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Sunday, July 01, 2007

Board Meetings - July 1 2007 - July 7 2007

Jul 2 2007 Bhagwandas Metals LtdAudited Results
Jul 2 2007 Gujarat Mineral Development Corporation LtdGujarat Mineral Development Corporation Ltd (GMDC) has informed BSE that a meeting of the Board of Directors of the Company will be held on July 02, 2007, to transact the following business:1. To consider and approve the audited account for the Financial Year 2006-07.2. To recommend the dividend for the year 2006-07.
Jul 2 2007 JIK Industries LtdJIK Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on June 30, 2007, inter alia, to consider allotment of 39,50,507 Equity Shares of Rs 10/- each at a premium of Rs 3.80 per share and 32,27,623 Fully Convertible Bonds of face value of Rs 69/- each convertible into 5 Equity Shares on private placement basis pursuant to Hon'ble BIFR orders.JIK Industries Ltd has informed BSE that the meeting of the Board of Directors of the Company which is scheduled to be held on June 30, 2007, is rescheduled on July 02, 2007, inter alia, to consider allotment of 39,50,507 Equity Shares of Rs 10/- each at a premium of Rs 3.80 per share and 32,27,623 Fully Convertible Bonds of face value of Rs 69/- each convertible into 5 Equity Shares on private placement basis pursuant to Hon'ble BIFR orders.(As Per BSE Announcement Website Dated on 28/06/2007)
Jul 2 2007 Jyoti LtdAudited Results
Jul 2 2007 Mardia Samyoung Capillary Tubes Company LtdAudited Results
Jul 2 2007 Shree Ashtavinayak Cine Vision LtdShree Ashtavinayak Cine Vision Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 02, 2007, inter alia, to consider the following:1. To consider the matter relating to raise further funds by issue of securities on preferential basis as per SEBI guidelines 2000 to selected group or persons, QIP and through issue of GDRs / ADRs or FCCB or any combination thereof to the extent of USD 50 Million for the purpose of long term Working Capital requirements for expansion of business activities of the Company including Production and Distribution of Films in Vernacular Languages.2. To plan for appropriate and optimum deployment of balance of the funds raised through IP0.
Jul 2 2007 Sundaram Multi Pap LtdSundaram Multi Pap Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 02, 2007, inter alia, to consider the shifting of the Registered Office of the Company from Kalina Motor Compound, Kurla Kalina Road, Kalina, Mumbai to Dev Plaza, S.V. Road, Opp. Andheri Fire Station, Andheri (W) Mumbai.
Jul 2 2007 Zicom Electronic Security Systems LtdZicom Electronic Security Systems Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 02, 2007, inter alia, to consider restructuring of the business operations of the Company with respect to its Consumer Service Group (Retail).
Jul 3 2007 Anant Raj Industries LtdAnant Raj Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 03, 2007, to consider and approve the conversion of 15,04,000 Warrants into Equity Shares of the Company. The said Warrants were issued to Foreign Institutional Investors (FII's) on preferential basis on April 28, 2006.
Jul 3 2007 Bombay Rayon Fashions LtdBombay Rayon Fashions Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on June 28, 2007, inter alia, to consider and take on record the Audited Financial Results for the year ended March 31, 2007 and also to consider recommendation of dividend, if any, on equity shares of the Company for the year ended March 31, 2007.Bombay Rayon Fashions Ltd has informed BSE that the meeting of the Board of Directors of the Company which is scheduled to be held on June 28, 2007, inter alia, to consider and take on record the Audited Financial Results for the year ended March 31, 2007 and also to consider recommendation of dividend, if any, on equity shares of the Company for the year ended March 31, 2007 has been rescheduled and will be held on July 03, 2007.(As Per BSE Announcement Website Dated on 27/06/2007)
Jul 3 2007 Emmsons International LtdQuarterly Results
Jul 3 2007 Larsen & Toubro LtdLarsen & Toubro Ltd (L&T) has informed BSE that a meeting of the Board of Directors of the Company will be held on July 03, 2007, inter alia, to consider declaration of special dividend for the financial year 2007-08.
Jul 3 2007 Prism Cement LtdPrism Cement Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 03, 2007, to approve the Company's Audited Accounts for the year ended June 30, 2007 and recommend dividend, if any, on equity shares for the year ended June 30, 2007.
Jul 4 2007 Akruti Nirman LtdAkruti Nirman Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 04, 2007, inter alia, to consider the Audited Financial Results of the Company for the year ended March 31, 2007 and to recommend dividend, if any.
Jul 4 2007 Dhampur Sugar (Kashipur) LtdInter alia to allot 10,00,000 equity shares to Capital Cement Ltd
Jul 4 2007 I-Flex Solutions Ltdi-flex Solutions Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 04, 2007, inter alia, to consider the following:1. To approve Book Closure dates.2. To consider allotment of shares to the eligible employees who have chosen to exercise their options under Employees Stock Option Scheme (ESOS) of the Company.
Jul 4 2007 Indus Fila LtdIndus Fila Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 04, 2007, inter alia, to transact the following business:1. Review of the expansion plans.2. To discuss the proposed business plans.
Jul 4 2007 Nexxoft Infotel LimitedQuarterly Results
Jul 4 2007 Vijay Shanthi Builders LtdQuarterly Results
Jul 5 2007 Global Broadcast News LtdAudited Results
Jul 5 2007 Hikal LtdHikal Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 05, 2007, to consider and to take on record the Audited Financial Results and recommendation of final dividend for the year ended March 31, 2007.
Jul 5 2007 MMTC LtdMMTC Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 05, 2007, inter alia, to consider the following:1. Approval of Annual Accounts of the Company for the year ended March 31, 2007.2. Recommendation of final Dividend for the financial year 2006-07.
Jul 5 2007 Network 18 Fincap LtdAudited Results
Jul 5 2007 Priyadarshini Spinning Mills LtdPriyadarshini Spinning Mills Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 05, 2007, inter alia, to consider & approve the issue of equity shares on a preferential basis to the promoters / promoter group.
Jul 5 2007 Srinivasa Shipping & Property Development LtdSrinivasa Shipping & Property Development Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 05, 2007, inter alia, to consider the approval and adoption of the Audited Financial Results for the year ended March 31, 2007 & Un-audited Financial Results (Provisional) for the first quarter ended June 30, 2007 & also to consider the proposal to recommend final dividend for the financial year 2006-07, subject to approval of the shareholders at the Annual General Meeting.
Jul 5 2007 Television Eighteen India LtdTelevision Eighteen India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 05, 2007, inter alia, to consider the following:1. To consider & approve the Audited financial results of the Company for the year ended March 31, 2007.2. To consider the proposal for the Issue of Bonus Shares.3. To fix the date of Annual General Meeting of the Company.
Jul 5 2007 Virat Crane Industries LtdCambridge Solutions Ltd has informed BSE that the allotment committee by way of circular resolution has allotted the following on June 28, 2007.1. 755 Equity Shares - Scandent Employee Stock Option Plan 20042. 5066 Equity Shares - Scandent Employee Stock Option Plan 2005 - (Program 1)Consequent to the above allotment, the paid up capital of the Company has gone up from 10,51,30,577 equity shares of Rs 10/- each aggregating to Rs 105,13,05,770/- to 10,51,36,398 equity shares of Rs 10/- each aggregating to Rs 105,13,63,980/-.
Jul 6 2007 Ankush Finstock LtdAnkush Finstock Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 06, 2007, to consider the unaudited financial results of the Company for the first quarter ended on June 30, 2007 and to consider the change in Object clause of the Company as the board of directors has decided to diversify the business of the Company and enter in the business of infrastructure projects and development of real estates.
Jul 6 2007 Chokhani Securities LtdAudited Results
Jul 6 2007 Ckoramaandel Cements LtdCkoramaandel Cements Ltd has informed BSE that a meeting of the Board Directors of theCompany will be held on July 06, 2007, inter alia, to transact the following Business:1. To Issue and Allot 30,00,000 Equity Shares of Rs.10/- each to promoters on preferential allotment basis.2. To Issue and Allot 41,96,790 Convertible Warrants to the Promoters / Promoter group on preferential allotment basis.
Jul 6 2007 HB Portfolio LtdQuarterly Results
Jul 6 2007 IMP Powers LtdIMP Powers Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on July 06, 2007, inter alia, to consider allotment of equity shares in conversion of the 789938 outstanding warrants.
Jul 6 2007 Shaily Engineering Plastics LtdIn order to allot shares of the Company on Preferential basis to M/s. Motika Ltd, a Company incorporated under the law of Cyprus.
Jul 7 2007 Hisar Metal Industries LtdHisar Metal Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on June 30, 2007, to approve the Audited Annual Accounts for the financial year ending March 31, 2007 and to take on record Audited Quarterly Financial Results for the quarter ended March 31, 2007 and Audited Annual Financial Results for the year ended March 31, 2007 and to recommend the dividend, if any.Hisar Metal Industries Ltd has informed BSE that the meeting of the Board of Directors of the Company which is scheduled to be held on June 30, 2007 has been adjourned to July 07, 2007 to approve the Audited Annual Accounts for the financial year ending March 31, 2007 and to take on record Audited Quarterly Financial Results for the quarter ended March 31, 2007 and Audited Annual Financial Results for the year ended March 31, 2007 and to recommend the dividend, if any.(As Per BSE Announcement Website Dated on 27/06/2007)

