India Equity Analysis, Reports, Recommendations, Stock Tips and more!
Search Now
Recommendations
Monday, September 17, 2007
Madness Continues .. Indowind
17-SEP-2007,INDOWIND,Indowind Energy Limited,AMBIT SECURITIES BROKING PVT. LTD.,BUY,478935,128.69,-
17-SEP-2007,INDOWIND,Indowind Energy Limited,ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD,BUY,429780,129.47,-
17-SEP-2007,INDOWIND,Indowind Energy Limited,KAUSHIK SHAH SHARES & SECURITIES PVT LTD,BUY,333122,130.12,-
17-SEP-2007,INDOWIND,Indowind Energy Limited,P R B SECURITIES PRIVATE LTD,BUY,250962,128.47,-
17-SEP-2007,INDOWIND,Indowind Energy Limited,PRASHANT JAYANTILAL PATEL,BUY,322682,130.02,-
17/9/2007 532894 IWIND ENERGY MATRIX EQUITRADE PVT LTD B 403005 129.24
17/9/2007 532894 IWIND ENERGY MATRIX EQUITRADE PVT LTD S 403005 129.66
17-SEP-2007,INDOWIND,Indowind Energy Limited,AMBIT SECURITIES BROKING PVT. LTD.,SELL,478935,129.04,-
17-SEP-2007,INDOWIND,Indowind Energy Limited,ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD,SELL,429780,129.87,-
17-SEP-2007,INDOWIND,Indowind Energy Limited,KAUSHIK SHAH SHARES & SECURITIES PVT LTD,SELL,334132,129.94,-
17-SEP-2007,INDOWIND,Indowind Energy Limited,P R B SECURITIES PRIVATE LTD,SELL,250962,129.55,-
17-SEP-2007,INDOWIND,Indowind Energy Limited,PRASHANT JAYANTILAL PATEL,SELL,322682,130.79,-
Be Careful if you have a position, exit at the first sign of weakness
Post Market Commentary
Global jitters and profit booking saw equities end in negative terrain on Monday.
Trade started off firm, shunning weakness in Asian markets, and driving the Sensex to 15,726 and Nifty to 4549 levels early in the session. But traders turned cautious not wanting to take bets ahead of the US Federal Reserve's meeting on Tuesday.
Adding to the anxiety, European markets were weak as UK's Northern Rock tumbled further, pulling other financials down. But even as analysts said the market has already discounted this factor, selling pressure mounted back home and the Sensex and Nifty ended at the day's low.
The National Stock Exchange's benchmark index ended down 23 points or 0.52 per cent at 4494.65. Bombay Stock Exchange’s Sensex closed down 99 points or 0.64 per cent at 15,504.43.
"The market is a little on the weaker side. We will continue to see sideways movement with a negative bias, till the FOMC meet is through. But if the Nifty breaks 4450 on the lower side, there will be more weakness," said Sandeep Wagle, chief technical analyst at Angel Stock Broking.
Chiefly responsible for the fall were HDFC (down 3.31%), Tata Consultancy Services (2.47%), Reliance Communications ( 2.26%), Bharti Airtel (2%), Satyam Computer (1.97%) and NTPC (1.56%).
But select auto and cement stocks managed to hold gains. Reliance Energy (up 2.85%), Maruti Udyog (1%), Bajaj Auto (0.72%), Ambuja Cements (0.52%), Tata Motors (0.36%) and ACC (0.33%) were the major index gainers.
Mid-caps, yet again, out performed the front liners. BSE Mid-cap Index finished 0.27 per cent at 6,915.37 and CNX Mid-cap Index gained 0.46 per cent to 6308.8. Market breadth on BSE showed 1,380 advances and 1,365 declines, while on NSE, 564 shares gained and 599 fell.
But as the broader market weakened, stock specific action was seen. McNally Bharat Engineering was up 3.38 per cent on receiving an order valued at Rs 258.68 crore from Steel Authority of India.
Nagarjuna Construction advanced 0.81 per cent on bagging orders worth Rs 150 crore for construction of bridges for Karnataka Road Development Corporation and Ahmedabad Municipal Corporation.
IVRCL Infrastructures & Projects gained 2.10 per cent on receiving orders aggregating Rs 368.14 crore from Chennai Water Supply & Sewerage Board. Aban Offshore added 2 per cent on securing an order valued at Rs 2,000 crore from ONGC.
First Global - Kouton Retail
First Global advises investors to subscribe to Koutons Retail's initial public offering for listing gains, as the company is susceptible to grave risks due to high inventory levels.
Koutons Retail India, an integrated apparel manufacturer and retailer, will enter the primary markets on September 18. The shares are priced Rs 370-415 per share. The issue closes September 21.
At the upper price band, Koutons commands a price-to-earnings ratio of 29.2 times 2006-07 (Apr-Mar) earnings per share of Rs 14.2 and 23 times 2007-08 EPS of Rs 18.2, which is at a discount to the other retail players.
The stock is available at an EV/EBIDTA of 21 times 2006-07 and 13 times 2007-08 estimate. First Global believes that the risks are high due to its high inventory level of 93 per cent of top line and 100 per cent of capital employed in FY07.
Although Koutons recorded a compounded annual growth rate of 163 per cent in the top line during 2005-2007 due to its fast paced expansion plans, the brokerage has some concerns on the inventory front.
Historically, Koutons has been recording very high inventory levels (almost 100% of its capital employed), which has resulted in negative operating free cash flows for the last four years, which is not a good sign as it results in high obsolescence losses.
According to brokerage estimates, Koutons is expected to record a top line growth of 60 per cent on a conservative basis, considering a CAGR of 163 per cent in the top line in FY05-07 and EBIDTA margin, net profit margin and debt to remain flat in FY08.
Market Gossip - Rajendra Mechanical
Rajendra Mechanical is headed for a target of Rs 350
We hear that Andheri Realty Block is going for Rs 350cr
Disclaimer: Not to be construed as true, keep appropriate stop losses, this gossip may be nothing more than bullsh??
Post Market Commentary
The market tumbles to close the session in a negative territory with BSE Sensex closed lower by 99.37 points at 15504.43 and Nifty slipped by 23.35 points to close at 4494.65. The BSE mid cap and Small cap closed higher by 18.37 points and 67.47 points at 6,915.37 and 8,640.23 respectively. The market breadth was strong with 1380 stocks advanced and 1365 stocks declined.
BSE IT index decreased by 61.88 points to close at 4,387.26 as TCS ltd (2.47%), Patni computer (2.21%), Satyam (1.97%), Infosys (1.35%) and Wipro (0.18%) closed in red.
BSE bankex index fell by 45.34 points to close at 8,090.77as Oriental bank (1.95%), Andhra bank (1.52%), IOB (1.45%), ICICI bank (1.37%), PNB (0.83%) and SBI (0.42%) closed in green.
BSE oil & gas index slipped by 15.13 points to close at 8,372.09 as IOCL (0.95%), Reliance petroleum (0.92%), HPCL (0.75%), Reliance industries (0.30%) and BPCL (0.05%) closed lower.
BSE Auto Index advanced by 11.70 points to close at 4,897.17 as Hind motors (20%), Maruti Udyog (1%), Bajaja auto (0.72%), Punjab tractors (0.71%) and Tata motors (0.36%) closed in green.
BSE Capital goods index grew marginally by 3.29 points to close at 13,704.85 Suzlon energy (1.68%), Crompton greaves (0.90%), Bharat electricals (0.80%), Havell India (0.80%) closed higher.
BSE Health Care Index closed up by 3.42 points to close at 3,668.98 as Cadila health care (2.34%), Glenmark (1.52%), Novartis (1.38%), Nicholas piramal (0.75%) and GlaxoSmithKline (0.61%) closed in negative.
BSE Metal index closed higher by 31.62 points at 12,011.58 as Sesa Goa (2.62%), Welspun Gujarat (1.34%), Hind Zinc (0.94%), Nalco (0.72%), Sterlite (0.65%) and Tata Steel (0.18%) closed higher.
BSE FMCG index grew by 17.98 points to close at 2,090.79 as United breweries (12.60%), United SPR (6.80%), Tata Tea (0.48%), HUL (0.28%) and ITC (0.25%) closed in positive.
Sensex slips on weak European markets
As the shares of Northern rock the UK mortgage lender tumbled for the second consecutive day, the equities in Europe opened weak extending Friday's losses. Weakness in European markets triggered a major selling in domestic indices. Shrugging off the weak Asian markets, the Sensex resumed with a positive gap of 61 points and moved with in a range above 15,600 for the better part of the session with a positive bias. However, a strong selling bout in the afternoon dragged the Sensex to the day's low at 15,467. The index showed signs of a pull back towards the close, but ended the session by shedding 99 points at 15,504. The Nifty dropped 23 points to close at 4,495.
The market breadth was neutral. Of the 2,812 stocks traded on the BSE, 1,384 stocks advanced, 1,360 stocks declined and 68 stocks ended unchanged. Out of the 12 sectoral indices, six indices ended higher and six indices eased on profit taking. The BSE CD index gained 3.21% followed by the BSE FMCG index (up 0.87%). However, the BSE Teck index slipped 1.44% and the BSE IT index tumbled 1.39%, while the BSE bankex, the BSE Oil & Gas index, the BSE PSU index and the BSE Realty index closed with marginal losses.
Most of the index heavyweights ended in the red. HDFC was the major loser and tumbled by 3.31% at Rs2,144. TCS at Rs997, Reliance Communication at Rs531, Bharti Airtel at Rs814 slumped around 2% each. Among the other major losers Satyam Computer dropped 1.97% at Rs422, NTPC lost 1.56% at Rs183, ICICI Bank fell 1.37% at Rs895 and Infosys declined by 1.35% at Rs1,806. Reliance Energy, however, bucked the downtrend and gained 2.85% at Rs908. Maruti Udyog was up by 1% at Rs874.
