Focus Energy has discovered natural
gas in Rajasthan.
* Aishwarya Telecom IPO has surprised the market with 34 times oversubscription. Accordingly, the grey market
premium is quoting between Rs.16-18 per share.
By Saarthi
BEST BETS
Grauer & Weil (India) Ltd. (Code: 505710)
Rs.115.80
Incorporated in 1957, Grauer & Weil India Ltd. (GWIL) is the flagship company of the Growel Group, which is a metal
finishing house that offers an integrated package of chemicals, plants, effluent treatment systems and waste recovery
techniques from spent solutions. In association and collaboration with renowned international partners like Serfilco -
USA, Goema - Germany, Nippon Denro Shamrock - Japan, Hawkings - UK, Manz Galvano - Germany, Utikal - Germany,
Sidasa - Spain and such others, GWIL is an undisputed leader in the electroplating market with almost 50% market share.
Its business model is divided into the following two segments:
Chemicals: GWIL produces more than 600 different metal finishing chemicals spanning the widest range of applications
for surface treatment. In addition, it also offers a variety of intermediates used in the manufacture of plating chemicals.
4
Engineering: In this division, it offers a wide range of electroplating plants and equipments - from conventional
standalone units to fully automatic programme controlled systems; integrated with effluent treatment, waste water
recovery and re-circulation procedures. Be it for general plating, plating of printed circuit boards, continuous plating lines
or pre-treatment/cleaning machines, the company's production programmes cater to all type of requirements for surface
treatment.
Currently, the company is operating through its four plants located at Vapi in Gujarat, Pune in Maharashta, Dadra and
Barotiwala in Himachal Pradesh. It is setting up a fifth plant with a capacity of 4000 MT in the tax-free zone of Jammu,
which is expected to become operational
shortly. It also has a full fledged R&D
division equipped with sophisticated and
analytical equipments and highly
qualified/ experienced technocrats. In the
near future, the company is looking at
diversification avenues in allied fields of
surface treatment/finishes e.g. pre-
treatment processes as also oils &
lubricants.
Apart from its core business enunciated
above, GWIL has also ventured into real
estate development since late 2003 and
has set up a 125,000 sq. ft. hi-tech mall
(Growel's 101) constructed on its 10 acre
surplus land in Kandivali, Mumbai. As of
today, the mall has become very popular
and boasts of high foot falls for shopping
and entertainment. The space has been
leased out to Big Bazaar (Pantaloon) and
Cinemax for which the company earns a
pure rental income of more than Rs.5 cr.
at the rate of around Rs.35 per sq. ft. per
month. After tasting the success with its
first real estate venture and to cash in on
the burgeoning lease rental prices, the
company is aggressively constructing the
Phase-II comprising a huge area of
300,000 sq. ft. This is expected to be ready
by this calendar year 2008 and will house
large and small retail outlets, department
stores, designer boutiques, fine dining
restaurants,
food
courts,
banquet
facilities, kiddie corners, beauty salons,
health care centres, business hubs, ATMs,
a cyber café, amphitheatre and other
specialty kiosks. Importantly, Phase–II is estimated to be leased out at an average rate of Rs.100 per sq. ft. per month.
Thus, the company may generate additional rental revenue of around Rs.30-35 cr. from Phase-II. After completion of
Phase II, GWIL intends to develop the last phase i.e. Phase–III, which will be another 300,000 sq. ft. of area. So by early
2010, the company may boast of developing and earning from 625,000 sq. ft. of Shoppertainment Mall. Apart from the
rental income, the company is also expected to get good revenue from various other promotional activities,
advertising/branding inside the malls etc.
Letter to the Editor
Kudos Money Times
Dear Sir,
Thank you for guiding your readers rightly.
In the first week of April, everybody was was advising to sell Orchid Chemicals
and my broker advised me to think again about my buy order as he said that it
may go down to below Rs.85 level. Following his advice, I did not buy Orchid
Chemicals at Rs.120 level. But after reading Tower Talk in Money Times a day
after, I purchased Orchid Chemicals at Rs.131.30 and sold them at Rs.290.00
last week. Though it went up further after my sale, I am happy about the profit
made. Thank you Money Times for the right guidance. Again, your advice of
selling/booking profit in Orchid Chemicals in this week's issue is also timely.
That is why we like to follow Money Times. We have to thank the management
of Ranbaxy Labs for the quick reversal of the fortunes of Orchid Chemicals
shareholders. It is really sad to hear some people asking for actions on such
transactions. Although the takeover of Orchid Chemicals is not being pursued
to the end, such takeovers are likely to be the order of the day.
Again in the first week of this month, when most people were talking about the
Sensex touching 10,000 or even 8500, the article 'Welcome Fiscal 2009 - Best is
yet to come' published in the second week gave us the courage to hold on to
our shares. The writer was right in questioning the Indian Mutual Funds and
analysts who, too, joined the crowd and ran away from the market. In fact,
analysts who change colours with every passing day deserve much harsher
comments for ignoring the interests of investors and for serving the interests
of operators and/or company managements. Here we are proud of Money
Times standing for us and for our interests.
Even managements of companies like Ind-Swift Ltd. deserve harsher comments
for forgetting the words given to shareholders in its annual report.
Ranbaxy Labs, Cipla and Dr. Reddy's Lab are interchanging the No. 1 position in
domestic sales among themselves. For these companies, taking over the
Rs.700 cr. Ind-Swift Group will tilt the scales permanently in their favour.
Moreover, group companies can be taken over for an amount below Rs.50 cr
This simple fact may not escape the attention of these pharma majors but I
wish to bring this to their notice through our beloved Money Times.
Yours faithfully,
Usha Rani
(via email)
For FY07, GWIL is expected to report total revenue of Rs.185 cr. with PAT of Rs.13 cr., which leads to an EPS of Rs.10 on
its current equity of Rs.12.80 cr. But with the Jammu plant operational and Phase-II, the company is expected to register a
topline of Rs.220 cr. with a bottomline of approx Rs.20 cr. i.e. an EPS of Rs.16 for FY09. Assuming there is no equity
dilution; the company has the potential to post an EPS of Rs.22 for FY10. Meanwhile, at a reasonable discounting by 12
times against its FY09 earning, the scrip can shoot up to Rs.200 within a year. However, only long-term investors are
advised to buy this scrip as any delay in construction of the mall may restrict the short-term rise in its share price.
5
Cosmo Films Ltd. (Code: 508814)
Rs.107.75
Incorporated in 1976 and promoted by Ashok Jaipuria, Cosmo Films Ltd. (CFL) is the pioneer and market leader in the
manufacture of biaxially oriented poly propylene (BOPP) films that are widely used as a flexible packaging material.
Being non-toxic and totally recyclable, this wonder thermoplastic material is also preferred for its superior moisture
retention, strength, flexibility and better optical properties that provide higher visual aesthetics. Remarkably, CFL is one
of the lowest cost producers of BOPP films in the world. It produces a wide variety of BOPP films such as transparent,
pigmented, pearlised, antifog, speciality, holography, pressure sensitive, synthetic paper films etc. Of late, it has also
started manufacturing value added and high margin products like thermal lamination films and metallized lamination
films. Apart from the FMCG sector being the major consumer, BOPP films also find application in various other
industries like textile, food processing, stationery, cigarettes over wraps, cosmetic, toiletries, label films, self adhesive
tapes, holography/lamination etc. Due to the small market size and demand supply mismatch in India, the company
presently exports 60% of its production. In fact CFL is the largest BOPP film exporter from India supplying to over 60
countries across USA, Europe, Middle East and other parts of Africa.
With its manufacturing plants spread across Gujarat and Maharashtra, CFL currently has an installed capacity of 56,000
MTPA of BOPP films, 21,000 MTPA of thermal lamination films and 3000 MTPA of metallized films. Despite the industry
encountering an overcapacity scenario in the domestic and global markets, CFL has been working at 100% capacity
utilisation together with regular expansions. It is still confident of its future growth and is further expanding its BOPP
capacity to 96,000 metric tonnes by 2009 and 1,36,000 metric tonnes by 2010. At the same time, its capacity of thermal and
metallized films will be increased by 24,500 MTA and 6600 MTA respectively by 2009. To maintain and grow its
bottomline, CFL is focusing on value growth compared to volume growth by selling more value-added specialty products
like multi-layer barrier laminates and thermal lamination films on paper based products as the margins are better. On the
other hand, it is targeting high end profitable markets to improve its realisation and has accordingly set up a wholly-
owned subsidiary in USA recently. Simultaneously, it has been expanding its customer base by providing cost effective,
innovative packaging solutions to its customers.
