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Assam Company – Stock To Watch

admin — Tue, 05 Jul 2011 13:10:18 +0000

Assam Company India Limited is a group company comprising of professional companies engaged in multifaceted activities like Tea plantation, Oil & Gas exploration, production & supply, Road Transportation etc., and a heritage company since 1839.

Assam Company is one of fewest heritage companies in India serving to the development of industries over 165 year. It is the first tea plantation company in India started its tea garden in North East India in 1839. Assam Company is the first company to explore oil in Assam in the year 1889. It is indeed a story that the engineers supervising the wood felling and carrying through elephants, found mark of oil on the feet of the elephants. They reached the spot and asked the laborers to dig saying “Dig Boy, Dig”. In fact, this was phenomenally known as Digboi, the oldest Well of the country located in Upper Assam. Assam Company is the only non-government company that has been exploring oil in north east India and desires to expand its exploration in the basin of Bay of Bengal.

Africa tea output is down by 35 m kg this year. Low Arican output is going to aid Indian producers. Drop in African production is culminating into higher prices going forward. It has triggered off big buying from Egypt and UK. Shortage is likely to go upto $ 50-55 million in Africa.

Tea prices have gone up by Rs 10-15/kg. Rains may hit production. Further increase in tea prices is likely. Assam Company is looking at restructuring outstanding FCCBs. Its FCCBs worth $ 32 million will mature in November. Promoters hold 51.18% stake in the company

VIP Industries – Stocks To Watch

admin — Tue, 05 Jul 2011 13:06:16 +0000

VIP Industries stock is constantly hitting new highs. Declining polymer prices may impact the bottomline of the company. Soft luggage space is a major revenue driver for the company. Currency fluctuations is also a factor. Plastic prices are down by about 15%. Crude correction is likely to impact positively to the company.

A reduction of 2-3% in costs on prices of plastic is coming down. Softening of aluminum and steel costs will have positive impact. VIP Industries has market share of 21% in Qatar. The company is eyeing 20% growth in sales. It is planning to ramp up production in 3 production plants in India.

VIP Industries is expecting the margins to be good. It sees 65% of the business from soft luggage and sees 35% growth in margins in both soft and hard luggage.

Strong yen expected to dent car maker’s profits – Maruti Suzuki

admin — Thu, 14 Apr 2011 02:19:44 +0000

Maruti Suzuki takes a knock

WHAT HAPPENED?

The stock of Maruti Suzuki tanked 6 per cent from Rs 1,252 to Rs 1,175 in nine trading sessions from March 11, wiping out over Rs 2,000 crore in market capitalisation.

WHY DID IT HAPPEN? The surge in the Japanese yen against other currencies, including the rupee, is expected to put pressure on Maruti’s earnings since 80 per cent of the auto maker’s imports are yen-denominated.

HOW WILL IT IMPACT? Every 1 per cent gain in the yen is expected to increase import of direct components by Rs 271 per vehicle and increase royalty fees by Rs 157 per vehicle. Maruti is expected to pay royalty of Rs 15,695 per vehicle in FY12. Analysts expect higher royalty pay-out to impact operating profi t per vehicle by 0.5 per cent. In Q3FY11, earnings fell 18 per cent to Rs 565 crore despite revenues rising 27 per cent, owing to higher royalty payments and raw material cost.

WHAT IS VIEW ON THE STOCK?

Though cautious, consensus (35 out of 60 analysts) is still bullish on the stock with a one-year target price of Rs 1,424, an upside of 21 per cent from the current levels of Rs 1,170. The view could change if the yen continues to strengthen, prompting analysts to lower estimates. The stock now trades at 12 times estimated FY12 earnings.

steel stocks are a good bet now

admin — Thu, 14 Apr 2011 02:14:05 +0000

PURELY FROM THE point of the Japanese crisis . Indian companies are not in a position to indulge in major exports, as of now. Secondly, the kind of products required may not be readily available at once since specialised grades of steel are required for each industry. So, the window of utilising the demand opportunity to the full extent is quite small. Besides, there is a big challenge in terms of rising prices of both iron ore and coking coal. Though prices have softened a little, they are still signifi cantly above previous year’s levels. Price of steel has not really moved up much to offset the input cost hike. This situation does not give me enough confi dence to say that steel stocks are a good bet now.

