REL- Good but Chances are slim!!!
Issue Date :Oct 29- Nov 1
Issue Price :160 Rs - 185 Rs
Min. Order Quantity :35 Shares
Grade :Good
Recommendation :Subscribe
Company Info
Religare Enterprises, a financial services company, is entering the capital markets with its initial public offering (IPO) of 7,576102 equity shares of Rs 10 each for cash, at a price to be decided through a 100% book building process. The issue will open on October 29, 2007 and will close on November 1, 2007. The price band has been fixed between Rs 160 to Rs 185 per equity share.
The company is promoted by the promoters of Ranbaxy Laboratories and the issue has been graded by ICRA and assigned the IPO Grade 3 on a five point scale. The equity shares of the company, offered through this IPO, are proposed to be listed on NSE and BSE.
Comments
I don’t think Rs 185 makes it too expensive; they should go on to do Rs 10 earning next year, something close to that, sub-Rs 20 PE multiple this year’s earnings, I think it will fly. It will be hugely oversubscribed and I don’t think people will get too much subscription but this one is an easy one. It has come in at good price point and I think it is fairly compelling story to sell
Premium on Listing : 100%
Chances are slim as it highly over subscribed!!! (better apply for Mundra Port IPO ....for better allocations)
October 31, 2007
BARAK VALLEY CEMENTS LIMITED - IPO prospects
BVCL- Avoid & Look out for better options!!!
Issue Date :Oct 29- Nov 1
Issue Price :37 Rs - 42 Rs
Min. Order Quantity :150 Shares
Grade :Average
Recommendation :Skip
Company Info
Barak Valley Cements is entering the capital market on 29th October, 07 with a public issue of 56.60 lakh equity shares of Rs.10 each in the band of Rs.37 to Rs.42 per share. At the upper band of Rs.42, issue size would be close to Rs.24 crores
The company, presently has cement manufacturing capacity of 760 TPD, of which 460 TPD is manufactured by the company and 300 TPD by its wholly owned subsidiary, Cement International Ltd. Inspite of having such a low level of activity, the company has three wholly owned subsidiaries viz. Badarpur Energy, setting up a 6 MW bio mass based power plant, Cement International is making 300 TPD of cement and Meghalaya Minerals & Mines supplying limestone for cement making.
Valuation
EPS may hover below Rs.10, as paid-up equity is also increasing by about 25%. Presently, many larger cement companies are ruling at a PE multiple of 5 to 6, and this issue, at upper band at Rs.42 is made at a PER of close to 5. Also, low capacity and high equity base would always be a dampner for the share price to rise.
Keeping these issues in mind, BVCL is fairly priced for this mediocre cement company which is posting profits largely due to various exemptions and benefits. Go for secondary market plays, if you are too keen to hold a mini cement or a small size cement company.
Premium on Listing : Will touch 100 in 5-6 months (based on the rally in Cement sector)
Issue Date :Oct 29- Nov 1
Issue Price :37 Rs - 42 Rs
Min. Order Quantity :150 Shares
Grade :Average
Recommendation :Skip
Company Info
Barak Valley Cements is entering the capital market on 29th October, 07 with a public issue of 56.60 lakh equity shares of Rs.10 each in the band of Rs.37 to Rs.42 per share. At the upper band of Rs.42, issue size would be close to Rs.24 crores
The company, presently has cement manufacturing capacity of 760 TPD, of which 460 TPD is manufactured by the company and 300 TPD by its wholly owned subsidiary, Cement International Ltd. Inspite of having such a low level of activity, the company has three wholly owned subsidiaries viz. Badarpur Energy, setting up a 6 MW bio mass based power plant, Cement International is making 300 TPD of cement and Meghalaya Minerals & Mines supplying limestone for cement making.
Valuation
EPS may hover below Rs.10, as paid-up equity is also increasing by about 25%. Presently, many larger cement companies are ruling at a PE multiple of 5 to 6, and this issue, at upper band at Rs.42 is made at a PER of close to 5. Also, low capacity and high equity base would always be a dampner for the share price to rise.
Keeping these issues in mind, BVCL is fairly priced for this mediocre cement company which is posting profits largely due to various exemptions and benefits. Go for secondary market plays, if you are too keen to hold a mini cement or a small size cement company.
Premium on Listing : Will touch 100 in 5-6 months (based on the rally in Cement sector)
October 25, 2007
SVPCL LTD - IPO prospects
SVPCL- Avoid !!!
Issue Date :Oct 22- Oct 26
Issue Price :40 Rs - 45 Rs
Min. Order Quantity :125 Shares
Grade :Average
Recommendation :Skip
Company Info
SVPCL, a leading paper products manufacturer in South India, proposed to enter markets with a public issue of Rs 34.50 crore through a 100 per cent book-building process. The issue opens on October 22 and closes on October 26. The price band is fixed at Rs 40-45 per equity share of Rs 10 each.
The company plans to use the net proceeds from the issue to expand its existing manufacturing facilities in Hyderabad, Vijayawada and Visakhapatnam, to set up marketing infrastructure in 10 identified locations in the country, to enhance its long-term working capital requirements and to meet expenses of the issue.
Other than the IPO, the company will raise its finance required by internal accruals. Out of the Rs 34.50-crore public issue, 50 per cent is allotted to Qualified Institutional Buyers, 15 per cent to non-institutional investors and the remaining 35 per cent to retail.
Valuation
SL is offering it’s shares at a price band of Rs.40 - Rs.45 at a P/E multiple of 13 & 15 respectively. The issue looks to be fully priced with not much room left for new investors. Last year, another company (from the same industry) i.e. Blue Bird India Limited, had come out with an issue of the same P/E as that of SL & is currently trading at a P/E of 7 with turnover being more than that of SL.
Currently, the capacity that SL has is under-utilized & SL is still looking for expansion & that too in the same region (viz. south India). There are other companies (peer group) which have better turnover than SL & valuations of which are more attractive than SL. Hence, we give an “Ignore" rating to the issue.