Financially, the company reported encouraging results for the March 2008 quarter and ended FY08 on quite a robust note.
Sales improved by nearly 10% to Rs.585 cr. but net profit zoomed by a whopping 80% to Rs.44.50 due to better efficiency
and higher other income. It reported a healthy EPS of Rs.23 and declared 50% dividend, which gives a yield of almost 5%
at CMP. To fund its ongoing expansion, the company has allotted 31 lakh warrants to the promoter group to be converted
at Rs.107 per share. Because of organized retailing, increasing mall culture and higher spending capacity, the FMCG and
food processing industry is witnessing phenomenal growth and the domestic BOPP market growing at 15-20% p.a.
Moreover, as per capita BOPP consumption in India is much lower compared to western and other Asian countries, the
potential for growth is quite high. Secondly, the company is looking to maintain its 18-20% growth in exports despite the
rupee appreciation. However, rising crude oil prices may affect its margins in future.
In short, although no extraordinary growth is expected for FY09, CFL can still register a topline of Rs.625 cr. and
bottomline of Rs.45 cr., which leads to an EPS of Rs.20 on fully diluted equity of Rs.22.50 cr. Considering the company's
leadership position, integrity of its management, massive gross block of more than Rs.450 cr., dividend yield, huge
reserves etc., the scrip is trading fairly cheap at an enterprise value of less than Rs.350 cr. Investors are advised to buy it at
current levels as the scrip has the potential to appreciation 50% in 12-15 months.
VST Industries Ltd.: Good dividend play
ANALYSIS
By Devdas Mogili
VST Industries Ltd. (VSTIL), the erstwhile Vazir Sultan Tobacco Company is a 78-year old Hyderabad based company
established in 1930. It is primarily engaged in tobacco and tobacco related products like cigarettes. Some of its successful
brands include Charminar, Charminar Special Filter, Charms Mini Kings and Charms Virginia Filter.
The company has a collaboration with the BAT Group of UK, which holds a 32.16% stake in the company. The company's
plant is located at Azamabad in Hyderabad. Abhijit Basu is the chairman while Raymond S. Narohna is the managing
director of the company.
VSTIL's subsidiaries are Hallmark Tobacco Company Pvt. Ltd., VST Distribution, Storage & Leasing Company Pvt. Ltd.
(VDSL) and Tobacco Diversification Investments Pvt. Ltd. (TDIL).
In 1990, the company entered the UAE market launching Kingston Mini Kings. To develop its export business, it
introduced fire-cured, light-soil Burley and other non-traditional varieties of tobacco followed by another brand called
Kingston Dual Filter in 1991. VSTIL introduced Gold Premium Filter in July 1993. The company has the status of an
export house. The company also exports agricultural products. In 1994-95, it launched two brands - Vijay Deluxe and
Charminar Standard. VSTIL is the largest exporter of cigarettes to the Middle East from India.
6
In 1992-93, it entered into a technical collaboration with High Value Horticulture of UK and signed an agreement with
Science and Technology Ventures of Israel. In 1994, it incorporated VST Natural Products, formerly VST Agro Tech, to
establish manufacturing facilities to process high value horticultural crops for export.
Latest Results: The company has come out with a steady performance in FY08 as sales rose to Rs.339.97 cr. against
Rs.336.20 cr. in FY07 while net profit rose by 5.92% to Rs.58.35 cr. against Rs.55.09 cr. in FY07. It clocked a consolidated
net sales figure of Rs.339.97 cr. with net profit of Rs.58.48 cr. and registered an EPS of Rs.37.87.
Financial Highlights:
(Rs. in lakh)
Financials: VSTIL has an equity base of Rs.15.44 cr.
with a book value of Rs.133.10. It is a totally debt-
free company. It has a RoCE of 43.24% and RoNW
of 28.08%.
Share Profile: VSTIL's share with a face value of
Rs.10 is listed and traded on the BSE and NSE
under the B1 group. Its share price touched a 52-
week high of Rs.490 and a low of Rs.275. At its
current market price of Rs.339, it has a market
capitalization of Rs.523.57 cr. It has a beta value of
0.3, which indicates low volatility.
Dividends: The company has a very attractive
distribution policy as can be seen form the
payment of higher dividends year after year.
FY07 - 200%, FY06 - 125%, FY05 - 125%, FY04 -
60%, FY03 - 55%, FY02 - 45%.
Recently, the company has recommended a
dividend of Rs.20 per share for FY08. It last
declared a bonus in 1991 in the ratio of 3:5 and is,
therefore, a strong bonus candidate.
Shareholding Pattern: The promoters hold 32.16%
stake while the balance 67.84% is held by non-corporate promoters, mutual funds and the Indian public. Mutual Funds
like Franklin FMCG Fund have been adding the company's shares to its FMCG fund for the last two years.
Consolidated
Particulars
FY08
FY07
FY08
FY07
Gross Sales
77344
72523
77344
72523
Less: Excise Duty
43347
38903
43347
38903
Net Sales/Income
33997
33620
33997
33620
Other Income
1368
1421
1389
1522
Total Income
35365
35041
35386
35142
Expenditure
a.Inc/Dec in Stock
16
(363)
16
(363)
b. Raw Materials
13642
11726
13642
11726
c. Employee Cost
4496
5431
4496
5431
d. Rates & Taxes
795
2551
796
2553
e. inc/Dec in ex duty
32
290
32
290
f. Depreciation
1372
1148
1381
1156
g. Other Expenditure
6603
5932
6610
5947
Total
26956
26715
26973
26740
Interest (Net)
(197)
(150)
(213)
(150)
Profit before tax
8606
8476
8626
8552
Tax Expenses
Current
2471
3468
2473
3488
Deferred
175
(651)
180
(645)
FBT
125
150
125
150
Net Profit
5835
5509
5848
5559
Paid up equity FV: Rs.10
1544
1544
1544
1544
Res Ex Rev Reserve
19007
19280
Basic EPS (Rs)
37.79
35.68
37.87
36.00
Prospects: The Indian economy has taken off with GDP growth in excess of 9% over the last two years. However, the
cigarette industry has been growing at a much lower rate due to restrictive government policies on tobacco and tobacco
related products.
The focus of the company continues to remain on cigarettes with greater thrust on improving its market share in both
existing and new markets. With the cigarette market in total disruption, VSTIL is well placed with several brands to
exploit any opportunities. It is also committed to improving the export turnover of unmanufactured tobacco with its
thrust on new crop varieties.
Conclusion: VSTIL is an existing, profit-making and dividend paying company with an excellent track record. The
company operates only in tobacco and tobacco related products.
At its current market price of Rs.339, its share price is discounted less than 10 times its latest earnings against the industry
average P/E multiple of over 20.
Since the markets are passing through a difficult phase, it would be a good idea to buy VSTIL's shares with a good
dividend yield. VST Industries' current dividend yield works out to 5.88% which makes it an attractive scrip for dividend
strippers. However, no fireworks can be expected from this scrip as it is meant for patient investors with an eye on the
dividends. Besides, VSTIL is a strong bonus candidate, which may not materialise immediately. However, it should
attract the attention of discernible investors with a long-term horizon.
Market closes higher taking cues from global markets
MARKET
By Ashok D. Singh
The BSE Sensex added 644.78 points or 3.91% to close at 17,125.98 for the week ending on Friday, 25th April 2008,
shrugging off a steep 50 basis points (bps) hike in cash reserve ratio (CRR) by the Reserve Bank of India (RBI) and edged
up taking cues from firm global markets and on the initial batch of good Q4 results. The NSE Nifty rose 153.3 points or
3.09% to close at 5111.70 for the week.
The BSE Mid-Cap index rose 219.82 points or 3.22% to end at 7,056.21 for the week. The BSE Small-Cap index slumped
196.36 points or 2.30% to close at 8,727.72.
7
CRR is the amount of money banks have to keep with RBI as a percentage of their liabilities (deposits). The CRR hike will
be introduced in two stages. In the first stage, RBI will raise CRR by 25 basis points to 7.75% on 26 April 2008. Another 25
basis point hike will come into effect from 10 May 2008. As a result of the increase in CRR, about Rs.18,500 cr. of bank
money would be taken out of the system.
