Long term picks

Bharat Bijlee - Results are coming up, should be a good one, but not as good as expected a year back. Valuations looks very reasonable at around 11 P/E (excluding the cash/investment value of the stock) and sales team is doing an amazing job of keeping the order book full.

Larsen & Toubro - One of the best stock in the Indian markets. An expensive stock, but considering that they are planning to separate out around 11 verticals and strong growth in the sectors the company has presence, the earnings multiples look okay.

Reliance Power - This is my speculative bet. Fundamentals take a back seat here.

DLF Limited - Best real estate stock in the index. Period. Probably a very good long term pick. I will pick up some more stocks as and when an opportunity arise.

Some of the better ones in 2008 could be NTPC, SBI, HDFC, ICICI Bank, JP Associates, BHEL, Jindal Saw, Reliance Energy, Reliance Industries, ABB, Mundra Port & SEZ, On Mobile, MIC Electronics, Jindal Steel & Power, ONGC etc.

J K Lakshmi Cement - A superb Opportunity !!!

The Nifty is down to 4745 at the time of writing this. Can it go down further? Yes, it can. The way I look at the current market scenario is like this. There are two different pockets in the market right now. One pocket consists of the frothy stocks which went up to crazy heights just a couple of months ago, without having any real earnings to justify their price rise. I am talking about stocks like REL, RIIL, Jai Corp, Unitech, JP Assoc, Punj Lloyd, GMR Infra etc. These stocks need to go down further.

Then the second pocket consists of stocks like JKLAKSHMI CEMENT which have gone down on very low volumes purely in sympathy with the overall negative sentiment in the market. They don't deserve to be at such prices. At today's low of 119, JKLAKSHMI is trading at a PE of 2.53. This is incredible for a company of this size and quality of management. JKLAKSHMI's PE is at a huge discount to its peers. The industry average PE used to be in the range of 10-14 which has now shrunk to between 8-12 after the January crash.

If I was a Fund Manager I would be going all out to buy this stock in bulk at these prices. Capacity is going to be enhanced from the present 3.5MT to 5MT by October 2008 and to 10MT by 2011. Cement is going to be in demand due to the thrust on building new infrastructure in the country. Considering all this, I would say that the market is giving a golden opportunity to buy gems like JKLAKSHMI at such throwaway prices.

Rel. Energy buyback

The management of Reliance Energy (REL) has announced a share buyback, seemingly to appease shareholders following the rout its stock has seen over the past couple of months. In fact, the company's stock price has almost halved from a peak of Rs 2,630 that it touched in January 2008.

This weakness follows a period of overvaluation where the stock price had reached dizzying heights not conforming to the company's inherent value. Then came the Reliance Power shocker, which investors had originally believed to be a 'fairytale' IPO, but that turned out to be a 'nightmare'.
Anyways, the management, with a view to "reduce short term volatility in the company's share price, deter speculative activity in the company's shares, send a strong signal to the capital markets on the perceived under-valuation of the company's share price and reiterate the confidence of management in future growth prospects of the company", has declared a buyback programme that will be spread over two stages.
Firstly, shares worth Rs 8 bn will be bought back, pursuant to the approval granted by the company's board of directors.
Then, a further amount of Rs 12 bn will be spent towards a further buyback, again subject to necessary approvals by the shareholders.
In totality, REL has proposed to buy-back shares worth Rs 20 bn for a maximum price of Rs 1,600 per share. This price represents a premium of around 10% to the closing share price on Wednesday, the last trading day before the buyback was announced.
In effect, for a transaction worth Rs 20 bn and at a maximum price of Rs 1,600 per share, REL will buy back around 12.5 m shares, or just about 5.3% of the current shares outstanding. This reduction in share base will improve the company's earnings per share by just around 5.8%, which is miniscule. How does the management then expect to provide 'substantial' benefits to shareholders through this buyback is thus questionable!
The fact that the stock has declined by over 10% after the buyback announcement points to the inadequacy of the entire exercise. Also, considering that the buyback amount of Rs 20 bn is just around 23% of the company's estimated net cash for FY08 (after reducing debt from cash and investments), the company could have given away more (bought back higher number of shares). This is also considering that due to the fact that all capex related to power generation will be taken care by Reliance Power going forward, REL's cash requirements will not be high in the future.
We had recommended a 'Sell' on Reliance Energy in January 2008 at Rs 2,135. The stock is down 37% since then. We had valued REL's core businesses at Rs 808 per share and its investment in Reliance Power at Rs 1,224 per share, thus arriving at a total value of Rs 2,032 per REL share. While we maintain our view with respect to the company's intrinsic value and the stock does look attractive on a valuation basis, we still prefer other power stocks under our coverage for simple reasons like their lower execution risks and management integrity
source:equitymaster.com

Stock Recommendation - March

NTPC

The present state of the market has brought the blue chips at much below their intrinsic worth, with many having corrected by about 30% from their recent highs. Under the present circumstances, it is thus best to pick up stocks which today offer greater value for money. National Thermal Power Corporation (NTPC) is one such stock.

This power generating PSU currently has a power generation capacity of 27,904 MW. Of this, the company owns 26,850 MW. Of this 26,50 MW, 22,895 MW is coal based with 15 projects while 3,955MW is gas based with 7 projects. 1054 MW is under JV of which 314 MW is coal based and 740MW is gas based.