New Peak in the new quarter

After stock markets finished the first three months of the fiscal on a bullish note, bulls on Dalal Street are looking for a new peak when the benchmark Sensex opens for trading on the first day of the second quarter tomorrow.

The Bombay Stock Exchange's 30-share barometer index gained 145 points on Friday to settle at 14,650.51 – less than 75 points away from its all-time high of 14,723.88 scaled nearly five months ago on February 9.

The index had hit an intra-day high of 14,663.25 points on the last trading day of the first quarter, missing its record high by just 60 points.

Besides, the index is barely two points away from its all-time closing high of 14,652.09, hit on February 8.

The 50-share Nifty of National Stock Exchange scaled a new closing peak of 4,318.30 points and is just 45 points away from its all-time intraday high of 4,362.95, struck on June 4.

The Sensex gained 17.6 per cent in the first quarter, while the gain was 18.8 per cent in Nifty during the same period.

The market observers believe that regaining this peak should not be a far-fetched conclusion early this week, as the market is expected to start factoring in expectations for March-June quarter earnings results, which are scheduled to start pouring in by the second week of July.

However, it remains to be seen whether the market manages to sustain at its higher levels, as earnings of IT firms, which are among the first ones to publish their results, are not expected to be exceptionally robust this time around due to the sharp depreciation in the US dollar.

The IT companies gather a major part of their earnings from overseas markets and a weak dollar adversely affects their results.

The market analysts are keeping their fingers crossed on June quarter earnings season, which will be kick-started by it bellwether Infosys Technologies on July 11.

Besides, the impact of rupee appreciation, high interest rates and skyrocketing wages could also upset the applecart of IT firms.

However, some market observers expect some boost to the sentiments from the latest government data showing a further decline in the inflation rate, which has fallen within the RBI's medium-term inflation target of 4.0-4.5 per cent, from a high close to six per cent in recent past.

The steady progress of monsoon so far is also being accounted for the expected sustained rally on the bourses.

Telecom - Spectrum Crunch may slow down pace

Amid the tussle between Defence and Telecom Ministry over spectrum, Communications Minister A Raja is understood to have met Prime Minister Manmohan Singh recently to apprise him on the need of releasing more spectrum by the armed forces.

Official sources said Raja met Singh a day after Defence Minister A K Antony said release of additional spectrum needed caution as armed forces had their own concerns about security.

Raja discussed the repercussions of unavailability of spectrum to mobile operators, saying this has halted the introduction of Third Generation (3G) Mobile services and other programmes. Operators also need more spectrum to roll out services in new circles and accommodate more subscribers in existing circles.

The target of touching a telecom subscriber base of 500 million by 2007-end might face hurdles if defence forces do not release spectrum, Raja is believed to have told the PM.

Department of Telecom officials said they were confident the Prime Minister had been convinced over the issue. However, PMO sources said Communication Ministry should try to resolve the issue of spectrum vacation with Defence Ministry in the Group of Ministers, which is the correct platform rather than direct intervention from the highest authority.

The officials also said the GoM, headed by Antony, is unlikely to meet any time soon for discussing the issue. The first scheduled meeting of the GoM was cancelled at the last moment early in June.