The wholesale price index rose 7.33% in the year through 12 April 2008, accelerating from the previous week's annual rise
of 7.14%, government data showed on Friday, 25 April 2008. The annual inflation rate was 6.34% during the
corresponding week of the previous year.
The tone of resilience in the US economy was set on Thursday, 24 April 2008 as data in the US showed an unexpectedly
low number of people applied for US jobless benefits in the latest week. Durable goods data also showed non-defence
capital goods orders excluding aircraft, considered a good proxy for business spending, held steady in March 2008.
FIIs bought shares worth a net Rs.299.40 cr. (till 24 April 2008). Mutual funds were net buyers to the tune of Rs.52.20 cr. in
the month of April 2008 (till 24 April 2008).
The market started on a positive note on the first day of the week extending gains for the fifth session on 21 April 2008.
On that day, the 30-share BSE Sensex rose 258.13 points or 1.57% at 16,739.33. The broader based Nifty rose 78.60 points or
1.59% at 5,037.
The market extended its rally for the sixth straight session on Tuesday, 22 April 2008 led by real estate, cement and
infrastructure stocks. On that day, the 30-share BSE Sensex rose 44.54 points or 0.27% at 16,783.87. The broader based
Nifty was up 12.30 points or 0.24% at 5,049.30.
The market finished lower in volatile trades on Wednesday, 23 April 2008, dragged lower by banking, capital goods and
select blue-chip stocks. On that day, the 30-share BSE Sensex lost 85.83 points or 0.51% at 16,698.04. The broader based
S&P CNX Nifty was down 26.50 points or 0.52% at 5,022.80.
The key benchmark indices witnessed a divergent trend on Thursday, 24 April 2008 after witnessing a bout of volatility
ahead of the F&O expiry on 24th April 2008. On that day, the 30-share BSE Sensex gained 23.04 points or 0.14% at
16,721.08. The broader based Nifty lost 22.95 points or 0.46% at 4,999.85.
The market spurted on Friday, 25 April 2008 following steady build-up of fresh positions in the derivatives segment on
the first day of May 2008 series. The BSE Sensex galloped 404.90 points or 2.42% at 17,125.98. The broader based Nifty was
up 111.85 points or 2.24% at 5,111.85.
The Sensex gained 644.78 points to close at 17,125.98 last week Global markets have bounced back on the back of
resilience of some US earnings to economic recession, which may further improve the sentiment. However, high inflation
remains a cause for concern for the markets. The ongoing earnings season may help the market remain firm in coming
weeks.
The market will react to Q4FY08 results of some large firms like ICICI Bank, Jaiprakash Associates, Reliance
Communications, Hindustan Unilever, Reliance Energy, and Sterlite Industries, which are due at the weekend and next
week.
Jindal Photo Ltd.: An undervalued scrip
STOCK PICK
By Suman Mukherjee
CMP: Rs.186.45
Book Value: Rs.127.87
EPS: Rs.43.87
Dividend: 10%
P/E: 3.78
Market Cap: Rs.170.29 cr.
Performance: Market out-performer
Target: Rs.300 in 6 - 9 months
Stop Loss: Rs.147, Rs.124 and Rs.105.
Introduction: Jindal Photo Ltd. (JPL) belonging to the B.C. Jindal Group was incorporated in 1986. It has a technical and
marketing tie-up with Fuji Photo Films Co. Ltd., Japan – a Fortune 500 company and the second largest photographic
products manufacturer in the world. It also has a technical tie-up with Fuji Hunt Photographic Chemicals Pte. Ltd.,
Singapore (a subsidiary of Fuji, Japan) to manufacture Photo Chemicals.
8
JPL is one of India's largest manufacturers of photographic and allied products. The product range includes Colour Roll
Films, Cameras, Photographic Colour Paper, Medical X-Ray Films & Equipments, Cine Colour Positive Film, Photo
Processing Equipments and Photographic Chemicals etc. The company has over 38% market share in the Colour Paper
and 44% market share in Colour Roll Films. The other products such as X-ray Films, Cine Colour Positive Film, etc. have
a market share of about 40%. To integrate the technology change in the photography processing, Jindal Photo has set up
over 600 Fuji Digital Imaging (FDi) facilities as an extension of the Fuji Imaging Services (FIS) already available
throughout the country. Fujifilm is a world leader in the Digital photographic technology. JPL is also marketing the Fuji
digital range of products after importing them from Japan. The digital product range being marketed in India includes
Digital ID Systems, Digital Cameras, Digitized Photographic Processing Equipments, etc. The company has its
manufacturing plants located at Dadra and Jammu. An ISO 9002 company, the manufacturing facilities of Jindal Photo
are model establishments with state-of-the-art machinery, where highly sophisticated materials are processed in a light
sensitive and dust free environment. This ensures that the same world class Fujifilm quality is available to customers in
India.
Shareholding Pattern: The promoters hold a whopping 71.49% stake in the company while the general public holding is
only 28.51%. Among the general public, Morgan Stanley Mauritius company Ltd. holds 2.27% shares.
Financials: The company declared excellent results for Q3FY08. Its total income was Rs.96.1 cr. as against Rs.80.96 cr. in
Q3FY07. The operating profit for Q3FY08 jumped to Rs.14.2 cr. from Rs.5.85 cr. in Q3FY07 while the net profit shot up to
Rs.10.49 cr. from Rs.3.6 cr. in Q3FY07. Its EPS trebled to Rs.10.23 from Rs.3.51 in Q3FY07. For the first nine months period
ending 31
st
December 2007, its EPS was Rs.34.56 and it could post an annual EPS of Rs.45-Rs.50 for FY08.
Triggers:
1) The company has completed its Rs.35 cr. expansion plan recently, which could boost its EPS to Rs.60 in FY09 and
Rs.75 in FY10. The company is on an ambitious growth path as evident by the results of the last quarter.
2) JPL is now fully focused to capture the booming medical imaging business and has brought in Fuji Film's
extensive line up of medical imaging solutions. The company is marketing Fuji Computed Radiography systems
(CRs) and Dry Imagers (Drypix) in India. This is a lucrative space where the margins are high and competition is
less.
3) The company very recently promoted two subsidiaries namely Jindal India Power Ventures Ltd. and Jindal
Buildmart Ltd. to carry on the work of 600 MW of power projects. Moreover, Jindal India Thermal Power Ltd.
became a wholly-owned subsidiary of the company during Q2FY08 adding value to the company. It also holds
around 1 lakh shares of its subsidiary, Jindal Imaging Ltd.
4) The company recently got a letter from the Ministry of Coal, Government of India contemplating for allocation of
Coal Mines in Orissa jointly with two other parties. Accordingly, it has decided to set-up Power Plants. 600 MW
of Power Project shall be set-up in the first phase, which will be expanded to over 1000 MW in the second phase.
The first phase is expected to start generating power from Q3FY10. Since mining companies are fetching high
valuations in the stock markets, this stock cannot be an exception.
5) As sales promotional efforts, JPL conducts many workshops, exhibitions, road shows in its efforts to reach out to
amateur consumers and holds the Super Six photography exhibitions all over India. This has helped the company
in promoting new products and technologies.
6) In FY08, the commercial production of colour Roll Films of Phase II of its Samta unit has also begun. This new
development will boost both its top-line and bottom-line and help consolidate its position with a larger market
share.
7) It is a dividend paying company since the last few years and last paid a dividend of 10%.
8) It has substantial deposits of around Rs.70-80 cr. in various mutual funds and in bonds of reputed companies.
This gives a good valuation to its
share considering its small market cap
of only Rs.170.29 cr.
9) Since the government will allow the
rupee to appreciate to thwart high
inflation, the company stands to gain
as it is a net importer of key materials
required for the manufacture of
photographic films and other allied
products.
10) Measures are continuously taken for
technological upgradation of plant
and machinery and energy efficient
devices are installed wherever and
whenever necessary. This has resulted
in reduction of energy consumption
and lower cost of production.
Optimum utilisation of Diesel
Generator (DG) sets has also resulted
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in lower diesel consumption. This assumes great significance when the crude oil prices are boiling in global
markets.