The paid up equity of the company is at Rs.8,245 crore being 824.55 crore equity shares of Rs.10 each. Of this, the Government of India holds 89.5%, 7.55% by mutual funds, banks and insurance companies while public holds 2.95% as at 31/12/07. Such a massive power generation company with a paid up equity of just Rs.8,245 crore is beyond imagination!

NTPC is implementing 11 projects for 10,860 MW in various states, which would take the capacity of the company to close to 40,000 MW. All these projects would be operational in next 36-42 months. The total cost of these projects is Rs.40,000 crore and are located in UP, Bihar, Assam and Maharashtra.

NTPC has also entered into a Joint Venture with BHEL, a 50:50 JV to carry on EPC activities, including manufacturing and supply of equipments and power plants for third party power generating companies.

With huge thrust in the 11th Plan on power generating capacity of 70,000MW, the company would cross power generating capacity of 50,000 MW by the end of the 11th Plan period, viz: 2012.

Instead of going for Ultra Mega Power Projects, the company is implementing projects of 1,000MW to 2,000 MW which can get completed in 3 years, in phases. Some of these projects are 1980 MW (660 MW ´3) in Bihar with Capex of Rs.7,341 crore; 750 MW (250 ´3) with outlay of Rs.4,375 crore in Assam; 1000MW (500 MW ´2) with outlay of Rs.5,459 crore in Maharashtra and 1320 MW (660MW ´ 2) in Allahabad. This puts the projects on a fast track thus minimizing the execution risks and cost overruns.

Once Nuclear Power project takes off, NTPC would be a giant player in the field to increase its power generating capacity.

Share at Rs.190 is a safe and excellent bet, which can give a consistent return of 24% over the next 3-4 years in share price.

Should you exit REPL before or after 3:5 bonus issue?

There are two possible scenarios for retail investors to exit pre and post the Reliance Power bonus. One is to sell before the bonus itself or wait for the bonus to hit the markets.
If they sell before the bonus - let’s say if price touches about Rs 450 and the cost of acquisition per share is about Rs 430, they were making a profit of Rs 20 on each share and most of them are allotted about 15 shares. So net income profit is about about Rs 300.
But if you take a scenario of post bonus issue, one of the unknown is out of the question - which is the bonus issue. Now, one has to have a fair assumption of what the fair price is going to be. Let's assume that the fair price is about Rs 350, pre-bonus issue. Thereby post-bonus issue, the price will come to around Rs 330. Thereby the profit - on a per share basis the profit is going to be Rs 61.
So if assuming somebody has got allotment of 15 shares, the number of shares will go to 24. So 24 multiplied by 61 would give a profit of about Rs 1460. If you assume that the fair price is Rs 300, then the market price is going to be around Rs 283, which is about 14% profit per share - that will come to around Rs 330 or Rs 336.
So people have to fairly assume the fair price and then see whether they want to sell it right now or whether they want to sell it after the post-bonus issue. But the cut-off price for somebody to make a profit on this particular stock, is Rs 285 on a current market price basis.


Should you exit pre-bonus or post-bonus?
Pre-bonus exit
-If price touches Rs 450,retail investor profit at Rs 20/sh
-For 15 shares, total profit made at Rs 300
Ex-bonus Exit
a) For Rs 350 pre-bonus price, retail investor profit at Rs 61/sh
-For 24 shares, total profit made at Rs 1,464
b) For Rs 300 pre-bonus price, retail investor profit at Rs 14/sh
-For 24 shares, total profit made at Rs 336
c) For Rs 285 pre-bonus fair price should be the cut off to avoid losses

Source:Moneycontrol.com

RPL Bonus share 3:5

Reliance power to give 3 bonus shares for every 5 shares held .
Rpower post bonus issue , the cost of acquisition of Rpower shares would come down to Rs 269 for retail investors
Reliance power in the next 12 months could offer more than 50% gains (as the case in all ADAG scrips)
Record date is Yet to be announced.

Stocks to focus before Budget

L&T
HDIL
RIIL
Centurion Bank
Powergrid
SBI
ICICI
RCOM &
Rpl

REC Limited-IPO Prospects

Issue Period: Feb 19 to Feb 22
Price Range: Rs.90 to Rs.105
Minimum Mkt Lot: 60 shares
Issue Size: Rs.1400 cr to Rs.1640 cr
Recommendation: Strong Subscribe
Expected Gains on Listing Day (in percentage terms): 15% to 35%
Expected Range of Listing Price: Rs.120 to Rs.145
Chances of winning Allotment: Strong (in Retail category)
Sector: Financial Services (power sector related)

Recommendation
The GOI's Eleventh Plan anticipates substantially increasing India's power capacity by the year 2012 & it is estimated that the implementation of the GOI's power sector plans will require overall funds of Rs.10,316 billion for investment in transmission, distribution & generation. REC Limited will be a prime beneficiary from the increased growth of, and investment into, the Indian power sector.

The business of REC Limited will stand to benefit from the increased growth of, and investment into, the Indian power sector. The issue of REC Limited is priced attractively in terms of valuations vis-a-vis its closest peer from the same space PFC. We recommend for a 'strong subscribe' to this IPO for Long-term investors. Short-term investors can expect modest-to-smart listing gains, even amidst current market volatility.

