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Monday, December 04, 2006
Businessweeek - 10 Asia TechnoVisionary Companies
Asia is more than just a huge market for technology products and services. Great innovative technology ideas are brewing across Asia, from China and India to Malaysia and the Philippines.
Pierre Hennes, a partner with Upstream Ventures and advisor for ZDNet Asia's Top Tech Index, said: "With a high concentration of the world's manufacturing and services, Asia is increasingly a locus of global research and development.
"The region continues to lead in economic growth, driven in part by large populations of highly educated and trained professionals, many returning from overseas as entrepreneurs with deep industrial and scientific experience," he noted.
According to Hennes, the region's private equity markets are attracting large inflows of foreign investments. Couple that with India and China's sizeable domestic markets, in particular the rapidly growing middle classes that are driving consumer demand, "these factors all contribute to the emergence of innovation and technology applications that are re-shaping Asia's economies", he noted.
This is why ZDNet Asia has introduced the Top Asian TechnoVisionaries award category. We want to recognize the great ideas that are coming out of garages and home offices in Asia, a region that is fast cultivating its own pool of technopreneurs.
The Top Asian TechnoVisionaries generated tremendous interest and queries, and at the end of the nomination period, ZDNet Asia received 30 completed nomination forms. We narrowed the list down to 15 and ended up with our top 10 picks. Nominees were judged on six criteria: technology innovation, market potential, business model, investor/financial record, customer strategy, and creative branding/marketing.
The Top 10 Asian TechnoVisionaries for 2006/07 are:
Antig (Taiwan)
ARE Technologies (India)
Bbmao.com (China)
Bluebird Soft (Korea)
Drishtee Dot Com (India)
Exist Software Engineering (Philippines)
Jataayu Software (India)
NetInfinium Corporation(Malaysia)
Peering Portal (Korea)
Singular ID (Singapore)
Commenting on the winners, Hennes said: "I am pleased to see that such a variety of strong entrepreneurs, companies and technologies are featured in this year's list.
"This year's Top Asian TechnoVisionaries is an indication of the promising future for Asia's entrepreneurs who are driving the emergence of Asian multinationals that could someday supplant foreign ones that currently dominate the Top Tech 50 list," he added.
Michael Leung, CIO of Bank of Amercia, agreed that tech startups in Asia have an advantage. "The Top 10 Asian TechnoVisionaries are fine examples of how a technology company with vision, determination and talent could, like a David among Goliaths, grab its fair share of the market, and win the support of the community at the same time.
"I believe the awards serve as important encouragements for many Asian companies in their pursuit of technology innovation and value creation going forward," added the Top Tech advisor.
Daniel Lai, CIO of MTR, said such award programmes are an excellent way in providing benchmarking opportunities and recognition for innovative technology companies. He also believes this will help encourage more tech startups to aim for further developments and achievements.
Sensex advances for the fourth straight trading session
The market ended with small gain as buying continued at higher levels. Shares from auto, metal and sugar sector witnessed buying interest.
BSE Sensex rose 29.55 points (0.21%) to 13874.33, which is an all time closing high. The Sensex opened with an upward gap at 13846.71 as buying continued following 148 point surge on Friday (1 December) and moved to an all time high of 13912.54. It hit a low of 13828.90.
The S&P CNX Nifty rose 3.40 points (0.09%) to 4001, an all time closing high. It had advanced to an all time high of 4015.25 in intra-day trade.
The total turnover on BSE amounted to Rs 4808 crore boosted by two block deals of 20.09 lakh shares each struck in ICICI Bank counter in the institutional segment at an average rate of Rs 884 per share.
The Sensex has gained 242.83 points or 1.79% in the past four days from 13601.95 on 28 November. The barometer index is up 47.82% for the calendar year 2006 on the back of sustained inflow from FIIs, backed by robust corporate earnings.
Market breadth was strong today. 1462 shares advanced on BSE as compared to 1090 that declined. 81 shares remained unchanged. The BSE Small-Cap index rose 58.10 points or 0.9% to 6,776.84 while the BSE Mid-Cap index gained 43.53 points or 0.75% to 5,818.95
Among the Sensex pack, 16 advanced while the rest declined.
Tata Motors was the top gainer, up 3.64% to Rs 873.55 on 7.02 lakh shares. It had surged to an intra-day high of Rs 887.20. Tata Motors’ vehicle sales rose 43% in November to 49,061 units compared with the same month a year ago. Sales of commercial vehicles rose 46 percent to 25,793, while sales of cars rose 48% to 19,475, helped by a surge in sales of its Indica model. Exports rose 9.6% to 3,793 units. Its ADR surged 5% on Friday on NYSE.
Reliance Energy (REL) (up 3.30% to Rs 558), NTPC (up 2.67% to Rs 152) and Bhel (up 2.53% to Rs 2584) were the other gainers.
Cement maker ACC rose 3.25% to Rs 1169 as investor’s bet that the recent cut in diesel and petrol prices will bring down transportation costs for cement firms. The company reported 2.7% growth in cement dispatches for November 2006 to 1.52 million tonne. Dispatches in the 11-months period January-November 2006 rose nearly 7% to 16.98 million tonne.
L&T gained 3.24% to Rs 1423.55 on reports that the company is planning to foray into arms and ammunition to widen its defense equipment portfolio. The company will initially manufacture small arms and later graduate to ammunition, including explosives. L& T is also in talks with two European companies for a technological tie-up in this field.