Premium on listing - Rs 2- Rs 5
Issue Date :Oct 22- Oct 26
Issue Price :40 Rs - 45 Rs
Min. Order Quantity :125 Shares
Grade :Average
Recommendation :Skip
Company Info
SVPCL, a leading paper products manufacturer in South India, proposed to enter markets with a public issue of Rs 34.50 crore through a 100 per cent book-building process. The issue opens on October 22 and closes on October 26. The price band is fixed at Rs 40-45 per equity share of Rs 10 each.
The company plans to use the net proceeds from the issue to expand its existing manufacturing facilities in Hyderabad, Vijayawada and Visakhapatnam, to set up marketing infrastructure in 10 identified locations in the country, to enhance its long-term working capital requirements and to meet expenses of the issue.
Other than the IPO, the company will raise its finance required by internal accruals. Out of the Rs 34.50-crore public issue, 50 per cent is allotted to Qualified Institutional Buyers, 15 per cent to non-institutional investors and the remaining 35 per cent to retail.
Valuation
SL is offering it’s shares at a price band of Rs.40 - Rs.45 at a P/E multiple of 13 & 15 respectively. The issue looks to be fully priced with not much room left for new investors. Last year, another company (from the same industry) i.e. Blue Bird India Limited, had come out with an issue of the same P/E as that of SL & is currently trading at a P/E of 7 with turnover being more than that of SL.
Currently, the capacity that SL has is under-utilized & SL is still looking for expansion & that too in the same region (viz. south India). There are other companies (peer group) which have better turnover than SL & valuations of which are more attractive than SL. Hence, we give an “Ignore" rating to the issue.
Premium on listing - Rs 2- Rs 5
October 22, 2007
BUY Tata Power @ cmp
Face value is Rs 10 and CMP is Rs. 976.65 - Here are some factors which forces us to recommend this stock
The management of Tata Power in a presentation in September 2007 stated that they expect power generation capacity to grow five times in the next five years. The company is already implementing a project with a capacity of 5,763MW and another project of 4,700 MW is also planned. Therefore we expect 10,313MW to be installed by FY13 against our earlier estimate of 9,413MW.
Thanks to its integration across the chain. In addition to its acquisition of a strategic stake in Indonesian coal mines, the Ministry of Coal has allocated coal mines in India to this company. Given the higher visibility of its implementation of power projects and backward integration in coal production, the company seems to be in a better place at the current level.
The management clearly indicated in its presentation that they may raise funds if required. According to their presentation, they need $1.4 billion for all their expansions by FY12 and they will get $600 million through internal accruals and $310 million by preferential allotment to Tata Sons. The remaining may be raised through debt. At least for the next 12 months, the fund raising is not required.
On the valuation front, at the CMP of Rs 1090, the scrip is trading at 30x of its FY07 earning. In the long run, with increased capacity and integrated across the chain, the topline and bottomline are expected to improve. Hence, we recommend investors to buy the scrip at the current level
10 Good stocks to BUY
10 GOOD stocks worth buying
In the long run, stockmarkets reflect the real economy. In the short run, they seem to have a life of their own. The factory worker who buys Tiger biscuits for his school-going daughter, or the call-centre employee who uses his first salary to make a deposit on his motorcycle, are not informed by the Nifty. But their purchase decisions determine the health of fast-moving consumer goods companies and packaging suppliers, of trucking companies and gear manufacturers.
The sentiment in the stockmarket is driven not just by the sentiment in the economy but also various other factors. These factors are now increasingly globally controlled, rather than locally. So while markets flew over the last few years on increased buying by foreign investors, this same phenomenon is lending it increased volatility now.
Such downturns in the market can deepen or correct, they can last a week or a year. But they do throw up opportunities to buy good stocks cheap. Our own take is that this correction may be deep, but will not last long. An economy growing at nine per cent annually is going to find willing investors on an on-going basis.
Outlook Money crunched the numbers of companies in the 'A' and 'B1' lists of the Bombay Stock Exchange (a total of 925 companies). We looked for companies that exhibited consistent profit growth over the last four years. As a next step, we sifted down to companies that showed a net profit growth of at least 25 per cent, year-on-year (y-o-y), in results reported for Q3, FY07. Then, based on BSE closing prices on 7 March 2007, we zeroed in on companies that were available for less than 25 times earnings.
Such companies offer a price earning to growth of one or less, reasonable by any norm. Despite our exacting standards, we ended up with 112 companies - an indication of how much entrepreneurial activity is going on in India, as well as of the upside when markets recover. From this list, we culled out 10 companies, across five sectors, which show consistent growth, steady or improving profit margins, and low discounting. Take your pick!
Information technology
1. Geodesic Information Systems
It is a software solutions company formed in 1999. Geodesic concentrates on software in the communications space. Its product 'Mundu Messenger' is a universal instant messaging service that facilitates collaboration across a host of Internet platforms, such as AIM, Google Talk, ICQ, MSN and Yahoo.
The company, which also offers software development in verticals such as publishing, banking, retail and healthcare, has attracted substantial overseas investment and now 51 per cent of its equity is held by foreign institutional investors.
2. NIIT Technologies
It is the software solutions business, which was formed when the old NIIT split into two. Over the last year, it has demonstrated its willingness to make acquisitions to complement its organic growth; as a result, it is able to offer a mix of near-shore and off-shore IT solutions from operations in North America, Europe, Asia Pacific and Australia. The company has alliances with global IT majors, including Computer Associates, IBM, Microsoft, Oracle and SAP.
3. Zenith Infotech
Focuses on banking solutions and infrastructure management. As a product and solutions company, it has a high (and growing) profit margin - for the last quarter, the operating profit was 56 per cent of the turnover. The company's banking solutions business now has over 100 customers, with its Banc724 software product either implemented or being implemented in over 3,500 branches.