V-Guard Industries Ltd -IPO Prospects

Issue Period: Feb 18 to Feb 21
Price Range: Rs.80 to Rs.85
Minimum Mkt Lot: 80 shares
Issue Size: Rs.64 cr to 68 cr
Grade: Above Average
Expected Gains on Listing Day (in percentage terms):15% to 25%
Expected Range of Listing Price: Rs.95 to Rs.110
Chances of winning Allotment: Strong (in Retail category)
Sector: Engineering (Multi product goods)

Recommendation
Much of the market in which the Company operates is unorganized & fragmented with many small & medium-sized companies. The Company faces substantial competition on the basis of product range, product quality, after sales service including factors, based on reputation, regional needs & customer convenience from other manufacturers in domestic or divisions of large MNCs.
On the other hand, V.Guard has around 15% of the market share in Voltage stabilizers in India. Pumps & Cables are the Company's second largest product categories. In present competitive environment, the Company develops effective, improved & reliable home appliances & have strong customer focus in the form of providing after sales services will be increasingly differentiated from the others in the field.
The Company has a good brand value of 'V-Guard'. Hence we recommend High risk investors to subscribe to this issue of multi-product company for medium to long-term investment

GSS America Infotech Limited -IPO Prospects

Issue Period: Feb 11 to Feb 15
Price Range: Rs.400 to Rs.450
Minimum Mkt Lot: 15 shares
Recommendation: Avoid
Grade: Average
Chances of winning Allotment: Strong (in Retail category)
Sector: Information Technology
Recommendations
The IT services market is highly competitive. The increasing attractiveness of the Global Delivery Model is forcing the overseas-based competitors to expand their base in India. The company lacks diversification in terms client operations most of which are located in USA. The valuations of this mid-cap IT company's issue is expensively priced vis-a-vis its other listed peer group companies like Aztec Software, Geometric software, Hexaware, KPIT Cummins, etc. Hence we recommend investors to Avoid this IPO.

RPOWER - Stay Invested for Long term

Taking into consideration that Reliance Power Limited has laid out an abmitious plan of 28,200 MW power generation capacity, none of which are operational as of now, and also factoring in the long gestation period needed in the execution of such large power projects, there may be some volatility in the stock movement of the company after listing in short to medium-term.

But, all-in-all, the company should be able to meet the planned expectations over a long-term period. Hence we recommend investors to subscribe to the issue with long-term perspective for more enhanced & superior returns.

NTPC and tata power are available at cheaper valuations than Reliance Power but the Ambanis have this knack of pulling off impossible.AA is planning to enter into nuclear power and his team has already started the ground work for this foray.Within 3 months of listing you will hear big news from Reliance power.

We see bright future for reliance power in long term.ADAG group has vision and we must give some time for our investment to grow.Wealth cant be created overnight especially in stocks like Reliance power which has long gestation period

SVEC Constructions Limited-IPO Prospect

Period: Feb 04 to Feb 08
Price Range: Rs.85 to Rs.95
Minimum Mkt Lot: 70 shares
Issue Size: Rs.38 crore
Recommendation: Avoid
Grade: Average
Chances of winning Allotment: Strong (in Retail category)
Sector: Construction

Recommendation:

SVEC Constructions values are comparably or expensively vis-a-vis its peer group competitors like MSK Projects, PBA Infrastructure, Tantia Construction. We recommend investors to Avoid subscribing to this IPO.

SVEC Construction IPO may give modest gains of 10-20% if secondary market conditions improve during the time of listing of this IPO. But, it is advisable to Avoid to this IPO.

Emaar MGF Land Limited-IPO Prospects

Issue Period: Feb 01 to Feb 06
Price Range: Rs.540 to Rs.630
Minimum Mkt Lot: 10 shares
Issue Size: Rs.5540 cr to Rs.6460 cr
Recommendation: Subscribe (High Risk Investors)
Grade: Good (For Long-term)
Expected Range of Listing Price: 595-685
Chances of winning Allotment: Strong (in Retail category)
Sector: Real-estate

Recommendation:

They have many projects in hand but most of them are on foundation stage, so most of them will take time to complete it .

The issue is quite expensive priced vis-a-vis with market leaders like DLF and Unitech. But looking at the strong Parentage support of internationally acclaimed company Emaar & domestic expertise of MGF; we recommend High-Risk investors to subscribe to this IPO with Long-term horizon.

Manjushree Extrusions-IPO Update

Issue Period: Jan 31 to Feb 06
Issue Price: Rs.45/- (Fixed Price)
Minimum Mkt Lot: 150 shares
Issue Size: Rs.23 crore
Recommendation: Avoid
Grade: Average
Chances of winning Allotment: Strong (in Retail category)
Sector: Plastic Packaging

Recommendation

Manjushree Extrusions Limited operated in a globally competitive environment & it faces significant competition from countries such as China, which also have cheap labour & significant production capacities. The Company may also face competition from established companies & future entrants into this industry. The growing competition may force Company to reduce the revenues & margins and/or decrease the market share. Some of the companies who operate in the same line of business as the Company are Pearl Polymers Ltd., Wimplast Ltd., Essel Propack Ltd., Mold-Tek Technologies Ltd., Fenoplast Ltd., etc. Hence we recommend subscribe investors to Avoid subscribing to this IPO

IRB INFRA -IPO Prospects

Period: Jan 31 to Feb 05
Price Range: Rs.185 to Rs.220
Minimum Mkt Lot: 30 shares
Issue Size: Rs.945 cr to Rs.1123 cr
Recommendation : Subscribe (Medium to High Risk Investors)
Expected Range of Listing Price: Rs.250 to Rs.300
Chances of winning Allotment: Strong (in Retail category)
Sector: Infrastructure

Recommendation

Indian construction sector is becoming increasingly attractive . The order books of construction companies in Road infrastructure space are likely to remain buoyant, especially in the case of larger construction companies that are expected to gain a greater share of BOT road projects planned over the next 5 years. Hence we recommend Medium to High Risk investors to subscribe to this IPO for Listing Gains/ Long-term horizon or both.