Consumer durable stocks registered strong gains. Rajesh export surged 7.86% at Rs787. While Titan Industries advanced 6.90% at Rs1,497, Gitanjali Gems gained 3.34% at Rs294 and Videocon Industries was up marginally at Rs367.
Over 3.62 crore Ispat Industries shares changed hands on the BSE followed by IFCI (1.44 crore shares), Centurion Bank of Punjab (1.25 crore shares), Indowind Energy (96.45 lakh shares) and Sunflag Iron & Steel (87.91 lakh shares).
GMR Infrastructure was the most actively traded counter on the BSE with a turnover of Rs136 crore followed by Indowind Energy (Rs125 crore), Reliance Energy (Rs121 crore), IFCI (Rs115 crore) and United Sprits (Rs104 crore).
Market Close: Profit booking as all eyes on Fed..
It was a firm start but market struggled to keep itself up in green as profit booking across the sectors. Indices lost its ground in the mid session as Europe opened in red which added to the fall. Market recovered a bit from its lower level in later session but selling pressure continued as cautious investors preferred to book profits ahead of Fed meet which is scheduled tomorrow. Markets slumped into the negative territory to end at days low. FMCG inex ended in green while rest witnessed selling pressure. IT stocks continued to lag behind on account of strong Rupee against US dollar.
Northern Rock as Mortgage Lender which is the latest Victim of Global credit worries slumped as it Dragged FTSE 100 which fell by 2% due to this European Markets opened in red. This could create a jitter world across.
Sensex ended down by 99 points at 15504.43. Weighing on the Sensex losses were in TCS (997.35,-2 percent), RCVL (530.8,-2 percent), Bharti Tele (814.25,-2 percent), Satyam (422.2,-2 percent) and NTPC (182.75,-2 percent). Losses were restricted by gains in Rel Energy (907.8,+3 percent), Maruti (874.45,+1 percent), Bajaj Auto (2393.8501,+1 percent), Guj Ambuja (145.2,+1 percent) and Tata Motors (696.3,+0 percent).
Subex Azure went for profit booking after the company reported that it has lowered FY-08 net profit guidance by 33 % to Rs 104 crore on cut in technology spending by North American client. The company has also cut FY-08 product revenue guidance to Rs 520 crore from Rs 615 crore. Guidance was lowered due to postponement of commitment by a US customer. The forecast was slashed from the earlier $150 million and $38 million, respectively following capital expenditure reduction by AT&T and consequent delays in projects. The sub-prime impact seems to be rubbing off on others also. Companies catering to the telecom space are where one needs to be doubly cautious. These include Wipro, Sasken, HCL Tech, KPIT; Sterlite Optical may be Tech Mahindra to some extent where we are aware of Telecom customers. The rupee continues to be strong? but it?s the derating process of the IT sector which is happening on the business visibility. The stock ended down by 12% on the back of news.
Government today exempted four services including transport and port services used by exporters from service tax. Government has issued a notification providing refund of service tax paid by exporters on four taxable services which are not in the nature of input services but could be linked to export goods. The government collects 12 % service tax along with 3 % education cess on services. Exporters already get refund of service tax paid by them on input services used for exports. Drawback scheme also factors service tax paid on input services used for exporting goods. In July the FM had provided a financial package of Rs 1,400 crore to exporters especially to the Textile, Handloom, Handicraft and other labour-intensive industries to cushion the impact of rupee appreciation. Stocks like Sical Logistics and GDL ended up on the back of news.
Technically speaking: Markets traded week on selling pressure as some negative cues inched from global markets. Sensex touched intraday high of 15726 and low of 15467. Overall market churned Rs 4673 Cr. Market breadth was in favor of Advances, where the Advances stood at 1509, while Declines were 1443. Near turn support seen at 15410 as it has broken 10 Day moving Avg if broken 15130 levels is on cards.
Market turns cautious ahead of Fed meet
The market settled near the lowest point of the day, on fresh selling in late trade. The market had started the day on a firm note on buying interest in index pivotals. However it had lost ground in early afternoon trade with European markets which opened after Indian market, sliding in early trade.
Investors turned cautious ahead of the crucial US Federal Reserve’s meeting tomorrow 18 September, which will set the trend for the global markets. The Fed is expected to cut the interest rate by atleast 25 basis points.
The BSE 30-share Sensex lost 99.37 points or 0.64% at 15,504.43. It opened higher at 15,664.74 and advanced further to hit an intra-day high of 15,726.06. It slipped to a low of 15,467.46, at the fag end of the trading session
At the day’s high of 15,726.06, Sensex had risen 122.26 points for the day. At the day’s low of 15,467.46, it had lost 136.34 points for the day. Sensex oscillated 258.60 points in the day.
The S&P CNX Nifty was down 23.35 points or 0.52% at 4,494.65. The Nifty September 2007 futures settled at 4483.90, a discount of 10.75 points as compared to spot closing.
The market breadth was just about positive on BSE, with 1362 shares advancing as compared to 1355 that declined, while 66 remained unchanged. The breadth was much stronger in early trade. In morning trade, 1305 shares had risen, 728 had declined and 52 were unchanged.
The BSE Mid-Cap index rose 0.27% to 6,915.37 while the BSE Small-Cap index gained 0.79% to 8,640.23. Both these indices outperformed the Sensex.
The total turnover on BSE amounted to Rs 4,661 crore as compared to Rs 6,506.10 crore on Friday, 14 September 2007. The NSE F&O turnover was Rs 35768.53 crore as compared to Rs 47177.37 crore on Friday, 14 September 2007.
Sectoral indices on BSE showed mixed trend. The BSE Consumer Durables index gained 3.21% to 4,713.97 and was the top gainer among the sectoral indices on BSE. It hit a high of 4,735.91 which is record high for the index.
Two heavyweights Rajesh Exports (up 6.76% to Rs 778.90) and Titan Industries (up 7.43% to Rs 1504.50), led rally in BSE Consumer Durables index. Rajesh Exports galloped on reports that the diamond industry giant De Beers and a US-based buyout firm have separately shown interest in acquiring 51% stake in the company.
BSE Health Care Index (up 0.09% at 3,668.98), BSE Bankex (down 0.57% at 8,089.46), BSE Realty index (down 0.56% to 7,928.01), BSE FMCG Index (up 0.87% at 2,090.79), BSE Oil and Gas Index (down 0.18% at 8,372.09), BSE Metal Index (up 0.26% at 12,011.58), BSE Capital Goods Index (up 0.02% at 13,704.85), BSE Auto Index (up 0.24% at 4,897.17), BSE PSU index (down 0.30% to 7,278.30), and were outperformed the Sensex.
BSE IT Index (down 1.39% at 4,387.26), and BSE TecK index (down 1.44% to 3,479.07) were underperformers.
Among the 30-member Sensex pack, 16 slipped while the rest gained
India’s largest private sector power utility company in terms of sales, Reliance Energy gained 2.71% to Rs 906.60 on 13.43 lakh shares. The stock surged 23% in the past month from Rs 717.50 on 16 August 2007 to Rs 882.65 on 14 September 2007. It was boosted by recent reports that the apex court has allowed the company to bid for Rs. 2,600 crore Mumbai sea link project.
Auto stocks gained on renewed buying interest in anticipation of robust sales growth in the coming months during festival season. Maruti Udyog (up 1.06% to Rs 875), Bajaj Auto (up 0.65% to Rs 2392), and Tata Motors (up 1.61% to Rs 705) edged higher
India’s largest private sector entity by market capitalisation and oil refiner Reliance Industries (RIL) slipped from day’s high of Rs 2058.90, and hit a low of Rs 2021.10. It settled 0.61% lower to Rs 2022 on 3.62 lakh shares. As per recent reports, RIL is foraying in shipbuilding and dredging business with two separate companies. It plans to invest around $1 billion each in two companies and has begun talks with international majors for a strategic tie-up for the dredging business.
India’s largest cigarette manufacturer in terms of sales, ITC rose 0.28% to Rs 180.85 on reports it is gearing up for the launch of a mass brand in the home and personal care space. The company has already set up a separate strategic business unit (SBU) for this purpose
Housing Development Finance Corporation (HDFC), the nation’s top mortgage lender in terms of revenue, lost 3.31% to Rs 2143.50 on 72,982 shares. It was the top loser from the Sensex pack.
IT shares were subdued throughout the day due to lingering concerns of possible US recession. TCS (down 2.31% to Rs 999), Infosys Technologies (down 1.55% to Rs 1801.55), Satyam Computers (down 1.97% to Rs 422.20), and Wipro (down 0.06% to Rs 450), were the other losers from IT pack.
Telecom pivotals Bharti Airtel (down 2% to Rs 814.40) and Reliance Communications (down 2.40% to Rs 530.10) slipped on profit booking.
Among side counters, Hindustan Motors (up 20% to Rs 36.30), Reliance Industrial Infrastructures (up 20% to Rs 720.05), and Tata Investment Corporation (up 20% to Rs 540.10), surged
Subex Systems (down 12.68% to Rs 445), MIC Electronics (down 8.03% to Rs 503.70), and Bayer Cropscience (down 5.44% to Rs 325.15), slumped.
GMR Infrastructures topped the turnover charts with a turnover of Rs 136.29 crore followed by Indowind Energy (Rs 124.95 crore), Reliance Energy (Rs 121.60 crore) and IFCI (Rs 115.36 crore)
Indowind Energy galloped 16.10% to Rs 132.40. On 14 September 2007 Citigroup Global Markets Mauritius bought 5 lakh shares of the company at Rs 90 per share in a block deal on BSE.