Index heavyweight Reliance Industries rose 0.24% to Rs 1264 on 5.62 lakh shares. The company has restarted a fire-damaged hydrotreater unit at its Jamnagar refinery in Gujarat on 1 December. The unit had been shut since a fire on 25 October. Reliance had said in November that no major equipment had been damaged in the fire.
HDFC Bank was the top loser, down 1.84% to Rs 1100 on 2.66 lakh shares of which 2.40 lakh shares came through a block deal which was executed at Rs 1100 per share on BSE at 13:00 IST
Wipro (down 1.77% to Rs 590.25), Hero Honda (down 1.51% to Rs 760) and Satyam Computers (down 1.47% to Rs 460) were the other losers.
Parsvnath Developers was the second highest traded counter on BSE with total turnover of Rs 301.80 crore followed by Era Construction (Rs 129.35 crore) and Unitech (Rs 103.84 crore).
United Breweries advanced 9.40% to Rs 199.05 after a block deal of 10 lakh shares was struck on the counter at Rs 190 per share on BSE by 11:42 IST.
Sugar stocks surged on reports that Indonesia will buy as much as 2,00,000 tonnes of white sugar by March 2007 to ensure supplies to keep a check on prices and control inflation. Indonesian sugar production is expected to reach 2.3 million tonnes this year, which is 7% lower than an initial target. Bajaj Hindustan (up 4.51% to Rs 247), Balrampur Chini Mills (up 9.34% to Rs 89), Bannari Amman Sugars (up 1.56% to Rs 810), Dhampur Sugar Mills (up 12.10% to Rs 95.40), Oudh Sugar Mills (up 8.50% to Rs 103.35), Mawana Sugar (up 5.46% to Rs 56.95), Shree Renuka Sugar (up 6.96% to Rs 532), Sakthi Sugar (up 13.06% to Rs 116) and Triveni Engineering (up 4.43% to Rs 58.90) surged.
Among the side counters, Media Video surged 20% to Rs 50.60 after its board approved spinning off the firm's real estate division.
Mahindra & Mahindra rose 0.42% to Rs 744 after its total automotive sales for November rose 11.5% to 13,600 units. Its tractor sales rose 12.4% to 7,987 units.
Jewellery maker Rajesh Exports jumped 10% to Rs 258.70 after the firm said it had formed an equal joint venture with US-based watch designer Fossil Inc. with an investment of Rs 25 crore to make watches and sell jewellery.
Steel pipe maker Welspun Gujarat Stahl Rohren surged 3.15% to Rs 91.65 on high volumes of 60.43 lakh shares after three block deals of 5 lakh shares each were struck on the counter at an average price of Rs 86.60 per share in opening trade on BSE.
Sterlite Industries rose 5.12% to Rs 586.25 after the company said on Monday it has commissioned an aluminium smelter with an annual production capacity of 2,45,000 tonnes.
K Sera Sera Productions jumped 6.35% to Rs 31 after it agreed to buy 80% of Lemon Entertainment, from Lemon's founders. Lemon Entertainment runs Lemon TV channel
Sensex holds ground
Sensex Open:13847 High:13913 Low:13829
The market exhibited volatility in the first half of the trading session. The Sensex opened two points above its last close at 13847 and moved up before a sharp bout of selling saw it slip into the red and touch a low of 13829. Renewed buying in most of the front-line stocks saw the Sensex soar to an intra-day high of 13913 towards the close, up 84 points from the day's low. The Sensex finally ended the trading session with gains of 30 points at 13874 while the Nifty advanced three points to close at 4001.
The breadth of the market was positive. Of the 2,650 stocks traded on the BSE, 1,491 stocks advanced, 1,086 stocks declined and 73 stocks ended unchanged.
Among the prominent index gainers Tata Motors surged 4.31% at Rs879, ACC soared 3.56% at Rs1,173, Larsen & Toubro jumped 3.13% at Rs1,422, Reliance Energy added 2.98% at Rs556, BHEL advanced 2.63% at Rs2,587 and NTPC gained by 1.99% at Rs151. However Satyam Computers shed 1.84% at Rs458, HDFC Bank tumbled 1.79% at Rs1,101, Wipro was down 1.76% at Rs590 and HDFC closed weaker by 1.19% at Rs1,624.
The BSE CG index was the major gainer among the sectoral indices and added 2.17% followed by the BSE CD index, which gained 1.86%. The BSE FMCG index, the BSE HC index and the BSE PSU index notched up marginal gains. However the BSE Bankex, the BSE Teck index, the BSE IT index and the BSE Oil & Gas index ended weak.
Among the capital goods stocks Ingersoll Rand gained 5.26% at Rs365, Lakshmi Machine Works surged 5% at Rs35,754 and Thermax advanced 3.13% at Rs390. Gammon India, Bharat Electrical, Carborundum Universal and ABB were up 2% each.
ABB at Rs3,840, BNK Capital at Rs62.85, BHEL at Rs2,605.85, SBI at Rs1,378.70, Goodyear India at Rs197.45, Aditya Birla Nuvo at Rs1,190 and GE Capital at Rs154.60 touched new all-time highs on the BSE.
Over 61.03 lakh Parshvanath shares changed hands on the BSE followed by Welspun Gujarat (60.48 lakh shares), Lanco Infratech (23.77 lakh shares) and IDBI (19.07 lakh shares).
Value-wise Parshvanath clocked a turnover of Rs302 crore on the BSE followed by HDFC (Rs73.52 crore), Reliance Industries (Rs71.39 crore) and Lanco Infratech (Rs63.32 crore).
