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Saturday, January 05, 2008
Weekly Technical Analysis - Jan 7 2008
The Nifty made a strong white candle on the last day, in the daily charts and weekly charts also. Both the stochastic are in the highly over bought zone. The 14,3,3 stochastic is still in buy mode. The 5,3,3 stochastic may generate a fresh buy signal with the further rise. The RSI is in the positive mode. However, it is nearing to the over bought zone. The ADX is in buy mode. The swing trade system further traveled in to the positive zone.
The 5-day SMA is providing a good support during the last 10 days on a closing basis. (Presently placed at 6183). Any daily close below this level might be an earlier indication of short-term weakness. The 10-day SMA breached 20 SMA and moving upwards. All these indicate that the undertone is bullish.
In the weekly charts, interestingly, we are getting early signals for the further rally. However, it needs conformation. Both the stochastic and RSI generated a fresh buy signals during the last week. In addition, the reversal of faster line of MACD after nearing the signal line is a very good positive signal for the weekly up trend may continue. The reversal of Nifty from PSAR in the weekly charts, confirms the above statement, barring any short-term weakness.
From the above rationale, the short term upmove might face profit booking on every rise or some weakness. As long as the weekly trend is up, one can assume that the Nifty is able to reach high levels in the coming days, with or without short-term weakness.
Outlook
While commenting on the outlook of the market next week, Iyer said that the Nifty is expected to show some early weakness, which may be a short-lived one. The under tone is still bullish. However, the Nifty is nearing some retracement resistance levels, it may act as a strong resistance on the up move.
The Nifty has resistance at 6305 (strong for short term). Any decisive trade above this level will make the Nifty to reach 6351,6450 and 6499. Anyhow, any daily close below 6153 will delay the up move to these levels.
On the other hand, the Nifty has support at 6222, 6153(on a closing basis), 6114-6130 (strong for short term), 6038 and 5946(strong for medium term).
Strategy
Hold long positions with the stop loss at 6153 (on a closing basis). Add fresh long above 6305. Stock rotation is advised on every rise. One should consider profit booking around the resistance levels.
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Weekly Newsletter
After a wonderful start to the New year, the bulls may look at pocketing further gains. Depending to some extent on global cues, the mood is expected to be positive. Towards the end of the caution, extreme caution may set in especially on the eve of Infosys results.
The Auto expo may cause some action in auto stocks based on announcements. Side counters will see frenzied activity, with mega issues like Reliance Power and Future Group coupled with the fight for market cap among the Ambani brothers, expect strong movement in large caps too. With buzz of more stocks being added to F&O, the likely new contenders could also witness buying.
Sensex hits new highs during the week
The stock markets ended the first week of the new year on a positive note with both key indices - the Bombay Stock Exchange’s Sensex and the National Stock Exchange’s Nifty 50 - scaling new lifetime highs, propelled by heavyweights Oil & Natural Gas Corp and Reliance Industries, on rising crude prices, coupled with the government’s announcement to hike retail oil prices by this month-end.
Big buying by domestic institutions and Finance Minister P Chidambaram’s plea to bank chiefs to reduce lending rates to maintain economic growth also boosted sentiment, said dealers.
The Sensex was up 341.69 points, or 1.68%, to 20,686.89 while National Stock Exchange’s S&P CNX Nifty Index gained 95.75 points, or 1.55%, to 6,274.30 on Friday.
The first week of 2008 saw the Sensex and the Nifty rising 2.38% (479.94 points) and 3.20% (194.60 points), respectively.
This is a strong start for the market for this calendar after its record-breaking 47% gain in 2007.
"Sectors such as domestic consumption, infrastructure and financial services look good. We are bullish on telecom, engineering, capital goods and banking space," said Puneet Nanda, executive vice-president and chief investment officer of ICICI-Prudential Life Insurance.
Domestic institutions have bought a net of over Rs 1,768 crore this week, negating selling pressure from foreign funds, who sold a net of Rs 1,300 crore in the same period. On Friday, the domestic institutions were net buyers for Rs 520 crore. FIIs were net buyers for nominal Rs 16 crore.
ICICI-Prudential Life, which is the second biggest investor in Indian equity markets among insurance majors (after government-owned Life Insurance Corp), has seen its assets under management growing from Rs 15,800 crore to Rs 28,000 crore since March 31, 2006.