This large installed base helps steady the revenue stream, thanks to the demand for maintenance services. The SAAZ infrastructure management product has more than 140 customers.
Banking and financial services (BFSI)
4. Mahindra & Mahindra Financial Services (MMFSL) A subsidiary of the leading tractor and utility vehicles company, it began as a vehicle-financing arm of the parent. As the company expanded into semi-rural and rural areas, it became apparent that there was a latent demand for a whole host of financial services that were not being met in these areas.
Accordingly, MMFSL now distributes mutual funds, and offers financial advisory services through its network of branches, which numbered 398 as on 31 December 2006. In its core area of vehicle finance, the company has extended business to finance for used commercial vehicles.
Infrastructure
5. Kalpataru Power Transmission
One of the leading companies in the field of turnkey projects for EHV transmission lines up to 800 KV in India and abroad. It has emerged as a leading player in erecting high voltage transmission towers and lines.
Aside from India, where power generation and transmission has got to be an on-going infrastructural priority, the company has worked on projects through Asia, Africa, and as far afield as Australia and Latin America.
With an order book of over Rs 2,100 crore, the company has achieved a run rate of Rs 1,000 crore (Rs 10 billion) per annum. In the last reported quarter, the turnover was up 82 per cent y-o-y, and EPS 96 per cent.
6. Bharat Heavy Electricals
The largest engineering and manufacturing enterprise in India in the energy-related infrastructure sector today. The company manufactures over 180 products under 30 major product groups and caters to core sectors of the Indian economy like power generation and transmission, transportation, telecommunication and renewable energy.
Though government owned, Bhel has shown the ability to respond to a buoyant market, both in India, and in the world, with projects implemented in 60 countries, ranging from the US to New Zealand.
Automobiles
7. FAG Bearings India
A member company of the German FAG group, it is a leading player in the Indian bearings industry. The company manufactures a wide range of bearings across sectors - auto companies, railways, mechanical and electrical engineering industries. The parent company has identified FAG India as a sourcing base - this along with the growth of the Indian economy should help maintain buoyancy in the company's operations. It is currently growing at over 50 per cent, y-o-y.
8. Phoenix Lamps
Specialises in automobile lamps sold under the Halonix brand name, though it has an extensive offering of over 500 different lighting products, including halogen lamps for general lighting and Compact Fluorescent Lamps. Last year, the private equity firm, Actis, bought out the promoters, who owned 40 per cent of the company, at Rs 152 per share with plans to aggressively invest in growth. Currently available at 12.83 times earnings, Phoenix's profits grew 46 per cent y-o-y in the last quarter.
FMCG
9. Ruchi Soya Industries
It is the flagship company of the Ruchi Group of Industries and has come to occupy substantial shelf space in edible oils and soya foods across the country.
The Nutrela brand, which it owns, is the market leader in this space - with soya nuggets, granules, cooking oils, and soya flour. The company also manufactures and sells vanaspati and specialty fats to the bakery industry. Besides, Ruchi Soya is the largest exporter of soya meal and lecithin from India.
Pharmaceuticals
10. Elder Pharmaceuticals
Now holds the 31st position in India's pharmaceutical industry (ORG-IMS). Relatively young, at 16 years, it is currently ranked the third-fastest growing Indian pharma business - which threw the company up in our search. In a sector that has been relatively quiet, Elder racked up a 36 per cent annual profit growth in the last quarter.
It has entered into a slew of licensing arrangements to manufacture and distribute products of international majors, while also building up an export market in some 37 countries.
In the long run, stockmarkets reflect the real economy. In the short run, they seem to have a life of their own. The factory worker who buys Tiger biscuits for his school-going daughter, or the call-centre employee who uses his first salary to make a deposit on his motorcycle, are not informed by the Nifty. But their purchase decisions determine the health of fast-moving consumer goods companies and packaging suppliers, of trucking companies and gear manufacturers.
The sentiment in the stockmarket is driven not just by the sentiment in the economy but also various other factors. These factors are now increasingly globally controlled, rather than locally. So while markets flew over the last few years on increased buying by foreign investors, this same phenomenon is lending it increased volatility now.
Such downturns in the market can deepen or correct, they can last a week or a year. But they do throw up opportunities to buy good stocks cheap. Our own take is that this correction may be deep, but will not last long. An economy growing at nine per cent annually is going to find willing investors on an on-going basis.
Outlook Money crunched the numbers of companies in the 'A' and 'B1' lists of the Bombay Stock Exchange (a total of 925 companies). We looked for companies that exhibited consistent profit growth over the last four years. As a next step, we sifted down to companies that showed a net profit growth of at least 25 per cent, year-on-year (y-o-y), in results reported for Q3, FY07. Then, based on BSE closing prices on 7 March 2007, we zeroed in on companies that were available for less than 25 times earnings.
Such companies offer a price earning to growth of one or less, reasonable by any norm. Despite our exacting standards, we ended up with 112 companies - an indication of how much entrepreneurial activity is going on in India, as well as of the upside when markets recover. From this list, we culled out 10 companies, across five sectors, which show consistent growth, steady or improving profit margins, and low discounting. Take your pick!
Information technology
1. Geodesic Information Systems
It is a software solutions company formed in 1999. Geodesic concentrates on software in the communications space. Its product 'Mundu Messenger' is a universal instant messaging service that facilitates collaboration across a host of Internet platforms, such as AIM, Google Talk, ICQ, MSN and Yahoo.
The company, which also offers software development in verticals such as publishing, banking, retail and healthcare, has attracted substantial overseas investment and now 51 per cent of its equity is held by foreign institutional investors.
2. NIIT Technologies
It is the software solutions business, which was formed when the old NIIT split into two. Over the last year, it has demonstrated its willingness to make acquisitions to complement its organic growth; as a result, it is able to offer a mix of near-shore and off-shore IT solutions from operations in North America, Europe, Asia Pacific and Australia. The company has alliances with global IT majors, including Computer Associates, IBM, Microsoft, Oracle and SAP.
