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T
I
M
E
S
A TIME COMMUNICATIONS PUBLICATION
VOL. XVII No. 51
Monday, November 3 – 9, 2008
Pages 15
Markets to consolidate
By Sanjay R. Bhatia
As indicated in the last issue, the markets witnessed a relief rally during this truncated trading week. Short covering and
selective value buying saw the markets move higher. Positive global cues also helped the market sentiment. Traders and
speculators were seen covering their short positions and also going long on a selective basis. FIIs have remained net
sellers in the cash segment but were net buyers in the derivatives segment. Mutual Funds, however, remained net buyers
during the week supporting the markets at lower levels.
The global cues remained mixed. Crude oil price
continued its downfall on the back of recessionary fears in
developed economies. Crude prices recorded a fall even
after OPEC announced production cuts and may again
announce a cut in production to arrest the falling crude
prices. The US economy continued to emanate mixed
signals. The US Federal Reserve announced a cut in
interest rates by 50 (basis points) bps, which was on
expected lines. This cut is likely to improve liquidity
conditions in USA. Other countries have also announced a
rate cut as a measure to boost their respective economies.
On the domestic front, inflation continued its downward
trend and fell for the fifth consecutive week. It has cooled
down below the 11% mark to touch 10.68% for the week ended 18 October 2008. FII selling continued unabated especially
in the cash segment and is a cause of concern for the markets. Now, it is important that markets stabilise and witness
buying support at higher levels especially from the institutional side for a sustainable relief rally to unfold.
1
Stability in the markets would be the key to establish an intermediate bottom. In the meanwhile, the markets would
continue to take cues from global markets and crude prices. Selling pressure is likely to continue at higher levels as fresh
short positions get added while selective value based buying would be witnessed at lower levels. s
Technically, the benchmark indices continue to be placed in an oversold zone. The markets could continue to witness
intermediate bouts of a relief rally amidst consolidation. However, it is unlikely that the relief rally would last for long as
it is not supported by good volumes. On the upside, the Sensex faces resistance at the 10000 and 12575 levels but has
support at the 8929, 7685 and 6150 levels. On the upside, the Nifty faces resistance at the 2967 and 3300 levels while 2866,
2632 and 2300 are its important support levels.
Investors should stay away.
Sensex out of ICU!!
By Hitendra Vasudeo
Market has done the right thing at the right time and taken the Sensex out of the ICU! Last week, the Sensex opened at
8599.58 attained a low at 7697.39 and recovered to a high of 9870.43 before closing the week at 9788.06. Thereby, it showed
TRADING ON TECHNICALS
a net week-to-week gain of 1086 points. As a result of its speedy recovery from its low has brought the Sensex out from
the ICU. We may, therefore, see the pull-back rally getting extended before it is punctured!
Sensex Wave Analysis
2
Normal Count
Wave I-2594 to 3758
Wave II-3758 to 2904
Wave III-2904 to 12671
Internals are as follows:
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 7697
Wave W-21206 to 14677
Wave X-14677 to 17735
Wave Y- 17735 to 12514
Wave X- 12514 to 15106
Wave Z- 15106 to 7697
Wave B- 7697 to 9870 (not
yet complete - the current
upmove)
If a triple zig-zag is
completed as mentioned
in the above count, then
the entire fall will be
termed as Wave A from
21206 to 7697. This also
means, as per this count,
that the recent low of 7697
might not be immediately
taken off till the pull-back
is not complete.
The pull-back level of the
fall from 21206 to 7697 is
23.6% - 10900 and 38.2%
12888. To an outer extent,
the pull-back could get
extended towards 50%-
14435 and 61.8% -16049.
On the immediate front,
we can expect 10900 at
least.
If Sensex moves quickly
to 10900 and violates the
low of 7697, then the
above wave count will
not be applicable and the
internals of 21206 will
shift the focus towards
the alternate count
discussed in the last
couple of
weeks as
reproduced below:
Alternative Wave Count
for the fall from 21206
WEEKLY UP TREND STOCKS
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
TATA
COMMUNICATION
487.05 178.2
368.1
439.0
558.0
747.9
86.2
427.0
31-10-08
GLAXO
SMITHKLINE PHA
1070.00 823.3
973.3
1026.7
1123.3
1273.3
82.4
1052.0
31-10-08
JAYBHARAT TEX.
REAL
212.00 165.8
193.7
203.4
221.7
249.6
78.9
200.4
31-10-08
STERLING
BIOTECH
180.40 131.3
161.8
173.6
192.3
222.8
78.5
171.0
31-10-08
INDIAN BANK
126.55
77.0
107.8
119.9
138.6
169.4
74.9
122.9
31-10-08
WEEKLY DOWN TREND STOCKS
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
BRAHMANAND
HIMGHAR
7.06
5.5
6.5
7.0
7.5
8.5
9.91
7.20
29-08-08
DALMIA
CEMENT(BHARAT
80.50
49.7
69.6
78.5
89.5
109.4
14.16
97.14
22-08-08
SUZLON ENERGY
44.45
25.4
39.1
47.4
52.8
66.5
16.09
67.91
22-08-08
CENTURY TEXT.&
IND.
167.05
108.7
146.3
163.1
183.9
221.5
16.29
189.08
12-09-08
AMTEK AUTO
72.25
49.9
64.9
72.4
79.8
94.8
16.53
88.59
16-05-08
Wave 1-21206 to 14677
PUNTER'S PICKS
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
PANORAMIC UNIVERSAL
531816
258.90
251.00
260.00
235.00 275.5
300.5
0.69
Wave 2- 14677 to 17735
Wave 3- 17735 to 7697
(not yet complete)
Internals of Wave 3
Wave -17735 to 12515
Wave 2- 12515 to 15579
EXIT LIST
Scrip
Last Close Sell Price Sell Price Sell Price Stop loss Target
Monthly Relative
Strength (RS)
SUN PHARMACEUTICAL I
1123.00
1214.96
1269.00
1323.04 1498.00 757.0
32.97
STERLING INTERNATION
224.65
258.13
276.62
295.12
355.00 101.4
39.08
Wave 3- 15579 to 7697
(not yet complete)
Micro Internals of 15579
to 9911
Wave i- 15579 to 14002
Wave ii-14002 to 1510
Wave iii-15107 to 7697
Wave iv-7697 to 9870 (not yet complete)
This count suggests that there will be a pull-back for Wave iv to retrace the fall from 15107 to 7697. The pull-back level of
this fall is placed at 10532 (38.2%), 11395 (50%) and 12284 (61.8%).
Both the counts suggest a pull-back. The intensity of the pull-back will decide whether it will immediately retest the low
or at some later period.
Weekly resistance will be at10539-10750. Weekly support will be at 9118-8701-8366-7697.
Conclusion
Pull-back levels could be tested.
Strategy for the week
Traders could trade long but keep in mind to book profit. Investors with stuck-up long positions can look for
opportunities to exit wherever possible and try to generate cash at higher levels.
* Promoters of Elecon Engineering have bought 0.25% stake from the open market and may use the 5% creeping
acquisition route to increase their stake. Scrip has a strong support and is risk-free bet at current levels.