Analyst Meet - Future Capital Holdings
The Analyst Meet will be held on Jan 7 2008
Time - 6.45 PM
Venue - Rooftop Hall, Hilton Towers
Future Capital Holdings Grey Market Premium
Future Capital Holdings 700 to 765 525 to 550
Reliance Power 405 to 450 420 to 425
SVPCL 42 DISCOUNT
Aries Agro 130 35 to 40
Manaksia Ltd. 160 15 to 20
Porwal Autocomponents 75 DISCOUNT
Precision Pipes & Profiles 150 25 to 30
BSE Bulk Deals to Watch - Jan 4 2008
4/1/2008 526717 GOPALA POLYP IDBI LTD S 100000 16.12
4/1/2008 530543 MARG CONSTRU MERILL LYNCH CAPITAL MARKETS ESPANA S A SV B 517000 574.59
4/1/2008 532494 MICRO TECHN GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD S 49723 345.22
4/1/2008 513446 MONNE ISPAT DEUTSCHE SECURITIES MAURITIUS LIMITED B 337247 650.72 4/1/2008 513446 MONNE ISPAT SWISS FINANCE CORP MAU LTD S 278247 653.00
4/1/2008 532527 RK FORGINGS THE INDIAMAN FUND MAURITIUS LTD. S 115000 262.00
4/1/2008 532887 SUJANATOWER BLACKSTONE ASIA ADVISORS LLC ACCT THE INDIA FUND INC S 291900 193.19
Moodys downgrade for Tata Motors
Global rating agency Moody’s Investors Service has announced that it has placed the Ba1 corporate family rating of Tata Motors Ltd on review for a possible downgrade.
This rating action follows the announcement by Ford Motor Company (Ford, which has a rating-B3/Stable) naming Tata Motors the preferred buyer for Ford's luxury Jaguar and Land Rover car brands.
Tata Motors will now be entering a period of more detailed negotiations with Ford.
“Should Tata Motors proceed with the transaction and acquire these two businesses, it will face considerable execution and integration challenges,” says Elizabeth Allen, a Moody’s vice-president and senior analyst.
“Furthermore, while Tata Motors enjoys a strong position primarily in the low to mid-end vehicle segments in India and in some developing markets, the acquisition of the Jaguar and Land Rover brands will expose the company to the luxury product category as well as to broader geographies; these are areas in which Tata Motors lacks experience. Moody's, therefore, believes such a transaction would materially increase the business risk profile of Tata Motors,” says Allen.
Precious metals fall
Gold and silver prices decline as crude retreats back by more than a dollar
Precious metals ended modestly lower today, 04 January, 2008. Gold and silver prices fell today after oil prices slipped a bit. But dollar continued to weaken against its rivals. It gave a sense of feeling among investors that gold rally in the last couple of days was overdone.
Gold generally moves in the opposite direction of the U.S. currency. Gold, as a dollar-denominated commodity, suffers from dollar strength.
Comex Gold for February delivery fell $3.4 (0.4%) to close at $865.7 an ounce on the New York Mercantile Exchange on Friday, 04 January, 2008. With today’s loss, gold has gained 3.3% in 2008.
Prices touched $872 during intraday trading yesterday and finally had closed at $869.3/ounce. Yesterday’s closing prices was the highest price after a record $873 that gold hit on 21 January, 1980.
Comex Silver futures for March delivery fell 3.8 cents (0.3%) to $15.462 an ounce. Prices touched 26 year high on 7 November, 2007, after reaching $16.275. Silver has gained 3.6% in 2008. The metal had climbed 15.5% in FY 2007. The metal also has gained for seven straight years.
Gold witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
In the currency market today, the dollar came off session lows after the dismal payrolls data. But dollar continued to remain under pressure by market expectations that the Federal Reserve will cut interest rates further this month. The dollar index, which tracks the performance of the greenback against a basket of other currencies, fell 0.1% at 75.785.
In the energy market today crude oil fell more than $1 a barrel in New York after a government report showed U.S. unemployment jumped to a two-year high, raising concern of a recession that would curb energy demand. In FY 2007, crude prices gained $57%.
Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices. Rising crude increases inflationary pressures and vice versa. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.
Gold had climbed 31% in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record.
The Fed reduced federal funds rate three times in FY 2007. The current interest rate stands at 4.5%. The Fed also lowered its discount rate twice, the interest it charges on direct loans it makes to banks, and currently it stands at 4.75%. With these interest rate cuts, dollar has been tumbling down. Market anticipates that there will be more rate cut in the coming year.