3. Zenith Infotech
Focuses on banking solutions and infrastructure management. As a product and solutions company, it has a high (and growing) profit margin - for the last quarter, the operating profit was 56 per cent of the turnover. The company's banking solutions business now has over 100 customers, with its Banc724 software product either implemented or being implemented in over 3,500 branches.
This large installed base helps steady the revenue stream, thanks to the demand for maintenance services. The SAAZ infrastructure management product has more than 140 customers.
Banking and financial services (BFSI)
4. Mahindra & Mahindra Financial Services (MMFSL) A subsidiary of the leading tractor and utility vehicles company, it began as a vehicle-financing arm of the parent. As the company expanded into semi-rural and rural areas, it became apparent that there was a latent demand for a whole host of financial services that were not being met in these areas.
Accordingly, MMFSL now distributes mutual funds, and offers financial advisory services through its network of branches, which numbered 398 as on 31 December 2006. In its core area of vehicle finance, the company has extended business to finance for used commercial vehicles.
Infrastructure
5. Kalpataru Power Transmission
One of the leading companies in the field of turnkey projects for EHV transmission lines up to 800 KV in India and abroad. It has emerged as a leading player in erecting high voltage transmission towers and lines.
Aside from India, where power generation and transmission has got to be an on-going infrastructural priority, the company has worked on projects through Asia, Africa, and as far afield as Australia and Latin America.
With an order book of over Rs 2,100 crore, the company has achieved a run rate of Rs 1,000 crore (Rs 10 billion) per annum. In the last reported quarter, the turnover was up 82 per cent y-o-y, and EPS 96 per cent.
6. Bharat Heavy Electricals
The largest engineering and manufacturing enterprise in India in the energy-related infrastructure sector today. The company manufactures over 180 products under 30 major product groups and caters to core sectors of the Indian economy like power generation and transmission, transportation, telecommunication and renewable energy.
Though government owned, Bhel has shown the ability to respond to a buoyant market, both in India, and in the world, with projects implemented in 60 countries, ranging from the US to New Zealand.
Automobiles
7. FAG Bearings India
A member company of the German FAG group, it is a leading player in the Indian bearings industry. The company manufactures a wide range of bearings across sectors - auto companies, railways, mechanical and electrical engineering industries. The parent company has identified FAG India as a sourcing base - this along with the growth of the Indian economy should help maintain buoyancy in the company's operations. It is currently growing at over 50 per cent, y-o-y.
8. Phoenix Lamps
Specialises in automobile lamps sold under the Halonix brand name, though it has an extensive offering of over 500 different lighting products, including halogen lamps for general lighting and Compact Fluorescent Lamps. Last year, the private equity firm, Actis, bought out the promoters, who owned 40 per cent of the company, at Rs 152 per share with plans to aggressively invest in growth. Currently available at 12.83 times earnings, Phoenix's profits grew 46 per cent y-o-y in the last quarter.
FMCG
9. Ruchi Soya Industries
It is the flagship company of the Ruchi Group of Industries and has come to occupy substantial shelf space in edible oils and soya foods across the country.
The Nutrela brand, which it owns, is the market leader in this space - with soya nuggets, granules, cooking oils, and soya flour. The company also manufactures and sells vanaspati and specialty fats to the bakery industry. Besides, Ruchi Soya is the largest exporter of soya meal and lecithin from India.
Pharmaceuticals
10. Elder Pharmaceuticals
Now holds the 31st position in India's pharmaceutical industry (ORG-IMS). Relatively young, at 16 years, it is currently ranked the third-fastest growing Indian pharma business - which threw the company up in our search. In a sector that has been relatively quiet, Elder racked up a 36 per cent annual profit growth in the last quarter.
It has entered into a slew of licensing arrangements to manufacture and distribute products of international majors, while also building up an export market in some 37 countries.
October 19, 2007
Rathi Bars - IPO Prospects
Rathi Bars Limited - Avoid and sit on cash!!!
Date :Oct 18- Oct 23
Issue Price :35 Rs
Min. Order Quantity :175 Shares
Grade :Average
Recommendation :Skip
Company Info
Iron and steel maker, Rathi Bars will raise Rs 25 crore through initial public offer (IPO) to fund its production capacity expansion plans. The shares with a face value of Rs 10 each would be issued at Rs 35, he said. The issue would open on 18 October and close on 23 October.
The company has earmarked an investment of Rs 35 crore for purchasing and upgrading its equipment and other expansion plans. “The public issue will fund the bulk of the expansion programme. The rest of the fund will come from internal accruals and debt market,”
Valuation
Date :Oct 18- Oct 23
Issue Price :35 Rs
Min. Order Quantity :175 Shares
Grade :Average
Recommendation :Skip
Company Info
Iron and steel maker, Rathi Bars will raise Rs 25 crore through initial public offer (IPO) to fund its production capacity expansion plans. The shares with a face value of Rs 10 each would be issued at Rs 35, he said. The issue would open on 18 October and close on 23 October.
The company has earmarked an investment of Rs 35 crore for purchasing and upgrading its equipment and other expansion plans. “The public issue will fund the bulk of the expansion programme. The rest of the fund will come from internal accruals and debt market,”
Valuation
Rathi bars is an average issue. The sector enjoys very low PE multiple of 5 to 6. Since company is already operating at its full capacity EPS for FY 08 and FY 09 is likely to remain at Rs 7 and present issue, discounts it, at a multiple of 5. Hence, not much upside is seen and such small issues, recently have been ruling at below its issue price.
Its better to avoid this IPO.People should wait for better scrips, which will be available in near term.
October 17, 2007
CEEEBI,CHIDU,REEDDY - Official terrorist of Stock Markets
Today market is down by 10%.We will buy at dips because its OPEN CHALLENGE that market will cross 20-21k in next 6-8 months.