TOWER TALK
* With crude oil trading decisively below US $65, a cut in domestic petrol/diesel price is imminent. Stay away from
HPCL & BPCL.
* Bombay Oxygen has liquid cash of Rs.140 cr. Still this debt-free company is available at a market cap of merely Rs.80
cr.!
* Micro Technologies has once again reported excellent results for Q2FY09 and has posted an EPS of over Rs.30 for
H1FY09. Scrip may see a smart recovery in the short-term.
* Honda Siel stock has shot up due to encouraging September 2008 quarter. Take this opportunity to exit and don't re-
enter for next one year. Company is tipped to provide substantial restructuring expenses in coming quarters.
* Madhucon Project with an order book of nearly Rs.5000 cr. has already reported NP of Rs.28 cr. for H1FY09 and may
end FY09 with PAT of more than Rs.50 cr. Yet it is available at a market cap of Rs.170 cr. and EV of Rs.370 cr.
* ABG Shipyard has bagged its first order for a rig worth Rs.2000 cr. from Essar Oil taking its total order book position to
around Rs.13,500 cr. A good bet.
* GSFC has performed well in Q2FY09 with an EPS of Rs.20. Share is a safe bet with a hefty book value and good
earnings in the current year.
* Wyeth with good projected EPS of over Rs.40 is available at very attractive valuation.
* IT stocks are the best bet as their operating costs are lower than the manufacturing sector. Many blue chips are available
at single digit P/E. Infosys, Oracle Financial Software, Wipro, TCS can be accumulated in small quantities.
* English India Clay has posted encouraging results for the September 2008 quarter. The stock is being accumulated by
knowledgeable circles on reports of expansion and the company commencing operation of its co-generation power plant,
which will entitle it to carbon credits. It plans a diversification into starch, which will be funded by a rights issue.
* Focus Energy is expected to come up with gas production in FY10, which is expected to boost the bottomline of Phoenix
International, its parent company.
* Something is cooking in Ennore Coke as the Board of Directors convened an emergency meeting.
By Saarthi
BEST BETS
Indo Tech Transformers Ltd. (Code: 534717)
Rs.184.95
3
Established in 1976, Indo Tech Transformers Ltd. (ITTL) is primarily engaged in manufacturing power & distribution
transformers, furnace transformers & special transformers upto 100 MVA/220 kV class. It is amongst the few companies
that have the technology to manufacture mobile sub-station transformers upto 60 MVA/220 kV class adhering to
American Standards. Lately, the company has also ventured into manufacturing open ventilated dry type transformers
which offer higher realization and better margins. Till date, ITTL has supplied over 56,000 transformers of various
capacities to over 3900 customers in India, USA, UK, Canada, Nigeria, Germany, Egypt, Singapore, Qatar, Abu Dhabi,
Saudi Arabia, Sri Lanka, Japan, Switzerland etc. Primarily, the company derives its revenue from sale of transformers to
state electricity boards (SEBs), EPC contractors, industrial & corporate customers. Over 70% of its total revenue comes
from the SEBs and it has a market share of around 15% in the southern states.
Till last year, ITTL operated through two
manufacturing facilities located at Palakkad in
Kerala and Thirumazhisai in Chennai with a
combined production capacity of 3450 MVA.
Recently, however, it set up a state-of-the-art
greenfield plant in Kancheepuram with a name
plate capacity of 4000 MVA. Although originally
conceived with an installed capacity of 2400 MVA,
the company decided to revise it to 4000 MVA to
cater to the huge demand. Hence the total
transformer production capacity of the company
stands at 7450 MVA. Secondly, this Extra High
Voltage
(EHV)
transformer
plant,
which
commenced commercial operation in February 2008,
is equipped to manufacture large power
transformers upto 315 MVA, 400KV class. Earlier in
July 2007, ITTL commissioned a dry type 100 MVA transformer plant for which it signed a MOU with DuPont (USA) and
now manufactures dry transformers between 100 KVA/11 kV & 2500 KVA/33 kV class. These transformers are
environmental friendly, maintenance free, very safe, with low operating cost and with overloading capability. The dry
type transformers are specifically used in urban areas such as residential complexes, malls, software technology parks,
office complexes, petroleum refineries, ships and in other areas where there is a risk of fire.
4
ITTL has an order book of nearly Rs.120 cr. and expects to win another Rs.50 cr. in the near future. In coming years, the
company foresees a huge opportunity of business from SEBs, power projects, public utilities, industrial customers and
exports. Besides, the government's rural electrification programme to electrify all villages by 2012 will substantially boost
the demand for transformers apart from the good demand from power-intensive sectors like cement, metals, chemicals,
oil & gas where massive investments are planned in coming years. With power being a major input, all the companies are
looking at captive power plants to achieve cost efficiencies and assured availability. Dry type transformers will also be in
great demand as their application increases in shopping malls, hotels and other commercial set-ups. Apart from domestic
demand, the power sector in developing regions like the Middle East, Africa and Asia are on the growth path and this
would be a huge opportunity for ITTL.
Fundamentally as well financially, ITTL is on a strong footing. Recently, it came out with excellent results. Sales improved
by 30% to Rs.65 cr. and net profit jumped 40% to Rs.14 cr. posting an EPS of Rs.13 for the single quarter. For H1FY09, it
has already registered an EPS of Rs.23 against Rs.16 in H1FY08. However, raw material costs form around 75% of the
price of a transformer and any sharp movement in the prices of its raw materials may put pressure on its margins. But if
the major raw materials like copper and CRGO continue to correct sharply, it would lead to lower realization for the
company. Despite all such concerns, ITTL may clock a turnover of Rs.240 cr. with net profit of Rs.40 cr. for FY09. This
translates into an EPS of Rs.38 on its current equity of Rs.10.60 cr. Considering its very low debt:equity ratio and
impressive profit margin, investors can buy this stock at current levels for a price target of Rs.280 (i.e. 55% return) in 9-12
months.
K S Oils Ltd.: Excellent prospects
By Devdas Mogili
K S Oils Ltd. (KSOL) is a 23-year old Morena (Madhya Pradesh) based company established in 1985. It is a leading
integrated edible oil manufacturing company with its product range constituting mustard and soya bean oils. The
company has five manufacturing plants with marketing offices and plantations in India, Malaysia, Indonesia and
ANALYSIS
Singapore. Its business can be broadly classified into five divisions viz. Oil, Refinery, Vanaspati, Solvent and Power. Mr.
Ramesh Chand Garg is the chairman while Mr. Sanjay Agarwal is the managing director of the company.
KSOL has renowned brands like Kalash, Double Sher and K. S. Gold, which comprise a range of healthy cooking oil
brands in mustard, refined oil and vanaspati. All its manufacturing plants are located in the rich mustard growing belt of
Madhya Pradesh and Rajasthan in India.