IVRCL Infrastructures & Projects rose 2.41% to Rs 382.40 after it bagged various water supply and sewage projects worth Rs 368.14 crore in Chennai.
Tata Investment Corporation surged 20% to Rs 540.10 after Tata Sons announced open offer at a 33% premium to Friday's closing price of Rs 450. Tata Sons, made an open offer at Rs 600 a share to buy up to 28.39% stake from other shareholders of the firm who presently hold 39.39%. Tata Sons and other Tata group companies hold 60.61% in Tata Investment.
Omnitech InfoSolutions surged 6.31% to Rs 168.45 on its plans to set up a joint venture with Japan's Sanwell Co to provide technology services like software development services, consulting services and outsourcing services with a total investment of 100 million yen ($866,800). The name of the proposed joint venture company will be Arham echnologies Co (ATCL).
CCL Products soared 7.28% to Rs 296.95. Reliance Mutual Fund bought close to 9 lakh shares of the company in a bulk deal at Rs 250 each on the BSE on 13 September 2007.
United Phosphorous rose 1.56% to Rs 358 on its plans to raise funds through various routes. The company announced during the market hours today, 17 September 2007 that it has decided to make preferential issue of 3.11 crore warrants exercisable into equal number of equity shares of Rs 2 each of to promoters.
Electrosteel Castings settled at Rs 52.95 after it went ex-split from today from Rs 10 to Re 1. It was last traded at Rs 490.15 on Friday, 14 September 2007.
Aban Offshore gained 1.59% to Rs 3082 on winning three contracts for deployment of rigs worth about Rs 2000 crore from Oil & Natural Gas Corporation. The rigs will be on contract with state-run explorer Oil & Natural Gas Corporation (ONGC) at a daily rate of $1,56,600.
IFCI rose 3.11% to Rs 79.60 after it announced the names of ten bidders lined up for 26% stake in the company.
McNally Bharat Engineering Company rose 2.93% to Rs 196.50 after it bagged order for setting up of by-product plant for IISCO steel plant, Burnpur from Steel Authority of India (Sail) valued at Rs 258.68 crore. The project will be completed in 29 months from the effective date of contract.
Spanco Telesystems & Solutions gained 4% to Rs 234 on reports the firm is consolidating its business process outsourcing (BPO) ventures under a 100% subsidiary, Spanco BPO Ventures.
United Spirits soared 8% to Rs 1840 after it acquired a majority stake in Liquidity Inc, a Delaware Corporation engaged in the business of alcoholic beverages. The acquisition is for a consideration of $3 million. The company made this announcement after market hours on Friday 14 September 2007
Balmer Lawrie & Company slipped 5.20% to Rs 415 after it went ex-dividend for a dividend of Rs 13.50 per share from today. It has face value of Rs 10 per share
Ispat Industries jumped 9.75% to Rs 21.95. Recent reports suggest that the company is planning to invest about Rs 10,000 crore within five years to ramp up domestic production, and is also planning to expand overseas through capacity expansion and backward integration.
Adani Enterprises rose 4.77% to Rs 411.05. As per recent reports, the Adani group would invest over Rs 10,000 crore to set up a 2,640-mega watts (MW) coal-fired power plant in Ahmedabad. The project is being handled by Adani Power (APL), a wholly-owned subsidiary of Adani Enterprises.
Swaraj Mazda declined 2.52% to Rs 303.95 on reports that it received a notice from the Punjab Tractors (PTL) for using Swaraj brand name in its products as well as the proposed rights issue.
European markets declined today, 17 September 2007. Key benchmark indices in United Kingdom (down 1.63% to 6,186.80), Germany (down 0.52% to 7,458.90) and France (down 1.44% to 5,458.90), slipped
Asian markets were mixed. Taiwan's Taiwan Weighted (down 1.46% or at 8,899.91), Singapore's Straits Times (down 1.70% at 3,476.31), and Hang Seng (down 1.20% at 24,599.34) slipped
However South Korea's Seoul Composite (up 0.09% at 1,871.66) and Shanghai Composite (up 2.06% to 5,421.39) rose.
Wall Street shares finished on flat note on Friday, 14 September 2007 after investors looked past weaker-than-expected economic readings and focused on the ramifications of the Federal Reserve's decision on interest rates next week. The Dow Jones industrial average rose 17.64 points, or 0.13%, at 13,442.52. Broader stock indicators likewise showed modest gains Friday. The Standard & Poor's 500 index rose 0.30 points, or 0.02%, to 1,484.25, and the Nasdaq Composite index edged up 1.12 points, or 0.04%, to 2,602.18.
Crude oil prices continued a retreat from record highs on Monday, 17 September 2007 after tropical storm Ingrid faded in the Atlantic over the weekend, soothing fears it could hit Gulf of Mexico crude production and refining. US crude for October fell 51 cents to $78.59 a barrel. London Brent crude for November traded 27 cents lower at $75.95 a barrel.
For the week ended 14 September 2007, the BSE Sensex rose 13.38 points or 0.09% to settle at 15,603.80. The S&P CNX Nifty rose 8.5 points or 0.18% to 4,518 in the week.
Consolidated Construction Consortium
Founded by four former Larsen & Toubro (L&T) professionals, Consolidated Construction Consortium (CCC) is a Chennai-based turnkey construction services provider of integrated turnkey construction in the industrial, commercial, infrastructure and residential sectors of the construction industry.
CCC has executed 334 projects comprising of 104 industrial, 172 commercial, 14 infrastructure, and 44 residential projects across 14 states and Union territories in India. The built-up area of the projects aggregates approximately 19 million square feet (sq ft) comprise 3.84 million sq ft in the industrial sector, 12.68 million sq ft in the commercial sector, and 2.48 million sq ft in the residential sector. The projects include factories, residential and commercial buildings, hospitals, hotels, power plants and structures in the infrastructure sector such as water tanks, water supply schemes and bridges.
The private and public sector clients of CCC include Infosys Technologies, Ascendas IT Park (Chennai), Khivraj Technology Park, Manipal University, Airport Authority of India, and Hi-Tech Carbon (a unit of Aditya Birla Nuvo).
The IPO of CCC is to fund acquisition of construction infrastructure, investment in subsidiaries, expenditure on skill and management development centres and repayment of loans. The issue will open on 18 September and will close on 21 September. The issue has been graded by ICRA as IPO Grade 3 indicating average fundamentals.
Strengths
- End July 2007, the pending order book stood at Rs 2049.57 crore. This is about 2.4 times reported FY 2007 revenue. The execution period for the order book is 12-15 months. Since July 2007, received 10 more orders aggregating a contract value of Rs 182.1 crore. Of the 14 top contracts aggregating Rs 1291.5 crore for which the expected date of completion has been given, about five contracts aggregating about Rs 389 crore are scheduled to be completed in the year ending March 2008 (FY 2008).
- Of the pending order book end July 2007, only 15.49% of the orders were fixed-price contracts. Thus, the margin is to a great extent cushioned against variations in input costs.
- More than 95% of the orders have been completed on time. Of the total order inflow in FY 2007, about 50% of the orders by value were by previous clients, indicating customer satisfaction.
- A subsidiary Noble Consolidated was incorporated in May 2007 for carrying out glazing and aluminium fabrication services. Ideally this business has a higher margin and accounts for about 25-28% of the total project work.
- In the recent past, many real-estate companies have tapped the capital market to fund the development of their land bank. This includes south-based players and some players with land bank higher than the cumulative development in the past. Thus good scope for outsourcing of the construction exits. Has construction capabilities of three million sq ft per month.
Weaknesses
- About 92.5% of the pending order book end July 2007 and 92.2% of FY 2007 revenue are from south. Besides, about 38% of FY 2007 revenue was from the IT/IT enabled services (ITES) sector. Thus, a slowdown in construction activities is south or in the IT/ITES sector could have an adverse impact.
- Does not own its trademark. The use of the trademark and logo has been licensed by Samruddhi Holdings, a promoter group entity. Has to pay 4% of audited profit before tax (PBT) at the end of every year subjected to a maximum of Rs 2 crore to Samruddhi Holdings as a consideration for the trademark.
Valuation
Between FY 2004 – FY 2007, net profit has shot up from Rs 4.12 crore to Rs 47.68 crore. The improvement in financials has been much sharper in the last two years due to increase in construction activity in south resulting into improvement in volumes and change in revenue mix. The share of low margin residential projects has declined in total revenue from 18.26% to 3.21%, while high-margin industrial projects have increased from 19.25% to 33.48% in the same period.
FY 2007 consolidated EPS on post-issue equity works out to Rs 12.9. At the offer price band of Rs 460-Rs 510, the P/E range is 35.7-39.5, respectively. The nearest comparable listed company is B. L. Kashyap & Sons, trading at a P/E 34.2 times its FY 2007 consolidated earning.
Expect a sideways movement
The current market sentiment is mainly driven by the expectations of the possible rate cut in tomorrow's Federal Reserve policy meeting. The mood of the market is expected to remain positive, however, subdued Asian markets in current trades may weigh on investors' sentiment. Friday's positive close in US markets is likely help the domestic indices advance further. Among the indices, the Nifty could test higher levels around 4550 and 4583 while on the downside the index has a strong support at 4420. The Sensex has a likely support at 15250 and may face resistance at 15700.
US indices gained on Wednesday, after a volatile session ahead of this week's Federal Reserve policy meeting. While the Dow Jones gained 18 points at 13443, the Nasdaq was up by a points at 2602.