CEEEBI,CHIDU,REEDDY -- have decided to oblige big FII players at cost of retail investors there is this rumour floating that HK based fund has shorted 1 crore nifty on friday at well known brokerage house and funds got badly stuck since market went up more than 300 points in nifty . so this move is to bail fund out .he has squared the trade now PC will come and issue clarification and everthing will be fine.
This is politics !!!!Yes official stock market terrorist !!!!!! this all credit goes to CEEBI chairman n CHIDDDDDDU,.Why they take such decision after mkt close, bcoz they can enjoy free fall next day. Yesterday FII were net seller of 3500 crore, this means they were knowing about this in advance.FIIS shorted in US market ( indian ADRS)
This has been happening time and again.. And this manipulation should stop.CEEBI chairman & Chiduuu should resign because this is not the first time ( and will not be last time) they have obliged and made way for FIIS.
Our msg-- Maintain calm and Pick R- stocks at dips,Pick Power,Infra,Telecom stocks.Dont panic at fall.. Technically 15600 is bottom.
SEBI should think of Improving Indian markets by implementing Pre market price discovery.
Dont sell in panic... 21k in next 6 months.
CEEEBI,CHIDU,REEDDY -- have decided to oblige big FII players at cost of retail investors there is this rumour floating that HK based fund has shorted 1 crore nifty on friday at well known brokerage house and funds got badly stuck since market went up more than 300 points in nifty . so this move is to bail fund out .he has squared the trade now PC will come and issue clarification and everthing will be fine.
This is politics !!!!Yes official stock market terrorist !!!!!! this all credit goes to CEEBI chairman n CHIDDDDDDU,.Why they take such decision after mkt close, bcoz they can enjoy free fall next day. Yesterday FII were net seller of 3500 crore, this means they were knowing about this in advance.FIIS shorted in US market ( indian ADRS)
This has been happening time and again.. And this manipulation should stop.CEEBI chairman & Chiduuu should resign because this is not the first time ( and will not be last time) they have obliged and made way for FIIS.
Our msg-- Maintain calm and Pick R- stocks at dips,Pick Power,Infra,Telecom stocks.Dont panic at fall.. Technically 15600 is bottom.
SEBI should think of Improving Indian markets by implementing Pre market price discovery.
Dont sell in panic... 21k in next 6 months.
October 16, 2007
Sensex @19K - Still waiting for a correction?
With the Sensex scaling 19000, subprime now seems to be a distant bad dream. However it was not too far ago when investors across the world were running helter skelter hearing subprime. It was then that the Fed like knight warriors came to the rescue by cutting the interest rates by 50 basis points. This action seems to have wiped all the subprime mess that has taken several years to build up. What did investors do in the meantime? A lot of people waited, waited and waited for the markets to correct even further. Nobody dared to enter the markets at 15000 levels or for that matter even at 14000 levels. At the same time several pundits were predicting the next big correction. Well the markets in the meantime zoomed across and in the process most people missed the boat like always. Well the markets have a very high probability of correcting now but the moot point here: More money is lost in waiting for corrections, anticipating corrections than in corrections itself.
Waiting for corrections to happen has been a reality of the markets and all market participants are guilty of such practices. I am not saying it’s a bad thing but that short-term corrections and sharp up moves are very difficult if not impossible to predict. How many people would have predicted the 600-point rally after the Fed rate cut? Charles Ellis’s Investors Anthology has a very apt quote which was part of weekly staff letter (1951) of David Babson & Company “It must be apparent to intelligent investors who if anyone possessed the ability to do so (read - forecast the immediate trend of stock prices) consistently and accurately, he would become a billionaire so quickly, he would not find it necessary to sell his stock market guesses to the general public”
There are both rumors and reports that the Sensex will touch 20000 soon and 25000 in the next 6-9 months. The logic is that if China can be valued at rich valuations of 45 plus why couldn’t the second fastest growing economy valued at 25 or for that matter 30. Sensex company’s earnings are predicted to be around Rs. 860 by end of the current year and Rs. 1000 by 2009. What would be the index levels with such earning levels? Your guess is as good as mine on this one.
So what should people do in such situations?
Firstly rebalance your asset allocation and have clear investment rules stating rules on when to buy and sell. If you are high on equity and have made sizeable profits, it means move into cash or debt as per your investment strategy. After a correction, when you are high on cash you can move back into equity. However if you are low on equity, then you should stagger new investments on every fall. Now what happens if there are no falls? No market could be insulated against falls and there will be falls along the way. I am not sure how looking at forward or trailing PEs could help perfectly estimate overvaluation or undervaluation. It could be an indicator along with several other parameters including volumes, technical data and F&O information. But these are not sacrosanct parameters and more often than not, their interpretation is wrong. And by the way if there are no falls then you can only stagger your investments unemotionally through regular investments in stocks and mutual funds.
Wait for the significant correction to happen. This essentially means timing the market and this is again a very difficult thing to do. How do you know what is the lowest level and how long should you wait? Is the rally post the correction a realistic one or is it just a dead cat bounce? There are several questions to be understood and answered here and how many people are gifted enough to consistently get this exercise right. Warren Buffet is often quoted in almost every second column but few people have the habit of being patient. Finally what does being patient mean? In a structural bull run, how patient can a person really be with the index conquering new heights and whether it is a wise strategy.
Our market currently faces three key Risks
An untoward event in the global situation due to subprime or any other possible theory has the potential to bring markets down.
Increasing Oil and Commodity Prices might exert an upward pressure on inflation and interest rates.
Domestic Political Situation leading to an early election might also cause nervousness in the markets. However this is the least crucial of all risks as our economy has gathered the momentum to clock high growth rates with any political party running its affair (except for if the Left comes to power which at least in the current scenario looks highly improbable.