Defence forces have to vacate 42.5 Mhz spectrum so that operators can expand their network. DoT has earmarked Rs980 crore for laying an alternate network for armed forces. While the network prepared by BSNL is ready for Air Force which is to releases 40 Mhz of spectrum, Army and Navy are not satisfied with the arrangement.
The demand by Army and Navy, who are to release 2.5 Mhz ofspectrum, for a more secure network would increase the outlay by Rs4,000 crore. This, DoT says, is not possible

India - Not a Friendly place to do business

India may have entered into the top league of world economies on the back of robust economic growth and booming stock markets, but it ranks among the bottom ten when it comes to promoting small businesses.

The country has been ranked 46 among 53 countries in a list compiled by global media conglomerate CNN-Time Warner group’s Fortune Small Business (FSB) magazine for their friendliness to small businesses.

The less-friendly approach toward small businesses probably also reflected performance of small-size companies, whose financial progression pales in comparison to their blue-chip counterparts.

According to a PTI Research analysis of the performances of publicly-listed small and large-cap firms in India, the small-caps have posted a lower growth rate in their collective turnover in the latest fiscal than the blue-chip giants.

This is despite the fact smaller firms are considered to have better growth prospects due to a lower base.

The country’s 30 biggest blue chips, present on stock market’s benchmark index BSE Sensex, saw a 31% growth in their collective turnover for the latest fiscal, while their net profit has also grown at a similar rate.

However, the combined turnover growth rate of 488 companies on the BSE’s Small-Cap Index stands at 29%, even though their net profit growth has been relatively better at 41%.

Besides, while the annual turnover of all the 30 Sensex companies have grown in the latest fiscal year, as many as 57 small-cap companies (12%) saw their turnover declining and 112 companies (23%) recorded a dip in their net profit.
Only one Sensex company, Hero Honda, saw a decline in its net profit in its latest fiscal ended 31 March, 2007. A total of 31 small-caps posted a decline in both turnover and net profit in their latest annual results.

The poorer financial performance comes despite a stronger show put out by these small-cap companies on the bourses in comparison to their blue-chip counterparts.
While the Sensex index has given a return of 38% in the last 365 days, the Small-cap index has gained over 44% in the same period.

Besides, the list of biggest gainers is dominated by the small-cap stocks and none of the Sensex constituent figure in the top 300 performers in terms of gains in their share prices over the past one year.

In the FSB list, Indonesia, Greece, Philippines, Brazil, Ecuador, Uruguay and Jordan are the only seven countries doing worse than India in terms of friendliness to small businesses.

Besides, India is doing poorly than not only the giants like the US, UK, Singapore and Hong Kong, known for promoting businesses, but even countries like Iceland, Finland, Jamaica, Latvia, Peru and Uganda also enjoy higher positions.

The list has been published in current issue of FSB magazine, whose sister publications include Fortune, Money, Business 2.0 magazines, and is based on World Bank’s annual Doing Business Report and the Global Entrepreneurship Monitor (GEM), an annual study produced by Babson College and the London Business School.

“India, despite its move into the big leagues of global economies, lags far behind in entrepreneurship,” FSB said.

Making it easy to launch a new enterprise is one of the many ways in which the US has led the world in fostering a dynamic entrepreneurial class, it noted.

ICICI Bank - Figures

2003 - 450 branches

2004 - 505 branches

2005 - over 580 branches

2006 - 667 branches

2007 (March) - 755 branches

Rising rupee pricks small exporters

Anand Khushwaha, a small Delhi-based exporter of imitation jewellry, has been inundated by e-mails from his customers in the United States and Europe. Most carry the same message: since he has raised prices up by 20 per cent, orders have been placed with cheaper exporters in China. Business is down 50 per cent for Friends International, Khushwaha’s firm.

Last year, it had done exports of Rs 25 lakh. “In the first three months of this financial year (April-June 2007-08), we have got orders of just Rs 5 lakh. We will be lucky to do Rs 15 lakh for the whole year,” said he.

Not far from Khushwaha’s office, Prince Malik runs a small outfit exporting home furnishings. At a recent exhibition in Hong Kong, he realised that he was hopelessly out-priced by rivals from other South Asian countries. Last year, he had come back from the same exhibition with orders of over $200,000.

“This year, it hasn’t gone beyond $50,000,” he said, putting the blame on the 15 per cent hike in his prices, thanks to the appreciation of the rupee against the dollar.

Small exporters like Khushwaha and Malik are the first casualty of the rising rupee which has gained over around eight per cent in the last three months and 11.6 per cent in the last one year. Unlike large exporters, they have no financial reserves to fall back on. And as they use locally-produced raw material, they do not benefit from imports becoming cheaper with the rise in the rupee. As a result, these exporters have been left with no option but to raise their prices. The consequences have been disastrous, a number of small exporters told Business Standard.

“If the rupee keeps on strengthening, I see at least 30 to 40 textile units closing down in the next six months in the apparel sector,” said Vijay Agarwal, chairman, Apparel Export Promotion Council. “Most of them will have to close their business if the rupee does not weaken,” added Rita Nahata, secretary, Society for Small and Medium Exporters.

Their numbers, to be sure, are huge. Commerce ministry officials said there were more than 1,00,000 exporters in the country – most of them are small with a turnover of less than Rs 1 crore. Data also suggests that small firms account for almost 70 per cent of the exports in some sectors like leather, sports goods and woollen products.

On its part, the commerce ministry had promised to cushion the losses of exporters by cutting the premium charges by the Export Credit Guarantee

Corporation, enhancing the DEPB and duty drawback rates and making exchange earners foreign currency (EEFC) accounts interest bearing.

Still, the exporters feel there is a tough battle ahead. “A majority of the small exporters do not have an EEFC account and are not eligible for DEPB and drawbacks on the products that they export. Relief will come only when the rupee weakens,” said Kolkata-based exporter Diptosh Bose.

By all accounts, the export target of $160 billion for 2007-08 looks like a daunting task.

Via Business Standard

HDIL IPO Analysis

HDIL IPO Analysis

Rollover Analysis

Rollover Analysis

Common Investing Myths

You need a broker to invest in equities

Now this is a classic case of not being up to date. We are moving to a paperless world my dear! And at least a dozen depository participants (DPs) will chase you to hell if they come to know you are interested in opening a demat account.

(And you just need to give them one address proof, one ID proof and PAN details for this) India already has about 10 million such accounts holders. So when you can place your order yourself by logging in from your home, where is the need for a broker? Plus, transactions through demat account guarantee transparency, fair play, convenience and saves time.