11) It has a strong R&D team to ensure quality and productivity. As a result, new systems are developed to produce
better quality products, reduction of wastage and trouble free operation. Latest testing and trouble-shooting
equipments are imported from time to time from Fuji Photo Films Co. Ltd., Japan and other countries to enforce
strict quality control and reduce the downtime of machines. Its technical personnel are trained at Fuji's factory in
Japan from time to time.
12) The growing urban middle class turning to photography has created a vast amateur market. The availability of
low-priced cameras has also helped in widening the spectrum of the photography industry. JPL was quick to
identify and capitalise on these new marketing opportunities with the spread of Fuji film labs in every corner of
the country.
Key Concern: Fierce competition continues to impact sales and margins are under pressure. Moreover, digitalisation of
photography is rampant, which might affect the sale of film rolls. However, by its higher brand equity and ISO 9002
certification this threat is neutralised to some extent. Also, the fact that JPL is diversifying into Power and is now fully
focused in medical imaging space will help it make up any loss it incurs due to digitalisation.
Conclusion: The India Photographic industry is perched for significant growth due to constructive and favourable new
advances in technological products, the tourism trends and evolving socio-economic conditions in the vast middle class.
JPL is well geared to meet the growing demand. There are also strong rumours that a big brokerage has purchased the
scrip in lots for its PMS clients and projects a target price above Rs.400.
Considering all these factors and taking into appears fact that it has a healthy order book position, the JPL scrip appears
undervalued at the CMP of Rs.186 and could be re-rated soon. The scrip could be purchased with a short-to-medium-
term perspective for a target of Rs.300 in 6 months to 9 months time frame. If it gets a modest discounting P/E of 10, the
scrip can easily trade around Rs.430-440, with the current fundamentals. Once the scrip rises above Rs.175, its next
immediate targets could be Rs.220, Rs.265, Rs.380 and Rs.415. The scrip is about to break out from its current level.
Market developing a bullish trend
MARKET
By G. S. Roongta
The stock market performed well last week in line with the positive forecast made in my last article. The CNX Nifty
crossed its most critical 5050 level while the BSE Sensex crossed 17,000 against my projected target of 17,500 despite the
severe fight between the bulls and bears last week.
With no major news either positive or negative, both at the domestic or global levels, the Dow Jones and
Asian indices recorded positive gains as the US sub-prime debacle gradually takes the backseat. The
victims of the sub-prime crisis have also reconciled themselves either by providing the losses in their
books of accounts or taking necessary action to put their houses in order.
The bears having taken full advantage of this financial crisis in the US ever since December 2007 have
also realised that any further liquidation in stocks is not likely and they will have to restrain themselves
as short-selling may not be fruitful at this juncture. Accordingly, they rushed to cover their short
positions, which in turn helped the market to rally by almost 2500 points from its recent low of below
15,000 a few weeks back.
G.S. Roongta
Last week, the market moved in a narrow range on account of the expiry of F&O contracts on Thursday, 24
th
April 2008.
In view of this expiry, both bulls and bears adopted a cautious approach and refrained from enlarging their positions
quite uncertain which way the market will trend or favour the bulls or the bears.
But the staunch bear operator, Mr. Shankar Sharma, was back on CNBC on Monday, 21
st
April 2008 questioning any
revival in sentiment as he felt there was no reason for the market to move up. Having failed in his forecast of the BSE
Sensex crashing below 10,000 level, he once again tried to misguide investors. He seems to have completely forgotten his
own forecast about the Sensex touching 25,000 made on the same channel some time in the last quarter of 2007 when he
candidly confessed that he has changed his opinion and reeled off the strong fundamental reasons for the Sensex to go up.
Subsequent speakers on the same channel have also questioned his recent forecast and marketmen are beginning to
wonder about his periodic telecasts, which tend to mislead investors at large. Some have even gone to suggest that there
is a vested interest in his promotion and that the 2500 points rally is possibly against the comfort levels of Mr. Sharma and
other media interests.
I fail to understand why the channel is given undue importance to this bear operator who has rarely proved to be right
and how can he possibly expect the BSE Sensex to fall by 7000 points now and hit below Sensex 10,000! To me, it looks
absurd at this juncture unless some national calamity or a severe macro-economic factor hurts the economy or a trading
10
crisis grips the market. May be, Mr. Sharma has a crystal ball where he is able to see such a calamity and therefore, talks
of a Sensex below 10,000!
There is no point in talking about a bear market now when the Sensex is rallying by almost 200 points on a day to day
basis and closed the week at 17,126 after touching a high of 17,151 on Friday, 25
th
April 2008. The market is definitely
consolidating and is geared for a rise – quite in the opposite direction of what Mr. Sharma has forecast.
Having written for over 20 years since 1986, I strongly feel that analysts should use the media in a responsible manner for
the overall good of common investors who can be easily misled by the media or the brokers. It is not uncommon to find
media linked to the games of market operators or company promoters when in reality the media is supposed to expose
such games and has done so in the past. The Harshad Mehta scam was exposed by the media just as this column exposed
the insider trading in Reliance Petroleum a few months back and which is now under SEBI investigation.
Fears of poor Q4 or annual performance has also been discounted with most companies declaring better than expected
results and positive guidance for the future despite the big hue and cry made about the rising inflation and the receding
demand. In such a scenario, how can one be negative about the market outlook?
It is true that the government has done its level best to hammer down steel and cement prices but has not succeeded as
both steel and cement prices are marching ahead on account of the huge gap in demand and supply globally. Similarly,
oil, fuel and energy costs are going up, which is bound to have a cascading effect. So how can one control the cost of
products? So long as the demand and supply gap is not bridged by higher productivity and new capacities, it is futile to
impose artificial and arbitrary controls as they never work.
The law of economics is supreme and higher demand has to be met by higher supply for prices to remain stable. Inflation,
which is a global phenomenon, should be tackled by higher income and better supply chain management and for which
growth should not be sacrificed. The government should not get unnecessarily worried about inflation, which is much
lower than in developed countries and is a part and parcel of economic growth. Just because it has become a political tool
for the opposition does not mean that the larger interests of growth in the economy should be sacrificed for temporary
relief in prices.
FIIs, mutual funds have also breathed a sigh of relief from the sub-prime issue and have now stopped liquidating stocks.
On the contrary they have started buying stocks which is quite evident by the successful roll over of F&O contracts
expired on 24
th
April 2008. The new transactions for the month of May will decide the trend, which according to me,
should be positive as crores of rupees will come into the hands of investors by way of dividends and can be deployed
back into the market for fresh purchases, which can take the Sensex to 17,500 whereafter it may give a correction.
The Lok Sabha will be approving and passing the Finance Bill and the Finance Minister may provide some relief to the
sectors that have been hit after discussion with industry captains and the public at large. This should positively impact
the market.
In the last issue, after a gap of two months or so, I recommended a few stocks. Readers of this column must have noticed
that they all have risen by 10-15% last week itself. While the Sensex rose by 2% only, Sarda Energy rose smartly from
Rs.300 to Rs.425, Garden Silk Mills rose from Rs.60 to Rs.72 – a rise of 20%. Idea Cellular and Power Grid Corpn. rose by
10% each as Idea Cellular hit the Rs.112 mark and Power Grid Corpn. touched Rs.108. JK Lakshmi Cement went up from
Rs.112.50 to Rs.128.30. Ashok Leyland, Sarda Energy, Garden Silk Mills and Hotel Leela were the star performers gaining
between 15-20% within a week.
Fast moving 'A' group stocks like ACC, Ashok Leyland, Hindalco, Tata Steel, Tata Tea also gained smartly from their
recommended levels while falling back on Thursday, 24
th
April 2008 on account of the expiry of F&O contracts and
shifting of liquidity positions on the last day.
Those who have booked profits have done the right thing but those who wish to buy again can do so now as there is still a
lot of potential left in Sarda Plywood, which now manufactures tea and commands a price of Rs.12-15 per kg. higher this
year. JK Lakshmi Cement, which had touched Rs.225, is still cheaper by Rs.100 as its results will be highly commendable.
Modern Steels manufacturing billets, which is sold higher by Rs.10,000 per tonne compared to last year will also report
good results shortly. Graphite India and Tube Investments also look very cheap at current prices.
NFO Analysis
MUTUAL FUNDS
By Devangi Bhuta
Sundaram BNP Paribas Financial Services Opportunities Fund
(NFO Closes on 14
th
May 2008, Minimum Investment: Rs.5000)
Objective: The objective of the scheme is to seek long-term capital appreciation by investing primarily in equity and
equity related instruments of companies in the domestic market that predominantly focus on opportunities in the
financial services space.