Nifty settles above 4000
The BSE Sensex ended with small gain as buying demand continued at higher levels. Shares from auto, metal and sugar sector witnessed buying interest.
The BSE Sensex rose 29.55 points (0.21%) to 13874.33, which is an all time closing high. The Sensex opened with an upward gap at 13846.71 as buying continued following 148 point’s surge on Friday (1 December) and moved to an all time high of 13912.54. It low for the day is at 13828.90.
The S&P CNX Nifty rose 3.40 points (0.09%) to 4001, an all time closing high. It had advanced to an all time high of 4015.25 in intra-day trade.
The total turnover on BSE amounted to Rs 4808 crore boosted by two block deals of 20.09 lakh shares each were struck in ICICI Bank counter in the institutional segment at an average rate of Rs 884 per share.
Market breadth was strong on BSE with 1462 shares advancing, as compared to 1090 that declined. 81 shares remained unchanged.
Among the Sensex pack, 16 advanced while the rest declined.
Tata Motors was the top gainer, up 3.64% to Rs 873.55 on 7.02 lakh shares. It had surged to an intra-day high of Rs 887.20. Tata Motors’ vehicle sales rose 43% in November to 49,061 units compared with the same month a year ago. Sales of commercial vehicles rose 46 percent to 25,793, while sales of cars rose 48% to 19,475, helped by a surge in sales of its Indica model. Exports rose 9.6% to 3,793 units. Its ADR surged 5% on Friday on NYSE.
Reliance Energy (REL) (up 3.30% to Rs 558), NTPC (up 2.67% to Rs 152) and Bhel (up 2.53% to Rs 2584) were the other gainers.
Cement maker ACC rose 3.25% to Rs 1169 as investor’s bet that the recent cut in diesel and petrol prices will bring down transportation costs for cement firms. The company reported 2.7% growth in cement dispatches for November 2006 to 1.52 million tonne. Dispatches in the 11-months period January-November 2006 rose nearly 7% to 16.98 million tonne.
L&T gained 3.24% to Rs 1423.55 on reports that the company will foray into arms and ammunitions business.
Index heavyweight Reliance Industries rose 0.24% to Rs 1264 on 5.62 lakh shares. The company has restarted a fire-damaged hydrotreater unit at its Jamnagar refinery in Gujarat on 1 December. The unit had been shut since a fire on 25 October. Reliance had said in November that no major equipment had been damaged in the fire.
HDFC Bank was the top loser, down 1.84% to Rs 1100 on 2.66 lakh shares of which 2.40 lakh shares came through a block deal which was executed at Rs 1100 per share on BSE at 13:00 IST
Wipro (down 1.77% to Rs 590.25), Hero Honda (down 1.51% to Rs 760) and Satyam Computers (down 1.47% to Rs 460) were the other losers.
Parsvnath Developers was the second highest traded counter on BSE with total turnover of Rs 301.80 crore followed by Era Construction (Rs 129.35 crore) and Unitech (Rs 103.84 crore).
The Nikkei average fell 0.11% on Monday as exporters such as Honda Motor Co. Ltd. fell on a strong yen while investors flocked to domestic demand-related issues such as property and consumer finance stocks. The Nikkei shed 18.19 points to close at 16,303.59
Hang Seng index rose 11.91 points (0.06%) to 18,702.73
Oil prices gained slightly Monday as fresh comments from key OPEC members over the weekend suggested the oil cartel would push for further cuts in output at its next meeting later this month. Light, sweet crude for January delivery rose 2 cents to $63.45 a barrel on the New York Mercantile Exchange.
The latest data showed FIIs resumed buying after two-day outflow. FIIs bought shares worth a net Rs 258.10 crore on Thursday 30 November while Mutual funds sold shares worth a net Rs 88 crore on that day.
US stocks fell on Friday after a manufacturing index showed its weakest reading in more than three years and a Federal Reserve official said more rate hikes may be required to control inflation. The Dow Jones industrial average fell 27.80 points, or 0.23%, to 12,194.13, while the Standard & Poor's 500 Index dropped 3.92 points, or 0.28%, to 1,396.71. The Nasdaq Composite Index sank 18.56 points, or 0.76%, to 2,413.21.
Strong market breadth
The market breadth was strong on BSE, as small-cap and mid-cap stocks also participated in the rally.
At 12:35 IST, the BSE Sensex was up 16.96 points (0.14%) to 13863.68. Earlier today, the Sensex opened with an upward gap at 13846.71 as buying continued following 148 point’s surge on Friday (1 December) and moved to an all time high of 13911.64. It low for the day is at 13828.90.
The total turnover on BSE amounted to Rs 2515 crore
Market breadth was strong with over 1.5 gainers for every single loser on BSE. 1501 shares rose, 900 declined while 63 remained unchanged. The BSE Mid-Cap index was up 0.86% while the BSE Small-Cap index rose 0.90%.
Among the Sensex pack, 19 advanced while the rest declined.
Tata Motors was the top gainer, up 4.10% to Rs 877.50 on 5.16 lakh shares. It had surged to an intra-day high of Rs 885. Tata Motors’ vehicle sales rose 43% in November to 49,061 units compared with the same month a year ago. Sales of commercial vehicles rose 46 percent to 25,793, while sales of cars rose 48% to 19,475, helped by a surge in sales of its Indica model. Exports rose 9.6% to 3,793 units. Its ADR surged 5% on Friday on NYSE.