Beginning operations in 1989 the company ventured into mustard oil with an oil mill having a crushing capacity of 150
tonnes per day (TPD). In 1992-93, it undertook its first major expansion with a building and commissioning its Solvent
Extraction Unit (SEU). In 1995, it expanded its refinery operations as a development module. During 2001, a vanaspati
unit of the company with a capacity of 150 TPD production was set up and also commissioned in the same year. To
improve its packaging system, a High Density Polythylene Jar manufacturing unit was started in 2002. In 2006, the
company acquired oil mills on lease with production capacities of 225 TPD. Further, it has received in-principle approval
for allotment of 2000 hectares of waste land in Morena District from the Government of Madhya Pradesh for cultivation
of Jatropha for the production of Bio-diesel. During 2007, it acquired an edible oil plant at Jodhpur, Rajasthan and made a
strategic tie-up with a plant in Alwar, Rajasthan, to enhance production.
KSOL ventured in the power sector by commissioning wind turbines of 2.5 MW. Also it added 28 windmills with capacity
of 24 MWs in 2008.
The company's journey as a global player began in 2008 when it became the first Indian company to acquire palm
plantations abroad. Its plantation in Indonesia occupies 50,000 acres (20,000 ha) is estimated to supply 80,000 tonnes of oil
to its manufacturing and refining plants in India.
KSOL, today, is a leading supplier of edible oils to the Indian defence forces and this tradition has been maintained for the
past few years.
The company has made concerted efforts to move up from a mustard oil producing company to a market focused FMCG
brand company. The opportunity in the Indian markets is huge. Statistics reveal that the 6 northern states consume 90% of
the mustard oil produced in the country, which throws up a market opportunity of over 50 crore customers.
Performance: The company has been posting consistently improved results quarter after quarter. During FY08, it clocked
a net sales income of Rs.2044.30 cr. with a net profit of Rs.120.70 cr. posting an EPS of Rs.4.48 per share with a face value
of Re.1.
Financial Highlights:
(Rs. in lakh)
Latest Results: In tune with its
earlier performances, the company
has reported encouraging Q2FY09
results registering a net sales income
of Rs.733.60 cr. with net profit of
Rs.42.22 cr. recording a basic EPS of
Rs.1.27 and a diluted EPS of Rs.1.25.
The annualised basic EPS works out
to Rs.5.08 and diluted EPS of Rs.5
(FV: Re.1).
Particulars
Q2FY09
Q2FY08
H1FY09
H1FY08
FY08
Net Sales/Income
73360
43980
142634
80338
204431
45
12
61
24
120
Other Income
Total Income
73405
43992
142695
80362
204551
65712
39105
127902
71164
183750
Total Expenditure
Other Income
242
112
565
238
1170
1612
952
2802
1836
3748
Interest
Profit before tax
6323
4047
12556
7600
18223
Tax Expenses
Current Tax
498
1230
2005
2275
3429
12
4
18
8
25
FBT
Deferred Tax
1591
155
2209
309
2699
Financials: KSOL has an equity
capital of Rs.33.24 cr. with a book
value of Rs.19.38. It has a debt equity
ratio of 0.47 and RoNW of 29.78%
and RoCE of 37.31%.
4222
2658
8324
5008
12070
Net Profit
Eq. Share Cap. (FV:Re.1)
3324
2732
3324
2732
3324
61005
Res Ex Rev Reser
Basic EPS (Rs)
1.27
1.12
2.50
2.18
4.48
Diluted EPS (Rs)
1.25
1.07
2.47
2.10
4.07
Share Profile: The shares of KSOL are listed and traded on the BSE under the B group. Its share touched a 52-week
high/low of Rs.142/38. At its current market price of Rs.38.90, it has a market capitalisation of Rs.1333 cr.
Dividends: The company has been paying dividends as shown below:
FY08 - 18%, FY07 - 15%, FY06 - 12%, FY05 - 10%.
Shareholding Pattern: The promoter holding in the company is 33.31% while the balance 66.69% is held by non-corporate
promoters, institutions, others and the Indian public. Among mutual funds, Kotak has added the company's shares to its
various schemes.
Prospects: Today, India accounts for 7% of the global oilseeds and oil meal production and 10% of the global
consumption of edible oil. With the edible oil market size placed at Rs.67,500 cr. and the branded segment commanding
15% market share, the market opportunity is huge. Also, with modern retail formats limited to just 3%, the penetration
opportunity is mind boggling.
Lastly, with the improvement in the lifestyle of the Indian consumer, healthy living will be a priority, which will create an
immense opportunity for the edible oil sector. The latest report from FICCI suggests that the branded edible oils market is
5
expected to grow by 20% per annum, which will not only spur the demand for edible oils but will also drive the demand
towards branded and organised edible oil players.
India is also witnessing an increase in lifestyle diseases like heart ailments and cardio vascular illness, which is said to be
much higher than other nations. This calls for healthy edible oil and mustard being among the world's most heart friendly
oil, consumers will be eager to adapt to qualitative mustard oil brands.
Conclusion: KSOL is one of the top five edible oil companies in India. Moreover, with its global foray, changing lifestyles
and health consciousness among the vast middle class is expected to have a beneficial impact on the company.
At its current market price of Rs.39, its share price is discounted less than 8 times its estimated earnings. It is worth
mentioning that the company has been able to post much better results in the present economic downtrend. Moreover,
with the shortage of food expected worldwide, the prospects for companies like KSOL is extremely good. This share may
be picked up in small parcels. The share offers a good investment opportunity to discerning investors with a medium-to-
long-term outlook.
Indices close higher but sentiment remains fragile
MARKET REVIEW
By Ashok D. Singh
Key benchmark indices bounced back, closely mirroring their global counterparts, which rallied after central banks across
the globe cut interest rate to tackle the financial crisis. The BSE Sensex rose 1,086.99 points or 12.49% to end at 9,788.06 for
the week ended Friday, 31 October 2008. The broad based NSE Nifty rose 301.6 points or 11.67% to close at 2885.60 for the
week. The market sentiment also got a boost after the inflation rate fell below 11% for the first time since May 2008. It was
a three day session week with stock markets closed on Tuesday (28 October 2008) and Thursday (30 October 2008) for the
Diwali holidays. A special one-hour Muhurat trading session was held on Tuesday to mark the beginning of the new
Samvat year 2065.
October 2008 was the worst month for stock markets in recent times, as the Sensex declined 3,072.37 points or 23.89% to
9,788.06 in the month. The barometer index is down 10498.93 points or 51.75% in the calendar year 2008 so far from its
close of 20,286.99 on 31 December 2007. It is 11418.71 points or 53.84% below its all-time high of 21,206.77 struck on 10
January 2008.
FIIs have been pulling out their investments from India and other emerging markets to shore up resources to beat the
global liquidity crunch. In India, FII were net sellers of Rs.14272.40 cr. in October 2008 so far (till 28 October 2008). They
sold Indian shares amounting to Rs.51064.10 cr. in calendar 2008. On the other hand, mutual funds have been buying.
Their net inflow in October 2008 totalled Rs.848.20 cr. (till 28 October 2008).
Inflation based on the wholesale price index (WPI), slipped to 10.68% for the week ended 18th October 2008 from 11.07%
in the previous week.
The US Federal Reserve cut its main policy rate to 1% on Wednesday, 29 October 2008, to stave off the credit crunch.