At the MCX, gold prices for February delivery closed lower by Rs 40 (0.4%) at Rs 10,935 per 10 grams. Prices rose to a high of Rs 11,007 per 10 grams and fell to a low of Rs 10,843 per 10 grams during the day’s trading.
At the MCX, silver prices for March delivery closed Rs 38 (0.19%) lower at Rs 20,015/Kg. Prices opened at Rs 20,050/kg and fell to a low of Rs 19,809/Kg during the day’s trading.
Gold is expected to rally to all-time highs in the first quarter in FY 2008 as higher oil prices and a weaker dollar will continue to boost demand.
Nifty January 2008 futures at discount
Turnover slips
Nifty January 2008 futures were at 6251, at discount of 23.30 points as compared to spot closing of 6274.30.
The NSE's futures & options (F&O) segment turnover was Rs 67,181.45 crore, which was lower than Rs 70,651.63 crore on Thursday, 3 January 2008.
Reliance Natural Resources January 2008 futures were at premium, at 209.50, compared to the spot closing of 208.85.
Reliance Industries January 2008 futures were at premium, at 3002.70, compared to the spot closing of 2993.
Reliance Communications January 2008 futures were at premium, at 768, compared to the spot closing of 760.65.
In the cash market, the S&P CNX Nifty gained 95.75 points or 1.55% at 6274.30. It struck all-time high of 6,300.05 in late trade today, 4 January 2008.
Reliance Power IPO Poll Update - Jan 5 2008
Are you applying for Reliance Power IPO ?
Yes ! Anil bhai's dream! 314 (69.6%)
No! Scam !! 137 (30.4%)
Votes so far: 451
Vote Now >> See the POLL on the right top of the site
NSE Burnpur Bulk Deals
04-JAN-2008,BURNPUR,Burnpur Cement Limited,AMBIT SECURITIES BROKING PVT. LTD.,BUY,337268,55.89,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,ASTUTE COMMODITIES & DERIVATIVES Pvt Ltd,BUY,287856,55.56,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,B K SHAH AND CO,BUY,365527,54.77,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,BAKLIWAL FINCOM PVT LTD,BUY,255000,56.44,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,CPR CAPITAL SERVICES LTD.,BUY,575826,53.97,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,CREDENTIAL STOCK BROKERS LIMITED,BUY,270860,54.05,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,DINDAYAL BIYANI STOCK BROKERS LTD.,BUY,322100,53.91,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,DINESH MUNJAL,BUY,597055,54.11,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,G CHANDRA SHEKAR RAO,BUY,250543,54.52,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,HARBUX SINGH SIDHU,BUY,1150375,54.22,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,INDUS PORTFOLIO (P) LTD.,BUY,436330,54.05,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,KAKANI GAURAV,BUY,288126,53.59,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,KAUSHIK SHAH SHARES & SECURITIES PVT LTD,BUY,481219,55.42,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,KJB TRADING CO,BUY,333912,54.93,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,KSHITIJ-PORTFOLIO-PVT.-LTD.,BUY,343424,52.01,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,MAHENDRA DHANJI CHHEDA,BUY,382337,54.21,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,NAMAN SECURITIES & FINANCE PVT LTD,BUY,459126,53.46,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,NEPTUNE FINCOT PVT LTD,BUY,424622,53.66,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,NISSAR BROTHERS,BUY,648357,54.24,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,OPG SECURITIES PVT. LTD.,BUY,241882,54.28,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,PELF FINSTOCK LTD.,BUY,342770,54.99,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,R.M. SHARE TRADING PVT LTD,BUY,676336,54.65,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,RAJNISH GARG & CO,BUY,75000,55.17,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,RUPESH KIRIT DALAL,BUY,354001,53.94,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,SANJAY BHANWARLAL JAIN,BUY,268797,53.61,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,SETU SECURITIES PVT.LTD.,BUY,339499,54.52,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,TRANSGLOBAL SECURITIES LTD.,BUY,2125590,54.86,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,VAIBHAV DOSHI,BUY,730173,53.23,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,VIJAY KUMAR SINGH,BUY,797133,54.13,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,YES INVESTMENTS VISHAL KISHORE BHATIA,BUY,245000,54.51,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,AMBIT SECURITIES BROKING