Analysis: The investment universe may include stocks from banking, broking, wealth management, insurance, asset
management and other financial services. Asset allocation will be in equity and equity related instruments of
11
predominantly Indian companies relevant to the theme 65-100%. Investment outside the theme will be 0-35% and fixed
income and money market instruments 0-15%.
Given the volatility in the markets and the fear of rising interest rates, banking stocks have been subdued for sometime
although they have picked up in the last few weeks and there are some good fundamental picks in this sector. Companies
that have broking income as the mainstay carry a very high risk given that their own performance apart from their stock
is linked to the trends in the equity markets. Banks and broking houses have ventured into asset management, wealth
management and other financial services. But how well these diversified business models work remains to be seen.
Insurance is one market, which has very low penetration in India. But as the concept gains further acceptance, volumes
would be the key growth driver for insurance companies.
Since the scheme is an open ended, investors maybe better off getting a feel of the fund manager's strategy and more
importantly viewing the stocks chosen before committing themselves.
Sundaram BNP Paribas Select Thematic Funds - Entertainment Opportunities
(NFO – Closed on 20
th
May 2008, Minimum Investment: Rs.5000)
Objective: The investment objective of this thematic fund is to achieve long-term capital appreciation by investing
primarily in the equity and equity related instruments of companies that focus on opportunities in the entertainment
business.
Analysis: The funds exposure will be in equity and equity related instruments in the entertainment sector of about 65-
100%; equity and equity related instruments other than the targeted sector/theme 0-35% and Fixed Income and Money
Markets Instruments of about 0-15%. Equity Investments under the targeted theme may also include overseas securities
up to a maximum of 35% of net assets of the scheme.
Its investment universe may include players in spaces such as broadcasting, content providers, electronic news, print
media, multiplexes, web-based services, leisure services, distribution, IT & telecom services, gaming, retailing, luxury
products & services and sports businesses as well as other new segments that may emerge in the listed space.
Beneficiaries and providers of equipment/services/turnkey solutions to such players may also be part of the portfolio.
The sectors in which the scheme proposes to invest offer attractive opportunities especially the retail and gaming
segment, which has tremendous scalability. The print and electronic media, too, offer good scope and good stock selection
will result in good returns over a longer time horizon.
As a thematic fund, the portfolio will be more diversified than a sector fund but may not be as a diversified as a typical
equity fund although it offers a broad host of sectors to pick stocks from.
Investors may be better off adopting a patient approach for some clear sign to emerge in the equity markets, which rely
on the following triggers - credit policy & corporate earnings in the near term and rainfall and political scenario in the
medium-term.
An insight into the scheme's investment strategy and the stock selection post listing before taking the plunge may be a
prudent move.
By Saarthi
STOCK WATCH
Being India's largest manufacturer of evaporator and condenser (E&C) coils with around 60% market share, Lloyd
Electric & Engineering Ltd. (Code: 517518) (Rs.109.50) has forward integrated itself into the lucrative business of contract
manufacturing of window/split air conditioners for various multi-national companies in India. It is also into
manufacturing of roof mounted packaged units i.e. packaged AC for railway coaches on a turnkey basis, which includes
designing, manufacturing, supplying, installation and maintenance. Interestingly, the company is now diversifying to
produce roll bond and frost free coils for refrigerators and has tied up with Hanyung Alcobis, a Korean company, for the
same. To maintain its future growth, the company is in the process of setting up a greenfield plant near JNPT port across
the Mumbai harbour. Meanwhile, it has signed a MoU with Air International Transit Pty. Ltd., an Australia-based
company for designing, manufacturing and supplying of AC package units for the metro rail in India. For FY08, it may
clock a turnover of Rs.650 cr. with PAT of Rs.58 cr. i.e. an EPS of Rs.19 on its current equity of Rs.31 cr. Simply buy and
hold.
******
Recently, Bihar Caustic & Chemicals Ltd. (Code: 500057) (Rs.78.40) came out with disappointing results for the March
2008 quarter. Sales increased by 25% to Rs.47.50 cr. but PBT improved by only 5% to Rs.13.70 cr. It seems the company is
facing the heat of rising input cost of coal etc. as it recorded lower OPM of 37% for the quarter. It declared a 15% dividend
for FY08, which was again below expectation. However, due to lower tax costs, the company was able to report a healthy
bottomline. For FY08, sales grew by 20% to Rs.174 cr. whereas PAT shot up 45% to Rs.49 cr. posting an EPS of Rs.21 on its
equity of Rs.23.40 cr. To maintain its growth, the company is in the process of expanding the capacity of its caustic soda
plant by 20% to 265 TPD by addition of electrolysers as well by debottlenecking. It has recently commissioned the stable
bleaching powder plant with an installed capacity of 60 TPD. Moreover, its Aluminium Chloride project with a capacity
12
of 12000 TPA is doing extremely well. In future, the company is expected to reduce its total debt, which will bring down
the interest cost substantially. To conclude, the company is still expected to maintain its EPS of Rs.20 for FY09 and is
trading extremely cheap with cash EPS of Rs.30, EV/EBIDTA of less than 4 times and expected book value of more than
Rs.75. Only long-term investors should accumulate on declines.
******
Gontermann Pieper (India) Ltd. (Code: 504701) (Rs.65.80), an Ispat Group company, is one of the leading manufacturers
of Cast rolls and Forged rolls that find application primarily in the steel industry. Its products are widely appreciated not
only in India but also in USA, Canada, China, South Africa, Taiwan, South Korea, Thailand, Indonesia and many other
countries. Considering the future global trend of the business, the company is giving thrust to new product development
i.e. enhanced carbide rolls in ICDP variety and High Speed Steel Rolls. With the domestic global steel industry adding
capacity at a fast pace, the company has recently undergone an expansion-cum-modernisation plan at Rs.40 cr. to enhance
its production capacity to 18,000 MTA of finished roll from 12,000 MTA. Further, it is planning some big expansion in
future as it contemplates to raise nearly Rs.200 cr. through private placement/FCCB/GDR route. It is also scouting for
inorganic growth opportunities in Europe to capitalize on the current boom in the steel industry and cater to the
European and US markets. For FY08, it is estimated to clock a turnover of Rs.175 cr. with profit of Rs.15 cr. i.e. EPS of
Rs.11 on its current equity of Rs.13.90 cr. The scrip can shoot upto Rs.100 in 6-9 months.
******
Ind-Swift Laboratories Ltd. (Code: 524652) (Rs.52.50) has already received the USFDA approval in September 2007 for its
API manufacturing facility at Derabassi, Punjab, for Clarithromycin. For other APIs, FDA inspection is expected shortly.
Presently, exports constitute around 45% of sales with the company exporting to 45-50 countries – in Europe, Asia, Latin
America and the Middle East. For future growth, the company has a robust product pipeline of 25 products, which
include a few blockbuster drugs as well. It has successfully filed over 72 DMFs with the US, Canadian, UK and European
Drug Authorities. The DMF filing will facilitate the launch of drugs by the company upon the patent expiry in those
countries. Hence the company has been aggressively expanding capacity and has quadrupled its gross block to nearly
Rs.400 cr. from Rs.100 cr. two years back. Accordingly, it may end FY08 with sales of Rs.450 cr. with PAT of Rs.25 cr. i.e.
EPS of Rs.11 on its current equity of Rs.22.80 cr. To fund its growth plans, the company made a preferential allotment of
28 lakh warrants at Rs.70 in March 2007 and has recently allotted another 25 lakh warrants at Rs.70 to the promoter
group. With a book value of a whopping Rs.93 and expected CEPS of Rs.18-20, the scrip is trading extremely cheap at a
P/E ratio of less than 5 times. A screaming buy at is has the potential to double in 12-15 months.
By Kukku
FIFTY FIFTY
Investment Call
* Webel SL Energy Systems (Rs.264) is the largest and fastest growing manufacturer of solar photovoltaic cells and
modules in India. For FY07, t registered a turnover growth of 56.61% to Rs.106.78 cr. and PAT increased 31.54% to Rs.8.43
cr. 95% of its turnover was from exports. Its products were certified by ISPRA, IEC, UL-TUV and PV-GAP-all reputed
international certifying agencies.