WOCKHARDT HOSPITALS-IPO Prospects

Wockhardt Hospitals LimitedIssue

Period: Jan 31 to Feb 05
Price Range: Rs.225 to Rs.260
Minimum Mkt Lot: 20 shares
Issue Size: Rs.639 crore
Recommendation: Avoid
Allotment: Strong (in Retail category)
Sector: Healthcare Sector

Recommendation:

The key ongoing industry wide challenges are providing quality patient care in a competitive environment & managing costs. Other areas of concern may be continuous technological & pharmaceutical improvements that increase the cost for providing, or reduce the demand for, healthcare; changes in the distribution process or other factors that increase the cost of supplies. Also, the valuations of the company seems quite expensive. Hence we recommend investors to Avoid subscribing to this IPO and wait for the opportunity to buy at a lower level after listing.

TULSI EXTRUSIONS LTD - IPO Prospects

Tulsi Extrusions Limited - Avoid
Issue Period: Feb 01 to Feb 05
Price Range: Rs.80 to Rs.85
Minimum Mkt Lot: 75 shares
Recommendation: Avoid
Allotment: Strong (in Retail category)
Sector:Engineering (Pipes)

Recommendation:

The Company competes with other pipe manufacturers in organized as well as unorganized sector on the basis of availability of product, product range, product traits, quality, price, reputation & customer service. Further, there are no entry barriers in this industry & any expansion in capacity of existing manufacturers would further intensify competition. However, economies of scale accrue to a few players & some of the major industry players are Jain Irrigation, Finolex Pipes, Kisan Mouldings & Supreme Industries Limited.

Hence we recommend investors to Avoid this IPO.

Story Time - The Square Watermelom

Japanese grocery stores had a problem. They are much smaller than their US counterparts and therefore don't have room to waste. Watermelons, big and round, wasted a lot of space. Most people would simply tell the grocery stores that watermelons grow round and there is nothing that can be done about it. That is how I would assume the vast majority of people would respond.

But some Japanese farmers took a different approach. If the supermarkets wanted a square watermelon, they asked themselves, "How can we provide one?" It wasn't long before they invented the square watermelon.

The solution to the problem of round watermelons wasn't nearly as difficult to solve for those who didn't assume the problem was impossible to begin with and simply asked how it could be done. It turns out that all you need to do is place them into a square box when they are growing and the watermelon will take on the shape of the box.

This made the grocery stores happy and had the added benefit that it was much easier and cost effective to ship the watermelons. Consumers also loved them because they took less space in their refrigerators which are much smaller than those in the US meaning that the growers could charge a premium price for them.

Success Principle

The major problem was that most people had always seen round watermelons so they automatically assumed that square watermelons were impossible before even thinking about the question. When faced with a problem, be creative in looking for a solution. This often requires thinking outside the box. The square watermelon question was simply seeking a better and more convenient way to do something. It’s the will power that made them get the solution.

Motivational Quote

“DREAMS at first seem Impossible, then they seem Improbable, and then when we Summon the Will, they soon become Inevitable.”- Christopher Reeve

Shriram EPC - IPO update

Issue Period: Jan 29 to Feb 01
Price Range: Rs.290 to Rs.330
Minimum Mkt Lot: 20 shares
Recommendation: Avoid
Grade: Average
Chances of winning Allotment: Full(in Retail category)
Sector: Renewable Energy

Recommendation:

Shriram EPC Limited operates in a competitive environment. The industry in which the company competes has been frequently subject to intense price competition. Some of the competitors are larger than this company & have greater financial resources & they may also benefit from greater economies of scale & operating efficiencies. Some of the company's principal competitors are Praj Industries, Alfa Laval, L&T, McNally Bharat, Paharpur Cooling Towers , Alstom Projects, Gammon India , etc. from their respective areas of business operations. Hence we recommend investors to Avoid subscribing to this IPO.

Shriram EPC Limited IPO may give listing gains of 10-25%. It would be safe to Avoid this IPO & stay in Cash better IPOs in next 10-15 days.

Multi Bagger #2 - J K Lakshmi Cements

JK Lakshmi Cement Ltd. has its plants located at Distt. Sirohi, Rajasthan and caters to the Northern and Western parts of India. The company has a capacity of 3.4 million tones.

The company’s plant has been operating at high capacities, this coupled with a successful cost-reduction exercise and an improvement in cement prices, the company has managed to significantly improve its finances during the past 18 months.

The company has also set up a 36 MW thermal power plant at its factory at a cost of Rs.152 crores. The first phase of 18 MW went on stream in March 2007 and the second phase became operational in July – August 07. This would make the plant self sufficient in power and would lead to substantial cost savings for the company.