strong domestic demand and a fall in iron ore prices

admin — Thu, 14 Apr 2011 02:11:24 +0000

SAIL and JSW to benefit

STEEL STOCKS LOOK good at this juncture because of the strong domestic demand and a fall in iron ore prices. Japan accounts for around 8 per cent of the world’s steel output and, in the short term, a fall in demand from Japan will be offset by cutbacks in steel output. Spot ore fine prices have already fallen 15 per cent from $200/MT last month. The fall in ore rates will also result in steel prices coming down. This is a big positive for nonintegrated players as they gain from a fall in input costs. But, for integrated players, this will be a negative as they do not derive any benefi ts from lower input costs, but get hurt owing to lower realisations. We expect SAIL and JSW Steel to benefi t as they are not fully integrated.

10 per cent decline in the Sensex in CY11

admin — Thu, 14 Apr 2011 02:06:38 +0000

Indian equities break correlation with the dollar index, indicating that macro concerns are playing spoilsport

The movement of the dollar index in the recent past marks a departure from its earlier trend of being a strong reference for predicting the way Indian markets move.

Th e dollar index is a measure of the value of the US greenback relative to a basket of six major international currencies. Seen as an indicator of risk aversion in the markets, over the years, it has moved inversely to the Sensex. Lower US interest rates enable foreign investors to borrow cheaply in dollars and deploy the funds in other currency, equity and commodity markets.

Indian markets benefitted from this trend as nearly Rs 102,268 crore poured into equities in the second half of 2010. During this period, the dollar index dropped nearly 8.13 per cent, while the Sensex rose 16 per cent. Girish Iyer, senior vicepresident, Mecklai Financial, explains: “As foreign institutional investors (FIIs) are a key driver of our equity markets, the dollar index not just refl ects
the currency-adjusted returns that investors expect from India but also impacts asset allocation decisions.”

However, the 10 per cent decline in the Sensex in CY11 curiously follows a fall of 4 per cent in the dollar index. Even as the dollar index weakened from 79.12 to 75.52 on March 23, the Sensex failed to rally as it has historically done. Instead, the Sensex tanked from 20,256 to 18,150, registering a fall of 10 per cent on the back of FII sales of Rs 7,783 crore. Th e FII pullout, despite the lack of any increase
in global risk aversion, suggests that Indian markets may have temporarily decoupled from the inverse correlation with the dollar index. Iyer reasons “Since Q3FY11, the political turmoil and government’s inability in controlling infl ation have taken a toll on investor sentiments towards Indian equities.” Indian markets have fared the worst, in terms of performance, in the Asia-Pacifi c group in the past six months. Th ailand, Taiwan, Indonesia, Korea have given positive returns of 5-10 per cent even as Indian markets turned negative.

Th e debt market though has not suff ered this fate,attracting fl ows of Rs 12,471 crore year till date. Even after adjusting for FII outfl ow in equities, the net infl ow of Rs 4,688 crore is helping the rupee shore up against the dollar. Abhishek Goenka, chief executive offi cer, India Forex, says, “Th e rupee is appreciating on the back of strong debt fl ows, which got a boost from the hike in FII limit.”

Going ahead, the decoupling of Indian equity market could continue for the next two to three months. Analysts suggest that dollar index might fall below 74 on account of two factors. Goenka says, “Th e US government’s buyback of $600 billion bonds is progressing steadily. Th is excessive credit infusion into the system means a weakening dollar bias.” Th e other reason is the building expectation that interest rates in Europe will go up. Th is could mean that money will fl ow into the EU, thus strengthening the euro against the dollar. Iyer expects the dollar index to move between 74 and 78 in the short- to medium-term and the bias towards Indian debt to continue. “As long as there is no broader contagion, the bias is towards a weak dollar,” he sums up

Shroff believes CY11 to be a negative year for Indian equities

admin — Thu, 14 Apr 2011 01:59:21 +0000

Chartists expect the Nifty to fall below 5,000 levels in the near term, before heading north

Don’t uncork the bubbly yet. If you thought the over 5.5 per cent jump in the Nifty to 5,687 in the past six sessions (till March 28) is an indication of (good) things to come, think again. According to chartists, it’s just a dead cat bounce and the 50-share index could head south.