China reduced rates earlier on
Wednesday, 29 October 2008 with
Taiwan and Hong Kong following up
with rate cuts on Thursday, 30 October
2008. The Bank of Japan announced a
20 basis points (bps) cut in interest rate
on Friday, 31 October 2008.
6
The BSE Mid-Cap index rose 104.34
points or 3.37% to 3,200.02 and the BSE
Small-Cap index rose 103.28 points or
2.82% to 3,765.11. Both the indices
underperformed the Sensex.
Volatility characterised trading on
Monday, 27 October 2008. Short
covering of derivatives positions
ahead of the expiry on 29 October
2008, triggered a sharp intra-day
pullback in the second half of the day's
trading session after indices plunged
to over 3-year low in the first half,
spooked by weak global equities. The
Sensex declined 191.51 points or 2.2%,
to close at 8,509.56, after slumping 1,003.68 points to 7,697.39 in afternoon trade, its lowest since 28 October 2005. The
Nifty lost 59.80 points or 2.31% to 2,524.20.
Firm global markets and relaxation of creeping acquisition norms for promoters boosted the battered bourses in the
special one-hour Muhurat trading session held on Tuesday, 28 October 2008. The Sensex rose 498.52 points or 5.85% to
9,008.08. The Nifty was up 167.70 points or 6.64% to 2,691.90.
Expiry of October 2008 derivatives contracts caused high volatility on Wednesday, 29 October 2008. Gains in some Asian
and European markets supported domestic bourses. The Sensex gained 36.43 points or 0.4% to 9.044.51. The Nifty was up
12.45 points or 0.46% to 2,697.05.
Ending one of the worst month in its history, the market surged on Friday, 31 October 2008, as it caught up with the rally
in global stocks on Thursday, 30 October 2008, triggered by a steep 50 bps rate cut by the US Federal Reserve. The Sensex
gained 743.55 points or 8.22% to 9,788.06. The Nifty rose 188.55 points or 6.99% to 2885.60.
Reliance Industries jumped 34.98% to Rs.1370.75 in the week.
Reliance Communications rose 14.12% to Rs.220.70. The company reported consolidated net profit of Rs.1530.78 cr., up
17.33% in Q2FY09 over Q2FY08. Its consolidated total income increased 23.29% to Rs.5645 cr. in Q2FY09 over Q2FY08.
The company added 5.25 million customers in Q2FY09.
Bharti Airtel, rose 21.43% to Rs.649. Net profit declined 0.9% decline in to Rs.1604.78 cr. on a 36.5% increase in sales to
Rs.8274.37 cr. in Q2FY09 over Q2FY08.
State Bank of India fell 4.05% Rs.1109.50 after muted growth in consolidated net profit in Q2FY09. SBI reported a 10.60%
rise in consolidated net profit to Rs.2378.19 cr. on a 26.4% increase in consolidated total income to Rs.27083.47 cr. in
Q2FY09 over Q2FY08. The consolidated earnings include numbers of recently acquired State Bank of Saurashtra.
ICICI Bank soared 28.82% to Rs.399.35. Net profit rose 1.2% to Rs.1014.21 cr. and operating income 1.3% to Rs.9712.31 cr.
in Q2FY09 over Q2FY08.
Tata Power gained 10.36% to Rs.689.65, boosted by better-than-expected Q2 results. Net profit of the Mumbai-based
power generation company rose 1.7% to Rs.261.93 cr. and sales 45% to Rs.1958.88 cr. in Q2FY09 over Q2FY08.
Suzlon Energy, fell 5.93% to Rs.44.45. The company suspended a Rs.1,800 cr. rights issue plan because of the stock-market
slide.
The New Delhi-based real estate developer Unitech surged 59.63% to Rs.30.10. The company offloaded a 60% stake in its
telecom venture for Rs.6120 cr. to Norwegian telecom firm Telenor.
The Sensex rose 1,086.99 points to close at 9,788.06 last week. Although the key benchmark indices edged higher, the
market sentiments remain fragile due to global recession worries and heavy selling by foreign funds this year.
Samvat 2065 ushers new hope
By G. S. Roongta
The just ended Samvat 2064 will be remembered as a year of boom & gloom as the stock markets swung to extremes that
were quite unexpected. The cheer that it brought within two months since Diwali in 2007 as the Sensex made its all time
top at 21,206 on 10 January 2008 was replaced by fear and panic over the past two months as the Sensex hit an intra-day
low of 7697 on Monday, 27 October 2008, on the eve of Diwali.
Thus Samwat 2064 ended on a very poor note and ushered in a Black Diwali. But goddess Lakshmi in her characteristic
styled dispelled the darkness and lit up the Muhurat session on Tuesday, 28 October 2008, with a gain of 498.52 points on
the Sensex. This was in sharp contrast to the loss recorded by the indices on Muhurat Trading over the past few years.
Thus Samvat 2065 began on an encouraging note and the further gain of 36.43 points on Wednesday, 29 October 2008, and
743.55 points on Friday, 31 October 2008, seemed to indicate that the worst is probably over and we can
look forward to a revival in our stock markets. This is also supported by the rise of 800 points on the
Dow Jones and 1500 points on the Hang Seng on a single day on Thursday, 30 October 2008, when our
markets were closed for Bhaubeej.
It, therefore, appears that a cycle of boom-bust, which is common to all markets, is over and we can look
forward to a resurgence on our bourses as has happened in the past. Readers may recall that after each
boom-bust cycle, the stock markets have risen to greater heights. Just as the peak of 1992 at Sensex 4546
and 6150 in 2002 led to a five fold rise and a three and a half fold rise respectively in FY08, so also the
next boom may well propel the Sensex above 30,000 over the next few years.
This may indeed appear mind boggling now and may be dismissed as a joke. But remember how people used to laugh at
projections of the Sensex at 15000 by analysts during the depression after the Harshad Mehta scam of 1992. This 'joke'
turned into a reality in 2007 and market experts revised the upward target in keeping with the fundamentals of the
economy and the changing global economic environment wherein India has begun to play a central role. Thus a Sensex of
30000 may appear laughable at this juncture, it is a distinct possibility within the next 5 years or so. Smart investors
MARKET
G.S. Roongta
7
should, therefore, not miss this opportunity to pick up the blue chips available at throwaway prices as this is indeed a
rare opportunity.
Nobody in January 2008 had imagined that Grasim, which was quoting above Rs.4000, could be available below Rs.1000
in just 8 months. Who would have thought that L&T, Hindalco, JP Associates, Tata Steel, Tata Motors could be available
so cheap at 20% of their peak values or at P/Es of 2-3 as against P/E levels of 20-30 that blue chip stocks often command.
It is nothing short of a dream to buy blue chips at one-fourth their book value as against the norm of 3-4 times book value!
You need not pray to God to see through divine eyes nor do you require an expert to advise you about the precious gems
available in the stock market at ridiculous prices thanks to the unloading by FIIs, who are compelled to sell at a loss to
meet their financial obligations back home. This is a god sent opportunity, which comes once in a lifetime, and should not
be missed by any long-term investor who wishes to see his/her portfolio multiply. From the given table, it is obvious that
several market favourites are available at scrap value and it is only a matter of time when they will regain their lost
composure as their fundamentals are still strong.