Primarily a cement focused company, the company has now diversified into a variety of products including Cement (OPC & PPC), Ready Mix Concrete (RMC), which is sold as ‘JK Lakshmi Power Mix Concrete’ and Plaster of Paris, sold as ‘JK Lakshmiplast’.

Conclusion

JK Lakshmi Cement has been on a capacity expansion spree and has expanded its capacity from 2.4 million MT to 3.4 million MT in FY 06-07. The company has undertaken another expansion project which would see its capacity go up from 3.4 million MT to 5.0 million MT by the end of third quarter of FY 08-09.

The company has managed to substantially control costs leading to higher profitability. The company can expect to make greater savings in power cost since its captive power plant has gone operational. The company is betting on Ready Mix Concrete (RMC) business as it believes that the modern method of use of ready mix concrete will replace the conventional method of site mix concrete at a much faster pace.

At its current price of Rs 136, JK Lakshmi Cement trades at a PE ratio of less than 3, both on expected FY 07-08 earnings and cheap valuations when compared with the peer group and looks attractive for investment.

Bang Overseas Limited - IPO Prospects

Bang Overseas Limited -Avoid

Issue Period: Jan 28 to Jan 31
Price Range: Rs.200 to Rs.207
Minimum Mkt Lot: 30 shares
Grade: Average
Chances of winning Allotment: Full(in Retail category)
Sector: Textile & Garment Sector

Recommendation:

The potential for the apparel market to witness multi-fold growth is very evident. However, numerous factors interplay to impede full realization of this potential. The sheer size of, and the diversity of tastes in, the India market make it one of the toughest to conquer. Catering to such varied demand will require not only a very accurate & sensitive forecasting model, but also an equally versatile manufacturing set-up in attendance.

The extinction of quota regime has resulted into high competition in the textile industry. Under this scenario, the company may have to confront pressures in respect of pricing, product quality, etc. and most importantly their pace in keeping up with the changing trends in fashion industry. The company is also in direct competition with the leading apparel & fabric manufacturers like Provogue (India) Limited, Koutons Retails India Limited, Kewal Kiran Clothing Limited, Trent Limited & Pantaloon Retail (India) Limited.

Hence we recommend investor to Avoid subscribing to this IPO. Bang Overseas Limited IPO may give modest gains on of around 10-15%, but it is advisable to avoid this IPO. It would be safe to Avoid this IPO & stay in Cash for a few better IPOs in next 10-15 days.

KNR Constructions Limited -IPO Prospects

IPO: KNR Constructions Limited -Avoid
Issue Period: Jan 24 to Jan 29
Price Range: Rs.170 to Rs.180
Minimum Mkt Lot: 35 shares
Offer Size: Rs.63 crore
Recommendation: Avoid
Grade: Average
Rating: 3 out of 10
Chances of winning Allotment: Strong (in Retail category)
Sector: Infrastructure Sector

Recommendation:

KNR Constructions Limited is a small sized infrastructure company & mainly competes with domestic players in the road construction & irrigation segments. While service quality, technical capability, past performance record, experience, safety records & availability of skilled personnel are key factors influencing client decisions, price often is deciding factor when it comes to awarding contract.

There are a number of competitors having better financials & other resources who have achieved greater market penetration. This may induce the company to accept contracts with lower margins & values if they are unable to compete with other bigger players in the large & high margin contracts.

Hence we recommend investors to Avoid subscribing to this IPO.** KNR Cons. IPO may give listing gains of 10-25%, but it is advisable to avoid this IPO seeing current market scenario. It would be safe to Avoid this IPO & stay in Cash for a few upcoming better Fundamental IPOs.

Opportunity to BUY - Grab them now!!!

Buy

• RelianceIndustries
• ITC
• Relenergy
• Rcom
  Parsvnath
• ICICBANK
• M&MFINANCE
• VIDEOCON
• PTC
• GUJNRECOKE
• SUZLON
• TATAPOWER
• NTPC
• DLF
• HDIL

Reliance Power - IPO Prospects

Issue Period: Jan 15 to Jan 18
Price Range: Rs.405 to Rs.450
Minimum Mkt Lot: 15 shares
Offer Size: Rs.10500-11500 crore
Retail Discount: Rs.20/- (for both Payment options)
Recommendation: Strong Subscribe (For Long-term)
Grade: Good & Attractive
Expected Gains on Listing Day (in percentage terms): 65% to 85%
Expected Range of Listing Price: Rs.740 to 840**
Chances of winning Allotment: Strong

Recommendation

1) Reliance Power Limited has laid out an abmitious plan of 28,200 MW power generation capacity, none of which are operational as of now, and also factoring in the long gestation period needed in the execution of such large power projects, there may be some volatility in the stock movement of the company after listing in short to medium-term. But, all-in-all, the company should be able to meet the planned expectations over a long-term period. Hence we recommend investors to subscribe to the issue with long-term perspective for more enhanced & superior returns.

2)R factor always work in Indian Stock Market.

Multi Baggers list # 1 - January

JK LAKSHMI CEMENT LIMITED

JK LAKSHMI CEMENT LIMITED has been posting solid results for the last five quarters in a row. The nine months Cash EPS till December, 2007 stands at 43.21 as against 27.57 for the same period previous year. At current price of 171, this stock is trading at a PE of a mere 3.6!!! The fair value of this stock should be three times the current market price at least. Long term investors can look forward to targets of 500 plus in the next one year. The company has also declared an interim dividend of 10% and record date for that is 30th Jan, 2008.