Reliance Energy (REL) (up 3.12% to Rs 557.10), and NTPC (up 2.10% to Rs 151.15) were the other gainers.
Index heavyweight Reliance Industries rose 0.43% to Rs 1266.40 on 3.15 lakh shares. The company has restarted a fire-damaged hydrotreater unit at its Jamnagar refinery in Gujarat on 1 December. The unit had been shut since a fire on 25 October. Reliance had said in November that no major equipment had been damaged in the fire.
IT counters witnessed selling pressure. Satyam Computers was the top loser, down 2.54% to Rs 455 on 2.59 lakh shares. Other IT shares, Wipro (down 1.73% to Rs 590.50) and Infosys (down 0.20% to Rs 2189) declined.
Among the side counters, Steel pipe maker Welspun Gujarat Stahl Rohren surged 6.13% to Rs 94.30 on high volumes of 42.93 lakh shares after three block deals of 5 lakh shares each were struck on the counter at an average price of Rs 86.60 per share in opening trade on BSE.
K Sera Sera Productions jumped 6.35% to Rs 31 after it agreed to buy 80% of Lemon Entertainment, from Lemon's founders. Lemon Entertainment runs Lemon TV channel.
Helicopter operator Global Vectra Helicorp surged 9.75% to Rs 207.10 boosted by reports that the government proposes to raise FDI limit in helicopter firms and in non-scheduled airline operations to 74% from 49%.
Essar Shipping jumped 10.52% to Rs 30.95 after its board of directors on Saturday approved delisting of the company’s shares from the Bombay Stock Exchange. The company would seek shareholders` approval next month for this purpose.
Havells India rose 1.26% to Rs 337.50 after the company said it is entering into a collaboration agreement with a leading European motor manufacturing company for its new project of electric motors at Nimrana, Rajasthan.
The latest data showed FIIs resumed buying after two-day outflow. FIIs bought shares worth a net Rs 258.10 crore on Thursday 30 November while Mutual funds sold shares worth a net Rs 88 crore on that day.
US stocks fell on Friday after a manufacturing index showed its weakest reading in more than three years and a Federal Reserve official said more rate hikes may be required to control inflation. The Dow Jones industrial average fell 27.80 points, or 0.23%, to 12,194.13, while the Standard & Poor's 500 Index dropped 3.92 points, or 0.28%, to 1,396.71. The Nasdaq Composite Index sank 18.56 points, or 0.76%, to 2,413.21.
Poweryourtrade.com Trading Calls
Buy Bharat Electronics at Rs 1245. Stop Loss at Rs 1210. Target of Rs 1295 and 1382 (Intra-day Call)
Buy Action Construction at Rs 394-370. Stop Loss at Rs 360. Target of Rs 460 and 575. (Delivery-based call)
Buy ABB at Rs 3820. Stop Loss at Rs 3700. Target of Rs 3931 and 4176 (Intra-day Call)
Sell ONGC below Rs 858 only for target of Rs 845, breaking which a target of Rs 838(intra day call).
Research Calls
Balaji Telefilms
Angel Broking has given a ‘buy’ recommendation for Balaji Telefilms with a 12-month price target of Rs 170. The company has been enjoying high TRPs over the years. This helps it to have the upper-hand while negotiating with broadcasters and this is reflected in the consistent high per hour realisations of the company.
Considering that Balaji's content commands a significant premium and Balaji itself has refrained from compromising on its realisations, Angel expects these to improve. Balaji has two shows lined up for release during Q4FY07 which will be beamed on Star One.
At the end of FY06, cash and investments amounted to around Rs 26 per share and by FY08 they are expected to be around Rs 33 per share, thus providing a cushion to the stock price. At the current price, the stock trades at a P/E of 9.8 times expected FY09 earnings.
Dr. Reddy's Laboratories
Motilal Oswal Securities recommended a ‘buy’ for Dr. Reddy's Laboratories with a price target of Rs 800. The company has recently priced its ADS at $16/ADS and has raised about $200 million. It is assumed that the ADS proceeds will be used for debt reduction.
Hence, savings in interest costs will compensate for the equity dilution. The company is eligible of Ondansetron 180-day exclusivity but the launch is contingent on US FDA approval. Motilal expects one-time upside of $45 million in revenues and an incremental EPS of Rs 9 from this opportunity.
The company expects to start Phase-III trials for Balaglitazone in early 2007 subject to favourable data on some of the tests conducted. Improvement in core business coupled with large short-term opportunities like Fexofenadine and Finasteride will result in increased traction for FY07.
The German operations are likely to contribute positively to margins despite the recent price cuts. The company is currently valued at 29.5 times and 21.3 times its expected FY07 and FY08 earnings.
Sharekhan Commodities Buzz dated December 04, 2006
Crude oil: To rule firm
Oil prices moved higher and closed above $63 per barrel on Friday following worries about the weather. Temperatures in the USA reached 60 degrees Fahrenheit on November 29, before plunging on December 1. The forecast is that the temperatures would be below normal over the next few weeks.