While the collapse in the markets has taken a heavy toll and
driven many away from the stock markets, this is not the first
time that this happened. This is a recurring phenomenon of every
boom -bust cycle when people begin to swear at stock trading
only to return in the good times. This is because the stock market
is the heart of all financial & commodity markets and takes a
knock at the slightest disturbance. But there is no denying the fact
that only stock markets can provide 100% to 1000% gains, which
no other investment can ever match. It has made the most
millionaires the world over and will continue to do so by its very
nature of value assignment and pricing.
Company
52-week
High (Rs.)
52-week
Low (Rs.)
%
Suzlon Energy
460
42 -90%
Unitech
547
27 -95%
Essar Shipping
260
32 -88%
Tata Steel
970
150 -86%
Grasim
4074
831 -80%
Hindalco
203
38 -82%
Jaiprakash Associates
510
47
98%
JSW Steel
1390
185
90%
ABB
1798
376
91%
Reliance Capital
2925
509
83%
Reliance Infrastructure
2632
354
87%
The market is currently oversold and any fresh supply or short
sell will attract investment buying as many people, who were waiting on the sidelines, will rush in to pick up the battered
blue chips. Today, these blue chips are attractive investments not only because of poor valuations but also because they
offer better returns compared to fixed deposits or debentures. The dividend yield, today, ranges from 6-10%, which is
comparable to any bank deposit.
HCC
280
30
90%
While one cannot state that the markets has bottomed out nor guarantee against any further falls, it is quite evident that
the markets have neared a bottom and a consolidation is likely. One who boards the train now can stand to gain by a rise
of 2000 to 3000 points.
By Saarthi
STOCK WATCH
Transformer & Rectifiers (India) Ltd. (Code: 532928) (Rs.158.90), which made an IPO at Rs.465 per share and was
oversubscribed 91 times in December 2007, finds no buyer at Rs.150 now. The company is a leading manufacturer of
power & distribution transformers, furnace transformers, rectifier transformers and specialized transformers. It currently
manufactures transformers up to 220 kV class and has an installed capacity of 7,200 MVA transformers per annum. To
cash in on the boom in the power sector, the company is setting up a greenfield plant in Moraiya, near Ahmedabad, with
an installed capacity of 16,000 MVA. The new plant, which is expected to be operational by March 2009, would be capable
of manufacturing transformers upto 756kV class although it initially intends to manufacture transformers of 220kV and
400kV classes. As of now, it has an order book position of Rs.383 cr. of which 70% orders are for power transformers. For
Q2FY09, its sales as well as net profit increased by 60% to Rs.114 cr. and Rs.12.70 cr. respectively. Accordingly, it may end
FY09 with sales of Rs.400 cr. and net profit of Rs.36 cr. i.e. an EPS of Rs.28 on its current equity of Rs.12.90 cr. It will,
however, report substantial growth in FY10 as its new plant begins operations.
******
Last week, Vakrangee Softwares Ltd. (Code: 511431) (Rs.48.75) announced encouraging Q2FY09 results. Revenue shot
up 60% to Rs.91 cr. whereas net profit increased by 50% to Rs.19 cr. recording an EPS of Rs.9 for the single quarter.
Accordingly for H1FY09, it has registered 70% growth in topline to Rs.153 cr. and 65% rise in net profit to Rs.30 cr.
Despite such an impressive performance, its share price has tumbled down to sub Rs.50 level from a high of Rs.300 in
May 2008 on distress selling by FIIs. The company has emerged as the lead provider of document management and
printing management solutions in the organised sector. With over 15 years experience in serving various government
organisations, the company forayed into the private sector for the first time in FY08. This includes large companies from
the BFSI, retail and telecom sectors in both its DMS and PMS verticals. It digitized various inbound documents (including
application and KYC forms) and developed customised software for each project. To meet the growing customers need in
the print management segment, it tied up with Eastman Kodak and installed Asia's biggest large scale variable colour
data printers. It is setting up a new hub office at Gurgaon equipped with a second printer of the same type. Last year, it
8
opened 32 new offices and has plans to open 100 more in a couple of years. Meanwhile, India is reporting the fastest
global growth in e-governance catalysed by the implementation of the RTI Act, which makes it mandatory for all
government departments to digitize their physical documents. It may end FY09 with sales of Rs.300 cr. and profit of Rs.58
cr. leading to an EPS of Rs.27 on its current equity of Rs.21.40 cr. As FIIs hold huge chunks, the scrip may continue to
underperform in the short-term.
******
Once again Mazda Ltd. (Code: 523792) (Rs.38) has come out with flying colours in Q2FY09. Its net sales as well as net
profit grew by 40% to Rs.22 cr. and Rs.2.30 cr. respectively and it posted an EPS of over Rs.10 for H1FY09. So for entire
FY09, it is slated to register sales of Rs.80 cr. with profit of Rs.8 cr. i.e. an EPS of Rs.19 on its small equity of Rs.4.25 cr. It is
among the few engineering companies in the world that manufactures very specialised, hitech and critical equipments for
various industries like power, refineries, fertilizers, chemicals, nuclear, sugar, paper, food, pharma etc. Broadly, its
product profile is segmented into vacuum system, valve division, air pollution control equipment, crystallizers and
evaporators. Notably, it has technical collaboration with world renowned Croll-Reynolds Inc., USA, which holds 12%
stake in the company. Fundamentally, the company is on a strong footing with very low debt:equity ratio and good
reserves leading to a book value of Rs.61. Moreover, HSBC is holding nearly 8% stake as on 30 September 2008 and hasn't
sold any share in this carnage. At an enterprise value of merely Rs.20 cr., the scrip is trading very cheap at a P/E multiple
of just 2 times, A screaming buy.
******
In the recent meltdown, the share price of TIL Ltd. (Code: 505196) (Rs.176.50) stands reduced to just 20% from its high of
Rs.825 in January 2008. The company is engaged in three business segments viz. construction & mining solutions (55%),
material handling solutions (25%) and power systems solutions (20%). It has long-term technical and strategic alliances
with leading equipment manufacturers in the world - Caterpillar Inc, Manitowoc crane Group, USA Famak S.A, Poland
and Paceco Corp, USA. Pioneering the manufacture of mobile cranes in India, the company produces rough terrain, truck
mounted, yard and industrial cranes, reachstackers, electric level luffing cranes, articulated lorry loaders, generator sets,
equipment for specialised Defence applications at its Kolkata plant apart from marketing imported equipment and spares
of reputed global manufacturers. For Q2FY09, it reported 50% growth in sales and PAT to Rs.264 cr. and Rs.9 cr.
respectively. To cater to its global clients effectively, it has set up
subsidiaries in Singapore, Nepal, Myanmar etc., all of which are
doing well. Further, the company is putting up a greenfield plant in
West Bengal at a capex of Rs.175 cr. for which it made a preferential
allotment of 30 lakh warrants to the promoters and others to be
converted into equity at Rs.326 per share. On a consolidated basis
the company is estimated to clock a turnover of Rs.1400 cr. with PAT
of Rs.50 cr. This translates into an EPS of Rs.50 on its current equity
of Rs.10 cr. whereas the diluted EPS works out to Rs.39 cr. on its
enhanced equity of Rs.12.75 cr. A solid bet.