If ever there was an undervalued share in the stock market, this is the one. Must Buy.

GODREJ INDUSTRIES

GODREJ INDUSTRIES will stand to gain immensely from the recent repeal of Urban Land Ceiling Act of Maharashtra. They holds a large piece of land in Vikhroli, which can be develop. They can expect a rental income alone over 100 crores annually. According to sources, the company is holding 82.88% stake of Godrej Properties P. Ltd. which is holding 51% of Godrej Realty P. Ltd. and 100% of Godrej Waterside Properties P. Ltd.

These companies are developing an IT Park at Kolkatta and a Residential Project at Thane. There is also a buzz in the market that Godrej Poperties will be coming out with a public issue soon. This and the company's foray into real estate in a big way will result in huge value unlocking for Godrej Industries. At the time of writing this, the stock was trading at the lows of 359.40.

It can turn out to be a Multibagger investment for long term investors

FUTURE CAPTIAL HOLDING - IPO Update

IPO: Future Capital Holdings LimitedIssue Period: Jan 11 to Jan 16
Price Range: Rs.700 to Rs.765
Minimum Mkt Lot: 08 shares
Offer Size: Rs.450-491 crore
Recommendation: Subscribe (For Listing Gains)
Grade: Above Average
Expected Gains on Listing Day (in percentage terms): 40% to 65%**
Expected Range of Listing Price: Rs.1060 to 1260
Chances of winning Allotment: Reasonable (in Retail category)
Sector: Financial Services
Bid for: cut-off price

Recommendation:

This company cannot be directly compared with any of its listed peers due its unique mix of busines model & structure. Though, we feel that the company is richly valued for a start-up business at this point in time. But we also feel that this IPO will provide investors an interesting opportunity for smart listing gains. Hence we recommend investors to subscribe to this issue for listing gains.

Stcok calls -09/01/08

• PTC is good buy for next 3-4 months.We expect the stock to correct a little bit but fundamentally as well as medium term technicals are very strong.It is buy on dips.

• Accumulate GSPL @ cmp.GIPCL is good midcap stock and there are rumours that stake sale will happen in next few days.

IPO dilemma – Reliance Power / Future Capital

Last year 112 stock got listed on Indian bourses and out of every 10 IPO listed on stock exchange 3 gave a return of more than 100%, five outperformed sensex and 3 are trading a loss of issue price. Primary market is luring retail investors like never before and paying a smart risk free return to investors. IPOs are selling like hot cake in India because of the simple reason that it gives easy money and if an investor puts his money smartly in selected IPOs, the chances of loss are minimal. But one thing that makes small investor reluctant to grab this opportunity of easy money is the likelihood of not getting allotment on application for IPO. Getting allotment in IPO is just like lottery and it depends more on luck if the IPO is like that of most chased after companies like – Religare, BGR Energy, Edelweiss, Mundra Port and so on.

Last year all the companies ADAG (Anil Dhirubhai Ambani Group) outperformed sensex and needless to say when it comes to return, Reliance is the leader. There is no denying the fact that issue is going to be oversubscribed and it will give a smart return to the investors. The issue also gives an option to small investors of making staggered payment and pay only 25% of the issue price at the time of application. So, this means that if a small investor is applying in the range of one lakh, he needs to pay only 25K at the time of application. This further makes it easy for the IPO to create more anxiety among the investors and makes them more worried about getting the allotment. .I personally feel that there are fair chances of getting the allotment as the issue size is a mammoth 12K crore. As it has happened last year, in the case of DLF($ 2 Billion) and ICICI Bank($ 2.5 Billion in domestic market) follow on offer, both these issues which were smaller in size than Reliance IPO were subscribed only 0.96 and 1.03 times respectively in retail section, so retail investor can expect to get the allotment. Just like Reliance Power, in the case of DLF and ICICI bank too, the retail investors had an option of making staggered payment. Taking the size and staggered payment option into consideration, I expect that allotment should not be a cause of concern for retail investors. But since this is an issue floated by the most sought after shares on the stock exchange and a business house which is known for smart yield to shareholders, the issue can be subscribed to a maximum of 4-5 times in retail section. All said and done, Indian investors and share market is highly unpredictable, so the results would be out only after the issue closes on 18th Jan.

Another good issue which is coming at the same time (opening on 11 Jan & closing on 16 Jan) is Future Capital, Kishore Biyani group. Infact, I am more bullish on Future Capital than Reliance Power because everybody is running after Reliance Power and that is why Future Capital is not getting the deserved attention. Furthermore, Reliance Power IPO will wipe out good deal of liquidity from the market therefore, going for the Future Capital is not at all a bad deal. No doubt that the issue will be oversubscribed good number of times and there is enough potential if one is looking at long term investment. This is another good opportunity to earn good return on investment and I expect the IPO to get listed at a premium of 100%. There is lot of depth in financial sector and this sector is opening up in India due to growing economy and huge investment and insatiable appetite of consumers. The mad rush for grabbing the shares of future capital is clear from the fact that when news of Fututre Capital IPO was made public, it was quoted at a premium of 300 Rs and just 5 days after that, grey market is quoting a premium of 100% on it.