Indian floats, however, ended lower. VSNL & Patni computer slipped over 2% while, Satyam Computer, Wipro, Tata Motors and MTNL lost over 1% each and Infosys, Dr Reddy's lab, Rediff also fell by 0.50% each. However, ICICI Bank and HDFC Bank were the only gainers amongst the ADRs and gained over 1% respectively.
Global crude oil prices slipped marginally on Friday, with the Nymex light crude oil for October series closed at $79.10 down by 99 cents per barrel.
IFCI - Blackstone, IDFC, Kotak, Morgan Stanley, Cargill
Ifci Limited has informed the Exchange vide its letter dated September 15, 2007 that: "Pursuant to inviting Expression of Interest from Strategic investors, following applications have been received : 1) General Electric Capital Corporation. 2) Kotak Mahindra Bank Limited. 3) Consortium of Sterlite Industries (India) Limited and Morgan Stanley & Co. 4) Infrastructure Development Finance Company Limited. 5) Newbridge Asia IV, L. P. 6) Consortium of WL Ross & Co. LLC, GS Capital Partners VI Fund, Standard Chartered Bank & Housing Development Finance Corporation Limited. 7) Cargill Financial Services Corporation. 8) Consortium of Shinsei Bank Limited, Punjab National Bank and J.C. Flowers & Co. LLC. 9) Natixis 10) The Blackstone Group L.P."
Pre Open Market Commentary
Indian market is likely to have a positive opening as the US market closed higher. On Friday, the Indian markets ended on a negative note, as BSE Sensex closed lower by 10.64 points at 15,603.80 while Nifty slipped by 10.95 points to close at 4,518. We expect the market to remain range bound during the trading session.
On Friday, the US market closed in green. The Dow Jones Industrial Average grew by 17.64 points to close at 13,442.52. The NASDAQ Composite Index increased by 1.12 points to close at 2,602.18. The S&P 500 index closed flat at 1,484.25
Indian ADRs ended in negative. In technology sector, Patni computers slipped by (2.07%) along with Satyam by (1.48%), Wipro by (1.01%) and Infosys by (0.88%). In banking sector, ICICI banks and HDFC bank advanced by (1.75%) and (1.39%) respectively. VSNL and MTNL fell by (2.58%) and (1.80%) respectively.
The major stock markets in Asia are trading mixed. Taiwan weighted trading lower by 103.87 points at 8,927.76. Singa pore Strait times slipped by 15.03 points to trade at 3,521.37. Hang Seng grew by 54.05 points to trade at 24,952.16. South Korea,s Seoul composite is trading down by 13.15 points at 1,856.87.
Today, Nifty has support at 4,480 and resistance at 4,580 and BSE Sensex has support at 15,490 and resistance at 15,790.
Market to stay sideways
The market is expected to stay sideways ahead of the crucial US Federal Reserve’s meeting tomorrow 18 September, which will set the trend for the global markets. The US Fed is expected to cut the rate by 50 basis points.
Advance tax figures of local companies which will be reported this week are expected to be higher, indicating optimism over the growth in earnings.
Asian markets were trading lower today, 17 September 2007. Taiwan's Taiwan Weighted (down 1.15% or at 8,927.76), Singapore's Straits Times (down 0.43% at 3,521.37), South Korea's Seoul Composite (down 0.70% at 1,856.87) slipped. However Hang Seng rose 0.22% at 24,952.16
Wall Street shares finished on flat note on Friday, 14 September 2007 after investors looked past weaker-than-expected economic readings and focused on the ramifications of the Federal Reserve's decision on interest rates next week. The Dow Jones industrial average rose 17.64 points, or 0.13%, at 13,442.52. Broader stock indicators likewise showed modest gains Friday but managed their biggest weekly gains since mid-August. The Standard & Poor's 500 index rose 0.30 points, or 0.02%, to 1,484.25, and the Nasdaq Composite index edged up 1.12 points, or 0.04%, to 2,602.18.
Crude oil prices continued a retreat from record highs on Monday, 17 September 2007 after tropical storm Ingrid faded in the Atlantic over the weekend, soothing fears it could hit Gulf of Mexico crude production and refining. US crude for October fell 51 cents to $78.59 a barrel. London Brent crude for November traded 27 cents lower at $75.95 a barrel.
As per provisional data, foreign institutional investors (FIIs) purchased shares worth a net Rs 1286.03 crore, while domestic institutional investors (DIIs) were net sellers of shares worth Rs 260.45 crore on Friday, 14 September 2007.
The BSE 30-share Sensex slipped 10.64 points or 0.07% at 15,603.80, Friday, 14 September 2007. It is now 265.05 points away from all time high of 15,868.85 it had struck on 24 July 2007
For the week ended 14 September 2007, the BSE Sensex rose 13.38 points or 0.09% to settle at 15,603.80. The S&P CNX Nifty rose 8.5 points or 0.18% to 4,518 in the week.
Morning Call
Market Grape Wine :
In House :
Nifty at a supp of 4440 and 4483 with resis at 4550 and 4583
Intra Day: Buy Bharatforge above 273 with a TGT of 280 and a SL of 269
F&O: Sell Mphasis below 280 with a TGT of 270 and a SL of 285
Buy Ansalinfra above 266.50 with a TGT of 280 and a SL of 264
Out House :
Markets at a support of 15454 & 15342 levels with resistance at 15696 & 15786 levels .
Buy : RIL
Buy : REL& NTPC
Buy : IFCI , TTML , TFCI & NagarFert
Buy : Hanun bullet
Buy : Titan & CenturyTex
Buy : IolBroad & ABAN
Buy : Tisco & ACC
Buy : Welsguj & Gitanjali & Aptech
Dark Horse : RIL , REL , Kotak , IFCI , Aptech , Everon & Jphydro
US Market registers good gains
Market expecting a 25-50 basis points cut in interest rate
US Market registered good gains for the week ended 14 September, 2007. Market started off the week on Monday, 10 September, on a bit stagnant note, but then picked up on the following days of the week. Federal Reserve Chairman, Ben Bernanke and group’s two-day meeting on 17-18 September, 2007 remained the top focus among investors for the whole week. A chance of interest rate cut provided an underlying positive sentiment among investors.
During the week, Countrywide Financials said that the company was able to secure an additional $12 billion in borrowing capacity through new and existing credit facilities. This gave the financial stocks an overall strength which had been going through roller-coaster rides since the past few months amid this subprime mess in the US market.
The Dow Jones Industrial Average gained 329 points for the week. Tech - heavy Nasdaq gained 36 points and S&P 500 gained 31 points.
Among other major events during the week, crude oil future prices rose and reached an all time new high. Crude prices crossed $80/barrel and touched $80.18/bbl during intra day trading on 12 September. Prices increased though OPEC raised their production ceiling by 500,000 barrels a day starting 1 November, 2007.
Prices increased after Energy Department’s weekly inventory report showed that crude supplies dropped more than 7 million barrels (expected 2 million) and motor gasoline inventories fell a sixth week in a row during the week ended 7 September, 2007.
Among other economic data that were released during the week, was August retail sales and August Industrial production data. Both the releases reflected sluggish economic growth.
August retail sales were up 0.3%. That was a bit less than the expected 0.5% increase, but the July gain was revised upward from 0.3% to 0.5%. August industrial production was reported up 0.2%, a bit less then an expected 0.3% increase.
McDonald's shared gave a good boost to the market on both Wednesday, 12 September and Thursday, 13 September. The fast-food giant said its same-store sales rose 8.1% in August amid strong sales abroad and brisk breakfast business. Big Macs gave the market another boost when it announced that it was increasing its dividend by 50%.
General Motors was upgraded to Buy at Citigroup. GM shares soared by 10% on Thursday, 13 September. GM together with Big Mac helped Dow registered good gains on Thursday and Dow soared by 133 points on that very day. Increase in dividend by Microsoft too added to this gain.
In the technology sector, Intel lifted its third-quarter revenue guidance. But at the same time, Texas Instruments tightened its third quarter forecasts.
Executive Summary
For the week, the indices closed modestly up. DJIx was up by 2.4% and S&P 500 was up by 2.1%. Nasdaq was up by 1.4%. Crude prices crossed $80/bbl for the first time ever though OPEC decided to increase production by 50,000 barrels/day w.e.f 1 November, 2007.
The 10-year note yield rose from 4.37% last week to close this week at 4.46%. For the year, Dow is up by 7.9%, Nasdaq is up by 7.7% and S&P 500 is up by 4.6%.
In the coming week beginning on Monday, 17 September, several investment banks will be reporting earnings. However, the key event of the week, will be Tuesday's Federal Open Market Committee meeting. Market is expecting a 25-50 bps cut in interest rate, presently which stands at 5.25%.
Grey Market - Kouton, Consolidated, Circuit Systems
Power Grid Corporation 44 to 52 18 to 19
Dhanus Technologies 280 to 295 90 to 100
Koutons Retail 370 to 415 60 to 65
Circuit Systems (India) Ltd. 35 4 to 4.5
Consolidated Construction 460 to 510 100 to 110
Magnum Venture 30 2.5 to 3
Kaveri Seeds 150 to 170 6 to 8
Allied Computer 12 0
Intraday Stock Ideas
Nifty (4518) Supp 4489 Res 4557
Buy ICICI Bank (907) SL 901 Target 919, 924
Buy Ranbaxy (414) SL 409 Target 422, 425
Buy DLF (665) SL 661
Target 674, 678
Sell Maruti (866) SL 872
Target 856, 852
Sell Zee (306) SL 311
Target 298, 294
Waiting for tomorrow
If something anticipated arrives too late it finds us numb, wrung out from waiting, and we feel - nothing at all. The best things arrive on time.
