Fw: Investor's Eye: Pulse - Inflation at 9.78%; Update - Tata Chemicals; Viewpoint - Bajaj Electricals

 

 

Investor's Eye [September 14, 2011]  Sharekhan www.sharekhan.com

Summary of Content PULSE TRACK Inflation increases to 9.78% STOCK UPDATE Tata Chemicals    Cluster: Vulture's Pick Recommendation: Buy Price target: Rs400 Current market price: Rs329 Annual report review Key points FY2011 profitability affected by higher raw material prices: Tata Chemicals Ltd (TCL) posted a dreary financial performance in FY2011 with adjusted net profit declining by ~8% year on year (YoY) during the year. The sales for FY2011 grew by 15.9% to Rs11,060.2 crore on the back of an increase in the realisation of soda ash and sodium bicarbonate in India and Africa and a rise in the trading volume of traded fertiliser (DAP and MOP). During FY2011 the operating profit margin (OPM) declined to 16.8% from 19.3% in FY2010 because of an increase in the raw material and energy costs.  Debt-to-equity ratio maintained: The company has maintained its debt:equity ratio at 1.0, despite around Rs700-crore increase in the total debt during the fiscal 2011. The company's net debt as on March 31, 2011 stood at Rs3,906.8 crore as compared to Rs3,276.4 crore (an increase of Rs630 crore) as on March 31, 2010.  Operating cash flow declined: The net operating cash flow during FY2011 stood at Rs427 crore as compared to Rs843 crore in FY2010. The operating cash flow declined mainly due to an increase in debtors as well as inventories during the year. The inventory increased mainly due to a shutdown at the Haldia plant and an increase in the work in progress. The increase in debtors was in line with the sales. The operating cash flow as a percentage of EBIDTA declined to 15.9% from 34.7% during FY2011, which reflects TCL's inability to manage its working capital. Decline in return ratios: The company's return ratios decreased from the levels of FY2010 and remained southward during FY2011. The return on equity (RoE) stood at 12.0% while the return on capital employed (RoCE) stood at 13.3% during the year. Dividend pay-out increases to 37%: The dividend pay-out ratio for the company improved from 29.1% in FY2010 to 36.9% during FY2011. Going forward, TCL's revenue would grow at a compounded annual growth rate (CAGR) of 13% and adjusted profit after tax (PAT) will grow at a 20% CAGR. With its liberal dividend pay-out policy we expect TCL to maintain a 31% dividend pay-out over the next two years.  Outlook and valuation: Despite the input cost pressure and lower trading volumes in the fertiliser segment, TCL is expected to show a strong performance on the back of a relatively healthy demand for soda ash, fertilisers and other agri inputs. Consequently, we maintain our Buy recommendation on the stock with a price target of Rs400. We value TCL at 9x FY2013E earnings per share (EPS) and investment value of Rs41 per share. At the current market price the stock is trading at 9.9x and 8.7x its FY2012E and FY2013E respective earnings. VIEWPOINT Bajaj Electricals    Near term concerns persist in E&P; consumption story on track  We recently met the management of Bajaj Electricals Ltd (BEL), one of India's leading lighting and consumer appliances companies. BEL has six strategic business units -engineering and projects, appliances, fans, luminaries, lighting and Morphy Richards. The company has an extensive supply and distribution network of about 1,000 distributors, 4,000 authorised dealers, over 4 lakh retail outlets and over 282 customer care centers.  The management has denied any slowdown in its consumer durables segment's growth momentum. It also added that it would probably take a severe recession for the Indian consumption story to get dented. The margins are looking sustainable at the level of 8% in FY2012 if metal prices stabilise at the current levels. We feel that the company's E&P segment could throw some negative surprise in the coming quarters but the order inflow would be the key to long term growth. However, factoring in these concerns, the stock has fallen sharply in the last two months. Available at 8.3x FY2012 consensus estimates, the stock looks marginally cheaper than its peers like Havells and V-guard.  Click here to read report: Investor's Eye