9
By Kukku
* West Coast Paper Mills (WCPM) (Rs.37), a part of the Bangur
Group, is one of the leading players in the paper industry. Apart
from paper, the company also manufactures and sells Optical Fibre
Cables and Jelly Filled Telephone cables. WCPM's Paper Division is
located at Dandeli and the Cable Division in Mysore, both in
Karnataka. Further, the company owns six windmills with an
installed capacity of 1.75 MW in Tamil Nadu and majority of this
wind power is supplied to the Tamil Nadu Electricity Board.
Net profit of the company rose 3.76% to Rs.22.90 cr. in Q2FY09 as
against Rs.22.07 cr. in Q2FY08. Sales rose 8.26% to Rs.162.36 cr. in
Q2FY09 as against Rs.149.97 cr. in Q2FY08.
The company has a good track record of earnings. For the last four
years, it paid a dividend of 150%, which works out to be around
8.5% yield at the current market price of its stock, which has a book
value of about Rs.70. The stock is available at half its book value
while its 52-week high is Rs.124.
Investors can accumulate this stock for good long-term growth.
* Andhra Sugars (Rs.68) has reported a encouraging results for
FIFTY FIFTY
Q2FY09 with sales moving up by 24% to Rs.159 cr. while net profit shot up by 292% to Rs.23.52 cr. The sugar unit did not
contribute in H1FY08 as crushing starts in H2FY09. Hence its full year results should be encouraging. Stay invested.
* First Leasing Company (Rs.28) has reported an EPS of around Rs.7.36 for H1FY09. Thus full year EPS may be around
Rs.15. The stock is available at P/E ratio of 1.8 while book value is around Rs.80. Accumulate on dips.
* Hindustan Dorr-Oliver (Rs.45) has reported strong growth in net profit, which went up to Rs.7.98 cr. in Q2FY09 from
Rs.4.61 cr. in Q2FY08. Investors are advised to add this stock on dips.
* Sterling Tools (Rs.40) is another good stock paying consistent dividend of 30-50% over the last five years. For the last
three years, dividend was maintained at 30%. For H1FY09, the company has reported 105% higher net profit of Rs.5 cr.
against Rs.2.44 cr. in H1FY08, while the equity of the company is Rs.6.84 cr. Since it has reported consistently good results
for the last three quarters, it may record further improvement in H2FY09 due to fall in raw material prices leading to an
EPS of around Rs.15 for the full year.
Book value of the company is around Rs.75 while the stock is available at almost half the price. Its 52-week high is Rs.101.
This is a good stock to add on dips to get good dividend yield and capital appreciation.
* We had advised to exit Piramal Glass (Rs.74) around Rs.155 level as the company has high debts of around Rs.732 cr.
The company has recently reported a loss of Rs.9.5 cr. for Q2FY09.
* Asahi India Glass (Rs.41) has reversed exchange loss on long-term foreign currency borrowings/liabilities accounted
up to Q1FY09 of Rs.48.6 cr. and has also not reinstated them at the closing rates as at 30 September 2008. Consequently,
the loss for H1FY09 is understated by Rs.114 cr. The company would take a final view about the treatment of exchange
rate variation at the end of the year.
The company has high debts of around Rs.1400 cr. while its equity is around Rs.16 cr. Investors can think of switching to
other good stocks.
* Bannari Aman Sugar (Rs.541) has reported encouraging results in line with market expectations with net profit of Rs.30
cr. against a loss of Rs.1.24 cr. during the same period last year. Investors are advised to stay invested.
* For Q3CY08, DIC India (Rs.113) reported 68% higher net profit at Rs.4.73 cr. against Rs.2.81 cr. in Q3CY07 on sales of
Rs.130 cr., which is higher by 27% over Q3CY07. Its future outlook is good as raw material prices show a downtrend in
view of the sharp fall in crude oil prices.
* Quarterly results of Atul Ltd. (Rs.43) are good. As per knowledgeable sources, the company has made some provision
in this quarter for foreign exchange losses etc. to the tune of around Rs.7/8 cr. Otherwise, its bottomline would have been
still better.
* Cummins India (Rs.205) is another good stock for long-term investors for at the current market price.
* Ashiana Housing (Rs.27) has reported net profit of Rs.12.09 cr. on an equity of Rs.18.73 cr. for H1FY09. At present, its
market cap is just Rs.48 cr. while it is a debt-free company with projects in hand of around 8 million sq. ft. wherein
expected profit is around Rs.350-375 per sq. ft. These projects shall get over in next four years. Book value of the company
is around Rs.35 while stock is trading at Rs.27 level. Last year itself, the company made profit of Rs.40 cr. and current year
profit, too, is likely to be in the same region while its market cap is just Rs.48 cr.
Note: Market has closed well at 9788 after remaining up on the last three days. It is a good sign of forming a bottom.
Except selling from FIIs, other factors are favourable and seem to have been discounted in the current market prices.
It is possible that bear operators, who made huge profits in a short span, are locking profits at current levels which shall
also help in forming the bottom.
Investors are advised to avoid metal stocks at present due to a meltdown in metal prices.
For the steel sector, margins are will remain under pressure.
There is sharp fall in melting scrap prices, which
will reduce margins of sponge iron companies.
Avoid stocks in this sector.
10
Copper is almost at three years low, which will
put pressure on margins.
But these factors are favourable for user
industries, which will help them in improving
margins.
Valuations are attractive and there is a lot of
buying by promoters in the last few months.
Recent guidelines by SEBI are also likely to boost
the sentiment.
Profitrak/Investrak product meets
Our Technical Products Awareness Programme is back for
traders & investors.
A personal talk and meeting with Hitendra Vasudeo between 3
p.m. to 6 p.m. on the 2nd & 4th Saturday of every month from
November 2008 at the Money Times office in Fort, Mumbai.
Get to know which is the right product for you and understand
its implementation.
Interested and existing subscribers are welcome
Many stocks below P/E ratios of 5 along with
attractive dividend yield are likely to attract the
attention of FII funds.
Call Money Times office on 022-22616970/ 22654805 or
email at moneytimes@vsnl.com for an appointment.
Firmness in the dollar is also likely to protect the domestic industry. At the same time, sharp fall in crude oil prices will
help our economy in a big way.
There are indications that inflation is also likely to come down below 9% level in the next few months.
There shall be a reduction in interest rates in the near future, which is likely boost our economy.
Investment in equity is always the best option as many stocks offer attractive dividend yield. Their valuations are so
attractive that there may be takeover threats in a few companies where the promoters' holding is very low.
11
By V. H. Dave
EXPERT EYE
Godawari Power & Ispat Ltd. (GPIL) (Code: 532734) (Rs.75.55), which beat street expectations, is all set to post an EPS of
Rs.44 in FY09. Investment in this share is likely to fetch decent appreciation in the long-term.
GPIL operates in the broader industry category of iron & steel, sponge iron, steel & ferro alloys, power and mining.