Hopefully, the time has come. We are not talking of the Ganeshotsav or the festival season in general, but the much awaited meeting of the Federal Open Market Committee. The Federal Reserve's policy-setting panel will hold its meeting tomorrow amid fresh concerns over the subprime contagion affecting other parts of the world. The latest casualty of the collapse in the US housing sector is a bank in the UK. Markets across the world, barring a few in Asia, tumbled on Friday following the announcement by Northern Rock that it had to seek emergency funds from the Bank of England amid continuing tight credit market conditions. Our market too tanked in step with the global trend. But, thankfully US shares managed to escape unhurt and ended flat ahead of the Fed meeting. Asian markets too do not appear to be all that rattled this morning.
So, we expect a flat to slightly positive start and a rangebound sort of day. Most investors are waiting with bated breadth what the Fed will do tomorrow? Will it finally lower interest rates to prevent a recession in the US? If yes, what will be the size of the cut? And, will there be hints of further reductions down the line? To get answers to a a lot of questions we will have to wait for Tuesday afternoon (US time). Indian and other Asian markets will only get to react to the event only on Wednesday morning. One will also have to listen what the Fed has to say on the US economy, particularly the housing sector. Expect a lot of stock centric action and don't be over aggressive with your purchases. Also, don't forget the quality of the stock that you are buying.
Watch out for Tech Mahindra, SAIL and Jaiprakash Associates.
US stocks closed slightly higher on Friday with the major indexes all scoring weekly gains, after a stronger-than-expected consumer confidence reading offset weak August retail numbers and news that a UK lender is tapping the Bank of England for emergency funds.
The Dow Jones Industrial Average gained 18 points or 0.1% to end at 13,442.5. It had a weekly advance of 2.5%. The S&P 500 finished flat at 1,484.25, giving it a weekly gain of 2.1%. The Nasdaq Composite Index too closed unchanged at 2,602.18, translating into a weekly gain of 1.4%.
A monthly survey by Reuters and the University of Michigan pointed to a rebound in consumer sentiment in September, with an index rising to 83.8 in September from 83.4 in August, above a forecasted rise to 83.5.
US retail sales rose 0.3% in August, with all of the gains coming from cars and trucks. Excluding vehicle sales, the figure fell 0.4%.
The US current account deficit narrowed to $190.8 billion in the second quarter, or 5.5% of GDP. Inventories at US businesses tightened in July ahead of the August financial crunch. The Fed reported an August rise in output at US factories, mines and utilities, with industrial production up 0.2%.
Gold futures shed earlier gains, with gold for December falling 10 cents to close at $717.80 an ounce. Despite Friday's modest declines, gold posted a gain of $8.10 on the week.
The dollar gained 0.1% against the euro and was down 0.1% against the yen. The benchmark 10-year Treasury note was up 2/32 at 102 9/32, its yield at 4.46%.
Crude oil futures fell 99 cents to close at $79.10 a barrel, giving it a 3.1% rise for the week. The front-month contract was quoting 52 cents lower at $78.58 a barrel.
Former Fed chairman Alan Greenspan says his outlook for the future of the US economy is pretty gloomy. In an interview to a US television network, Greenspan said over the long run, the biggest problem facing the US economy is the re-emergence of inflation, and rising interest rates.
British stocks declined on Friday after UK lender Northern Rock turned to the Bank of England for emergency funds, saying the global credit crunch has it struggling to raise financing. The FTSE 100 in London closed down 1.2%, or 74.60 points, at 6,289.30. The index closed off lows after a stronger-than-forecast reading of US consumer confidence.
Other European stocks also ended lower. The pan-European Dow Jones Stoxx 600 index declined 1.2% to 367.75. The German DAX 30 fell 0.5% at 7,497.74 and the French CAC 40 dropped 0.5% to 5,538.92.
In emerging markets, the Bovespa in Brazil fell 0.4% to 54,671 while the IPC index in Mexico dropped 0.7% at 30,096 and the RTS index in Russia rose 0.55% to 1943. The ISE National-30 index in Turkey surged 2.5% to 64,055.
The Shanghai Composite index was up this morning despite China lifting its benchmark interest rates to cool the nation's economic growth and inflationary pressures. Markets in Tokyo are shut for a holiday while stock indices are down in Hong Kong, Singapore, Seoul and Taipei.
Swinging markets pared their intra-day gains following a sharp fall in the European markets after Northern Rock Plc, a British Home lender sought emergency funding from the Bank of England after a freeze in money markets left the mortgage provider unable to finance itself. The Auto and the IT stocks were worst hit and other like Pharma and Consumer Durable stocks followed suit. Even the Mid-Cap and the Small-Cap indices ended lower. Finally, BSE 30-share benchmark Sensex slipped 10 points to close at 15603. NSE Nifty slipped 10 points at 4518.
L&T gained by 1% to Rs2591 following reports that the company has secured order worth Rs762crores. The scrip touched an intra-day high of Rs2629 and a low of Rs2580 and recorded volumes of over 6,00,000 shares on NSE.
HDIL surged by over 2.5% to Rs593 after the company announced that they would develop 70acres of Land in Kochi and have signed Joint development agreement with Blue Star Realtors. The scrip touched an intra-day high of Rs610 and a low of Rs583 and recorded volumes of over 29,00,000 shares on NSE.
Suzlon edged lower by 0.8% to Rs1373. According to reports the company has won Rs20bn DFL order for 500-MW turbines. The scrip touched an intra-day high of Rs1404 and a low of Rs1363 and recorded volumes of over 6,00,000 shares on NSE.
Simplex Infrastructure gained by 1% to Rs368 amid reports that the company would foray into power transmission EPC business in India and abroad. The scrip touched an intra-day high of Rs380 and a low of Rs366 and recorded volumes of over 14,000 shares on NSE.
Banking stocks ended higher on expectation that Federal Reserves may cut interest rates in its meet due on 18th September and RBI would follow suit. ICICI Bank surged by over 2.5% to Rs906 and HDFC Bank added 1.2% to Rs1228. However, Mid-Cap Banks pared their gains Bank of India, Union Bank and OBC were the major losers among the Mid-Cap Banks.
ABG Shipyard surged by over 1% to Rs633 after reports stated that the company would bid for more than 51% for restructuring of Western Shipyard Ltd. The scrip touched an intra-day high of Rs639 and a low of Rs625 and recorded volumes of over 33,000 shares on NSE.
M&M lost 1.4% to Rs698. According to reports the company has pulled out of the race to buy Ford's luxury brands - Jaguar and Land Rover. The scrip touched an intra-day high of Rs719 and a low of Rs695 and recorded volumes of over 24,000 shares on NSE.
Oil PSUs stocks also pared their gains on back of profit booking. IOC slipped 0.7% to Rs392, HPCL was down by 0.7% to Rs239 and BPCL lost 1.5% to Rs306.
Realty stocks continued its firm run led by gains in the index heavyweights. DLF advanced by 3% to Rs665, Akruti surged by over 3% to Rs630 and Sobha added 1% to Rs757. However, Parsvnath slipped by 1% to Rs318.
Cement shares were a mixed bag. According to reports local companies may go in for a price hike of Rs3-5 per bag. ACC slipped by 2% to Rs1107, Grasim dropped by 1.1% to Rs3227. However, Ambuja Cement added 0.5% to Rs144.
Banking stocks ended higher on expectation that Federal Reserves may cut interest rates in its meet due on 18th September and RBI would follow suit. ICICI Bank surged by over 2.5% to Rs906 and HDFC Bank added 1.2% to Rs1228. However, Mid-Cap Banks pared their gains Bank of India, Union Bank and OBC were the major losers among the Mid-Cap Banks.
SCI and ONGC to form JV for offshore services; It will focus on drilling ships.
De Beers has shown interest in jewellery and retailer Rajesh Exports for acquiring 51% stake in it.
Tata Sons proposes to make an open offer for 29.3% equity stake in Tata Investment Corporation at Rs600 per share, a 33% premium to Friday’s closing of Rs450 .
Nipuna Services, the BPO arm of Satyam Computers, is looking at a BFSI buy.
10 bidders in fray for 26% stake in IFCI.
Subex Azure has announced cut in its guidance for FY08 due to postponement of capex commitments by a US customer.
United Spirits may see some action as announcing the acquisition of a majority stake in Liquidity Inc., a Delaware company engaged in the business of alcoholic beverages.
Omnitech InfoSolutions could also attract some attention after the company decided to incorporate a Joint Venture in Japan.
Ess Dee Aluminium is likely to be in the limelight as Morgan Stanley has picked up 1410000 shares at Rs575 per share.
The Government issued guidelines for semiconductor policy; to provide incentives up to 20% for minimum investment at US$550mn in a “fab” unit located in a SEZ.
The TRAI has asked all the telecom operators to give access to their fixed line optical fibre cable and copper network to each other on a non-discriminatory basis.
Fund Activity:
FIIs were net buyers of Rs12.86bn (provisional) in the cash segment on Friday and the local institutions pulled out Rs2.6bmn. In the F&O segment, foreign funds were net buyers of Rs5.11bn.
On Thursday, FIIs were net sellers to the tune of Rs466mn in the cash segment. Mutual Funds were net buyers of Rs802mn on the same day.
Upper Circuit:
Tourism Finance, Bombay Burmah, IID Forgings and Jai Corp.
Lower Circuit:
Carol Info, Usher Agro and Marathon Nextgen.
Major Bulk Deals:
Morgan Stanley has picked up Advani Hotels; Bear Stearns has bought Ganesh Forgings; Principal PNB MF has purchased Gayatri Projects; Religare Securities has bought Goldstone Tech; UBS has picked up Gremac Infra; UBS and ABN AMRO have purchased IT People; Citigroup Global has picked up Indowind Energy; HSBC has sold JRG Securities; Lotus Global has sold Kashyap Tech; Bear Stearns has bought SREI Infra; HSBC picked up Vinay Ceme; BNP Paribas has purchased XL Telecom.
