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