Regards, The Sharekhan Research Team myaccount@sharekhan.com   www.sharekhan.com to manage your newsletter subscriptions

 

Fw: Investor's Eye: Update - Sintex Industries; Viewpoint - Ashoka Buildcon

 

 

Investor's Eye [September 13, 2011]  Sharekhan www.sharekhan.com

Summary of Content STOCK UPDATE Sintex Industries    Cluster: Apple Green Recommendation: Buy Price target: Rs233 Current market price: Rs145 Annual report review Key points Strong all round performance; monolithic lifted the revenue growth: On a consolidated basis, Sintex Industries (Sintex) reported a robust all round performance for FY2011 with revenue and earnings growth for the year at 35.1% and 40% respectively. The monolithic segment (a part of the building material business) continued to grow at a very brisk pace clocking an 86% year-on-year (Y-o-Y) growth. It contributed approximately 30% to the consolidated revenue for the year. The other segments (barring Zeppelin) posted a decent show as well with the custom mouldings segment growing at 26.3% year on year (YoY) and the textiles segment growing at 25.9% YoY. Margin improvement across segments resulted in blended margin improvement: Led by revenue upliftment coupled with margin expansion across the segments, the EBITDA for FY2011 grew at 38.5% on a Y-o-Y basis and the blended EBITDA margin expanded by 50bps from 18.9% in FY2010 to 19.3% in FY2011. Zero coupon FCCBs keep the consolidated debt at elevated levels: On a consolidated basis, with Rs2,774 crore of debt on the books, the overall debt equity ratio looks elevated at 1.15x and has been hovering in the band of 1.1-1.35x over the last five years from the time the zero coupon convertible bonds were issued. Adjusting for the foreign currency convertible bonds (FCCBs; which are kept in an escrow account), the leverage position is manageable at 0.64x.  Working capital efficiency reflected in the free cash position: The working capital cycle improved considerably from 155 days in FY2010 to 103 days in FY2011, largely due to a strong execution coming from the monolithic business and a reduction in the debtors days (from 58 days to 45 days) coupled with reduction in loans and advances (down from 46 days to 42 days). Driven by efficiency coming from the working capital front, the free cash for the year came marginally positive at Rs49 crore. Return ratios improved: The strong growth in the earnings (40% YoY) and an improved working capital mix got translated into improved return metrics. The return on capital employed (RoCE) and return on equity (RoE) for the year stood at 13.1% and 19.2% respectively. We remain bullish: Looking at Q1FY2012 results, wherein the first quarter is seasonally a lean period, the monolithic business of Sintex continued to post a robust show on both, the execution and order inflow fronts. For the quarter, the incremental order inflow stood at about Rs375 crore with the total order book at Rs3,200 crore (2.3x its FY2011 monolithic revenue). This trend of execution, the new order momentum as well as the margin profile continue to provide us comfort on the revenue and profitability of the company. Further, the composite business is also on a strong footing, with new synergistic benefits taking shape in the form of margin expansion and new client additions. Post Q1FY2012 results and an encouraging management commentary, we maintain our estimates, rating and price target for the stock. We have a Buy rating on the stock with a price target of Rs233. At our price target the stock trades at 10.5x its FY2013E fully diluted earnings per share (EPS) of Rs22.2. VIEWPOINT Ashoka Buildcon    An experienced road BOT player  Ashoka Buildcon Ltd (ABL) is one of the few players to have experienced the full life cycle of a road BOT project. Further, it has witnessed an impressive growth rate both in terms of revenue and net profit over the past few years. Its revenue and PAT grew at a compounded annual growth rate (CAGR) of 59% and 45% respectively over FY2008-11. With 18 projects already operational and two more to get operational in this fiscal, there is good revenue visibility in terms of toll revenue. Moreover, its strong order book position provides strong revenue visibility for its EPC segment in the coming years. ABL being one of the major toll players is set to benefit from the tremendous opportunity available in the road sector. Based on our rough estimates, we expect its revenue and PAT to grow at a CAGR of 34% and 40% respectively. However, at the current market price it looks almost fairly valued as it trades at 1.3x and 1.1x its FY2012 and FY2013 book value respectively and 9x and 7x its FY2012 and FY2013 earnings respectively. Click here to read report: Investor's Eye