Initially, it started operations at Raipur in Chhattisgarh as a sponge iron manufacturer and progressively expanded its
operations across a significant part of the value chain of the iron & steel industry eventually covering the sponge iron,
steel and power segments by venturing into greenfield projects. Its sponge iron division was set up in April 2001. The
steel division started operating from February 2002.
GPIL is part of the Hira Group promoted by the Agrawal family of Raipur. Mr. O.P. Agrawal is the chairman and Mr. BL
Agrawal is the managing director.
With the expansion initiated in the last two years, it now has the capacity of sponge iron: 4.95 lakh TPA; steel billets: 4
lakh TPA; steel wires: 1.20 lakh TPA; ferro alloys: 16,500 TPA; power generation: 53 MW; and oxygen gas: 1.1 million cum
a year. The major capacity enhancement took place only in Q2FY08.
Wire rods, an intermediate product, between billets and HB wires are manufactured in the company's two subsidiaries;
RR Ispat and Hira Steel respectively. GPIL has 100% stake and 23.3% respectively in these companies. RR Ispat has a
capacity to produce 1 lakh tonnes of wire rod and 30,000 tonnes of HB wires. Hira Steel has capacity to produce I lakh
tonnes of wire rod and 50,000 tonnes of HB wire.
The company has set up as 53 MW captive power plant of which 11 MW is coal-based and the balance 42 MW is from the
waste heat recovery plant, which generates power from waste flue gases from the sponge iron plant. Power is one of the
major costs in the manufacture of steel. But with captive power plants in place, GPIL would save substantially on a yearly
basis based on Rs.2 saving per unit.
GPIL is also entitled for CER benefits on account of the 42 MW waste heat recovery power plant since it reduces the
company's dependence on coal and would allow it to use the captive coalmines for its core sponge iron manufacturing.
The plants also have the infrastructure status and can avail tax benefits till 2014-15 under Sec 80-IA.
It is setting-up a 12 lakh TPA iron ore crushing plant, a 1 lakh TPA beneficiation plant, a 6 lakh TPA pelletisation plant
with railway siding and other infrastructure development etc., at a cost of Rs.235 cr. This has been partly financed by
rupee term loan or external commercial borrowings from the banks upto Rs.140 cr. and partly financed by way of fresh
issue of equity 32,25,807 equity shares of Rs.10 each at a premium of Rs.300 per share to the QIP investors. The plant is
expected to be commissioned in FY10.
It has received forest clearance for its iron ore
mines at Ari Dongri where operations are
expected to start in H2FY09. Statutory
clearances are awaited for second iron ore mine
at Boria Tibu.
During FY08, the company was granted
prospecting licence for its third iron ore mine
with an area of 754 hectares in Chhattisgarh.
Presently, 50% of its iron ore is sourced from
NMDC and the rest from private miners.
During FY08, sales moved up by 87% to Rs.829
cr. and net profit by 81% to Rs.95 cr. Its EPS was
Rs.34 on its increased capital of Rs.28.1 cr.
During Q2FY09, sales have gone up by 86% to
Rs.332 cr. and net profit by 48% to Rs.32 cr.
During H1FY09, sales have advanced by 87% to
Rs.652 cr. whereas net profit shot up by 65% to
Rs.70 cr. H1FY09 EPS stands at Rs.25.
GPIL's equity capital has gone up to Rs.28.1 cr.
due to preferential allotment of shares to QIP at
Rs.310 per share. With reserves of Rs.356 cr., the book value of the share works out to Rs.137. GPIL has allotted 10 lakh
warrants convertible into equity shares at a price of Rs.324 per warrant to the promoters & promoters group in December
2007.
The promoters hold 56.2% in its equity capital, foreign holding is 12.4%, mutual funds/institutions hold 9.1% and PCBs
hold 6.7% leaving 15.6% with the investing public.
The coal mines and iron ore mines when commissioned would substantially increase its valuation. GPIL is likely to
achieve sales of Rs.1250 cr. in FY09 with a net profit of Rs.120 cr., which would give an EPS of Rs.42.7.
At the CMP of Rs.76, the GPIL share is available at a P/E of 1.8 on it FY09 estimated EPS of Rs.42.7. The share is
recommended with a medium-term target of Rs.100.
******
The share of Core Projects & Technologies Ltd. (CPTL) (Code: 512199) (Rs.62.50) has come off its 52-week high of Rs.464
and is available at a forward P/E of just 3.6 on its estimated EPS of Rs.11.5 for FY09.
CPTL has undergone a strategic shift from an IT service provider in various domains to a focused player in the education
sector. The company has developed significant IPR in terms of software solutions catering to various processes in the
education infrastructure domain.
CPTL is an IT product and end-to-end services solution provider catering mainly to verticals such as Education, Logistics,
Healthcare and ERP. It is a niche player within the IT education domain having products such as Core Star, Core Bright
Idea, Core Grants Manager etc. Its products in other verticals include Core RFIDS, Core Mobile-VTS, Core Hospital
Managemnt, Core Prism, Core Attorney-MS etc. Enterprise Computing Services Inc. (ECS), USA, Software Technical
Services Inc. (STS), USA, Core Projects & Technologies Ltd. FZE, UAE, Weda Infotech Pvt. Ltd, Aarman Inc. and Aarman
Software Pvt. Ltd. and EMACS Technologies Inc. are its subsidiaries.
It currently has 31 products in the education space and operates in 16 States in the USA and is also present in some parts
of UK, Africa and Nigeria. Its current offerings in logistics include RFID and GPS/GPRS based asset tracking system
(ATS). It enables automated tracking of assets or products on real-time basis.
CPTL has a long list of partners including IL&FS, IBM, NASA and IGNOU. It has planned to spin off its IGNOU alliance
into a new subsidiary, which is supposed to add $100 million in the coming two years to the topline. CPTL also
extensively works with state governments under the aegis of Sarva Shiksha Abhiyan (SSA) of the Central Government.
This partnership is supposed to add another $100 million in coming years. The IL&FS alliance would focus on the Indian
education industry and is believed to be the growth driver for its Indian operations.
CPTL has acquired seven companies in the last two years, most of which work in niche product and solution domains
with an average net income margin of around 15%. This helped CPTL move up the value chain from being a pure play IT
service provider to predominantly an education infrastructure company. The acquired companies contribute over 60% to
the topline and over 45% to the operating income.
CPTL's client list includes various state governments such as Georgia, North Carolina, Michigan, Illinois, Florida and
Maine in the US. It achieved a major breakthrough by bagging an order from the Jharkhand Government and is
aggressively looking to add various state governments of India to its client kitty. CPTL is scouting to expand its expertise
across the globe with view to tap the potential in the EU and Australia.
Recently, it tied up with IBM, for using its
platform to provide solutions in the
government and education space. It has
entered into a pact with CHL (Center of
Higher Learning), which is collaboration
between NASA and the State of Mississippi, to
develop innovative technologies that would
be used in the delivery of education in USA
and India.
12
During FY08, its consolidated net profit
increased by 153% to Rs.84.5 cr. on 129%
higher sales Rs.445.9 cr. EPS on a consolidated
basis works out to Rs.10.1.
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During Q2FY09, CPTL registered 40% higher
consolidated revenue of Rs.161 cr. and posted
32% higher net profit of Rs.29.6 cr.