Capacity Growth: The company increased its installed capacity from 1 MW to 10 MW within nine years in response to
increasing technology absorption capabilities and favourable market conditions. Going forward, it expects to enhance the
capacity from 10 MW to 42 MW in FY08 and to 72 MW by FY10 and 102 MW by FY11.
Outlook: The future of photovoltaic modules is promising as solar energy, along with other renewable energy sources,
is seen as the next hi-tech growth industry. According to Solar Energy Products, the annual demand for
photovoltaic (PV) modules is expected to more than treble from the 2005 level to 531 MW by 2010 with aggregate
industry revenues of US $18.6 billion.
The company likely to achieve sales of Rs.105/110 cr. for FY08 with net profit of around Rs.11 cr. on its equity of Rs.8.2 cr.
while for FY09 sales likely to go up to Rs.240 cr. with bottomline of over Rs.24 cr.
The stock has reacted from its high of Rs.847. Thus at the current level its downside is very minimal. Investors can add
this stock at current levels for target of Rs.500 over the next one year.
Market Guidance
* Kirloskar Pneumatics' (Rs.404) Q4FY08 results are encouraging. It earned a net profit of Rs.20 cr. on sales of Rs.170 cr.,
giving an attractive EPS of Rs.15.57 on its equity capital of Rs.12.84 cr. For FY08, the company reported sales of Rs.403 cr.
with net profit of Rs.30.46 cr. giving an attractive EPS of Rs.23.72.
The company has enhanced the dividend from 25% to 70%, which indicates that its future outlook is encouraging. The
stock is available at half its peak price of Rs.814.
Leading mutual funds have increased exposure to the stock in March. Reliance Capital Asset Management Company and
Reliance Capital Trustee Company are holding around 7% in the company.
13
The stock is trading at a P/E multiple of 18 while Atlas Copco commands a P/E multiple of 33. Investors can accumulate
this stock for strong long-term growth.
* Ramsarup Industries (Rs.165) is estimated to report Rs.60 cr. profit on sales of around Rs.1500 cr. while equity is Rs.17.5
cr. The stock has reacted from a high of Rs.300 to the current level where it looks attractive for investment. For FY09, it
may report sales of Rs.2500 cr. with PAT of Rs.140 cr. on its increased capital of Rs.42 cr. after merger with a group
company. Closing above Rs.180 should give good breakout.
* Gallantt Metal's (Rs.28) March 2008 quarter EPS is likely to be around Rs.3. Stay invested.
* Ansal Properties & Infra (Rs.160) is bottoming out at the current level as it has come down from its high of Rs.466.
* Yuken Pumps (Rs.192) is said to have developed gear pumps for the export market and expects to get good response
for the same.
* Ashiana Housing's (Rs.88) full year net profit is likely to be around Rs.40 cr. on its increased capital of Rs.18.73 giving
an attractive EPS of Rs.21.73. The stock is trading at a P/E multiple of just 4.5. Investors can add at current levels.
* New developments in HDIL (Rs.731) are said to be encouraging. There are rumours of a stock split and a bonus issue.
* Indiabulls Real Estate (Rs.555) and Shiv-Vani Oil (Rs.568) are likely to remain in action. Stay invested.
* Pratibha Industries (Rs.343) is likely to report encouraging results. Its saw pipe units are also likely to contribute to
profits in future. Leading mutual funds have increased exposure to the company. Stay invested for target of Rs.500 over
the next one year.
* Investors should stay invested in Monnet Ispat (Rs.537) and Tata Sponge (Rs.270) as good reports are pouring in.
* Atlas Copco (Rs.1119) - In an interview to a leading business fortnightly, the management has given a very optimistic
view stating that sales which shot up by 100% in the past 3/4 years may double over the next few years.
Long-term outlook of the company is encouraging but investors should take note of following points:
(1) Though sales have shot up by 100% over the last few years but margins are falling every year. Sale realisations have
not improved. May be the company is executing old orders while input costs have shot up.
(2) It is relying more on group products as bought out purchase has gone up sharply as evident by imports of Rs.214 cr.
v/s Rs.139 cr. last year. May be larger margins are passed on to the parent company.
(3) Spares, accessories etc. form 45% of total sales v/s 42% last year, which normally yield very attractive margins.
(4) Steel prices are hardening globally and costs will be a great challenge to contend with. Protecting even last year's
margins will be difficult.
(5) The company's management mentioned after acquiring the unit of Ingersol Rand that the company got into the right
segment at right time. It is also mentioned that the company was not present in coal mining business before that.
Investors must note that Atlas Copco, which sold Revathi Equipments a few years back at just Rs.40 cr., was an
established player in mining drilling equipments.
Still, the stock is a good portfolio choice with a long-term view as sales are likely to double even from the current level
over the next few years time. Stay invested for better times ahead.
* PNB Gilts' (Rs.29) Q4FY08 results are not encouraging as it has reported a loss of Rs.6 cr. Since interest rates have gone
up in the current quarter, it may not report good results over the next few quarters. Book profit to the extent of 75% of
holding and switch to First Leasing Company on dips.
* DIC India (Rs.161) - There are indications that Q1 results are likely to be better. This MNC company is available at
below book value and a P/E ratio of less than 10 on a consolidated basis.
* Cords Cable (Rs.93) is expected to report encouraging results. The stock has reacted from its high of Rs.155 to the
current level where it looks attractive for
investment.
* Traders can keep a watch on Reliance
Petroleum (Rs.194) and Orchid Chemicals
(Rs.234) for an upmove in the next one
month.
* Mahalaxmi Rubtax (Rs.87) is a stock to
watch for a speculative upmove as per market
sources.
* Revathi Equipments (Rs.1300) has given
good upmove of around 30/35% may be on
expectation
of
better
results.
New
developments are likely to be favourable. For
long-term investors, it is a good wealth
creation story. Stay invested but no fresh
buying is advised at this high level. The stock
Daily Fresh Buy
(for the busy investor)
PROFITRAK is pleased to announce the launch of 'Daily Fresh Buy' for
investors/ traders who are keen to focus and gain from a single stock every
trading day.
With just one daily recommendation selected from stocks in an uptrend,
you can now book profit the same day or carry over the trade if the target
is not met.
Our review over the next four days will provide new exit levels while the
stock is still in an uptrend.
This low risk, high return product for the busy investor is available for
subscription at Rs.2000 per month. For details contact
moneytimes@vsnl.com or phone on 022-22616970/ 22654805.
14
is very likely to reach its earlier high in good sentiment.
Note: (1) Market upmove is in line with expectations as discussed earlier. There is a broad based recovery in small and
mid cap stocks as many of these stocks have shot up by 40-125% in the last few weeks.
(2) At higher levels, market is more liquidity driven rather than by fundamentals. Last year, too, market shot up from
15,000 to 21,700 level on good liquidity rather than fundamentals. At lower levels, insurance linked schemes along with
mutual fund players along and corporate funds bought heavily into the stocks.
(3) The Nifty closed above the 5100 mark and if it sustains above this level we may see positive inflows from FIIs and
hedge funds may enter for short-term profits. We may see the index going up further on short covering.
(4) In case there is further recovery, fundamentals may not support the upmove as there is sharp rise in input costs, which
we have been highlighting for the past many months. Investors are advised to take benefit of the upmove to book profits
in stocks have shot up by 50-100% in the last few weeks or in stocks where input costs have shot up sharply.
(5) Results declared so far are not that encouraging and the current quarter, too, may not be encouraging. So take benefit
of the sharp rally to book part of profits. Remain invested in hotel/sugar/service sector stocks.
By V. H. Dave
EXPERT EYE
Transformers & Rectifiers India Ltd. (TRIL) (Code: 532928) (Rs.441.70) formerly known as Triveni Electric Company, is
a 13-year old Gujarat-based company established in 1995. It manufactures various kinds of transformers such as power
transformers, distribution transformers, furnace transformers, rectifier transformers and specialised transformers. TRIL's
manufacturing facilities are situated at Changodar and Odhav, both in Ahmedabad, Gujarat. TRIL tapped the capital
market in December 2007 with an IPO of 29,95,000 equity shares of Rs.10 each at a premium of Rs.455 per share for
expansion.