Both these IPOs are a golden opportunity for the small investors to start the year with a whopping return and retail investors should apply for both these IPOs in the range of one lakh. Both of them are among the favorites for investor, which is further substantiated by the fact that premium for the shares are soaring in grey market day after day. Even economic times which keeps away from unofficial news, quoted a premium of 9000 on every application for Reliance Power IPO in grey market. In the worst case scenario, if an investor applies for these IPO, he may not get the allotment for Future Capital (considering the size) but getting an allotment of one lot (15 shares) in Reliance Power is certain. So, applying for the IPOs is a good trade off and one should apply for both the shares.

Disclaimer: I have no personal interest in Reliance Power or Future Capital.

IT firms may report 7 % -Q3 growth

No longer the blue-eyed boys of the stock market, Indian information technology service providers are expected to declare a 6.5-7 per cent sequential growth (as compared to the trailing quarter) for the third quarter ending December 31, 2007.

Analysts also expect the bottom-line growth to range anywhere between 6-10 per cent during the same period.

The third quarter is generally the weakest for most IT firms since it has fewer working days. Infosys and Satyam in particular, witness weak third quarters. In contrast, the third and fourth quarters are the best for TCS and Wipro

The calming fact is that unlike the previous two quarters (Q1 and Q2), the US dollar was almost stable (around 1.5 per cent appreciation) for the September-December 2007 quarter. The rupee had appreciated by almost 12 per cent in the first two quarters of FY2007, gnawing into the rupee profit margins.

Of concern in Q3, though, is the trend of the rupee appreciating against the British pound by 3.5-4 per cent, which could affect the performance of the companies that have increased their exposure in the UK, following the steep rise in the Indian rupee against the US dollar.

Large share

Most IT firms do not give a break-up of their UK revenue which is clubbed with that of Europe.
For instance, till the second quarter ending September 30, 2007, 19.9 per cent of TCS' revenue came from the UK, while 8.4 per cent accrued from continental Europe.

In the case of Infosys revenue from Europe constitutes 27.4 per cent of the total revenue. For Wipro, the figure is 25 per cent (for Europe), while it was 21 per cent for Satyam.
Moreover, mid-caps like HCL Technologies(28.6 per cent from Europe) and Tech Mahindra (with over 75 per cent of its revenue from British Telecom) too are likely to take a hit.

The appreciation of the rupee against the pound is likely to affect IT companies since most of them would not have hedged adequately against the British currency. Every rupee rise shaves off 30-50 basis points off the operating margins.

However, IT firms can exercise the option to bill their clients in Euros too (against which the rupee depreciated around 0.5 per cent) instead of pounds, notes Krupal Maniar, an analyst from ICICI Securities.

Better efficiency

Nevertheless, the EBIDTA (operating profit) margins for IT firms on an average is expected to be higher in Q3 since the IT firms have effected higher billing rates, lowered their selling, general and administration (SG&A) expenses, and managed costs efficiently, notes Harit Shah of Angel Broking.

Analysts will be keenly watching the indications of IT budgets for CY2008.
Estimates indicate that the 2008 IT budgets for large global banks and financial institutions are seeing pressure post the subprime meltdown in the US. Most CIOs are indicating flat-to-slightly-down budgets for 2008 with cuts in discretionary spending projects in the first half of 2008. The outlook for the second half of 2008 is unclear and would depend on US economic growth in the first half of 2008.

Source: http://www.rediff.com/money/2008/jan/08it.htm

Bank Stocks

Banking & Financial sector will outdo others in 2008-09 . My pick in this sector is

• In my opinion the leader is SBI, biggest of all, getting bigger and better.
• In PSU lot pick - Dena, UCO, Allahabad, PNB, Canara
• In Private lot pick - ICICI, Centurion BOP, Axis, Kotak

Mid-caps & Small-caps-BE CAREFUL!!!

Beware of mid-caps and small-caps stocks.Buy fundamentally strong stocks.Dont fall in trap of brokers,vested interest,promoters and operators.Some of the stocks are surging ahead without any fundamentals.These stocks are operated and manipulated by operators and brokers on behest of promoters.

Buy quality midcaps which rewards investors with regular dividend and which has got good cash surplus

Buy midcaps in Oil & gas,Power,IT infrastructure & eduation & construction equipments space.Avoid penny stocks and dont buy stocks on basis of rumours.Dont fall in trap of operators on basis of the planted stories.Most of midcaps and small caps are moving on basis of planted stories !!!

Subhiksha plans IPO this year

The Chennai-based discount retail chain Subhiksha Trading Services said that it would announce its initial public offering (IPO) this year.

Mr R Subramanian, Managing Director, said, “We will announce the IPO this year. In fact, I would be very surprised if that doesn’t happen this year. However, I will restrain from putting a time limit of say three months or six months to it.”

According to earlier reports, Subhiksha had planned its IPO by the second half of 2007, as soon as it completed 1,000 stores across the country. Mr Subramanian said, “We were supposed to float the IPO after we completed 1,000 stores. However, today we are well above that mark and about to touch the 1,400-1,500 store mark by March, and are still well stacked in terms of finances.”

He said the company was still evaluating market conditions with a team of its in-house venture capitalists, consultants and accountants, all of whom are members of the company’s board of directors. Mr Subramanian had earlier said that the IPO was more for the purposes of listing than raising money for expansion. He had said, “We want the IPO to give liquidity to shareholders.”

Subhiksha is a discount format modern trade organisation that operates through four verticals — fruits and vegetables, pharmaceuticals, FMCG and telecom. Its direct supply arrangements with manufacturers help it reduce the supply-chain costs, in turn helping it keep prices of all products much lower than the market levels.