You can’t beat the market

What this means is that it is not possible for individual traders to earn more than the stock market. This is a long established myth having its roots in the Efficient Market Theory, which claims the financial markets are efficient. So, movements in a stock market are caused by rational investors responding quickly to the news that may affect their stocks.

As a result, the theory states that it’s not possible to outperform the market by using any information that the market already knows. This is not the case. Most mutual funds consistently aim to beat their benchmark index, and are able to do so. In fact, many individual investors too outperform the market.

Index stocks are the best stocks

This again is a myth because if this was true, most investors would safely park their money here to book maximum profit without looking out for other stocks. Most indices are a collection of stocks with highest market cap. Take for e.g. Sensex. Companies comprising Sensex are some of the largest and highly traded stocks in the country.

“The risk is certainly less in index stocks as they are well researched and leaders in their sector, but again margins may not be very high. On the other hand, investing in companies with evolving business models may give you better returns over the same period,” says Angel Broking VP-research, Sarabjit Kour Nangra. So it’s better to keep your eyes open to other stocks too. Who knows, you might be investing in the index stocks of tomorrow!

Stocks trading below their book value are cheap

Let’s first understand what is book value. It is the actual worth of a stock as in a company’s books (read balance sheet). It often bears little resemblance to the current share price. Shares of industries that are capital intensive have higher book value and vice versa. “Book value can’t be the only criteria to pick a stock. In companies with large intangible assets, book value doesn’t tell you much about the price. Whereas in commodity stocks, as most of the assets are tangible, book value can be a criteria,” says Ms Nangra.

So keeping in mind that the effect of book value varies across industries and businesses, it can’t be the sole criteria to value a stock. “In stock markets it’s very difficult to generalise things as everything is stock specific. The same is true even for book value. It is not necessary that all the stocks trading below their book value are cheap. For example, companies in services or knowledge sectors do not require huge capital investment. Thus, their book value itself may be very low. So, these stocks trading above or below their book value has no meaning,” says a fund manager at SBI MF, Jayesh Shroff.

Stocks trading at low P/E ratio are under valued

Investors usually think price to earning ratio (P/E) of a stock as a single reflection of how cheap or expensive a stock is because of the simplicity of the strategy. And from this come the ‘theory’ that stocks with low P/Es are cheap and vice versa. P/E alone doesn’t tell much about the pricing of a stock and should be seen with other fundamentals like the risk factor involved, company’s performance and growth potential. “P/E multiples may be a quick way to see a stock but one should look at these in correlation with expected growth earnings,” says Sharekhan research head Sandeep Nanda.

Also, the idea behind dividing price to earning is to create a level playing field where some kind of comparison can be made between high- and low-priced stocks. Since P/E ratios vary across sectors, with growth stocks consistently trading at higher P/E, one can only compare the P/E ratio of a stock to the average P/E ratio of stocks in that sector to make a judgment.

Penny stocks make good fortunes

Penny stocks by nature are low-priced, speculative and risky because of their limited liquidity, following and disclosure. If it’s easy to invest in penny stocks — as here you shell out much less money per share than you would require for a blue-chip firm — it’s also easy to lose it. Chances are you make a high fortune from these, keeping in mind its high volatility, but you should also be prepared to lose all the money parked in. “Just because they come cheap, you can’t pick penny stocks.

As they have high volatility and risk factor, it’s a wrong notion that penny stocks make good investment,” says Mr Nanda. “This is the biggest myth in the stock markets in India. In fact, investing in penny stocks is a very high-risk strategy. History has shown that most investors would have only lost money by investing in penny stocks,” says Mr Shroff. “Investment in equity market is an art and a science and it is not as easy as it may seem to make money in this market. Least by way of investing in penny stocks,” he adds.

Anyone, who disagrees?

The worst is over in the stock market or the market has peaked

Timing the market is a common strategy among investors. However, there is no ideal way of smart investing by which one can time the market. Timing the market means forecasting and that should better be left for tarot readers. “One should concentrate on timing the stock than timing the market. If you have done your valuation studies, you shouldn’t worry about the timing of market,” says Ms Nangra. In June-end, 2004, who knew that Sensex, that was trading at 4,800-level, would cross 14,000-mark in December 2006

Fixed income are safest

Fixed income avenues are often chosen by senior citizens, as this provides a safe and steady flow of income, keeping in mind their low-risk appetite. But also keep in mind that your aim is to make profit after factoring in the rate of inflation, which, not too long back, was hovering around 7%-level. Investing in equities may be a little risky but it also gives much better returns.

“While fixed income products have less risk, they also give low returns relative to more riskier asset classes like equities. In today’s world, it is not advisable to go with a zero-risk policy as one needs to take care of returns also,” says Mr Shroff.

Diversification is the key to investment

Well, diversification does help, but in falling markets, most often than not, almost all stocks will take a hit. Diversification is a virtue but if it’s done only for the sake of it, it may become a vice. In fact, if you are not sure, it’s still better to focus on a few companies in which you are comfortable irrespective of what sector they belong to. This should be done by taking into account the fundamentals, past performance and future outlook of the company as well as its sector.

“I have been trading since the past 4-5 years but I focus on only a handful of companies I am comfortable in because it’s easier to study and keep a track on them,” says a retail investor Kavita Tekriwal from Varanasi. Diversification helps only when it is done without compromising on the attractiveness of the stock being selected. Adds Mr Shroff, “Diversification is an effective tool to reduce the risk of your portfolio. While diversification does not ensure return on your investment, it reduces the risk that is carried on such investments.”

Volatility is the culprit

On the contrary, there are always some excellent opportunities in a volatile market. How can one possibly make profit in a stable market? What is needed is the understanding of the situation. Down-trending markets shift money rapidly to new sectors, which may be tomorrow’s BIG thing. “Volatility is a culprit when leveraged. In fact, volatility can give good opportunities to buy or accumulate stocks,” adds Mr Nanda.

Hoping that few of the myths on investment are put to rest. Just one last bit. It’s true that equities are riskier than bonds - as they see more ups and downs in a short while - but please keep in mind that in the long run, it’s the stocks that pay you more, with dividends. Sensex alone has given a consistent return of about 18% in the past 10 years and that’s after factoring in inflation. So just do your homework well, have an open mind and stay invested!