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Poweryourtrade.com Trading Calls
Buy UTI Bank with a stop loss of Rs 467 for target of Rs 513/567
Buy Tata Motors with a stop loss of Rs 790 for target of Rs 920/1000
Buy Punj LLoyd below Rs 1115 with stop loss of Rs 1085; This is a day-trading recommendation
Short sell Tata Steel above Rs 467 with stop loss of Rs 473; This is a day-trading recommendation
Buy Bata with stop loss below Rs 198 for target of Rs 215–218
Buy ERA Construction with stop loss below Rs 459 for target of Rs 513, if needed take delivery
Poweryourtrade.com Trading Calls
Buy Era Construction at around Rs 473.20 with stop loss of Rs 468. (Intra-day call)
Buy Godawari Power at around Rs 100.70 with stop loss of Rs 97. (Intra-day call)
Buy Sterling Holiday at around Rs 86 with stop loss of Rs 84 (Intra-day call)
Sensex may test 14,000
Sensex surged 148 points to 13,844.78 on Friday (1 December) following a good rollover in the derivatives segment from November series to December series and on decent to strong auto sales figures for the month just gone by. The barometer index is now just about 150 points short of the next psychologically important level of 14,000. Nifty hit the psychologically important 4,000 mark on 1 December. It ended slightly below that on that day.
Sensex may test 14,000 level this week. But subdued trend in Asian bourses and a surge in crude price to above $63 a barrel may cap upmove on the domestic bourses today.
The market sentiment remains bullish due to strong FII-inflow, continued strong economic data and an upward revision in earnings growth of corporates by brokerages, on the back of strong Q2 results.
The latest data showed FIIs resumed buying after two-day outflow. FIIs bought shares worth a net Rs 258.10 crore on Thursday 30 November, compared to an outflow of Rs 63 crore on Wednesday 29 November. FIIs had pulled out a net Rs 335.30 crore on 28 November. Cumulative FII inflow for 2006 has reached $8.8 billion compared to record inflow of $10.7 billion in 2005.
Asian markets were mostly subdued on Monday (4 December). Key benchmark indices in Hong Kong, Japan, South Korea, and Singapore were down by between 0.1% to 0.3%.
US stocks fell on Friday after a manufacturing index showed its weakest reading in more than three years and a Federal Reserve official said more rate hikes may be required to control inflation. The Dow Jones industrial average fell 27.80 points, or 0.23 percent, to 12,194.13, while the Standard & Poor's 500 Index dropped 3.92 points, or 0.28 percent, to 1,396.71. The Nasdaq Composite Index sank 18.56 points, or 0.76 percent, to 2,413.21.
Nymex crude was hovering at $63.47 after Friday (1 December)’s surge.
Poweryourtrade.com Market Outlook
Rajat K Bose
The movement of the Sensex shows a bearish inside day formation. This formation has earlier led to range-bound activity on the very next day. However, since such an occurrence has been found only twice in the recent past of about one year, we can't say with conviction that this would be the probable market movement for the day.
Going by the international market movements-chances are-we would see an upward swing today at least initially. On the upside, the Sensex would find resistance between 13682 and 13711. This would be the first significant resistance zone. Next, it would gather good upside momentum if it manages to get past 13740. The final hurdle would be a tough 13818 - 13828 supply pressure area. Any major bull charge would be severely resisted by this significant final resistance zone.
On the downside, the Sensex may find support between 13565 and 13526. If it falls further then, chances are, we might see it going down to test even 13450. Any fall below that would make the index look very susceptible to further fall to some where in the region of 13333 to 13295.
Anil Manghnani, Modern Shares & Stock Brokers
The indices have made a fresh break out on Friday and thus should continue to make new highs this week. The Sensex has crossed a major resistance level at 13814 and now is headed towards the next major level of 14017. Once the Sensex crosses and sustains above 14017, it should start another major rally with the immediate targets of 14176 & 14546. The Nifty, on the charts, appears to be stronger than the Sensex and its next targets are placed at 4029-4062-4129.
On the down side, the supports for the Sensex are placed at 13606-13511-13451-13296. For the Nifty the supports are at 3922-3900-3873-3838. One should use any dips to the lower support levels to buy with a trading perspective. One should continue to buy stocks on declines that are making new highs as the upside momentum in these stocks is still very strong.
The Mid-cap Index is also showing some signs of strength and thus could rally up to 5252. However, here one needs to be more selective when picking stocks.
Ashwani Gujral, Techncial Analyst
The Nifty closed at 3997 for the week ended December 1st Nov 2006, up about 1.18% from the previous week. The market is gaining momentum as it makes new highs and participation increases. A more serious correction may start only below 3915. Next target is 4090 and then the mid term target of 4700.
The midcaps are showing strength increasingly on certain days, very select group is attracting consistent money. Realty, construction, media sectors, capital goods and banking are attracting consistent money. In the next week banking, cement and auto sectors are expected to show buoyancy.
Metals and sugar remain weak and people should avoid getting into them before they bottom out.
Overall all dips should be used to buy into the market both at an index level and at the stocks level in the mid cap space. Retail should keep low leverage and try to ride larger moves, as follow through is patchy and higher holding period is required.
Indiainfoline - Trading Calls
NIFTY (3997) SUP 3977 RES 4021
BUY APTECHT (150.90) SL 146
T 158, 160
BUY BATAINDIA (203.70) SL 198
T 213, 215
BUY SRF (219.30) SL 214 T 228, 231
BUY BANKBARODA (272.75) SL 268
T 280, 283
BUY KRBL (145.05) SL 141
T 153, 156
Indiainfoline - Simplex Infrastructures Ltd.
Simplex Infrastructures Ltd.