Regards, The Sharekhan Research Team myaccount@sharekhan.com   www.sharekhan.com to manage your newsletter subscriptions

 

**[investwise]** Preparing For A Credit Crisis (110911)

 

"Prodi and the other leaders who forged the euro knew what they were doing. They knew a crisis would develop, as Milton Friedman and many others had predicted. They accepted that as the price of European unity. But now the payment is coming due, and it is far larger than they probably thought. This week we turn our eyes first to Europe and then the US, and ask about the possibility of a yet another credit crisis along the lines of late 2008...

http://www.stock-investing-software.com/commentary/articles.html?next=17117

Ian

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Fw: Religare Finvest NCD - Opening on 9 Sep 2011

 

 

COMPANY PROFILE: Religare Finvest Ltd (RFL) was incorporated as a private limited company called Skylark Securities Private Limited on January 6, 1995. Subsequently its name was changed to "Religare Finvest Limited" vide a fresh certificate of incorporation dated April 4, 2006. RFL is a systemically important non-deposit accepting non-banking finance company (NBFC), focusing on small and medium enterprises (SME) financing and retail capital market financing. ISSUE SALIENT FEATURES : Interest rate range from 12.00% to 12.50% depending on the series applied for (Option I & Option II) Higher interest rates for individuals applying up to Rs. 500,000 Credit Ratings of "ICRA AA- (Stable)" and "CARE AA-" Non-convertible debentures (NCDs) are allotted on a first-come-first-serve basis NCDs are allotted on demat mode only NCDs have two series of options: 60 months and 36 months ISSUE INVESTMENT OPTIONS Options | || Minimum Application Rs10,000 (10 NCDs; for all options of NCDs, namely Options I and II either taken individually or collectively). Face Value/Issue Price Rs. 1,000 (1 NCD) In Multiples Of Rs. 1,000 (1 NCD) Interest Rate (%) per annum 1) For NCD holders in Category I 12.10% 12.00% 2) For NCD holders in the Non-Institutional Portion (Category II) 12.25% 12.15% 3) For NCD holders in the Reserved Individual Portion (Category III) 12.50% 12.25% Yield on Maturity (%) (per annum) 1) For NCD holders in Category I 12.10% 12.00% 2) For NCD holders in the Non-Institutional Portion (Category II) 12.25% 12.15% 3) For NCD holders in the Reserved Individual Portion (Category III) 12.50% 12.25% Listing BSE BSE Frequency of Interest Payment Annual Annual Redemption Amount (Rs/NCD) Repayment of the face value plus any interest that may have accrued on the redemption date. Repayment of the face value plus any interest that may have accrued on the redemption date. Tenor 60 months 36 months An Applicant is allowed to make one or more applications for the NCDs for the same or the other series of NCDs, subject to a minimum application size of Rs10,000 and in multiples of Rs1,000 thereafter, for each application. For the purposes of allotment of NCDs under the Issue, applications shall be grouped based on the PAN; applications under the same PAN shall be grouped together and treated as one application. Two or more applications will be deemed to be multiple applications if the sole or first applicant is one and the same. For the sake of clarity, two or more applications shall be deemed to be a multiple application for the aforesaid purpose if the PAN number of the sole or the first applicant is one and the same. Applicant Category I Public financial institutions, statutory corporations, commercial banks, co-operative banks and regional rural banks, which are authorised to invest in the NCDs; Provident funds, pension funds, superannuation funds and gratuity fund, which are authorised to invest in the NCDs; Venture Capital funds registered with SEBI; Insurance Companies registered with the IRDA; National Investment Fund; Mutual Fund; Applicant Category II Companies; bodies corporate and societies registered under the applicable laws in India and authorised to invest in the NCDs; Public/private charitable/religious trusts which are authorized to invest in the NCDs; Scientific and/or industrial research organizations, which are authorized to invest in the NCDs; Limited liability partnerships formed and registered under the provisions of the Limited Liability Partnership Act, 2008 Resident Indian individuals who apply for NCDs aggregating to a value more than Rs.5 Lac, across all series of NCDs, (Option I and/or Option II); Hindu Undivided Families through the Karta who apply for NCDs aggregating to a value more than Rs.5 Lac, across all series of NCDs, (Option I and/or Option II); and Non Resident Individuals (NRIs - Non repatriation basis only) who apply for NCDs aggregating to a value more than Rs.5 Lac, across all series of NCDs, (Option I and/or Option II) Applicant Category III The following persons/entities Resident Indian individuals who apply for NCDs aggregating to a value not more than Rs.5 Lac, across all series of NCDs, (Option I and/or Option II) Hindu Undivided Families through the Karta who apply for NCDs aggregating to a value not more than Rs.5 Lac, across all series of NCDs, (Option I and/or Option II); Non Resident Individuals (NRIs - Non repatriation basis only) who apply for NCDs aggregating to a value not more than Rs.5 Lac, across all series of NCDs, (Option I and/or Option II).