Via Economic Times

Rupee Impact on IT Services

Bear Stearns analysts are assuming the following impact of rupee rise

For every 1% rise in rupee, operating margins have to be trimmed as shown below

# Infosys: trims operating margins 50 basis points.
# Wipro: 35 basis points.
# Satyam: 30 basis points.
# Cognizant: 20 basis points.
# Sapient: <15 basis points.
# Accenture <5 basis points.

So, with a rupee rise of over 10%, Infy's margins could take a hit of 5%

Austin Engineering

Austin Engineering

Nifty and Stock Analysis

Nifty was able to break out of the 4050-4250 band last week. While the spot Nifty closed at 4318.3, a gain of about 1.5 per cent over the week, the Nifty future ended at 4293.4 (4240.75).

Overall open interest positions hit another high this week at Rs 81,992 crore against last week’s Rs 76,006 crore.

Despite healthy rollover of open positions (for both index and stock futures), turnover remained rather dull compared with previous occasions.

Follow-up: Expecting a downtrend, we advised investors to go short on the Nifty July future with a stop-loss at 4250.

Currently, this strategy is in negative position. Those, who have not closed out their positions can hold on.


The Nifty future is just a little way away from its all-time high of 4314.

While a breach above that level could take the Nifty future to the 4410-15 level, a dip below its support 4285 could weaken it to 4230 and even to 4115.

We expect the latter to happen, as Nifty future is in over-bought position.


We expect the market to open on a firm note but the rally may fizzle out later.

We advise investors to consider shorting Nifty July future and hold it till expiry. However, this strategy is for those who are willing to take risks. On other hand, the investor may also buy the Nifty 4150 put; it ended at Rs 54.5 on Friday.

Put/call ratio

Open interest put/call ratio increased to 1.58 against the previous week’s 1.4 while volume wise PCR to 1.54 (1.03). This indicates a lot of puts positions were carried over and call positions were squared-off during last week when the market climbed sharply.

Implied volatility

IV declined for both puts and calls. While puts IV decreased to 15 per cent (21 per cent), calls implied volatility slipped to 18 per cent (19 per cent).

Though the relative stability in calls IV suggests strong undertone, the decrease indicate calm market condition ahead.


The Nifty future widened its discount and it now trails the Nifty by 24.3 points against last week difference of 11 points. This suggests that a lot of short positions were added.

Stock futures

ICICI Bank: We presented a negative outlook on the stock with a target range of Rs 900 on the downside.

Though the stock witnessed some pressure, it was able to remain firm and closed around previous week’s levels of Rs 955.

We still believe that this stock could test Rs 900 level. Those who hold short positions on the counter can continue to do so. The market lot is 350 units per contract.

NTPC: We had presented a positive outlook on the stock and had said that it might not witness any sharp swings.

This counter also finished around the previous week’s levels of Rs 153.

We still expect the stock to touch our targeted level of Rs 168 if it breaches resistance at Rs 158.

Consider going long on the stock keeping stop loss at Rs 150 levels. Market lot is 1,625 units per contract.

IDBI: The stock is at a critical stage. While a move post its 52-week high at Rs 121 could take it to Rs 135-140, a dip below current level could weaken it to Rs 110-105 level. We expect the latter to happen as the stock is in an overb ought position.

Consider shorting the IDBI future with a stop loss if it begins the week on a weak or flat note. In that event keep the stop loss at Rs 121.

FIIs trend

The cumulative FII positions as percentage of total gross market positions on the derivative segment as on June 21 improved to 35.20 per cent (33.83 per cent).

FIIs were predominantly net sellers last week. They now hold open positions of Rs 14,412.01 crore (Rs 20,135 crore) in index futures and Rs 19,968.99 crore (Rs 22,665.76 crore) in stock futures.

Position-wise, they hold 6,46,798 contracts (9,45,092 contracts) of index futures and 6,86,149 contracts (7,93,995 contracts) of stock futures.

BEML: Invest

Investors with a three/four-year investment horizon can subscribe to the follow-on public offer of Bharat Earth Movers (BEML), being made in the price band of Rs 1,020-1,090 per share. At the price band, the offer is priced at 21-22 times its FY-07 per share earnings on a post-issue equity base. The rise in industrial capex, increasing Defence outlay, and proposals to introduce metro rail projects in major cities, lend visibility to BEML’s future earnings. This apart, BEML’s well-diversified product portfolio, established presence in the domestic market, strategic tie-ups with global players and a planned approach towards marking a global presence, are positives. However, short-term investors, despite these positives, can stay away, given the possibility of better entry points to the stock in the short term after the issue closes.


Operating in three segments — construction and mining equipment division, Defence products division and railway and metro division — BEML’s strength stems from its business straddling a variety of user industries. In the construction and mining equipment space, BEML enjoys market leadership, thanks to its well-diversified product portfolio. The division’s performance can also be attributed to BEML’s competitive pricing and on-time availability of spare components. While this trend is likely to continue given the ongoing industrial capex boom, the revenues are likely to get a boost from BEML’s upcoming contract mining operations.

To leverage on opportunities in contract mining, BEML has formed a joint venture with Midwest Granites and the Indonesia-based Sumber Mitra Jaya. This venture, apart from giving BEML a 45 per share in earnings, will also serve as an alternative source of revenue; BEML is expected to provide for about 40 per cent of the mining equipment needs. However, effective contributions from this venture are likely to be derived from FY-09 only. While the construction and mining equipment division is likely to enjoy a robust revenue growth, increase in outsourcing of components and rising competition in this space could curtail pricing power.

Having established itself as the country’s leading metro coach manufacturer, BEML is well-placed to benefit from the upcoming metro rail projects in major Indian cities. While concerns on the delay in the execution of such projects cannot be ignored, the inevitability of the roll-out of such projects, given the increasing congestion in major cities, points to sound long-term prospects for the business. Further, the Railways’ proposal to introduce enhanced passenger capacity coaches, increase the production of electric motor units (EMU) and introduce air-conditioned EMU coaches in suburban trains in Mumbai, Chennai and Kolkata, are also opportunities.

BEML has planned an investment of about Rs 210 crore from the offer proceeds towards expanding its capacity to 190 coaches per annum from the present 150 coaches. Given the cost-advantage BEML enjoys over international players (partly because of a five-year sales-tax exemption), it is likely to garner a chunk of the metro project business. Nevertheless, the possibility of BEML losing out a few orders to other players cannot be completely ruled out.