Indian Investors will be surprised to know that there are a lot of US Money Market Funds that have invested in subprime debt. Also there are several other financial institutions that have huge exposures to subprime debt. According to a recent Bloomberg column, AIG, the world’s largest insurer and reinsurer, had almost around one third (33%) of its USD 104 billion networth invested in subprime related securities. And there are several such insurance companies with subprime exposure of 3 to 20% of its networth. What would happen if one of these institutions or some large hedge fund with huge subprime exposures collapse like the one we witnessed in August this year? Surely our markets will come down and decoupling that is a buzzword these days might seem like a joke.
Source:Moneycontrol.com
Waiting for corrections to happen has been a reality of the markets and all market participants are guilty of such practices. I am not saying it’s a bad thing but that short-term corrections and sharp up moves are very difficult if not impossible to predict. How many people would have predicted the 600-point rally after the Fed rate cut? Charles Ellis’s Investors Anthology has a very apt quote which was part of weekly staff letter (1951) of David Babson & Company “It must be apparent to intelligent investors who if anyone possessed the ability to do so (read - forecast the immediate trend of stock prices) consistently and accurately, he would become a billionaire so quickly, he would not find it necessary to sell his stock market guesses to the general public”
There are both rumors and reports that the Sensex will touch 20000 soon and 25000 in the next 6-9 months. The logic is that if China can be valued at rich valuations of 45 plus why couldn’t the second fastest growing economy valued at 25 or for that matter 30. Sensex company’s earnings are predicted to be around Rs. 860 by end of the current year and Rs. 1000 by 2009. What would be the index levels with such earning levels? Your guess is as good as mine on this one.
So what should people do in such situations?
Firstly rebalance your asset allocation and have clear investment rules stating rules on when to buy and sell. If you are high on equity and have made sizeable profits, it means move into cash or debt as per your investment strategy. After a correction, when you are high on cash you can move back into equity. However if you are low on equity, then you should stagger new investments on every fall. Now what happens if there are no falls? No market could be insulated against falls and there will be falls along the way. I am not sure how looking at forward or trailing PEs could help perfectly estimate overvaluation or undervaluation. It could be an indicator along with several other parameters including volumes, technical data and F&O information. But these are not sacrosanct parameters and more often than not, their interpretation is wrong. And by the way if there are no falls then you can only stagger your investments unemotionally through regular investments in stocks and mutual funds.
Wait for the significant correction to happen. This essentially means timing the market and this is again a very difficult thing to do. How do you know what is the lowest level and how long should you wait? Is the rally post the correction a realistic one or is it just a dead cat bounce? There are several questions to be understood and answered here and how many people are gifted enough to consistently get this exercise right. Warren Buffet is often quoted in almost every second column but few people have the habit of being patient. Finally what does being patient mean? In a structural bull run, how patient can a person really be with the index conquering new heights and whether it is a wise strategy.
Our market currently faces three key Risks
An untoward event in the global situation due to subprime or any other possible theory has the potential to bring markets down.
Increasing Oil and Commodity Prices might exert an upward pressure on inflation and interest rates.
Domestic Political Situation leading to an early election might also cause nervousness in the markets. However this is the least crucial of all risks as our economy has gathered the momentum to clock high growth rates with any political party running its affair (except for if the Left comes to power which at least in the current scenario looks highly improbable.
Indian Investors will be surprised to know that there are a lot of US Money Market Funds that have invested in subprime debt. Also there are several other financial institutions that have huge exposures to subprime debt. According to a recent Bloomberg column, AIG, the world’s largest insurer and reinsurer, had almost around one third (33%) of its USD 104 billion networth invested in subprime related securities. And there are several such insurance companies with subprime exposure of 3 to 20% of its networth. What would happen if one of these institutions or some large hedge fund with huge subprime exposures collapse like the one we witnessed in August this year? Surely our markets will come down and decoupling that is a buzzword these days might seem like a joke.
Source:Moneycontrol.com
Accumulate Power Grid - Long term
Create Wealth by Accumulating PGCIL
Investors can look at accumulating Power Grid at current price and at lower levels.It is the monopoly status of Power Grid, not many companies in India with such a fantastic network.
Its outlook and business is very good.After listing the price has doubled.Many retail investors have got very small allotment.So one can keep adding this stock now and at every fall.
I would say that one can buy upto 5-10% of portfoilio with Power grid and fair valuation of the stock you can expect to be around 80-90 levels.
Someone who missed IDFC,can buy this would be a very good stock for next few yrs with good upside and very negiligible risks.
Investors can look at accumulating Power Grid at current price and at lower levels.It is the monopoly status of Power Grid, not many companies in India with such a fantastic network.
Its outlook and business is very good.After listing the price has doubled.Many retail investors have got very small allotment.So one can keep adding this stock now and at every fall.
I would say that one can buy upto 5-10% of portfoilio with Power grid and fair valuation of the stock you can expect to be around 80-90 levels.
Someone who missed IDFC,can buy this would be a very good stock for next few yrs with good upside and very negiligible risks.
PSU PICKS
The navratna for India's biggest public sector companies is proving to be a fitting one. For, in the past one year, the government has become wealthier by over Rs 3,14,000 crore or $78 billion thanks to the appreciation in the stock prices of public sector undertakings and new listings. And that's not all, the government earned a cool Rs 16,000 crore as dividend from the 58 listed central PSUs last year alone.
There have been a number of star performers in the Government portfolio. The biggest contributor to GoI wealth has been NTPC. The market value of government holding in the power major is now $23 billion, which is an increase of $13 billion. Next in line is minerals and metals trader MMTC, which has contributed $11 billion to the rise in government's net worth. The once mired under a mountain of debt and steeped in losses Steel Authority of India (SAIL), is now one of the biggest wealth creators in the business.
The market capitalistion of the country's largest primary steel producer has more than doubled in last one year to nearly Rs 68,000 crore. This has created an additional wealth worth $10 billion for the government. Other big contributors include recently listed Power Grid Corporation, Bharat Heavy Electricals and State Bank of India and Power Finance Corporation.