Sharekhan Ltd: BSE Cash-INB/ INF 011073351; NSE - INB/INF231073330; DP: NSDL-IN-DP-NSDL-233-2003; CDSL-IN-DP-CDSL-271-2004; PMS INP000000662. Sharekhan Commodities Pvt. Ltd.: MCX-10080; NCDEX-00132; Regd/Admin Add:- Lodha iThink Techno Campus, 10th Floor, Beta Building, Off. JVLR, Opp. Kanjurmarg Station, Kanjurmarg (East), Mumbai 400 042, Maharashtra. for any complaints email at igc@sharekhan.com. Sharekhan Disclaimer: Sharekhan Limited is engaged as a distributor for distribution of Shriram Transport Finance Company Non-Convertible Debentures. Sharekhan or any of its group concerns do not in any manner recommends any product or any of its characteristics. The client is advised to take his / her own independent decisions for investing in any financial product after understanding their respective nature and risk and returns involved. The client may also approach his / her own consultants for investing in financial products or in relation to the tax related aspects. We do not solicit any action based upon this promotional material. Please note that the product does not take into account any particular investment objectives, financial decisions or needs of individual recipients. Neither Sharekhan nor any person connected with Sharekhan accepts any liability arising out of investment suggested in the material above.

Fw: Investor's Eye: Viewpoint - Liberty Phosphate; Update - Transmission and distribution

 

 