BEML’s Defence products division, which supplies Tatra Vehicles, armoured vehicles and ammunition loader vehicles to the Government, is likely to sustain its revenue growth. Given the 11.6 per cent increase in Defence budget for FY-08 over the previous year, the division is likely to sustain its growth levels. Also, the new Defence procurement procedure, which stipulates a 30 per cent offset for contracts exceeding Rs 300 crore, augurs well for domestic Defence contractors such as BEML.

Brazilian foray

BEML has proposed to form a joint venture with Companhia Comercio E Construcoes, a Brazil-based railroad equipment provider. It plans to utilise about Rs 100 crore from the offer proceeds towards this venture and has proposed to acquire a local manufacturing unit. Given the growing demand for coal mining in Brazil and other South American countries, the joint venture, when it takes off, is likely to help BEML consolidate its position in these new markets. While it is certain to face stiff competition from the already established international players in the region such as Caterpillar, Terex and Komatsu, there is enough room for growth for BEML. Nevertheless, the first couple of years could be crucial.

BEML’s tie-up with Apollo Tyres and MRF Tyres for the manufacture of Off The Road (OTR) tyres, apart from meeting the increasing demand for such tyres from earth moving equipment companies, is also likely to help it reduce the delay in orders and production cycles.


For the year-ended FY-07, the earnings grew 10 per cent on the back of an 18 per cent increase in revenues. Operating profits grew 17 per cent, while the margins remained flat. However, with the introduction of the voluntary retirement schemes and setting up of windmill for captive power consumption, the pressure on margins is likely to reduce. For the year, while the mining and construction equipment division and the Defence products division contributed to about 63 per cent and 32 per cent of the total turnover respectively, the Railways division made only a 5 per cent contribution. The metro coaches division is loss-making, but with the roll out of metro rail projects in the light of BEML’s increase in capacities, the division is likely to see better contributions.


Given that the Government contributes to a major share of BEML’s revenues, any unfavourable changes in policy with regard to Defence or the Railways procurement and any constraints in their budget could affect its earnings negatively. This apart, any unprecedented changes in the price of steel could also dent its earnings.

Offer details

The offer is open from June 27-July 3. The company seeks to raise Rs 534 crore through this offer. ICICI Securities is the book running lead manager and Karvy is the registrar to the issue. The offer would constitute about 11.7 per cent of the fully diluted post-issue paid-up equity capital of the company.

Allied Digital Services : Invest at cutoff

Investors with a high risk appetite and a three-year investment horizon can subscribe to the Initial Public Offer of Allied Digital Services (ADS) as it has reasonable growth prospects.

The company, which started operations in 1995, provides IT infrastructure management and technical support outsourcing services to a large set of corporate clients. It primarily acts as a support-partner for the infrastructure products — desktops, laptops, servers, network management etc. — of companies such as HP, Dell, IBM, Compaq, Cisco, Microsoft and Symantec. ADS generated revenues of over Rs 156 crore during FY07 and has grown at a CAGR (compounded annual growth rate) of over 50 per cent over the last three years.

Business Outlook

The company generates revenues mainly by providing services related to IT infrastructure, such as incidence-based support, facility management services (FMS), annual maintenance contracts (AMC), project management and consultancy, and network audit services. The prospects for the company over the medium-term appear to be good. First, Allied delivers its services through its own facilities and centres spread across 92 cities and follows a ‘direct’ model rather than a franchisee model.

This gives it direct control over customers’ Service Level Agreement (SLA) and Quality of Service (QoS) level requirements. Second, Allied has taken a vendor-neutral approach, which has allowed it to be a solutions and channel partner for some of the big names in the IT infrastructure space, and develop technical expertise over a vast range of products. Third, the company generates its revenues mainly from the BFSI (banking, financial services and insurance) sector, telecom and manufacturing clients and has announced an increased thrust on these businesses. With increased IT spending by these businesses , Allied is in a reasonable position to translate at least a part of this into business on its books, considering its longstanding client relationships.

Expansion Plans

The company plans to raise about Rs 86 crore (at Rs 190, the upper end of the price band). About Rs 33 crore has been earmarked for starting a Global Service Delivery Centre (GDSC), which is likely serve as a centralised control and monitoring centre for the company’s operations around the country.

The GDSC is to host, among others, a technical BPO, an IT services delivery centre and a remote management service centre. The company already runs a customer support centre for a few clients, such as EDS, Unisys and Fujitsu. Upgrading and expanding its existing internal infrastructure and setting up strategic units — a Network Operating Centre and a Security Operating Centre — have been allocated Rs 10 crore and Rs 16 crore, respectively.

All the above units are expected to help Allied expand its service offerings, considering the technical knowledge base it has already acquired. A sum of Rs 35 crore is envisaged to be spent on possible strategic acquisition(s) and the company has indicated that it is looking out for partners in a similar line of business.

Risks and valuation

Allied faces considerable competition (directly and indirectly) from highly established and more integrated players in the field, such as HCL Infosystems, CMC Ltd, CMS Computers, Wipro Infotech, Datacraft and Netsol, among others. The established players are more equipped to handle rapid changes in technology and client requirements. They are also better placed to operate on wafer-thin margins.

Another fact to be considered is that the capex to be funded by this IPO is expected to provide returns only over a two-three year period, as this expansion marks a significant ramp-up in scale.

The fact that it plans to have its Technical BPO to serve potential North American clientele could expose it to currency appreciation risks at a later date.

Last, the efficacy of any possible strategic acquisition remains in the realms of speculation as no company has been specifically identified as a takeover candidate. These factors indicate high levels of execution risks in its operations, which could affect earnings.

Allied Digital is much smaller in scale and breadth of operations when compared to companies that operate in this space. However, Allied has an EBITDA (Earnings Before Interest Taxation Depreciation and Amortisation) margin of 21.2 per cent, which is a clear 10 percentage points higher than players such as HCL Infosystems and CMC. This reflects Allied’s status as a pure services and solutions provider, as also its reasonable operating efficiency.

The EV (Enterprise Value) multiple, at the upper end of the price band at 10.1, is at a discount to its peers considering its smaller scale of operations. The offer price (at Rs 190), values the company at a PE multiple (price-earnings multiple) of about 14.3 times the FY07 EPS (Rs 13.3), on diluted equity. This is at a discount to competition. Considering the valuations, one could consider investing at the cut-off price.