PVT. LTD.,SELL,344488,55.90,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,ASTUTE COMMODITIES & DERIVATIVES Pvt Ltd,SELL,361846,56.01,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,B K SHAH AND CO,SELL,371523,54.90,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,CPR CAPITAL SERVICES LTD.,SELL,575826,54.07,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,CREDENTIAL STOCK BROKERS LIMITED,SELL,270860,54.26,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,DINDAYAL BIYANI STOCK BROKERS LTD.,SELL,322100,55.04,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,DINESH MUNJAL,SELL,597055,54.23,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,G CHANDRA SHEKAR RAO,SELL,250543,54.37,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,HARBUX SINGH SIDHU,SELL,1150375,54.41,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,INDUS PORTFOLIO (P) LTD.,SELL,436330,54.15,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,KAKANI GAURAV,SELL,288126,53.86,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,KAUSHIK SHAH SHARES & SECURITIES PVT LTD,SELL,484719,55.77,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,KJB TRADING CO,SELL,333912,54.97,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,KSHITIJ-PORTFOLIO-PVT.-LTD.,SELL,343424,51.77,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,MAHENDRA DHANJI CHHEDA,SELL,382337,54.29,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,NAMAN SECURITIES & FINANCE PVT LTD,SELL,463122,53.50,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,NEPTUNE FINCOT PVT LTD,SELL,424622,54.03,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,NISSAR BROTHERS,SELL,648357,54.35,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,OPG SECURITIES PVT. LTD.,SELL,241882,54.31,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,PELF FINSTOCK LTD.,SELL,342770,55.28,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,R.M. SHARE TRADING PVT LTD,SELL,676336,54.78,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,RAJNISH GARG & CO,SELL,254799,55.58,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,RUPESH KIRIT DALAL,SELL,354001,54.02,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,SANJAY BHANWARLAL JAIN,SELL,268797,53.75,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,SETU SECURITIES PVT.LTD.,SELL,400495,55.32,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,TRANSGLOBAL SECURITIES LTD.,SELL,2142590,54.90,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,VAIBHAV DOSHI,SELL,730173,53.51,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,VIJAY KUMAR SINGH,SELL,797133,53.85,-
04-JAN-2008,BURNPUR,Burnpur Cement Limited,YES INVESTMENTS VISHAL KISHORE BHATIA,SELL,245000,53.71,-
Burnpur BSE Bulk Deals - Jan 4 2008
4/1/2008 532931 BURNPUR JMP SECURITIES PVT. LTD. B 707861 54.54
4/1/2008 532931 BURNPUR B K SHAH AND CO B 297052 53.09
4/1/2008 532931 BURNPUR LATIN MANHARLAL SEC PVT LTD B 751543 54.37
4/1/2008 532931 BURNPUR AMIT M GALA B 262644 52.97
4/1/2008 532931 BURNPUR H.J.SECURITIES PVT.LTD. B 266514 52.79
4/1/2008 532931 BURNPUR BHANDARI RAKHI KALPESH B 230000 52.11
4/1/2008 532931 BURNPUR JMP SECURITIES PVT. LTD. S 974561 53.63
4/1/2008 532931 BURNPUR B K SHAH AND CO S 300054 52.97
4/1/2008 532931 BURNPUR LATIN MANHARLAL SEC PVT LTD S 1129043 52.62
4/1/2008 532931 BURNPUR AMIT M GALA S 262644 53.47
4/1/2008 532931 BURNPUR H.J.SECURITIES PVT.LTD. S 277014 53.13
4/1/2008 532931 BURNPUR BHANDARI RAKHI KALPESH S 230000 52.13
Top Stories for week
Crude oil crosses US$100
Crude oil futures backed off after crossing the US$100 per barrel mark in anticipation of a decline in job creation in the United States, stoking concerns that demand for fuel would fall in the world's biggest energy consumer. Earlier, crude oil surpassed the three-digit mark on nagging concerns about global supply following a latest militant strike on Nigerian oil facilities, a weakening dollar and drop in US crude inventories for a seventh consecutive week. Crude oil for February delivery fell as much as 0.7%, to US$98.50 in electronic trading on the New York Mercantile Exchange. It traded at US$98.72 at 9:52 a.m. in London, on Friday. Yesterday, the contract set a record US$100.09 before closing down 44 cents at US$99.18 a barrel. Oil prices are up 77% from a year ago level. Crude oil prices jumped 58% last year, the biggest annual gain this decade amid rising demand from countries such as China and India, thinning supplies in the US, a weakening dollar and geopolitical risks. Oil prices have nearly tripled since 2003.