Investor's Eye [September 07, 2011]  Sharekhan www.sharekhan.com

Summary of Content VIEWPOINT Liberty Phosphate    Key beneficiary of NBS scheme Key points Leading producers of SSP: Liberty Phosphate was incorporated in 1976 to produce essential nutrients like sulphur for crops. It has around 18% share of the domestic SSP market. In India the total consumption of SSP has grown at a compounded annual growth rate (CAGR) of 8% over FY2008-11. Being the industry leader Liberty Phosphate has better capacity utilisation as compared to some of its peers. It has grown its revenues at a strong CAGR of 56% over FY2008-11. This along with a significant improvement in its operating profit margin (OPM) helped its bottom to grow at a CAGR of 179% over the same period NBS scheme a complete game changer for SSP: The SSP industry was almost dead due to the unfair policy adopted by the Government of India of subsidising SSP and favouring the manufacturers of DAP and complex fertilisers. But the introduction of the nutrient-based subsidy (NBS) scheme and the declaration of sulphur as an important crop nutrient, in line with nitrogen, phosphorus and potassium (NPK), revived the SSP industry. The Government of India included sulphur in the NBS policy from April 1, 2010. thereby providing a level playing field to the manufacturers of SSP with regard to the DAP and complex fertiliser makers. According to the NBS policy, the subsidy for all major nutrient, NPKS, are fixed by the government while the maximum retail price (MRP) of a product is flexible and is fixed by companies according to the cost of production in order to maintain the margin. Organic and inorganic growth initiatives to drive growth: Liberty Phosphate is planning to increase its capacity through de-bottlenecking at different plant locations. It has increased its capacity by 99,000 tonne through de-bottlenecking which has increased its installed capacity to 5.62 lakh tonne. The company is further planning to set up a plant at Dahej to produce 1 lakh tonne of triple super phosphate and 1 lakh tonne of complex fertiliser. There are substantial inorganic growth opportunities as many of the SSP units have closed and are available for sale. A cash balance of around Rs20 crore on books and a favourable debt-equity ratio will help the company cash in on these opportunities in the coming years. Liberty Phosphate can grow inorganically capitalising on its brand and marketing network. Easy accessibility to raw materials: One of the key advantages enjoyed by Liberty Phosphate is the easy availability of raw materials from local suppliers, eg rock phosphate from Rajasthan Mines and sulphuric acid from Hindustan Zinc. Rock phosphate and sulphuric acid are the basic raw materials required for the production of SSP. Liberty Phosphate is having a long-term contract with the local suppliers of these raw materials.  Outlook and valuation: Liberty Phosphate is one of the largest manufacturers of SSP and can grow by capitalising on its brand name and distribution network. Given the aggressive expansion of its manufacturing capacities Liberty Phosphate can potentially grow at a CAGR of around 22% over the next two years. In terms of valuations, the stock trades at around 1.6 x FY2013 rough estimate; this makes it one of the cheapest stocks in the complex fertiliser space. However, in view of the stock's extremely low both market cap and volumes at the counter, we do not have it under our active coverage.  SECTOR UPDATE Transmission and distribution  Power Grid's low order awarding activity disappoints  Key points Power Grid Corporation of India Ltd (PGCIL)'s order awarding activity has been very poor so far in FY2012 and signals a muted order inflow scenario for the transmission and distribution (T&D) companies in H1FY2012, unless the order inflow picks up in September of 2011. In July this year, no orders were awarded as per the company's website. Most of the T&D players draw a sizeable chunk of their orders (ranging from 5% to 50% of their order book) from PGCIL and have been experiencing a dry order inflow spell since March 2011. Though traditionally the first half of a financial year is sluggish compared to the second half, when the order awarding activity picks up, but we can see a substantial fall on a yearly basis too.  In one of our earlier reports on the sector (dated March 30, 2011) we had said that the order inflow would gain momentum moving forward as PGCIL was expected to invest about Rs17,700 crore during FY2012, the last year of the 11th Five-Year Plan. PGCIL is also expected to double its investment to Rs120,000 crore in the 12th Five-Year Plan from Rs55,000 crore in the 11th Five-Year Plan. However, prima facie it appears that so far this has remained only an opportunity and not taken any concrete shape. This also means that while the order inflow for most companies would remain sedate in at least the first half, more companies would be chasing fewer orders. This would further pressurize the margins, which are already reeling under the pressure of higher input cost and interest rates.  Hence, we remain cautious on the T&D sector where the order inflow has become very critical for achieving earnings growth in the coming quarters. Companies most affected by this slowing momentum of order inflow are Crompton Greaves, ABB, Siemens and Areva T&D. Bharat Heavy Electricals Ltd (BHEL), which has recently forayed into the T&D space by winning the largest T&D order in India, would also be affected to some extent. However, most of these companies are already trading at (or below) five-year average multiple and could see a rally once the order inflow activity and industry capital expenditure cycle pick up.   Click here to read report: Investor's Eye

Regards, The Sharekhan Research Team myaccount@sharekhan.com   www.sharekhan.com to manage your newsletter subscriptions

 

Fw: Maha Life Gold

 

IEP INSURANCE BROKING SERVICES PVT. LTD.

4F, 4th Floor, Kences Towers, Ramakrishna Street, North Usman Road, T.Nagar, Chennai 600017.

 

Dear Investor,
Greetings from IEP Insurance.