Some PSU Stock Picks For Longterm :
Power Finance Corp (PFC) -- Target -- 265 +
Power Grid Corp -- Target -- 165 +
National thermal power corp ( NTPC ) -- Target -- 275 +
Power Trading Corp -- Target -- 130 +
There have been a number of star performers in the Government portfolio. The biggest contributor to GoI wealth has been NTPC. The market value of government holding in the power major is now $23 billion, which is an increase of $13 billion. Next in line is minerals and metals trader MMTC, which has contributed $11 billion to the rise in government's net worth. The once mired under a mountain of debt and steeped in losses Steel Authority of India (SAIL), is now one of the biggest wealth creators in the business.
The market capitalistion of the country's largest primary steel producer has more than doubled in last one year to nearly Rs 68,000 crore. This has created an additional wealth worth $10 billion for the government. Other big contributors include recently listed Power Grid Corporation, Bharat Heavy Electricals and State Bank of India and Power Finance Corporation.
Some PSU Stock Picks For Longterm :
Power Finance Corp (PFC) -- Target -- 265 +
Power Grid Corp -- Target -- 165 +
National thermal power corp ( NTPC ) -- Target -- 275 +
Power Trading Corp -- Target -- 130 +
October 10, 2007
Tips for 11/10/2007
- Focus on Power , Infrastructure , Cement & Engg. Sector in this fall
- Accumulate Tata Power & Rel. Energy on every correction
- 3i Infotech -expect a 30-40% increase in long run
- Indus Ind bank has the target of RS 100
- BUY Tata Steel at this level- expect Rs 1000 by end of this month
- Accumulate BALRAMPUR CHINNI - target 100 Rs
- Accumulate SBI Bank -expect Rs 3100 in next 12 months
- BHEL - next 6-7 months - target 3000 Rs
October 9, 2007
Buy @ Current levels
Long term Investors can BUY the following at current levels - though we are heading for some correction at this level
HCC - Hindustan Construction
HCC Long term charts are very good, fundamentally & technically strong company, If an Investor is not looking at short-term gyrations then Hindustan Construction could be a stock that would give you decent returns. If it were to cross Rs 170-174 range then it might even cross Rs 200 over the medium-term.
NTPC
If you look at the long-term charts, NTPC looks pretty good, you can still buy it at the current levels.
PFC
PFC was supposed to touch the technical target around Rs 245 or so and it went close to that and now it is on a correction mode - wait for it to consolidate and BUY & Accumulate in huge quantities
PTC
PTC requires more consolidation but for investments you may actually wait before you buy them right now
Rel. Energy
Reliance Energy is one stock in the power sector, which looks in a very strong uptrend and any correction in the stock is a great buying opportunity specially the level of Rs 1,065 would be a screaming buy
HCC - Hindustan Construction
HCC Long term charts are very good, fundamentally & technically strong company, If an Investor is not looking at short-term gyrations then Hindustan Construction could be a stock that would give you decent returns. If it were to cross Rs 170-174 range then it might even cross Rs 200 over the medium-term.
NTPC
If you look at the long-term charts, NTPC looks pretty good, you can still buy it at the current levels.
PFC
PFC was supposed to touch the technical target around Rs 245 or so and it went close to that and now it is on a correction mode - wait for it to consolidate and BUY & Accumulate in huge quantities
PTC
PTC requires more consolidation but for investments you may actually wait before you buy them right now
Rel. Energy
Reliance Energy is one stock in the power sector, which looks in a very strong uptrend and any correction in the stock is a great buying opportunity specially the level of Rs 1,065 would be a screaming buy
October 8, 2007
Focus - In Next few Months
Unlocking Value in coming months!!!
In coming days our focus should be on AUTO,HOTEL,CEMENT,Realty & IT stocks!!!!
Ofcourse Reliance pack,Infrastructure,Capital goods & power stocks will always be on our radar.
Watch magic in ACC,L&T,HDFC,ITC,ADITYA BIRLA NUVO in coming months.
HINT : Something similar to Reliance & Relenergy (Did we hear, some one say De merger/value unlocking???)
In coming days our focus should be on AUTO,HOTEL,CEMENT,Realty & IT stocks!!!!
Ofcourse Reliance pack,Infrastructure,Capital goods & power stocks will always be on our radar.
Watch magic in ACC,L&T,HDFC,ITC,ADITYA BIRLA NUVO in coming months.
HINT : Something similar to Reliance & Relenergy (Did we hear, some one say De merger/value unlocking???)
October 5, 2007
Power Grid to give over 50%, hold for long term: Experts
India’s principal power transmission company, Power Grid Corporation of India will list on the bourses with public issue shares on Friday, October 5, 2007.
Analysts told Moneycontrol.com that the stock may list above Rs 85 and advised to hold the stock for short term.
S P Tulsian of sptulsian.com said, "Power Grid Corporation is likely to list at Rs 85 on Friday. Buying is advised below Rs 80, while allottees are advised to hold the stock for 2-3 months."
According to R S Iyer of KR Choksey Securities, "The stock is expected to list at around Rs 85-90. It also could see three digit mark on the back of huge buying for long term. But for the time being, investors, who got allotment, can book profits above Rs 95."
"Power Grid may open at around Rs 82 and advised to hold for long term. It looks attractive with short to long term perspective as there is no major competitor to the company", said Manish Bhatt of Prabhudas Lilladher.
Arpit Agrawal, Head of Research, Arihant Capital Markets said, "Keeping in mind PGCIL’s monopoly in the transmission segments and the strong growth prospects, we believe investors should be invested in the company with a long term perspective."
Power Grid Corporation of India owns and operates most of India’s interstate and inter-regional electric power transmission system.
Source:Moneycontrol.com
Analysts told Moneycontrol.com that the stock may list above Rs 85 and advised to hold the stock for short term.
S P Tulsian of sptulsian.com said, "Power Grid Corporation is likely to list at Rs 85 on Friday. Buying is advised below Rs 80, while allottees are advised to hold the stock for 2-3 months."