Major consuming nations have no intention of releasing strategic fuel stocks to curb a five-year rally in crude. Despite oil prices hitting US$100, the White House said it would not open up the nation's emergency crude oil reserves to bring down prices. The International Energy Agency (IEA), adviser to the world's top industrialised countries, echoed the White House in saying there was no need to release emergency crude. Two OPEC members expressed the cartel's inability in softening prices. OPEC kept its production targets unchanged at its last meeting Dec. 5, spurning calls by the US to pump more oil. The group next meets on Feb. 1. Commodities such as gold and platinum also hit record highs partly due to the struggling dollar, which makes dollar-denominated assets relatively cheap in non-US currencies. The dollar slid after a key index of the US manufacturing sector last month tumbled to its lowest since April 2003, raising expectations of more rate cuts from the Fed. The dollar's 11% fall last year against the euro helped boost oil prices because it made commodities cheaper for buyers outside the US.
Reliance Power IPO
After overcoming a few legal and regulatory impediments along the way the Reliance-Anil Dhirubhai Ambani Group (ADAG) finally launched the multi-billion dollar mega IPO of Reliance Power Ltd. Earlier, SEBI had cleared the Reliance Power IPO with a few riders. The capital market regulator had asked the promoters to lock-in the entire 20% of their contribution to the IPO for five years. The SEBI directive came while disposing off the case that it was hearing following an order of the Bombay High Court on a Public Interest Litigation (PIL). Reliance Power has fixed the price band of Rs405-450 per share.
To enable large participation by retail investors, Reliance Power will offer a discount of about 5% to the retail investors. Reliance Power has also fixed convenient payment terms for all categories of investors. While QIBs are required to pay 10% on the application, the HNIs and retail investors will have the option to pay Rs115 on the application, i.e. only about 25% of the issue price. The balance amount will be payable on allotment. The IPO is scheduled to open on January 15, and will close on January 18.
Reliance Power, through this IPO proposes to raise about Rs105-115bn - the largest IPO in the history of the Indian capital markets. Reliance Power proposes to issue 260mn shares of Rs10 each, including a promoters’ contribution of 32mn shares which will be allotted at the IPO price to the promoters. The balance 228mn shares would constitute the net issue to the public. The IPO will constitute 11.5% and the Net Issue will constitute 10.1% of the post-issue paid-up capital of Reliance Power.
Reliance Power is currently engaged in the construction and development of various gas and coal based thermal power projects and hydro power projects in various parts of the country, of over 28,000 MW capacity - the largest development pipeline in the country. The issue proceeds are proposed to be utilised for funding subsidiaries to part-finance the construction and development costs of the various projects under development and for general corporate purposes.
Revathi Equipment
Coimbatore-based mining equipment manufacturer, Revathi Equipment Ltd, is looking to diversify its revenue base. The company, which has so far been dependent on Coal India for business, is trying to tap other clients, too.
It is in the process of forging an international tie-up for manufacture and supply of exploratory drills. In the works is a five-year international marketing and distribution tie-up with Bucyrus that could give it an order for seven machines.
Meanwhile, Revathi has ventured into the concrete equipment business, including batching plants, transit mixers and concrete pumps, and has picked up substantial stakes in companies like Monarch Catalysts and Potential Service Consultants.
Abhishek Dalmia, chairman, Revathi Equipments told DNA Money, “We expect the division to post revenues of Rs 30 crore by FY08 and Rs 150 crore by FY10, from a mere Rs 2 crore in FY07.”
The concrete equipment market is currently worth around Rs 800 crore, which the company expects to expand to Rs 1,500 crore by FY10.
The construction equipment business can outgrow the mining equipment business in times to come, said Dalmia, adding, the former is a high-volume, low-margin play, whereas the latter involved low-volume but relatively better margin.
“The whole idea for all these measures is to reduce dependency on a single business and a single client,” said Dalmia.
After acquiring a 40% stake in Bangalore-based PSC, the management has drawn up a bigger plan for Revathi. It is PSC’s operations to other metros, including Mumbai, Pune and Chennai and bringing in a dedicated chief operations officer to manage and grow the business.