Ashish Shroff , technical analyst at Ambit Capital, who drew fi rst blood when the Nifty touched 5,400 in January, just as he predicted in December, believes the pullback won’t last for long and the Nifty will tank to 4,780 levels in the
coming quarter. Th at is a good 907 points, or a 19 per cent, drop by .

“As per the Elliott wave, in December 2010, the Nifty completed its fi ve-wave upmove. In January 2011, the Nifty fell more than 10 per cent and retraced the 23.6 per cent retracement of the rise from its low of 2,252 in October 2008 to a high of 6,338 in November 2010. So, in January 2011, the Nifty achieved 5,400 but the index did not complete the bear wave count,” Shroff notes in his report
titled, ‘A storm in the making’. According to the Ambit chartist, the Nifty has completed the ‘Y’ wave and is currently in the ‘X’ bounce wave. However, the index has to head down as per the ‘Z’ down wave. Concurring with Shroff is Vijay Bhambwani of bsplindia.com. “The probability at this point in time is bearish,” he says. “Th e Nifty is still below its 200-day moving average at this point.”

Th ough traders would be looking at going long, given that the Nifty is just 1 point away from breaching its 200-DMA of 5,688, Shroff thinks otherwise: “As long as the Nifty stays below the 200-DMA, it’s better to go short.” Bhambwani adds, “Th e Nifty will just manage to touch it (200-DMA) but will fall below that level.”

“Th e Nifty will just manage to touch it (200-DMA) but will fall below that level.” Shroff believes the index will break down through its short-term support and medium-term support of 5,400 and 5,280 in the coming months. “The bounce back looks more like a bull trap,” he says. “In fact, if the index goes beyond the 200-DMA, the downfall will be much sharper.” However, he advises traders to keep their stop-loss at 5,780, which marks the 50 per cent retracement of the Nifty’s previous fall from 6,338 to 5,127. But what gives credence to Shroff ’s bearish views is the fact that average volumes clocked during the upmove were much lower at around Rs 1 lakh crore compared with the average daily traded volumes of Rs 1.6 lakh crore. Besides, the number of stocks that participated in the rally shows that the rally is not broad-based: just 26 of the 50 stocks pulled up the index. “In fact, of the 26 stocks, only 13 were outperformers,” points out Shroff . Besides, for the fi rst time in eight quarters, the Nifty is headed for a negative close in the fi rst
quarter of 2011 from its close of 6,134 on December 31. Shroff believes CY11 to be a negative year for Indian equities, though the index won’t see the sort of fall it took in 2008.

CSS Tech – Stocks To Watch

admin — Sun, 27 Mar 2011 11:38:55 +0000

CSS Technergy Ltd.

BSE 590050

NSE CSSTECH

CSS Tech is engaged in providing turnkey ITES solutions adopting ICR, OMR, OCR in various e-governance projects and in end-to-end student data management for arge-scale entrance examinations. CSS also does end-to-end meter-to-cash solutions and adoption of firmware upgrades in Spot Billing Machines which are still being used on a large scale due to their highROI and high efficiency. CSS serves more than 20 million consumers across india through its utility services division in 8 states.

CSS is serving customers like FedeX,Fujitsu, PSEB,Wipro, GE, CMC,Capgemini D E Shaw, MESCOM, Mahavitaran etc. CSS expertise summary :- E-governance project planning and implementation. End to End document management One of India’s largest Utility IT Services company offering services to several DISCOMs Serving 10 top utilities in the country CSS stores, manages and maintains close to 10 million customer data on the servers in a secure manner CSS is an empanelled member of PFC for bothMDASP and GSP for R-APDRP programs of Govt Empanelled with UIDAadhaar in the highest T2,F4 category for all-India capability. CSS has its own suite of customer- proven products for each of the vertical it operates in. These solutions are used on a regular basis at CS project locations and at client deployment areas. Its suite of products includes: EBAS, MetTecaa, DMSol, Loyaltrack.