Markets will be rangebound
| The eventual breakout is somewhat more likely to be upwards but it's almost a 50:50 guess. |
| The major indices saw little change in a week when the action shifted to the slightly smaller stocks. The Nifty was up a nominal 0.2 per cent at 4518 while the Defty was ahead by 0.68 per cent as the rupee strengthened again. |
| The Sensex was up by a similarly nominal amount and closed at 15603. The Nifty Junior was however, ahead by 1.29 per cent beating the bigger indices. |
| Breadth weakened towards the end of the week. The CNX IT lost a massive 4.6 per cent and that was a major cause of the drag on the big indices. The Bank Nifty was up 1.01 per cent. |
| Both FIIs and domestic mutuals were net buyers until Thursday. The FIIs sold on Thursday and anecdotal evidence suggests that they also sold on Friday though concrete data is not yet available. Volumes were okay and rose on Friday during the selloff. |
| Outlook: The market is range-trading. The eventual breakout is somewhat more likely to be upwards but it's almost a 50:50 guess. There's support at 4450 and resistance above 4550. A close beyond either of these levels would project to a 100-point move. |
| Rationale: We've seen several sessions of consolidation in a narrow range between 4450-4550. Clearly, there needs to be a trigger for a breakout. |
| The intermediate trend has now been bullish for over three weeks. If it remains bullish, the breakout is more likely to be upwards and culminate in a new all-time high. |
| On the downside, a breakout below support at 4450 would probably result in a bounce from support between 4350-4375. |
| Counter-view: If the pattern on Friday's session is indicative, there could be heavy selling when the market opens. FII attitude will be crucial. It will be negative if the global credit situation remains unclear. |
| Bulls & bears: There was across the board selling pressure on IT stocks through the week but both buying and selling was scattered across other sectors. |
| Quite a few banks and financial service providers did well with HDFC, HDFC Bank, IFCI, Indian Infoline, Reliance Capital, ICICI and Corporation Bank all looking capable of further bullishness. |
| Cement shares did well until Friday when there was a lot of selling. Reliance Industries continued to hit new highs while there was obvious interest in RIIL and IPCL. Unitech saw buying as did DLF. |
| MICRO TECHNICALS |
| HDFC Bank Current Price: 1232.7 Target Price: 1310 (long-term) |
| The stock has seen volume expansion while developing a promising formation. It faces serious resistance between 1240-1250. |
| However if it closes above 1250, there will be a target of 1310. Keep a stop at 1225 and accumulate a deliver position with a timeframe of about four-five weeks. |
| India Infoline Current Price: 842.3 Target Price: 970 |
| A strong uptrend has also been supported by excellent volumes. India Infoline is now trading very close to its all-time highs. It has a short-term target of 970 and a possible long-term target of 1100. Keep a stop at 800 and go long. Consider delivery with a six-week perspective. |
| Rolta Current Price: 446.25 Target Price: 420 |
| A sharp rally has been followed by an even bigger sell-off. Any important resistance was broken at 450 on high volume. |
| There is a likely downside target of 420, which is a strong support that's likely to be tested on intra-day basis at least. Keep a stop at 452 and go short. Cover below 425. |
| Reliance Industrial Infrastructure Current Price: 599.6 Target Price: 700 |
| The stock has seen a single-session jump from 511 on a huge volume expansion. This completes a promising chart formation and projects to a possible target at 700. Keep a stop at 585 and go long. Move the stop up 15 points for every 15 point rise. |
| Unitech Current Price: 282.9 Target Price: NA |
| The stock has split very recently and it's due to be added to the Nifty. While both are positive developments, they also make target projections impossible. |
| Keep a stop at 265 and go long. Book partial profits above 295 and hold the rest for delivery with a three-week timeframe. |
Koutons Retail: Invest
An investment with a one-year perspective can be considered in the initial public offer (IPO) of Koutons Retail India (KRIL). KRIL is a player in the menswear segment with a network of stores mainly in northern and western India. The offer proceeds will help the company expand its retail network.
The price band of Rs 370-Rs 415 values the company at 33-36 times its 2006-07 earnings per share, on an expanded equity base.
KRIL’s premium pricing appears to factor in higher growth rates compared to domestic apparel majors such as Raymond, Zodiac Clothing and Kewal Kiran Clothing. The latter trade at price-earnings multiples of 15-20 based on trailing earnings.
However, KRIL’s performance over the last couple of years and its proposed expansion plans provide some justification for the higher growth expectation.
The expensive valuation for the offer, however, does not provide a margin of safety in the event of disappointing performance. This makes it suitable only for investors with a high risk appetite.
Massive retail ramp upKRIL sells menswear under the brands “Koutons” and “Charlie Outlaw” targeted at customers in the 22-45 and 14-25 age groups respectively. The company has grown its brands by setting up a chain of exclusive outlets across the country. Opening exclusive outlets to improve brand visibility and enhance margins is a strategy that most branded retailers such as Raymond, Provogue and Madura Garments have pursued.
However, at their early stages, most players, particularly regional ones, prefer to distribute their products through national chain stores and multi-brand outlets. This practice allows branded players to improve their reach without bearing the risk of unsold inventory.
Going by its performance, however, KRIL’s strategy of relying mainly on exclusive branded outlets operated by franchisees, appears to have worked. From 75 stores in 2005, the chain of stores expanded to 687 by March 2007. Revenues have grown at a scorching pace from Rs 60 crore to Rs 400 crore over the same period. With operating margins also improving significantly over this period to about 17 per cent, profits have grown at an even faster pace.
Further expansionThe company plans to further expand its reach with the offer proceeds. About Rs 40 crore of the fresh issue proceeds will be deployed in setting up 140 stores over the next two years. The stores will be leased by the company but operated either by the company or franchisees.
The offer document does not mention the exact timeline for these stores to become operational. It has tied up retail space for 75 such outlets, most of them in malls, which is likely to add about 1 lakh square feet of retail space to the existing 8 lakh. Though the remaining proceeds will go towards setting up an integrated facility, this will not result in any capacity expansion.
However, a significant ramp up in revenues is likely this fiscal, given that KRIL has already added about 300 stores or 3 lakh square feet to its retail network since March 2007. Having significantly expanded its manufacturing facilities recently, it is also well-placed to feed the additional stores and introduce product lines. It proposes to introduce separate lines for women and children.
Risky modelDespite the high growth trajectory so far, the business model carries high risks. One, there is a high dependence on franchisees to expand the retail network.
Second, KRIL’s ability to transform its brands “Koutons” and “Charlie Outlaw” from regional- to national-level brands is yet to be demonstrated, despite its large retail network. The retailer tends to rely on heavy discounting to push products.
Seen in this light, the company’s ability to maintain its price-line and implement its stated strategy of targeting the premium segment, could face challenges. Selling expenses have been on a rising trend and now account for almost 25 per cent of sales, as the company increases expenditure towards brand-building.
The offer is open from September 18-21. About 35 lakh shares are on offer, of which 9 lakh shares are an offer for sale by the promoters. The lead manager is JM Financial.
Consolidated Construction: Invest at cut-off
Investors can subscribe to the initial public offer of Consolidated Construction Consortium (CCC), an integrated construction services company.
Bright growth prospects, backed by demand for quality construction contractors, strong management bandwidth and an order-book that lends visibility to earnings growth over the next couple of years are positives for this offer.
At the offer price of Rs 460-510, the price-earnings multiple is 14-16 times the company’s estimated consolidated earnings for FY-09 on an expanded equity base.
This valuation is comparable to its nearest peer B. L. Kashyap and Sons.
At the offer price band, the market capitalisation of the company’s stock on listing would be Rs 1,700-1,900 crore.
Profile and objectivesCCC undertakes turnkey building contracts for corporates, infrastructure and realty players and the Government. The company cannot be termed as an infrastructure or real-estate player and can be better defined as a pure construction company that offers a wider range of services. The company has clients in sectors such as IT, manufacturing, retailing and education. The offer proceeds (Rs 170-190 crore) are to be primarily used for acquiring construction equipment and for investments in subsidiaries, which provide allied construction services.
Lesser risksThe profile of CCC inspires confidence as it is primarily into a business with lesser risks and uncertainties than are typically associated with infrastructure and real-estate players. For instance, the company does not face risks related to buying or developing land or any slowdown in the infrastructure order-flow from the Government.
No doubt, the margins for a pure construction player may not be as lucrative as the others in the industry.
However, higher volume of business could make up for this. Infrastructure and real estate companies are holding huge orders that need to be executed and the likes of CCC are likely to benefit from this. CCC could also benefit from higher corporate capital expenditure outlays.
The demand for CCC’s service is reflected in a compounded growth of 75 per cent and 125 per cent in its sales and net profits respectively over the last three years. The company’s order-book of Rs 2,200 crore as of August 2007 is over 2.5 times its sales for FY-07.
Well-structuredCCC’s diversification in terms of business, client mix and geography points to a well thought out model to mitigate risks.
One, although CCC’s current order-book is concentrated in the South (92.5 per cent), it has been making headway in States such as Rajasthan, Himachal Pradesh and Delhi.
Two, in terms of client mix, the company has a healthy variation of clients from various sectors with almost 40 per cent of them turning in for repeat orders. Three, the service/product mix, although tilted towards core construction, has a healthy sprinkle of mechanical and engineering services and interiors (through subsidiaries) to the extent of 17 per cent.