BUY
CMP: Rs400
Simplex Infrastructures Ltd (SIL) is a 82-year contracting company with a profit making track record since inception. The reveals the quality of management and its focus on consistent bottomline generation. The company has also had the same auditor, ‘Price Waterhouse’, since the year 1947 when the Mundhras’
took charge, which could be seen as an indication of healthy accounting practices.
Well diversified with Rs47bn order book SIL’s order book is a well diversified one with no vertical accounting for more than 30% of the company’s turnover. The order book/FY06 sales at 3.5x offers visibility given the average execution period of 1.5 years. Backed by a healthy order book and an estimated order intake/execution of 1.7x in FY07, we expect
SIL to witness a CAGR of 45.4% in topline during FY06-08.
Big plans for the overseas market SIL earns close to 10% of its total revenues from work overseas and plans to increase this proportion to 40% in the next four years, in order to diversify geographically as well. It also expects margins to be higher by 100-200bps overseas. The company is presently executing orders in Doha, West Indies and Bahrain and has presence in many other countries too.
Targeting new verticals SIL is planning a foray into road BOTs, mainly for annuity projects. It will also work on the feasibility of BOT/EPC projects in power T&D, power generation, ports, railways, real estate development and industrial construction, in its bid
to become a US$1bn company in the next five years.
The company raised close to Rs1bn through a preferential allotment to Chrys Capital and plans for another GDR/FCCB worth US$200mn, not factored into our workings, to meet its future fund requirements.
The SIL stock is trading at a P/E of 15.5x FY08E earnings. These are attractive valuations for a company expected to witness a CAGR of 63.2% during FY06-08. The market capitalization is at 0.3x its order
book, which is low and leaves scope for an increase. We recommend a BUY with a one-year price target of Rs459.
Indiainfoline - Strategy Inputs of the Day
Cautious start...bulls on defensive!
There is always more spirit in attack than in defence.
The spirit of attack or defence seems to be lacking for our 'Men in Blue' in South Africa. The stock market is a different ball game and betting on the bulls seems to be only picking up steam. After an attack for the last couple of months, the bulls may get on the defensive and lose a few wickets. Though they appear to be in total control, some hiccups are not ruled out. We expect a cautious opening due to weakness in US and Asian markets. But, the bulls may regain their confidence as the day wears on.
With the foreign funds pumping up the volume, the main indices are unlikely to face any major resistance. What's more, every fall is likely to be used as an opportunity to buy for the long-term. A lot of money is waiting on the sidelines to make way into the market. Mutual Funds too are sitting on a huge pile of cash. As a result, the market has rebounded with a vengeance after every big fall. Global concerns like a slowing US economy and higher oil prices aside, the domestic factors are fairly bullish. Among the key worries include rich valuations and expectations of further increase in interest rates.
A lot of stock specific action is expected. TCS and Wipro could gain amid reports that they have bagged orders from Cable & Wireless. TCS is also believed to have won a big contract from the Bank of China. Videocon Industries is likely to be in the limelight as it is reportedly eyeing LG.Philips Displays. Britannia may benefit from the cooling of temperatures with joint venture partner Danone over the Tiger brand. GHCL could rise amid reports of another acquisition in the textile business, this time in the US. Four-wheeler companies such as Tata Motors, M&M and Maruti are likely to advance after all of them reported robust volume growth in November. Maruti is also likely to launch a new Zen this week.
Nirlon is witnessing some pick-up in buying. The company is all set to build an IT park inside its complex at Goregaon in Mumbai. Tyre stocks too appear to be back in favour with surging domestic automobile sales and stable raw material prices. Adani Enterprises' Board has decided to raise up to $250mn through issue of securities. Gujarat State Petronet has commissioned the Kalol-Mehsana Pipeline. Essar Shipping is seeking the approval of its shareholders on January 2 for delisting the company's equity shares from BSE. Havells India is entering into a collaboration with a leading European motor manufacturing company for its new project of Electric Motors at Nimrana, Rajasthan.
FIIs were net buyers to the tune of Rs1.95bn (provisional) in the cash segment on Friday. In the F&O segment, they poured in Rs4.22bn. On Thursday, foreign funds were net buyers of Rs2.58bn. Their net inflows in November stood at $2bn, taking the total for the year to $8.85bn. Mutual Funds were net sellers of Rs884.3mn on Thursday.
US stocks closed lower on Friday after a report showed a surprising contraction in the manufacturing sector and a measure of inflation jumped, raising fears of excessive slowdown in the world's largest economy.
The S&P 500 Index lost 3.92, or 0.3%, to 1396.71. The broader index had its worst first trading day in December since Dec. 3, 2001, when it dropped 0.8%. The Dow Jones lost 27.80, or 0.2%, to 12,194.13. The Nasdaq declined 18.56, or 0.8%, to 2413.21.
For the week, the S&P 500 dropped 0.3%, the Dow lost 0.7% and the Nasdaq retreated 1.9%. Both the S&P 500 and Dow fell for a second week, the first back-to-back losses since July, as oil prices rallied.
Crude futures rose 30 cents or 0.5% to US$63.43 per barrel on the New York Mercantile Exchange. This was the highest close since Sept. 18. The front-month crude contract was trading nearly unchanged at $62.42 a barrel in extended trading in Asia this morning.
The dollar tumbled to the lowest level since March 2005 against the euro following the release of the manufacturing report. Against the British pound, the US currency declined to the lowest in 14 years.
COMEX gold lost 50 cents to end the day at US$415.40 an ounce. Treasury bond prices ended the session higher, with yield on the benchmark 10-year note falling to 4.05% from 4.08% late on Thursday.