The company acquired the Odhav unit in 2006 as part of its expansion plans and also enhanced the production capacity of
its Changodar plant from 4000 MVA p.a. to 6000 MVA p.a. With a view to augment its production capacities, the
company initiated several expansion and de-bottlenecking procedures like installation of new winding machines,
separate oven for coil drying, segregation of dispatch area along with 100 MT capacity EOT crane etc.
TRIL has acquired 100% stake in Transweld Mechanical Engineering Works and 51% in Transpares Ltd., which are now
its subsidiaries. These subsidiaries manufacture transformer tanks, core channels and radiators, which give cost-effective
backward integration support to the company.
TRIL caters to a wide spectrum of industries such as petrochemicals, oil refining, cement, paper, pharmaceuticals,
automobiles, steel, power plants, railways, mining & minerals among others. Its clientele includes State Electricity Boards
(SEBs), Uttar Pradesh Power Corporation L&T, Siemens, ABB, NTPC, NEG-Micon, Areva T&D, Torrent AEC Power, Shah
Alloys, Rohit Ferro Tech, Prakash Industries, Suzlon Energy, the Jai Balaji Group etc.
The company exports transformers to Nepal, UAE, Indonesia, Pakistan, Bangladesh, Ghana, Sri Lanka, Kenya, UK,
Zimbabwe, Phillipines, Kazakhastan, Dakar (Africa), Saudi Arabia, Australia, Tanzania, Iran, Bhutan, South Africa,
Zambia and Azerbaijan.
For Q4FY08, it posted a net profit of Rs.13.3 cr. on sales of Rs.106 cr. For FY08, it achieved 38% higher sales of Rs.305 cr.
(Rs.221 cr.) and earned 98% increased net profit of Rs.34.8 cr. (Rs.16.7) cr. Its EPS is Rs.27 on post-issue equity capital of
Rs.12.9 cr.
Its equity capital is Rs.12.9 cr. now and with reserves of Rs.166.7 cr., the book value of its share works out to Rs.139. The
promoters hold 76.8% in the equity capital, foreign holding is 5.6%, institutions/mutual funds hold 7.6%, corporates hold
1.5% leaving 8.5% with the investing public.
TRIL has firmed up an expansion project involving setting up of a new unit at Changodar near Ahmedabad with a
capacity to manufacture transformers up to 400 kV Class in the first phase having an installed capacity of around 8000
MVA p.a. It has already started implementing the said project, of which 3000 MVA is targeted to become operational by
June 2008. This will increase its production capacity from 7,200 MVA to 15,200 MVA p.a., which will eventually be
augmented to 23,200 MVA.
Leveraging on its established relationships and credibility with power transmission and distribution (T&D) companies
TRIL plans to take up turnkey projects for setting up sub-stations. It is also seeking to increase its global presence after
commissioning its greenfield manufacturing facility.
The government's vision of 'Power for all by 2012' entails an investment of Rs.11,50,000 cr. in power generation, T&D
because of which the demand for transformers will dramatically increase in coming years.
About 1,00,000 MW of power generation capacity is likely to be added by 2012. For every 1 MW of new capacity that
comes up, 7 MVA transformers are used across generation, T&D segments.
This implies a demand of 7,00,000 MVA of transformers unfolding over the next five years that will result in an annual
demand of about 1,40,000 MVA. Transformers usually have a life of 20-30 years, hence transformers installed in the 1970s
15
16
and 1980s are likely to be replaced in the next few years. In addition to this, 20% of the transformers demand would come
from replacement demand, which would enhance the total demand to 8,40,000 MVA.
The Ultra Mega Power Projects (UMPP) expected to cost around Rs.15,000 cr. each creating a capacity of 20,000 MW.
Various multinationals have lined up huge investments not only for the generation but also for distribution. The
privatisation of distribution is likely to encourage expenditure on T&D infrastructure. Investments in inter-regional
transmission will help sustain the demand for T&D equipment.
TRIL has an order book of Rs.400 cr. to be executed over the next 9 months. Its customers are also well-diversified both
geographically and an end-users.
Its expanded capacity, a wide product portfolio, focus on high margin higher kV transformers, cost-effective backward
integration, strong order book, the ongoing reforms in power & industrial sector, increasing thrust and massive
investments lined up in the power sector provide the company strong visibility of revenue and profitability in coming
years.
During FY09, sales are expected to advance to Rs.450 cr. and net profit to Rs.60 cr., which would give an EPS of Rs.46.5. Its
EPS could go up to Rs.59 and net profit to Rs.76.5 cr. on sales of Rs.750 cr. in FY10.
At the CMP of Rs.441, the share is trading at a P/E of 9.8 on FY09 EPS of Rs.46.5 and 7.7 on FY10 EPS of Rs.59. The share
is recommended with a target price of Rs.700 in the medium-to-long-term. The 52-week high/low of the share has been
Rs.939/346.
******
An analyst with a reputed brokerage house strongly recommends the share of Repro India Ltd. (RIL) (Code: 532687)
(Rs.100.90) for long-term appreciation with a target price of Rs.200.
RIL originally began as a partnership firm by the name 'Repro' and was converted to Repro India Pvt. Ltd. in 1995 and
later into a public limited company with its present name. It tapped the capital market in with an issue of 26.20 lakh
shares at a price of Rs.165 per share aggregating Rs.43.2 cr. in December 2005 to part finance the enhancement of its
existing printing facility (Rs.18.4 cr.), setting up a new print facility in the Special Economic Zone (SEZ) in Navi Mumbai
(Rs.14.5 cr.), setting up infrastructure for content process outsourcing (Rs.3.5 cr.) and meeting additional working capital
requirement (Rs.10 cr.).
The company provides value-added printing and print related solutions to major publishing houses, corporates and
software companies (packaging and developing manuals). Exports constitute 45% of sales of the company.
Its products range includes scholastic books, children's colouring & activity books, scientific, technical and medical
books, trade books, digital printing books, content services and fulfillment. Its services range from content creating and
designing, sourcing and procurement, printing and production, editing illustrations, colouring and imaging, creating
templates, product standardisation and innovation desktop publishing typesetting, warehousing, assembly and
dispatches.
RIL's main clients include publishing houses such as Alligator Books, Heinneman Educational Books (Nigeria) PLC.,
Modern Publishing Inc, Orient Longman, Oxford University Press. Software companies like Microsoft Inc, Lenovo India
and Indian corporates include Tata Steel, Nokia India, NIIT, Wipro and Satyam Computer Services.
Since RIL is on a Digital/PDF workflow, it has the capability to replicate products across multiple media such as print,
CD, web, archiving/cataloguing, etc.
RIL has leveraged its expertise in digital printing and content creation business in order to capitalise on the growing
opportunities both from the domestic and global markets. It is well-poised to benefit from the growing international
trend of outsourcing print and related services from countries like India.
During FY07, RIL posted sales of Rs.131 cr. and earned a net profit of Rs.9.5 cr. yielding an EPS of Rs.9. During Q3FY08,
its sales moved up by 29% to Rs.59 cr. and net profit by 72% to Rs.4.1 cr. over Q3FY07. For the first 9 months of FY08, it
reported 64% higher net profit of Rs.11 cr. on 25% increased sales of Rs.119 cr. over the previous corresponding period.
Its equity capital is Rs.10.5 cr. and with reserves of Rs.73.2 cr., the book value of its share works out to Rs.80. The
promoters hold 73% in the equity capital, institutions/mutual funds hold 7%, corporates hold 5% leaving 15% with the
investing public.
Globally, USA and UK are its very large markets. There are huge World Bank funded education projects in Africa
offering big opportunities to quality Indian printers.
The Indian printing industry estimated at US $12 billion (Rs.47, 500 cr.) has grown at 14% CAGR over last 26 years. It is
highly fragmented with low entry barriers at the lower end but there is a big opportunity for large integrated domestic
printers.
The global market for the printing industry will witness good growth with large market opportunities in USA, Europe,
and Asia. According to a study, the global print market is forecast to grow by 18% to US $721 billion by 2011 with the
fastest growth in developing/emerging countries. Digital printing processes, both electro photographic and inkjet, will
continue to grow ahead of all other sectors.
Publication printing comprises 42.9% share of the overall market for printing products and has historically been the
driver of growth in consumption of printing products. By 2011, the combined share of the market held by digital printing
processes is estimated at 21%.