So far, performance of CSS has been lacklustre. However, in view of certain developments, CSS has much better and brighter future prospects. As company is T2F4 level categhorized by UIDAI, it has bagged contract for 22 disctricts covering the states of Bihar, West Bengal, Andhra Pradesh and Orissa. Company can cover the whole of eligible numbers with in these 22 districts and additionally also bid for other locations with different registrars. From this new business, company is eligible to capture 50 million nos of UID Project. THIS PROJECT CAN LEAD TO 200 CRORE REVENUES TO CSS IN 3 YEARS. Company has already started implementation of this prestigious project which is being done through Own Assets as well as Outsourcing. For implementation of this project, company needs to spend approx 3 lac for each work-station and total capex will be 600 lacs for 200 workstations. To raise money for this project, CSS may make preferential offer of equity shares in near future (that is why, equity for next year has been shown as 7 crores. Above estimates have been arrived at only considering orders in hand. If CSS manages to capture more orders from UID, company’s performance can be spectacular in coming years. Its current market cap is just 14 crores which is really considering:

Book Value is Rs 35.50, Scrip is available at 3.80xFY12E Eps, Scrip is trading at 2.45xFY12E Eps, So far, share price has been lying low due to lacklustre performance. However, in near future, company’s performance will witness huge improvement and share price too can climb sharply. Scrip at Cmp appears risk-free. Floating stock is low. Investors may gain 50-70% in next 6 months.

Buy Rural Electrification Corporation

admin — Sat, 26 Mar 2011 05:42:29 +0000

Rural Electrification Corporation is going to raise $ 1 billion via bond issue in US. The company has raised $ 500 million via bond issue in international market. The company is eyeing international markets for fund raising. It is planning to raise funds via ECBs, corporate bond issues. The company aims Rs 24000 crore of disbursements in CY11.

PFC & REC are going to apply for banking license together. As part of its capacity expansion plans, REC is expecting additional capacity of 35,000 MW to come in the next 2 years. Matching transmission and distribution network has to be done.

The company is planning road shows in US and Europe. The company is also considering raising funds in Swiss Franc. He said that the company want to keep basket of different currencies.

Planning to raise $ 1.2 Bn next yr; want to keep basket of different currencies; recently raised Rs 3,000 Cr from LIC; expect to maintain borrowing cost around 8.1% in FY12: REC

Jindal Steel & Power – Stocks To Watch

admin — Sat, 26 Mar 2011 03:14:02 +0000

Jindal Steel & Power Ltd (JSPL), a part of US $12 billion O. P. Jindal Group has investment commitments in steel, power, oil & gas and mining with presence in major markets like Asia, Africa, South America and Australia. The company has an installed steel-making capacity of 3mtpa. JSPL’s power subsidiary Jindal Power has an installed merchant power capacity of 1,000 MW and is currently undertaking projects of over 5,000MW. JSPL has executed projects well over the past 10 years and has continuously followed a strategy of backward and forward integration in the steel business.

JSPL has strong backward integration in place with captive coal reserves to feed 4,180MW (out of 5,380MW) capacity.

Power sector is slated for phenomenal growth going forward as India requires a capacity addition of 275 – 300 GW by 2017 whereas the estimated additions in 11th and 12th plan are 60GW and 100 GW respectively, resulting in a shortfall of close to 140 GW by 2017.

JSPL’s steel business enjoys flexibility of production. JSPL can vary its steel product mix based on market conditions and pricing trends

At the CMP of Rs663.5/share, JSPL is quoting at 12.3x its FY 2012E earnings and at an EV/EBITDA of 8.6x.

Target price of Rs713 comprises of Rs 235.4 for the steel business (6.5x FY12 EV/EBITDA), Rs 121 for the captive power business (surplus power) of JSPL and Rs 356 for JSPL’s 96.5% stake in Jindal Power.