With the company further investing in its subsidiaries, the allied services offered by it is likely to emerge as value-adds for improving the operating profit margin, which is now 8 per cent.
Four, the company does not depend so much on business from the Government (which is about 16 per cent of order-book), thus reducing the risk of any slowdown or stoppage in projects due to delays.
Five, fixed price contracts at about 15 per cent of current orders means that the rest of the projects are likely to enjoy price pass through for any raw material hikes.
We do however, see challenges arising from the company’s plans to build a food processing Special Economic Zone through a subsidiary. We have not factored in the same in our valuations due to lack of visibility.
Trader's Corner
Stocks seldom open at the same level at which they closed in the previous session. When they open well above the previous session’s high or below the previous session’s low, they form a ‘gap’ in the chart. The Japanese, in their picturesque terminology, called these ‘windows’. Analysing these gaps or windows provides an analyst with vital clues regarding the trend in the stock.
While an analyst would welcome gaps in the charts, position traders would be happy to issue a ban on gaps, if they could. They play havoc with positions that are rolled over as stops become redundant in a large gap opening. The only recourse when stuck on the wrong side of a gap would be to book the loss and exit.
What can an intra day trader do if the market opens with a gap in the morning? He would need to take in to account the prevalent trend in the morning before acting on a gap. For instance, if the market is in a strong up trend, it can stabilise at the higher level after a gap ‘up’ opening and then move up further in the later half of the session. So, the trader would wait for the prices to sustain at higher levels for at least an hour and then play long with a stop just below the level where the gap began.
Similarly, in a market that is trending down, downward gaps would be common. If the price moves sideways after a downward gap, there is a high degree of probability that the price would fall further as the trading day advances and hence provides an opportunity to go short for the intra-day trader.
It is, of course, of paramount importance to determine if the gap is a strong one that will go unchallenged for many days or a weak one that will get filled the same day. The magnitude of the gap would play a critical role in deciding its strength. As a rule of thumb, smaller gaps are more likely to get filled the same day when compared with a larger gap.
The way to determine if the gap is small or large would be to compare with the previous day’s trading range. Gaps that are more than 50 per cent of the previous day’s trading range are more likely to remain open for a while when compared to gaps that are less than 50 per cent of the previous day’s trading rangeIndex Outlook
Sensex (15603.8)
The cacophony in conjecturing the various ways in which the Federal Reserve can act, made many among the market participants retreat to the fence last week. Profit booking near intra-day highs checked the up-moves in the Sensex while short covering in derivative segment prevented a sharp slide. The index finally ended the week on a flat note.
Traders busied themselves with the small-cap stocks and that made the market breadth positive. The BSE small-cap index was the strongest performer last week and is currently poised 2.6 per cent above its July peak. The broader indices such as the BSE 500 and BSE 200 too seem inclined to move higher. FIIs have reversed their stance in September and have already infused $1 billion in cash this month.
The Sensex did a commendable job of holding steady despite being buffeted by a host of negative tidings last week. But the momentum has slowed down significantly due to the protracted sideways move recorded over the last two weeks. Since corrections can either be shallow and long-drawn or deep and short-lived, let us hope that the correction this time around belongs to the former category.
The wave counts have not altered this week. The move from the 13780 trough could have one more leg upwards that can take the Sensex to 16025 or 16307. But the index can fluctuate in the range between 15300 and 15850 for a few more sessions before a break-out occurs. A fall below 15200 is required to negate the positive outlook for the short-term.
Though the short-term outlook is positive, medium and long-term investors need to exercise caution as the zone between 16000 and 16400 is a potent long-term resistance.
With the Sensex positioned just a stone’s throw away from recording a new high, excitement is running high. The movement next week could stay choppy with the Sensex moving in a band between 15350 and 15900. Move beyond the upper boundary would take the Sensex to the next milestone at 16025. Supports below 15350 are at 15211 and then 15043.
Nifty (4518)The daily candle-stick chart of the Nifty last week has a plethora of bearish patterns, a hanging man, followed by a grave-stone doji and two shooting stars. If that hasn’t rattled traders, nothing else will. The Nifty can move around in the band between 4450 and 4650 next week. A dip lower to 4450 or 4408 is possible in the early part of the week. A reversal above 4400 would provide good buying opportunity for traders.
The upper targets for the week are 4582 and then 4636. Move beyond the second target can propel the index to 4716. The outlook for the short term stays positive as long as the index stays above 4360. Support below is at 4223.
Global CuesGlobal markets pulled back from the lows last week on rising hopes of a benign Fed stance. The DJIA has, however, not yet risen above the resistance at 13500. But chart patterns indicate that the index can try to get back towards 14K soon. Markets in Asia are in the wait-and-watch mode prior to the FOMC meet. The only exception being the Hong Kong market, which soared to new highs.
Nymex crude retreated from its intra-week high of $80.3 to close the week at $79.1. Since the current rally is the fifth wave from the January low of $49.9, the short-term target is $84.4. This target is achievable if the commodity stays above $76 in the near term.Gujarat Industries Power: Buy
Investors can consider buying the Gujarat Industries Power Company (GIPC) stock at the current market price with a medium- to long-term perspective.
The company is in the growth mode and is increasing generation capacity that will add to earnings from 2009-10. Meanwhile, the existing generation units are stabilising and improving their operating efficiencies.
At the current price of around Rs 80, the stock is valued at a discount to its peers such as Neyveli Lignite Corporation; re-rating could happen sooner than later given the company’s improving performance and its investment in capacity expansion.
Growing fastGIPC now runs three power stations adding up to a total capacity of 555 MW, which is just about 10 per cent of the total installed power generation capacity in Gujarat.
The company’s capacity will increase to 805 MW by March 2009 when the new units under construction are commissioned. GIPC supplies its power to the State electricity board under power purchase agreements already signed.
The company has a healthy fuel mix for generation. The two older units at Vadodara (aggregate capacity of 305 MW) run on natural gas while the third and the latest one at Surat (250 MW) commissioned in 2000 is fuelled by lignite from the company’s captive mine. GIPC has firm allocation for more than 90 per cent of its gas requirements from GAIL and a fallback allocation for the remainder. But it has faced problems in gas availability in the past for its second 160 MW unit in Vadodara and has had to resort to naphtha which is dearer.
Operating margins have been hit due to this; the low plant load factor at this station has also not helped overall performance.
The new capacity of 250 MW under implementation will be fuelled by lignite and will be a pit-head plant. The company has adequate lignite reserves in its mine to fuel the new capacity comfortably in the long term.
This is expected to ensure fuel security and also help in increasing margins as the pit-head location will save on transportation costs for lignite. The first 125 MW unit of this plant is scheduled to go on stream in November 2008 and the second by March 2009 which means that initial revenues from these projects will get reflected in the financial statements of 2009-10.
Meanwhile, GIPC has initiated a study for another new 500-600 MW plant at the pit-head of another mine that it has been leased by the Gujarat Government. This augurs well for the long-term growth plans of the company.
Sound financialsThough it has had challenges in the past in the form of declining margins, GIPC has managed to stabilise its financials well in the last couple of years.
Thanks to a significant reduction in debt, interest costs have dropped appreciably (20 per cent lower in 2006-07) enabling the company to post good earnings growth in the last few quarters.
The falling debt has also lowered the leverage of the company which will come in handy now as it embarks on borrowings for its ongoing expansion project at Surat. However, the flip side is that interest charge could now increase and could pressure margins in the near-term till the projects are commissioned.
More gas, higher priceMargins could also come under some pressure when gas supply contracts come up for renewal in the next couple of years.
Though gas availability is set to improve significantly in the region, it could come at a relatively higher cost than the subsidised prices that GIPC has been used to till now.
What lends confidence though is that Gujarat has an 8.5 per cent energy deficit which goes up to 13.6 per cent during peak hours.
Given this large deficit, GIPC’s power will be consumed even at marginally higher prices. Shareholders can buy the stock with a two- to three-year holding period in mind.
Bank of India: Buy
Investors with a higher than normal risk appetite can consider buying the Bank of India (BoI) share at current market price of Rs 250.
Returns from this point, however, could be muted in line with the trends seen in peers such as Bank of Baroda, Canara Bank, Corporation Bank, Oriental Bank of Commerce and Union Bank of India in the past two years.
In this group, banks such as Corporation Bank have posted decent earnings growth, while some such as Union Bank of India and Bank of Baroda have posted more sedate growth.
These banks are broadly trading around 10 times their recent earnings and have been trading in this valuation range since September/October 2005.
The Bank of India stock is now trading at a similar valuation (about 10 times its FY 07 earnings), having seen a downward move from a multiple of 18-20 times two years ago. A downward move to the valuation zone of the other public sector banks seems to have occurred and the risk is of this becoming permanent.
In the event, returns from an investment in this stock may not match what has been recorded in the past few years.
The Bank of India stock has returned around 57 per cent in the last one year and has also provided fairly high returns (of 45-50 per cent per annum) over a three-to-five-year period. This places the BoI stock in the company of other counterparts such as Axis Bank, State Bank or HDFC Bank, which have generated similar returns. In contrast, Canara, Bank of Baroda and Oriental Bank of Commerce have generated returns of 13, 11 and 15 per cent, respectively, in the past one year.
There also appears to be a valuation fatigue with respect to the public sector banks listed above. This valuation drag could be on account of the relative performance of the public sector banks vis-À-vis the new private sector banks as well as due to the fact that FII holdings in most of these banks are close to or at the permissible limit of 20 per cent. FII holding in BoI is currently around 16.50 per cent and any move by them to increase this may see valuations rising.
Underlying performanceFrom a fundamental perspective also, BoI’s business performance is not such as to place it differently from its public sector peers. Growth in certain key parameters that drive earnings and returns on equity — such as advances, deposits, interest income, interest expenditure, other income, operating expenses — has broadly moved in line with the peer group.