According to R S Iyer of KR Choksey Securities, "The stock is expected to list at around Rs 85-90. It also could see three digit mark on the back of huge buying for long term. But for the time being, investors, who got allotment, can book profits above Rs 95."
"Power Grid may open at around Rs 82 and advised to hold for long term. It looks attractive with short to long term perspective as there is no major competitor to the company", said Manish Bhatt of Prabhudas Lilladher.
Arpit Agrawal, Head of Research, Arihant Capital Markets said, "Keeping in mind PGCIL’s monopoly in the transmission segments and the strong growth prospects, we believe investors should be invested in the company with a long term perspective."
Power Grid Corporation of India owns and operates most of India’s interstate and inter-regional electric power transmission system.
Source:Moneycontrol.com
October 4, 2007
Lot of STEAM left in power stocks?
Analysts said that the power sector is buzzing due to the Reliance Power IPO and also because Power Grid will be listing in a couple of days.
The whole power sector space is being impacted by what is happening with Reliance Power. The stock of Reliance Energy, on a sum of parts valuation, is highly sensitive to where Reliance Power is likely to come in.
If there is a 10-15% dilution, the overall valuation one puts to Reliance Power, is speculated between USD 400-667 billion. Analysts added that if one takes this big price band and put it in Reliance Energy’s sum of parts valuation, one gets between 1,730-2,304. Right now, Reliance Energy is way below this price. The stock has run up sharply over the past few days.
If one sees Reliance Energy’s run up, at the time of Power Grid opening, it was at Rs 862 and is now in the range of Rs 1,417. The valuation band, if we take Reliance Energy as the top power company, was at that time 22 times ‘08 earnings and is right now 36 times ‘08 earnings. So, all the other power companies are trying to catch up with it.
At that time, Tata Power was a 24 times earnings. With the run up in Reliance Energy, it has also moved up. It is at 35.8 times forward earnings. So, one is seeing the ruboff coming from these companies.
The thing to watch out for is NTPC, as it has been grossly undervalued, observed analysts. It is trading at 22.6 times. Analysts believe that there is likely to be a ruboff effect coming from Power Grid. It will be listing on Friday and analysts expect the listing to be above Rs 80 for Power Grid.
Source: Moneycontrol.com
The whole power sector space is being impacted by what is happening with Reliance Power. The stock of Reliance Energy, on a sum of parts valuation, is highly sensitive to where Reliance Power is likely to come in.
If there is a 10-15% dilution, the overall valuation one puts to Reliance Power, is speculated between USD 400-667 billion. Analysts added that if one takes this big price band and put it in Reliance Energy’s sum of parts valuation, one gets between 1,730-2,304. Right now, Reliance Energy is way below this price. The stock has run up sharply over the past few days.
If one sees Reliance Energy’s run up, at the time of Power Grid opening, it was at Rs 862 and is now in the range of Rs 1,417. The valuation band, if we take Reliance Energy as the top power company, was at that time 22 times ‘08 earnings and is right now 36 times ‘08 earnings. So, all the other power companies are trying to catch up with it.
At that time, Tata Power was a 24 times earnings. With the run up in Reliance Energy, it has also moved up. It is at 35.8 times forward earnings. So, one is seeing the ruboff coming from these companies.
The thing to watch out for is NTPC, as it has been grossly undervalued, observed analysts. It is trading at 22.6 times. Analysts believe that there is likely to be a ruboff effect coming from Power Grid. It will be listing on Friday and analysts expect the listing to be above Rs 80 for Power Grid.
Source: Moneycontrol.com
October 3, 2007
Maytas Infra Limited - IPO Prospects
Maytas Infra Limited - Get them on listing
Issue Date :Sept 27 - Oct 04
Issue Price :320Rs - 370 Rs
Min. Order Quantity :18 Shares
Grade :Average
Recommendation :Skip
Company Info
Maytas Infra, a construction and infrastructure development company, controlled by sons of Mr. Ramalingam Raju (SATYAM) is entering the capital market with an initial public offering of 88.5 lakh equity shares of Rs 10 each for cash at a price to be decided through a 100 per cent book building process.
The company plans to use the funds to purchase construction equipment, invest in companies, building an elevated road in Bangalore, a coal based electricity generation plant in East Orissa and a coal washery in Chhattisgarh.
According to the company, Maytas has undertaken projects in 12 States, including those in irrigation, roads and bridges and other infrastructure sectors
Issue Date :Sept 27 - Oct 04
Issue Price :320Rs - 370 Rs
Min. Order Quantity :18 Shares
Grade :Average
Recommendation :Skip
Company Info
Maytas Infra, a construction and infrastructure development company, controlled by sons of Mr. Ramalingam Raju (SATYAM) is entering the capital market with an initial public offering of 88.5 lakh equity shares of Rs 10 each for cash at a price to be decided through a 100 per cent book building process.
The company plans to use the funds to purchase construction equipment, invest in companies, building an elevated road in Bangalore, a coal based electricity generation plant in East Orissa and a coal washery in Chhattisgarh.
According to the company, Maytas has undertaken projects in 12 States, including those in irrigation, roads and bridges and other infrastructure sectors
Valuations
Maytas Infra is a contracting company, they have a turnover of about Rs 800 crore as a contractor and their order book is about Rs 3,500 crore. Now they are making all investment into the BOT and power generation projects. In fact, some of them like Gautami Power, in which they have a minority stake, the project is completed but since they have not been getting the gas, it is just lying idle.
Looking at the current market situation and hopes that current market trend sustains in the near term then people can apply for Matyas Infra issue without worry. The stock can list at around Rs 420-425. Margin has always been the concern for this company and the price band is not reasonable. One can compare with Patel Engineering, Gammon India, IVR Prime and HCC.
Premium on listing - 50-70 Rs - Hold for long term for better prospects
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