For
H1FY09, sales have shot up by 59% to Rs.320
cr. and net profit by 63% to Rs.57 cr. A Rs.2.1
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restatement of Foreign Currency Liabilities & Assets. Core has no Forward contracts of Foreign currency.
The company's equity capital has gone up to Rs.17.3 cr. conversion of to conversion of (a) FCCBs into 16.75 lakh shares at
Rs.165.72 per share and (b) 16.50 lakh shares on conversion of warrants at Rs.200 per share. The book value of its share
works out to Rs.48. The promoters hold 47.7% in its equity capital, foreign holding is 11%, mutual fund holding is 1.5%
and 2.6% is with the government, PCB holding is 26.5%, which leaves 10.7% with the investing public.
CPTL is likely to register income of Rs.6500 cr. with a net profit of Rs.105 cr. yielding an EPS of Rs.12 on its enhanced
equity of Rs.17.3 cr.
At CMP of Rs.63, the stock is trading at 3.6 times its FY09 estimated EPS of Rs.12 and can be bought for steady
appreciation in the medium-to-long-term. Investment in this share is likely to fetch an appreciation of over 30% in the
medium-term. The 52-week high/low of the share has been Rs.464/34.
Paper Products Ltd. records increased sales for Q3CY08
MONEY FOLIO
The Paper Products Ltd., a leading flexible packaging company, has posted 22% higher net sales for Q3CY08 ended 30
September 2008 of Rs.177.51 cr. as against Rs.145.77 cr. in Q3CY07. The PBT was Rs.6.12 cr. in Q3CY08 as compared to
Rs.7.73 cr. in Q3CY07. Its basic & diluted EPS was Rs.0.65 in Q3CY08 as compared to Rs.1.19 in Q3CY07.
The company achieved sales of Rs.508.15 cr. during the nine months, representing a growth of 21.8% over sales of
Rs.417.32 cr. in nine months 2007. The PBT was Rs.23.62 cr. compared to Rs.22.63 cr. in nine months 2007 showing growth
of 4.4%. The basic & diluted EPS was Rs.2.79 as compared to Rs.3.06 in nine months 2007.
A forex loss of Rs.10.54 cr. for the nine months and Rs.3.18 cr. for Q3CY08 was incurred, for mark to market valuation of
forex contracts.
Aarti Industries posts robust growth in Q2FY09
Aarti Industries Ltd., a leading manufacturer of Basic Chemicals, Speciality Chemicals and Pharmaceuticals, has posted a
robust growth for Q2FY09 as its turnover jumped 117% to Rs.427.5 cr. from Rs.196.5 cr. in Q2FY09. The turnover for
H1FY09 was up by over 103% at Rs.785.4 cr. from Rs.385.7 cr. in H1FY08.
PAT for Q2FY09 zoomed by 370% to Rs.34.2 cr. from Rs.7.3 cr. in Q2FY08. PAT for H1FY09 also zoomed 439% to Rs.67.4
cr. from Rs.12.5 cr. in H1FY08. The company's EPS for H1FY09 was Rs.9.26. Considering the performance, the Board of the
company has recommended an interim dividend of Rs.1.80 per share at the rate of 36% on the face value of Rs.5 per share.
BoI Q2FY09 net up 79.5%
13
Bank of India's (BOI) business mix reached
Rs.2,93,560 cr. – robust rise of 30%. Its Net
profit shot up by 79.53% from Rs.425 cr. in
Q2FY08 to Rs.763 cr. in Q2FY09.The
Operating Profit was up by 44.64% AT
(Rs.1215 cr.) supported by growth in net
interest income as well as other income.
Net Interest margin improved of the bank
rose by 38.23% to Rs.1363 cr. in Q2FY09 from Rs.986 cr. in Q2FY08 despite challenging conditions while Net Interest
Margin improved from 3.04% to 3.20%. Non Interest Income smartly rose by 23.11% from Rs.528 cr. to Rs.650 cr.
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Gross NPA fell from 2.07% in Q2FY08 to 1.53% in Q2FY09. Net NPA dropped to 0.48% in Q2FY09 from 0.75% in Q2FY08.
Its Return on Asset (annualised) jumped from 1.15% to 1.58%, while EPS for the quarter shot up sharply from Rs.8.73 to
Rs.14.53.
Bajaj Allianz General Insurance rated 'iAAA'
Bajaj Allianz General Insurance, one of the leading private general insurance companies in India, has received a rating of
'iAAA', which is the highest rating for claims paying ability from ICRA Ltd. (an associate of Moody's investors).
For FY08, it garnered Rs.2578 cr., a growth of over 43% over FY07. It was the first private general insurance company to
cross Rs.100 cr. in PAT in FY08.
Union Bank Q2FY09 net up 31%
Union Bank of India recorded 32.3% higher operating profit of Rs.700 cr. for Q2FY09 as against Rs.529 cr. in Q2FY08. Net
Profit has increased by 31.16% to Rs.362 cr. from Rs.276 cr. in Q2FY08.
Net Interest Margin (NIM) increased to 3.01% as against 2.49% in Q2FY08 despite a scenario of rising cost of rising
resources.
Capital Adequacy Ratio (CAR) under BASEL I shored up to 12.53% in Q2FY09 from 11.55% in Q2FY08 whereas CAR
under BASEL II is at 11.77% in Q2FY09.
Net Worth of the bank rose smartly to Rs.6203 cr. in Q2FY09 from Rs.5231 cr. in Q2FY08 and Return on Average assets
improved from 1.05% in Q2FY08 to 1.12% in Q2FY09 indicating more efficient utilisation of assets.
Dena Bank Q2FY09 improves
Dena Bank recorded 11.59% higher Net Profit of Rs.102.83 cr. for Q2FY09 although the Operating Profit was lower by
7.18% at Rs.149.22 cr. Its Business Mix improved by 21.11% to Rs.60,268 cr.
Return on Assets (annualized) was 1.03% while EPS was Rs.3.59 (not annualized).
Net Interest Income grew by 22.99% to Rs.206.73 but Net Interest Margin was lower at 2.88% against 2.95% in Q2FY08.
Its Capital Adequacy Ratio (CAR) improved to 12.34% from 11.47% in Q2FY08 despite increase in total risk weighted
assets.
For H1FY09, net profit was up 15.84% at Rs.171.13 cr. Return on Assets (annualized) was at 0.86% and the H1FY09 EPS
was Rs.5.97.
BoB Q2FY09 net up by 21%
Bank of Baroda (BoB) recorded 20.81% higher Net Profit for Q2FY09 at Rs.395.29 cr. on 20.79% higher income of Rs.4026.9
cr.
For H1FY09, Net Profit was up by 16.43% at Rs.766.14 cr. on 23.19% higher income at Rs.7833.26 cr.
Its total Business Mix was up by 26.6% at Rs.2,80,544 cr. while net NPAs were down to 0.43% and the Capital Adequacy
Ratio (CAR) stood at 12.86%.
The Return on Assets (Annualised) was 0.84% for Q2FY09 while Return on Equity stood at 14.87% (annualized) for
H1FY09 and the EPS was Rs.42.06 (annualized).
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