In the past five years, Bank of India’s advances portfolio has grown at a CAGR (compounded annual growth rate) of 18 per cent, which is slightly lower than the 22-23 per cent growth posted by its nearest peers Canara Bank and Bank of Baroda. In comparison, Axis Bank and HDFC Bank have grown their advances by around 50 per cent CAGR in the past five years.
BoI has been able to grow its deposit base at around 15 per cent, which is again slightly lower than the 17 per cent growth of Canara and Bank of Baroda and much lower than the 30 and 35 per cent growth of HDFC Bank and Axis Bank.
At around 41 per cent, BoI’s share of low-cost deposits is quite high by industry standards as well as its peer group. But interest expenditure growth at 9 per cent in the past five years is broadly in line with peer banks’ levels and, in fact, is higher than that of Bank of Baroda, which has seen a 6 per cent rise in interest expenses.
In comparison, interest expenditure for both Axis Bank and HDFC Bank has grown by 25 per cent in the past five years.
Scoring over peers in non-interest incomeOne parameter on which BoI scores well over its peer group is in respect of non-interest income. Non-interest income has grown by close to 8 per cent on average in the past five years, which places BoI alongside State Bank of India . Against that, other income for Canara Bank, Bank of Baroda and Punjab National Bank have all grown by only 1.5-2 per cent in the last five years. The private sector banks — Axis and HDFC Bank — though, have grown their non-interest income by as much as 20 and 35 per cent respectively, in the past five years.
Missed opportunities and prospectsThe overall message from the above business numbers and growth performance of BoI (other public sector banks as well) vis-À-vis that of private sector banks is one of missed opportunities in an economy that has registered strong growth in the past few years. It is difficult to see a radical and, more importantly, a quick shift in the business strategies of the public sector banks that may enable them to capitalise fully on the still strong growth impulses in the economy.
But, their established presence, network and the relationships built over almost a century of banking are their main strengths that could provide a certain measure of stability to the earnings stream and could even stand them in good stead in a business/economic downturn.
Corporate lending and relationships, in which public sector banks have relatively more focus, could help them maintain the income flow as against retail lending where relationships are not a material factor. The quality/income potential of the retail portfolio would, therefore, be more subject to system-wide influences.
Overall, investments in stocks such as BoI could provide decent long-term investment returns in the mid- to high teens.
Stocks you can pick up this week
Motherson Sumi System
Research: Merrill Lynch
Rating: Buy
CMP: Rs 96
Merrill Lynch initiates coverage on Motherson Sumi Systems (MSSL) with a ‘buy’ rating due to the following reasons: (1) 23%+ compounded annual growth rate (CAGR) in EPS during FY07-FY10E and sustainability of 20%+ earnings growth over a longer period; (2) 560 bps expansion in return on equity capital (RoCE); and (3) new business ventures.
Expansion of the rubber components business following the recent acquisition of Empire Rubber in Australia and beginning of commercial production of mobile phone plastics parts business in H2 FY08 are the key growth drivers, apart from the 22% CAGR in wiring harness revenues. There is significant possibility of earnings surprise on account of: (1) management guidance of 43% CAGR in earnings being significantly higher than expectations; and (2) likely benefit of 18% fall in copper prices in the next six quarters, compared to Merrill Lynch’s assumption of flat prices. The stock is trading at 11.97x FY09E EV/EBITDA — a discount of 15% and 31%, respectively, compared to Mico and Cummins India, despite better growth prospects and good track record. At management-guided EPS of Rs 9.8 in FY10E, the stock trades at 9.7x earnings.
Sesa Goa
Research: Buy
Rating: Goldman Sachs
CMP: Rs 2,111
GOLDMAN Sachs initiates coverage on Sesa Goa with a ‘buy’ rating. Sesa Goa is India’s largest exporter of iron ore in the private sector and is a direct play on iron ore price negotiations. With sustained tightness in the iron ore market, it will be a direct beneficiary of higher iron ore prices. High margins, attractive returns, debt-free balance sheet, strong free cash flow generation and cash pile of Rs 220 per share are added positives. The non-iron ore businesses will benefit due to a robust outlook on pig iron and met coke prices. Reining in logistics costs will remain a key focus area. Additionally, after the completion of the ongoing open offer, the new promoters, Vedanta Resources, may deploy surplus cash reserves. Sesa Goa is likely to deliver 40% earnings CAGR over FY07-FY09E on the back of a bullish iron ore price outlook and modest volume growth. Potential announcements on strategic use of the cash pile or expansion plans, post completion of the open offer by Vedanta Resources, can provide upside triggers. At 2.8x one-year forward EV/EBITDA — which is at a 50% discount to global mining companies — the stock is attractively valued.
Tata Motors
Research: Citigroup
Rating: Buy
CMP: Rs 694
Citigroup has put a ‘buy’ recommended on Tata Motors. The management guidance points to a modest revival in truck sales in H2 FY08E, which implies that overall sales for FY08 will be flat or may register modest growth. Truck operators’ profitability remains healthy, despite rise in interest rates. Freight rates continue to remain stable. The company will deploy Rs 8,000 crore over the next three years to launch new platforms in passenger cars and trucks.
The small car remains on schedule and will be launched in mid-CY08 (H1 FY09E). The management has said Tata Motors will start the process of demerging its subsidiaries by end FY08E, but this is still at a nascent stage. Brand, technology and markets are the key decision variables. Cost pressures (steel accounts for 45% of input costs) will continue to affect margins. Cost reduction exercise is nearly complete — the company has achieved Rs 970 crore of its stated Rs 1,000-crore cost-cutting exercise. Hikes in CV prices (~1-1.5%) undertaken in early FY08 will mitigate (but not offset) the impact of cost pressures.
Binani Cement
Research: JP Morgan
Rating: Overweight
CMP: Rs 79
JP Morgan initiates coverage on Binani Cement (BCL) with an ‘overweight’ rating. BCL appears to be at the cusp of aggressive volume growth. Cement production is likely to witness a CAGR of 44% over FY07-09. Increasing volumes, coupled with robust prices (in the current year) should drive 44% EBITDA growth and 40% EPS growth in FY08, as per JP Morgan’s estimates. In FY09, aggressive volume growth is likely to help offset the negative impact of an estimated 6% YoY decline in cement prices. A near 10% CAGR in domestic demand and benefits of consolidation should provide a higher floor to domestic prices, relative to previous cycles. BCL’s valuation looks compelling — the stock is trading at a near 40% valuation discount to mainstream cement players.
IDBI Bank
Research: ICICI Direct
Rating: Outperformer
CMP: Rs 131
ICICI Direct initiates coverage on IDBI Bank with an outperformer rating. IDBI Bank has transformed itself from a development financial institution (DFI) to an active participant in the booming banking and financial services space.
The amalgamation of United Western Bank with IDBI Bank has given the latter the much-needed branch network to enhance its retail presence. This, coupled with unlocking of value in its investments, is expected to lead to a surge in earnings. ICICI Direct expects earnings to witness a CAGR of 19% over FY07-09E to Rs 885 crore. IDBI Bank has a huge investment portfolio of quoted and unquoted equity stocks. It can unlock the value from these stocks and boost its profitability.
The value of the quoted and unquoted equity book is Rs 52 per share of IDBI Bank. The bank is expected to improve its core business gradually with net interest margins (NIMs) expanding from 0.48% in FY06 to 0.74% in FY07 and further to 1.07% by FY09E. At the current price around of Rs 130, the stock is trading at 1.3 its FY09E adjusted book value (ABV) and 10.6x its FY09E EPS of Rs 12.2. Based on a theoretical book value multiple of 0.9x its FY09E ABV, the value of its core banking business comes to Rs 87 per share. Its huge investment portfolio is valued at Rs 52 per share and subsidiaries at Rs 17 per share.
Godavari Chemicals & Fert
Research: IDBI Capital
Rating: Buy
CMP: Rs 129
Godavari Chemicals and Fertilizers — promoted jointly by Andhra Pradesh State Co-operatives (APSC) and the Indian Farm and Fertilizer Co-operative (IFFCO) — is one of the frontline players in the fertiliser segment in the South. It is now a part of Chennai-based Murugappa group, which acquired the stake of the Andhra Pradesh government in the process of disinvestment through Coromandel Fertilizers. Godavari is one of the leading producers of DAP and has a market share of 9% across India, while it has a 73% share in Andhra Pradesh.
During FY07, it increased the sale of traded products like water-soluble fertilisers, micronutrients and G-Sulphur. It has an approximate capacity of 1.2 million metric tones (mt), with a proximity to seaport and good infrastructure. Production during FY07 was highest at 11.35 lakh tonnes, when the average output increased to 72 mt per hour against 65 mt per hour. However, production was hit due to constraints of phosphoric acid supply. The company will expand its capacity by 4.25 lakh mt by June ’09. It has also completed construction of 10,000 mt atmospheric ammonia at Kakinada. Godavari Chemicals has put up a good show for Q1 FY08 with regard to operating and net profits. Its revenue, at Rs 17.3 crore, was down by 35% YoY. PAT was Rs 1.3 crore, against a loss of Rs 40 lakh in the year-ago period. The stock is currently trading at 6x its trailing 12 months EPS of Rs 20.65.
Labels:
Binani Cement,
citigroup,
Goldman Sachs,
GPIL,
ICICIDirect,
IDBI Bank,
IDBI Capital,
JP Morgan,
Merrill Lynch,
Motherson Sumi,
Sesa Goa
DP Group! | Facebook | Twitter
Subscribe to:
Posts (Atom)