Allied plans to issue 45,22,435 shares, representing about a 25 per cent stake in post-offer equity. The price band is Rs 170-190. The offer is open from July 2 to July 5, 2007.

Rising rupee and IT stocks

What will be the stock market impact of the recent sharp appreciation of the rupee? Will the currency’s strong gains provide additional momentum to any generalised de-rating of stocks caused by, say, a global move away from emerging markets?

This has been a key concern with the rupee rising notably from around 46/47 levels against the dollar last July/August to its current level around 41. This analysis focuses listed, export-oriented companies, in particular, the IT sector, what with its heavy export bias and the weights/influence IT companies have on the overall market indices and investment sentiment.

Benign impact so far

Going by historical evidence, further upward movements in the rupee’s exchange rate will have no adverse impact on the overall stock market performance of the IT sector. To that extent, developments in the currency market may not provide a an impetus to any generalised withdrawal by global investors from “risky” emerging markets. (Actually, purely from a currency point of view, any sharp appreciation in the rupee would be even more welcome for that category of foreign investors for whom investment in the Indian securities market is more a play on the “undervalued” Indian currency rather than taking an exposure in “mainstream” companies. The focus here, though, is on what impact the rising rupee value has on the company earnings/margins and how that, in turn, will impact stock market performance.)

An analysis of the statistics relating to the IT sector’s stock market performance (mirrored by the CNX-IT index, which accounts for as much as 90 per cent of the market capitalisation and traded values of the listed IT sector) in relation to the changes in the exchange rate of the rupee over the past five years points to this inference. If the foreign exchange exposure of the IT sector can be expressed in terms of the extent to which the stock market value (of the sector) changes in relation to a certain change in the level of the rupee’s exchange rate, it can be inferred that the level of FX exposure of the sector is quite low.

In statistical terms, it has been noticed that the IT index’s value changes only by around 0.30 times the change in the rupee’s value.

And this measure of the relationship between the two data sets — the regression co-efficient — is also not statistically significant at the 1 per cent level of significance. In other words, one can be 99 per cent confident that the IT index’s value does not change by more than 0.30 times the change in the value of the rupee. Not surprisingly, given the above data, the changes in the rupee explain only around 0.15 per cent of the change in the value of the index in the above period.

exports do well

What has perhaps provided the foundation for IT stocks’ relative insensitivity to the secular upward trend noticed in the rupee’s exchange rate in the past five years is the strong performance of IT exports in the same period.

The rupee has appreciated, on average, about 4 per cent a year in the past five years — from 49.05 in June 2002 to its current levels around 40.95/41. Software exports recorded strong growth in the above period — both in dollar and rupee terms. The growth in rupee terms is significant because it implies that the sector has been able to protect its final rupee realisations despite the secular rise in the currency.It is possible that the critical factors that enabled the sector to post good growth in rupee terms are:

Steady rise in export volumes in dollar terms and, more important,

A good level of hedging of the foreign currency receivables exposure.

Also, critically, the cost base of the IT companies/sector appears to have been systematically managed (lowered in relation to, say, income) as it is possible to protect/enhance margins despite higher FX hedging only with simultaneous action on the cost side.

Systematic hedging

Systematic hedging of the operating exposure (reflected in the increasing level of foreign currency receivables) has ensured that the rupee value of the underlying assets of the sector — broadly represented by the level of the index — is kept relatively immune to foreign exchange risk and is able to rise in tandem with the overall market.

As seen in the Table, software exports, which were around Rs 26,300 crore in 2000-01, have risen at a CAGR of around 30 per cent in the period up to 2005-06. In dollar terms, exports have risen almost at the same rate — rising at 31 per cent CAGR, from $5.75 billion in 2000-01 to $23 billion in 2005-06.

The growth in dollar terms has not been very much higher than that in rupee terms. But what is significant here is that the rupee growth rate has almost kept pace with the dollar growth rate. This points to a good level of hedging of the export receivables.

An example proves the point: In 2004-05, for instance, the dollar export figure was $17 billion. In rupee terms, this was around Rs 75,000 crore. This gives an average rupee rate of around Rs 44.10 per dollar. Applying this average rupee rate of 44.10 to the 2005-06 dollar export figure of $23 billion, one gets a rupee value of around Rs 1,01,000 crore. Against that, the actual rupee exports figure was as much as Rs 99,000 crore.

Given that the rupee has posted a secular appreciation in the five-year period mentioned above, the fact that in 2005-06 the export figure in rupee terms was only marginally short of what would have been the case if the same average rupee rate — of 44.10 — had prevailed that year, shows that software companies had broadly hedged their export receivables for 2005-06 at around the 44.10 levels. The same is the case with the other years too.

Overall prospects

Overall, IT stocks could continue to display robust valuations if stock market performance of the past five years and evidence from the sector’s approach to managing business risk is any indication. The larger message for stocks/companies with an export bias is this: Begin implementing appropriate hedging strategies to minimise the level of risk.

Hexaware Technologies: Buy

Investors with a two-year perspective can buy the Hexaware Technologies stock. At the current market price, the stock trades at around 15 times its expected FY-07 earnings and 12.5 times its expected FY-08 earnings. This valuation is at a discount to its peers such as KPIT Cummins and iGate. A good business model, a strong order-book and healthy client additions reiterate our positive view. But the near-term returns are likely to be muted.
Business Prospects

With the acquisition of Focus Frame, the US-based testing consulting firm in November 2006, Hexaware plans to enter testing services in a big way. The company expects testing services to contribute $50 million (Rs 204.5 crore) to the revenues this year compared to $11 million (Rs 45 crore) last year. The management expects testing services to bring in $100 million (Rs 409 crore) by 2009. Testing has contributed to 17.5 per cent of the revenues in Q1 compared to an average of 5.3 per cent in FY-06, with the integration of Focus Frame. Focus Frame has also patented the ‘Acclerator’ technology which provides pre-defined testing components for several platforms including SAP and Peoplesoft. Since Hexaware is one of the largest providers of offshore services for the Peoplesoft suite, the availability of the acclerator would help the company obtain new businesses on the latest Peoplesoft version 9. Eight new clients were acquired in Q1 including those of Focus Frame and Hexaware Testing.
Reorganised business

Since January, Hexaware has restructured its business to bring in greater competency. It has identified six focus areas and henceforth, sales strategies including client wins and mining of existing clients are to be aligned to these focus areas. Despite higher client acquisitions, repeat business in this quarter stood at 88.7 per cent as against 88.4 per cent last quarter.