The company was formed in 1997 in Chennai, and currently operates over 1,000 outlets across 90 cities. ICICI Venture Capital holds 24 per cent in the chain, reports The Hindu Business Line.

Source : Moneycontrol.com

Reliance Power IPO : Power ON India ON

Anil Ambani Speech from Reliance Power IPO Press Brief

On behalf of ADAG I welcome all of you witness the announcement of a very very important of a very very young ADAG Group. This group is a creation of the demerger and the restructuring of the group. vision dreams of late father DA As I reflect back roughly 2.5 yrs the ADAG rewarding journey opportunity in June 2005, to be born again as a new group She took great care in ensuring .. such is the love and affection of all mothers and I must acknowledge the role played by my mother..

The reliance group was the vision of one man,it was the dream and it continues..
I had the big fortune to be the part from 1982 and the opportunity to be part of every major capital raising programmes and that was invaluable learning process under the able and living guidance of my late father. The journey began in 70s slogan roti, kapda or maakan father chose kada, started textile vimal. that was the birth of RIL

Then came 2000, roti, kapda, makaan mobile.That was the big rev of telecom in the country

What we see in 2008 is for india roti, kapda, makan, mobile, power it was always vision of my late father to provide high quality low cost services in every area..
financial , entertainment, energy i think we are fully committted in this
ADAG June 2005 the market value of 15000 crores , currently as I stand here in front of you its 32500 crores making us the second largest industry group This is something we have accomplished with the support of over 7 million retail investors and 100s of domestic and foreign investors.

Rs.20 less than issue price for public.
Reliance Power IPO 15 to 18
Part payment option available.
To be listed in the first week of February
60%QIB ,30%Retail (due to regulations.)
16crores - 300crores ADAG grew Last year.
Every listed company of ADAG beat sensex in 2007.
Per Capita Power Consumption 618 units is less than 1/4th of world average.
Installed Capacity CAGR power 4%, China 12%
India 25 yr = china 1 year

GDP 9% end of 10th plan - 07 - energy shortage 14% Generation coal,gas,hydro captive coal - 6states sell power sasan, krishnapatnam power trading uttarkhand arunachal largest domestic sasan december 09- first commision 40% Gas. Bullish on Gas

Reliance Power IPO- Payment Options

IPO Date : Jan 15 - Jan 18 2008

Net Issue to the Public 228,000,000 Of which Retail Portion 68,400,000

Issue Proce :Rs. 405 -450

Discount for IPO : Retailers have been promised 5 percent discount, which will be reflected on the final offer price when they get the allotment

Lot Size :15 stocks

Max. Retailers can apply for :225 stocks

There are two payment options for retailers

Payment Method-1

Amount Payable on Submission of Bid-cum-Application Form in case of Retail Individual Bidders and Non-Institutional Bidders, is Rs. 115.0 per Equity Share, such that it shall not be less than 25% of the Issue Price and Balance Amount Payable shall be paid by the Due Date for Balance Amount Payable. All Non Resident Bidders availing the option of Payment Method-1 are required to submit a copy of an approval from the RBI allowing them to subscribe to the partly-paid up Equity Shares.
Under Payment Method – 1, out of the Amount Payable on Submission of Bid-cum-Application Form, Rs. 2.5 is towards face value and Rs. 112.5 is towards premium.

Payment Method-2

Amount Payable on Submission of Bid-cum-Application Form in case of Retail Individual Bidders and Non-Institutional Bidders shall be 100% of Bid less the Retail Discount .

There will be no preference if you pay by method 1 or 2

Advantage with Payment method 2 is it get alloted to you on allotment day as fully paid stock but in payment 1 its only partially paid which get converted to fully paid after Allotment plus 28 days or so after you pay the remaining amount and the process getting over , so you cant sell it immdtly in payment 1 and you can sell it on the listing day in payment 2.


My final Conclusion on the payment option is Payment 1 which is 25 percent payment now and remaining on allotment is good so you can use remaining fund for some other IPO.

Bullish on Logistics, Hospitality & Energy '08

After 50% growth, everyone needs a break. I do not think that anyone is expecting these kind of returns YoY. But we still expect at least 15-20% growth from here. We may be looking Index at 22,000-25,000 .

we are bullish on any industry, which is supporting the oil and gas upstream or coming up with an infrastructure project.

Hospitality stocks, oil and gas and infrastructure would continue to be very good. I think logistics is the other sector, where more and more outsourcing will happen. Corporates will go for third party logistics outsourcing and that is another sector that we are very bullish on.

My Picks 2008

My Picks for 2008

1. Indiabulls Finance
2. NTPC
3. PTC
4. PFC
5. Power Grid
6. Essar Oil
7. Facor Alloy
8. GIPCL
9. Gujarat Nre Coke
10.Gateway Distripacks

Dividend Profit Strategy

Buy stock on or around the day of the ANNOUNCEMENT and sell just
before the close on the day before the ex-dividend date. You DON'T get
the dividend but you've very likely made a tidy profit as people
scamble to get on and get the dividend thereby driving up the share
price.

THEN having sold your position, you could go a second bite and SHORT
the stock at the close that same day. The stock is sure to open the
next day down by the amount of the dividend - close it out just after
the open for another excellent quick profit.

Try this strategy for RAJESH EXPORTS