Global publishing houses outsource printing requirements to lower cost destinations with technology permitting
offshoring. The US offsite printing, which is growing at 15% CAGR would grow to $25 billion (Rs.1,00,000 cr.) by 2009. EU
offsite printing currently at €15 billion (Rs.86,700 cr.) is expected to grow faster than US.
RIL's initiatives, like offering digital workflow and comparable technology, adding new clients in India and abroad,
increasing its geographical spread, enhancing products and services vertically to existing clients and/or offering value
added services, providing content services globally coupled with the global focus on education, the sustained growth in
consumption of printing products, strong outsourcing trend and the advantages of global sourcing etc. give strong
visibility to revenues & profitability in coming years.
During FY08, RIL is likely to register a net profit of Rs.16.7 cr. on sales of Rs.180 cr. and the EPS would work out to Rs.16.
During FY09, sales are expected to move up to Rs.245 cr. with net profit increasing to Rs.26 cr. while EPS would go up to
Rs.24.8.
At CMP of Rs.100, the share is trading at a P/E of 6.2 on FY08 estimated EPS of Rs.16 and 4 on FY09 projected EPS of
Rs.24.8. The share is recommended with a price target of Rs.200 in the medium-to-long term. The 52-week high/low of
the share has been Rs.184/75.
17
By Nayan Patel
TECHNO FUNDA
Cosmo Films Ltd.
BSE Code: 508814
Traded on NSE as COSMOFILMS
Last Close: Rs.107.40
Cosmo Films was started in 1980 to manufacture Bi-axially
oriented polypropylene (BOPP) films for the first time in
India. The company has maintained market leadership in
the Indian market and also continues to be largest BOPP
film exporter from the country.
Review
- Last week we recommended Super Tannery at Rs.10.84.
During last week it kissed Rs.12.95 level.
- Uni Abex Alloys recommended at Rs.102 reached
Rs.107.10 level.
th
- In issue No.22 dated 14 April 2008, we recommended R
Systems at Rs.88. The stock has zoomed up to Rs.111 level.
It has a current capacity is 68000 MTA including 8000 MTA of thermal lamination film. The company has its own captive
power plant of 8 MW capacity, which ensures good quality uninterrupted power supply for its production at an
economical cost.
Since last 3 years, the company is faring well work and declared mind blowing results. In Q4FY08, the company's profit
jumped 53.49% to Rs.14.75 cr. For FY08, its profit jumped 79.29% to Rs.44.50 cr. and it posted an EPS of Rs.22.89. The stock
is available at P/E ratio of just 4.71 and the company has an equity of Rs.19.44 cr. with reserves of Rs.161.75 cr. After
declaring marvelous results, the company declared a huge dividend of 50% (Rs.5 per share).
Few weeks ago, its price kissed Rs.165.50 level but is now available at Rs.108 with 50% dividend.
It is one of the best investment stocks for short-to-medium-term investors. Buy with stop loss of Rs.100. On the upper
side, the stock can go up to Rs.120 level in a short time while it can touch Rs.153, Rs.165 level in the medium-term.
Prime Property Development Corporation Ltd.
BSE Code: 530695
Last Close: Rs.85.85
This property stock is available at a P/E ratio of just 5. It is a Mumbai based construction-real estate developer and is the
cheapest stock in its segment. The company has equity of just Rs.10 cr. with a face value of Rs.5 per share. Last year it
declared 25% dividend. The company has declared fantastic FY08 results. In Q4FY08, it posted a net profit of Rs.15.22 cr.
v/s loss of Rs.1.39 cr. in Q4FY07. For FY08, it posted a net profit of Rs.32.70 cr. v/s Rs.8.23 cr. in FY07 and recorded an
EPS of Rs.16.35.
Its weekly chart also looks very positive. It is the best stock for short-to-long-term investment. Buy with a stop loss of
Rs.75. On the upper side, the stock can go up to Rs.98, cross over will take it to Rs.112 level in coming days. If we apply a
P/E multiple of just 10, the stock can easily touch Rs.165 level in the long run.
Lloyd Electric & Engineering Ltd.
BSE Code: 517518
Traded on NSE as LLOYDELENG
Last Close: Rs.109.65
Lloyd Electric & Engineering is in the business of manufacturing Heat Exchanger Coils for air-conditioning and
refrigeration application, 'U' bend and return bend for heat exchanger coils, system tubing and header line for air
conditioner equipment and sheet metal items for air conditioner systems made from CNC presses and is the leader in
India. The company is an OEM supplier to almost all AC manufacturers in India.
It has an equity of Rs.31 cr. Merrill Lynch, Goldman Sachs, Morgan Stanly, JF India Fund, Bank of New York, Swiss
Finance, JP Morgan, Shinsei UTI Fund, DSP, Sundaram BNP Paribas mutual fund hold a huge stake in this company. For
the first nine months, its net sales jumped 40.82% to Rs.482.76 cr. while net profit jumped 39.74% to Rs.44.94 cr. Net profit
is higher than the whole of last year. It has already posted an EPS of Rs.14.49. As per expected FY08 EPS, the stock is
available at P/E ratio of just 5.5. This 20% dividend paying stock available at dirt cheap. Buy with stop loss of Rs.103. On
the upper side, the share price can go up to Rs.116, Rs.123 levels in a short span of time. Its 52-week high is Rs.252.
Facor Alloys Ltd.
BSE Code: 532656
Last Close: Rs.13.73
This is the best stock for short to medium term investors. This mining stock can go up to Rs.17.50 and Rs.22 levels in
coming days. The company's profit jumped 577.76% in the first nine months and it expects to post mind blowing results
for March 2008 quarter. Buy at every decline with a stop loss of Rs.11.50. Its 52-week high is Rs.22.
Gokul Refoils & Solvent's IPO opens on 8
th
May
MONEY FOLIO
Gokul Refoils & Solvent Ltd., a Gujarat based company engaged in the business of solvent extraction , refining of edible
oil and manufacturing vanaspati is entering the capital market with an IPO of 71,58,392 equity share of Rs.10 each in the
price brand of Rs.175 to Rs.195 per share . The company intends to raise Rs.139.59 cr. at the cap price of the price band.
The 100% Book Built issue opens on Thursday, 8
th
May and closes on Tuesday, 13
th
May 2008. ICRA has assigned an ICRA
IPO grade 3/5 signifying average fundamentals to the proposed IPO.
NABARD records 21% growth in FY08
NABARD registered a growth of 21% in business operations in FY08 compared to 17% growth n FY07. The size of its
balance sheet as on FY08 touched Rs.98,500 cr. compared to Rs.81,220 on FY07.
Significant among different segments was loans to State Governments for supporting rural infrastructure. RIDF
supported loans to State Governments increased by 53% from Rs.20,005 cr. as on FY07 to Rs.30,650 cr. as on FY08. Short-
term refinance for crop loans registered 18% growth. Investment credit refinance was to the tune of Rs.34,848 cr. In terms
of disbursements, both by way of refinance to Rural Finance Institutions and loans to State Governments for RIDF, a
quantum jump of 30% from Rs.29,792 cr. to Rs.38,965 cr.
Anu's Labs plans IPO
Hyderabad based Anu's Laboratories Ltd., an ISO 9001:2000 certified company engaged in the manufacture of quality
drug intermediates, plans to issue 40,00,000 equity share through the book building route to fund its new API unit at
Vishakapatnam.
Central Bank's interest margin declines
Central Bank of India recorded 35.5% growth in business in FY08 and posted 10.47% higher net profit at Rs.550.16 cr.
despite 11.25% lower operating profit and 10.16% lower net interest income of Rs.2223.07 cr. against Rs.2474.42 in FY07.
Its net interest margin declined to 2.53%from 3.28% in FY07.
FY08 a landmark year for Nicholas Piramal
Nicholas Piramal India Ltd. (NPIL) has reported 19% higher total operating income of Rs.770 cr. in consolidated basis for
Q4FY08 as compared to Q4FY07. Operating profit increased by 139.9% to Rs.200 cr. while net profit was up by 141.7% at
Rs.130 cr.
For FY08, NPIL's consolidated sales grew by 16.2% to Rs.2870 cr. OPM increased by 3.4$ to reach 18.9%. OP for the year
was up by 41.3% at Rs.540 cr. NP was up by 53.1% at Rs.330 cr. The consolidated EPS for the year was up by 65.9% to
Rs.17.4 compared to Rs.10.5 for FY07.
18
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
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