We have great pleasure in introducing  " Maha Life Gold " from Tata AIG Life Insurance – a whole life insurance plan, which is an Ideal Gift to your beloved child.

Benefits :

• Child Life will be covered up to the age of 100, by paying premium for 15 years only.
• Guaranteed Annual Cash Payout @ 5% p.a from 10^th year onwards till 100^th Birthday.
• Non Guaranteed Annual Cash Dividend from 6^th year onwards till 100^th birthday. ( Payout Declared for FY 2010-11 is 2.62%)
• In the event of unfortunate death of the parent during the premium payment term, all the future premium will be waived and the child will receive the Annual Payout every year up to his/her 100^th birth day.
• Tax Benefit U/S 80c & 10(10D) of IT Act 1964.

Individuals aged between 30 days to 60 years can join this plan.

Illustration :

Parent aged 40 takes the policy for his 5 year old child with a Life cover of Rs.10 Lac. The Annual Premium payable is Rs.92,695/- & the Child Life will be covered up to his / her 100^th birth day for Rs.10 Lac.

• From 6^th year onwards the child will start receiving the Non Guaranteed Annual Cash Dividend approximately Rs.40,000/-* 
• From 10^th year onwards the child will start receiving approximately Rs.90,000 ( Guaranteed Rs.50,000 + Non Guaranteed Rs.40,000*)
• The child will receive both the payouts till his/her 100^th birthday (which is totally a Tax Free Income)

In the unfortunate event of parent's death, say after paying premium for five years, all the future premiums  ( 10 X 92,695 = 9,26,950 ) will be waived off & the child will continue to get approximately  Rs.90,000 as Annual Cash Payout till his/her 100^th Birth Day.

*  Annual Cash Dividend is Non Guaranteed & for illustration purposes assumed the same @ 4% p.a.

For more details please contact us. 

    

Regards,

IEP Insurance Broking Services Pvt Ltd., 

 

Fw: Equity Mutual Funds - The best vehicle for wealth creation in the long term

 

Equity Mutual Funds - Best vehicle for wealth creation in the long term
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Oflate, Equity has become inevitable part of any investment portfolio. In a rising inflationary trend, investors need to invest at least some portion of their savings in equities. Investing in equities directly requires reasonable knowledge, effort, time & enough money. This may not be possible for many retail investors with limited resources.

This leaves, Equity Mutual Funds as the only option for long term wealth creation. Investing systematically (SIP) brings down the risk further as you invest in a rising market and also in a falling market like today.

 

FYI, we are providing you with the details of some of the top performing Diversified Equity Funds.

 

Fund Name	Return for Lumpsum Investment			Return for SIP			Value Research Rating
	3 yrs	5 yrs	Since Inception	3 yrs	5 yrs	Since Inception
Canara Robeco Equity Diversified	15.42	14.54	22.94	17.46	12.86	16.44	*****
DSPBR Equity	12.33	15.37	22.99	14.27	-	10.78	****
Franklin India Prima Plus	10.74	12.64	19.51	13.14	9.56	21.67	****
HDFC Equity	15.59	14.02	21.17	17.40	12.90	23.79	*****
ICICI Pru Dynamic	10.03	12.36	29.05	13.02	9.76	20.35	****
Mirae Asset India Opportunities	16.51	-	12.46	18.66	-	17.38	*****
Reliance Equity Opportunities Fund	18.26	13.03	20.47	22.11	13.96	15.17	*****
UTI Opportunities Fund	17.51	14.36	16.94	18.02	13.94	13.77	*****
1.  Return as a % as on 29.08.2011 2.  Returns for more than one year are annualized 3.  Details Pertains to Growth Option

 

 

For more informations and application forms, kindly contact your nearest branch of Integrated.

 

For list of branches, please visit http://www.iepindia.com/contact.aspx

 

Risk Factors : Mutual Fund investments are subject to market risk. Please read scheme information document carefully before investing.

 

 

Regards,

Integrated Enterprises (India) Ltd.,