Hexaware ended Q1FY-07 on a reasonable note. The quarter saw an all-time high order booking of $61 million (approximately Rs 249 crore). Client acquisitions were healthy at 20. Revenue and profit figures were in line with the guidance; revenues grew by 10.1 per cent sequentially showing double-digit growth after two quarters. The management expects to double revenues in the eight-10 quarters beginning January 07. Profits grew by 4.3 per cent for the quarter, sequentially.

For the next quarter, the profit guidance stands at $7-7.2 million (about Rs 29 crore), lower than the $8.02 million (Rs 35 crore) PAT achieved in Q1. This is attributed to three reasons: A wage increase of 14-15 per cent offshore and 3-5 per cent onsite; one-time visa charges of $3 million; and rupee appreciation.
Margin pressures

The company is looking at increasing margins by 1-1.5 per cent this year. But the target appears ambitious. Focus Frame is an onsite business with margins lower than Hexaware. This is reflected in the onsite percentage in Q1 which has increased to 62.1 compared to 61.6 per cent last year.

This has also played a role in the flat operating margin for Q1 although gross margins have improved. Selling, general and administrative expenses in Q1, as a percentage of revenue, have risen to the 24-25 per cent levels as against the reductions achieved in the previous year. What has helped maintain Q1 margins is the stepped up utilisation rates and an increase in the billing rates . The pressure on the margins might remain until full integration of Focus Frame is achieved by end 2007.
Attrition and utilisation

The attrition rate (excluding Focus Frame) at 16.1 per cent in Q1FY-07 is not expected to reduce in a big way despite wage hikes. Utilisation rate in this quarter has touched the 70 per cent mark by keeping the head count lower. Given the revenue growth that the management wants to achieve over the next two years, utilisation must improve in such a way as to help the margins grow along with the revenues. The company has a forward cover of $60 million at Rs 44.73. Any adverse impact of rupee appreciation, competition from local and MNC peers and visa issues remain principal risks to this recommendation.

Last year, General Atlantic picked up a 7.95 per cent equity stake along with optionally convertible preference shares. Preference shares, when converted, would increase the holding to 14.99 per cent (the open offer trigger is 15 per cent). One needs to wait and watch as to how things unfold on this front.

Lloyd Electric & Engineering: Buy

Investors with a 2-3 year perspective can add Lloyd Electric & Engineering to their portfolio, as the stock could emerge as a proxy for increasing consumerism in the country. Niche positioning as original equipment manufacturer of coils for a number of air-conditioner manufacturers, operational efficiencies derived from a fully integrated business and strong financials are positives for the company. At the current market price the stock trades at 10 times its expected earnings for FY08.

Lloyd Electric’s operations are forward integrated, ranging from making heat exchanger coils for air-conditioners to manufacturing window/split air-conditioners.

The company’s stock may not deserve the valuation commanded by branded players such as Blue Star or Voltas, but the current valuation discount suffered by Lloyd appears to be too steep, given its forward integration. As one of the leading coil manufacturers in India, Lloyd is an OEM supplier for leading AC makers including Blue Star, Voltas and LG. With possible spikes in demand for air-conditioners in the peak season (January-June), AC makers prefer to outsource excess demand for coil.

Lloyd is equipped with high quality imported machinery and has very few organised competitors; it may, therefore, continue to derive business from branded players. Further, the entry of new players, which is reducing margins for AC marketers, is actually a positive for Lloyd as it translates into new business.

Lloyd Electric has also started receiving outsourced orders for making window and split air-conditioners for some of the branded players. To cater to this demand, the company has expanded the capacity of its Himachal Pradesh unit and set up a new AC manufacturing plant in Uttaranchal.

That the company is also a supplier of AC package units (through a tie-up with an Australian company) for Delhi Metro Rail Corporation reflects its product strengths. We also view the company’s tie-up with a Korean company for making coil for frost-free refrigerators as a product diversification move.

The company’s sales grew at 36 per cent annually over the past three years and stood at Rs 496 crore in FY07. Operational efficiencies from its backward and forward integration projects ensured a 65 per cent annualised growth in operating profits over the same period. In terms of risks, a rise in raw material cost, especially copper, can dent operating margins. Tax benefits in all its three plants would, however, lend a boost to the net profits over the next few years.

Hotels ride high

ith room rates and occupancy remaining strong, hotel companies with a presence in key areas such as Mumbai, Delhi and Pune, have performed well in the quarter and year ended March 31, 2007, say analysts.

Companies have posted net profit growth between 25 and 40 per cent, which, Mr Pratik Dalal from SBICAP Securities Ltd says, “is a decent growth compared to last year’s performance”.

Indian Hotels Company Ltd, which runs the Taj Hotels Resorts and Palaces, with a growth of 71 per cent in net profit to Rs 135 crore (Rs 78 crore) has performed “outstandingly” well, according to Mr Dalal. Hotel Leela accounts its slow growth in the quarter ended March to “the saturation of room prices in Bangalore”, the property that accounts for maximum revenues for the hotel. Leela recorded a growth of 18 per cent in its fourth quarter net profit to Rs 45 crore (Rs 38 crore).

So is the case with Bangalore-based Royal Orchid Hotels Ltd. “The hotel’s room prices are at mid level and there is space for premium room rates,” says an analyst. The hotel registered a growth of 37.5 per cent in net profit to Rs 11 crore (Rs 8 crore)

The other premium category hotel, East India Hotels Ltd, a member of the Oberoi Group, has also registered a growth of 59 per cent in net profit to touch Rs 59 crore (Rs 37 crore).

The Asian Hotels, on the other hand, has registered a net profit of Rs 34 crore, a growth of 48 per cent from Rs 23 crore in the corresponding quarter last year.

However, the way ahead from here, Mr Dalal says would be for hotels with “good expansion plans reflecting growth in their profitability.” While in Bangalore, the room rates have already touched peak, the Hyderabad market will take time as the supply of rooms meets the demand now, he adds. Mr Dalal says companies with plans in Mumbai, Pune, Kolkata and Delhi should do well as room prices are still “robust”.