In FY07, the domestic drills business contributed Rs 70 crore to Revathi’s revenue, while exports stood at Rs 8 crore.
Revathi was established in 1977 as a joint venture between Drill Pvt Ltd and Chicago Pneumatic Tools Co Ltd. The current promoters, Utkal Investments, bought out a 40% stake of Atlas Copco in 2002, thereby increasing their stake to 60% in Revathi Equipment.
Via DNA Money
Blue Star, Ruchi Soya, Simplex Infra, Kalyani Steel, Pyramid Saimira
Blue Star
CMP: Rs 535
Target price: Rs 593
Kotak Securities has a ‘buy’ rating on the central air-conditioning systems major Blue Star, as it feels it will report handsome earnings growth over the next two years (CAGR of 78% between FY07 and FY09). The company being in a position to offer the best requirement for central as well as commercial refrigeration equipment enabling it to maintain a leading market position in this segment, remains one of the key reasons for its bullishness.
The brokerage also feels that the stock is a play on structural themes like IT/ITeS and retail. However, the brokerage warns that appreciation in the rupee and slowdown in IT/ITeS services remain key concerns. Kotak calculates that at the current price, BSL is trading at 25.1x and 19.3 times FY08 and FY09 earnings, respectively, and on a forward EV/EBITDA basis, the stock is trading 12.6 times.
Ruchi Soya
CMP: Rs 144
Target price: Rs 193
KR Choksey Securities has reiterated its ‘strong buy’ recommendation on Ruchi Soya Industries (RSIL) and revised upwards its estimates and target price. “We strongly believe RSIL is grossly undervalued considering the various growth drivers of its existing business and new ventures,” the brokerage said in a note to its clients. It says that its belief in the growth prospects of the company is substantiated by the fact that the management of RSIL is increasing its stake in the company by way of a preferential allotment.
It estimates that India has one of the lowest per capita consumption of oil in the world, but rising income levels, emanating from general economic growth, is leading to an increase in consumption which should augur well for the company. Taking into consideration the consistently high growth in branded revenues, sustainable revenue
visibility and improvement in profitability, the brokerage believes RSIL deserves the valuation of an FMCG company.
Simplex Infra
CMP: Rs 692
Target price: Rs 754
Ambit Capital has a ‘buy’ rating on Simplex Infra on the basis that the company’s two recent equity issues would lead to an increased net worth and reduced financial leverage. “The risk of high debt-to-equity would now take a back seat, as it would come down from 2.5 times in FY07 to 0.7 times in FY08E.
The reduction in financial leverage would lead to a reduction in the extremely high interest payments and thus increasing earnings for the company on a net level,” the brokerage feels. Considering the robust order book position (of Rs 8,100 crore), improved debt-to-equity levels and improved working capital position, Ambit has remodeled its numbers for FY08E and FY09E, with an increase of 10.8% and 22.8% in net earnings for two years.
Kalyani Steels
CMP: Rs 499
Target price: Rs 771
Prime Broking says ‘it’s a no-brainer’ to figure out that the Pune-based company is a strong ‘buy’, based on the company’s expected growth in its core business and highly attractive valuations. The brokerage estimates that the company plans to expand its capacity at Hospet by 75% to 0.3m metric tonnes in FY08 at an outlay of Rs 300 crore, implying a 28% volume CAGR(compounded annual growth rate).
It says that KSL directly and through its 100% subsidiaries has substantial investments in group companies — Bharat Forge, Bharat Utilities and Hikal. At current market prices, the value of the KSL’s investment portfolio works out to Rs 633 per share, which is around 20% higher than the company’s current stock price. “Applying a holding discount of 30%, we have arrived at an investment value of Rs 443 per share,” the brokerage said.
Pyramid Saimira
CMP: Rs Rs 484
Target price: Rs 630
India Infoline says that investors should ‘buy’ the stock on declines as it could be a good long-term bet. The brokerage says that the com-pany, engaged in distribution and exhibition of films, plans to enter into movie making business with plans to make 40 movies in five lan-guages by FY09.
“We expect the subsidiaries of PSTL, Pyramid Saimira Production and Singapore-based Pyramid Saimira Entertainment to witness huge growth in coming quarters,” India Infoline said. The company’s capex plans also include development of 200 malls and 175 multiplex with around 2,000 screens by FY10. Recently, PSTL acquired Texas-based FunAsia an existing theatre and radio network in Chicago and Houston
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