Among the Indian ADRs, Patni was down 3.3%, VSNL gained 2.4%, Infy lost 1%, Wipro dropped 1.3%, Satyam was down 0.6%, Tata Motors surged 4.65%, Dr Reddy's climbed 2.5%, HDFC Bank and ICICI Bank closed flat while MTNL rose 1.85%.
Asian stocks fell Monday morning, snapping a three-day rally, after a report showed that manufacturing in the US unexpectedly shrank for the first time in more than three years. Toyota and LG.Philips LCD led exporters down.
The Morgan Stanley Capital International Asia-Pacific Index dropped 0.5% to 136.03 as of 10:55 a.m. in Tokyo, halting a three-day, 3.4% rally. Indexes open for trading elsewhere in the region declined, apart from in China and Malaysia.
Japan's Nikkei 225 Stock Average fell by 52 points to 16,269 while the Hang Seng in Hong Kong was down 10 points at 18,680. The Kospi in Seoul dropped 3 points to 1430. Japanese exporters including, Sony also declined after the dollar weakened against the yen.
European shares fell on Friday following the release of the weak report on US manufacturing sector. A rapidly strengthening euro and pound added to the sell-off.
The pan-European Dow Jones Stoxx 600 index slipped 0.6% at 349.53. The French CAC-40 closed down 1.4% at 5,254.05 and the German DAX Xetra 30 fell 1.1% at 6,241.13. The UK's FTSE 100 was down 0.5% at 6,021.50.
In the emerging markets, the Bovespa in Brazil was down 1.4% to 41,327 while the IPC index in Mexico shed 0.75% to 24,962 and the RTS index in Russia gained 0.2% to 1780.
Insider Trades:
Simplex Infrastructures Limited: Franklin Templeton Mutual Fund (through its various schemes) (i) Franklin India Smaller Companies Fund (FISCF) (ii) Franklin India Prima Fund (FIPF) (iii) Franklin India Opportunities Fund (FIOF) (iv) Franklin India Flexi Cap Fund (FIFCF) has purchased from open market 3241350 equity shares of Simplex Infrastructures Limited on 29th November, 2006.
Matrix Laboratories Limited: Dr. Hari Babu, Senior Vice President (Manufacturing) has sold in open market 34375 equity shares of Matrix Laboratories Limited on 30th November, 2006.
Gujarat Ambuja Cement Ltd: Shri Anil Singhvi (Managing Director) has sold in open market 101000 equity shares of Gujarat Ambuja Cement Ltd on 28th November, 2006.
Apollo Tyres Ltd: HDFC Trustee Company Limited A/C - HDFC Prudence Fund has purchased from open market 406414 equity shares of Apollo Tyres Ltd on 28th November 2006.
Market Volumes:
The turnover on NSE was down 55% to Rs82.00bn. BSE Auto index was the major gainer and gained 2.84%. BSE Capital Good index (up 1.84%), BSE FMCG index (1.61%), BSE Pharma index (up 1.33%) and BSE Technology index (up .98%) were among the other major gainers.
Volume Toppers:
IFCI, Parsvnath Developers, Indiabulls, Reliance Comm, ITC, Indian hotels, Dena Bank, HLL, SRF, DCB, Ashok Leyland, IVRCL Infra, MTNL, NTPC, APIL, Reliance Inds, EKC and JP Associates.
Delivery Delight:
3i Infotech, ABB, AIA Engineering, APIL, Bata India, BHEL, Bombay Dyeing, BRFL, Educomp Solutions, Era Constructions, EKC, Hero Honda, Indiabulls, Jaiprakash Associates, Mahindra Gesco, Maruti Udyog, Punj Lloyd, SRF, SBI, Tata Motors and Tata Power.
Brokers Recommendations:
Dr Reddy’s Laboratories – Buy from Motilal Oswal
Long Term Investment:
Tata Motors
Major News Headlines:
Inflation was 5.45% in week ended Nov 18 vs expectation of 5.6%
ACC Nov cement sales nearly flat at 1.52mn tons
TVS Nov sales at 118157 units (up 4.3%)
Maruti Nov sales rises 16% to 55033 units
M&M Nov vehicle sales up 11.5% at 13600 units
Tata Motors Nov sales up 43% to 49061 units
Bajaj Auto Nov sales up 32.8%; to expand motorcycle capacity
Punj Lloyd group company signs a large contract
Ranbaxy buys South African Company for $70mn
Color Chips to build new facility at Vishakhapatnam
Mcleod Russel to acquire Moran Tea for Rs414.9mn
Thomas Cook India is acquiring Travel Corporation India
Market may move sideways
The market is likely to open strong on the back of a strong domestic fundamentals and healthy FII buying support. While the domestic indices, the Nifty could target 4020 on the upside, it has supports at 3975 and 3940 on the downside. The Sensex has a support at 13800 and a resistance at 13880.
Amomng the indices the US indices posted marginal loss on Friday and the Asian indices were weak in early session. While the Dow Jones declined 29 points to 12194, the Nasdaq moved down 19 points to close at 2413.
Indian ADRs witnessed mixed trend. Patni led the downfall with a slump of 3.31% followed by Rediff down by 2.11% while Wipro and Infosys dropped over 1% each. Satyam and ICICI Bank were down 1% each However, Tata Motors gained 4.65%, Dr Reddy soared 2.51%, VSNL up with 2.36% and MTNL advanced 1.85% while HDFC Bank reported steady gain.
In the crude oil space, the Nymex light crude oil for January 07 series advances by 30 cents at $63.43 a barrel while the London Brent crude spurted by 62 cents at $59.46 per barrel. The commodity segment saw the Comex gold for February delivery declined $2.30 to settle at $650.60 respectively.
Hidden Gems By Ashish Chugh
Frontier Springs Ltd.
CMP - Rs.17.00 BSE Code -522195
The stock trades in `Z' Group of BSE and is thus advised for investors with an appetite for HIGH RISK.
Frontier Springs Ltd. is a part of Kanpur based Frontier group and manufactures Helical Coil Springs for Automobile & Railway Suspension, Helical Coil Springs for Railway Rolling Stock for their wagon, carriage & loco and Laminated Leaf Springs for Light commercial and heavy duty vehicles including Railway Rolling Stock.
The FRONTIER GROUP consists of different professionally managed companies having varied product mix. The present product range includes Helical Coil Springs, Laminated Leaf Springs, Steel Castings, Bogie Fasteners, Metal Bonded Rubber Products for Rail Stock.
All the Companies of the Group have Modern Manufacturing facilities and strive to provide its customers with highest quality product at most competitive prices. The Group has made sizable exports in its business with the export of Leaf Springs & Coil Springs to U.K., Holland, & U.S.A. The present turnover of the GROUP is R. 500 Million. The group has already developed Coil Springs for various cars like, FORD, OPEL, DIAMLER, BENZ, and BMW.
Rapid Expansion
The company has undertaken expansion by setting up production facilities for manufacture of Air Suspension Springs. The company has also established another assembly line for Heavy & Light Coil springs, catering mainly to the Auto segment. The company is finalizing orders for Leaf Springs with some foreign buyers and shall expand capacities of Leaf Spring once the orders are finalized.
The expansion projects will give a substantial boost to the revenues and profitability of the company in the years to come.
The company is seriously exploring collaboration/ tie ups with foreign companies for the manufacture of Air Suspension Springs to meet the requirements of Indian Railways and the growing demand from the Automobile Industry.
Research & Development
Research and Development is a key strength of the company. The company has developed various products in-house and has made key modifications in the products to suit customer's requirements and to improve bring about functional improvements. The company's R&D facilities are well equipped with most modern instruments including Tensile Testing Machines, CAD/ CAM facilities and Spectrometer.
Financials
The latest financials of the company are given as under :-
| QUARTERLY - LATEST RESULTS - Frontier Springs Ltd (Curr: Rs in Cr.) | |||||||||
| Particulars | Quarter Ended | Quarter Ended | Quarter Ended | YTD / Latest Half | YTD / Latest Half | YTD / Latest Half | Year Ended | Year Ended | Year Ended |
| Sales | 6.1 | 3.67 | 66.2 | 10.57 | 6.6 | 60.2 | 15.52 | 14.44 | 7.5 |
| Other Income | 0.02 | 0.03 | -33.3 | 0.04 | 0.05 | -20 | 0.08 | 0.07 | 14.3 |
| PBIDT | 0.77 | 0.38 | 102.6 | 1.23 | 0.78 | 57.7 | 0.97 | 0.64 | 51.6 |
| Interest | 0.07 | 0.07 | 0 | 0.13 | 0.14 | -7.1 | 0.28 | 0.31 | -9.7 |
| PBDT | 0.7 | 0.31 | 125.8 | 1.1 | 0.64 | 71.9 | 0.69 | 0.33 | 109.1 |
| Depreciation | 0.09 | 0.07 | 28.6 | 0.16 | 0.14 | 14.3 | 0.29 | 0.27 | 7.4 |
| PBT | 0.61 | 0.24 | 154.2 | 0.94 | 0.5 | 88 | 0.4 | 0.06 | 566.7 |
| Tax | 0.24 | 0.09 | 166.7 | 0.35 | 0.18 | 94.4 | 0.21 | 0.02 | 950 |
| Deferred Tax | 0 | 0 | - | 0 | 0 | 0 | -0.06 | -0.03 | -100 |
| PAT | 0.37 | 0.15 | 146.7 | 0.59 | 0.32 | 84.4 | 0.25 | 0.07 | 257.1 |
The company has an Equity Capital of Rs.3.96 crores with the promoters holding 52%. For the first half of the current FY, the company has reported a 60% increase in its revenues to Rs.10.57 crores and 84% increase in its PAT.
Conclusion
Frontier Springs is a low priced stock catering to both the Locomotive and Auto Ancillary sectors - the company is well placed to encash the boom in the Locomotive and Auto sector. The company is rapidly scaling up its operations by expanding its capacities which will substantially boost the revenues and profits in the future.
With huge expansion and modernization plans of the Indian Railways by way of replacement and modernization of wagons, the company is expected to benefit immensely. The company caters to the Auto Ancillary sector where the demand for springs is shooting up. Moreover, with India emerging as a major outsourcing base for Auto components, exports are growing at a fast pace.
With the various expansion projects of the company going on stream, the company is expected to log substantial growth in revenues and profits in the times to come. There is thus a visibility of future earnings of the company.
The current market cap of the company is just Rs.7 crores. The company has been reporting increased revenues and profits for the last few quarters. With the new capacities going on stream, the pace of growth will increase in the future, which will provide a big impetus to the stock price of the company.
Frontier Springs is a low priced fundamental company operating in the Locomotive and Auto Ancillary segment and could turn out to be a potential multibagger over 2-3 years period.
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