Allahabad Bank , Bajaj Electricals , Essar Oil , Hindustan Unilever , Rolta, Ranbaxy Labs, Kingfisher Airlines

Allahabad Bank , Bajaj Electricals , Essar Oil , Hindustan Unilever , Rolta, Ranbaxy Labs, Kingfisher Airlines

ITC (Buy), Rolta (Buy); F&O - Crompton Greaves (Long), Biocon (Long)

ITC (Buy), Rolta (Buy); F&O - Crompton Greaves (Long), Biocon (Long)

Madras Fertilisers, Axis Bank, Thermax, Power Sector, Power Grid Corporation, Textile Sector, Thinksoft Global, Rolta, Hero Honda, EMCO, Tata Motors

Madras Fertilisers, Axis Bank, Thermax, Power Sector, Power Grid Corporation, Textile Sector, Thinksoft Global, Rolta, Hero Honda, EMCO, Tata Motors, Tata Steel & ICICI Bank

Rolta India

Rolta India

Educomp, GAIL, Hindalco, IVRCL, NCC, Piramal Healthcare, Rolta, Tata Motors, Tulip Telecom

Educomp, GAIL, Hindalco, IVRCL, NCC, Piramal Healthcare, Rolta, Tata Motors, Tulip Telecom

Rolta India

Investors with a two-year horizon can buy the shares of Rolta India, a software solutions provider, considering its strong order book position, favourable geographic mix and a strong focus on areas such as Defence where spends are increasing.

At Rs 183, the stock trades at 10 times its likely FY11 per share earnings. Given its differentiated focus, there are no strict peers, but valuations are at a discount to most mid-tier IT companies of similar size.

In the nine months of FY10, the company has seen revenues grow by 7.7 per cent to Rs 1,120.6 crore, while operating profits improved 14.9 per cent to Rs 440.8 crore.

Rolta provides geospatial information to the armed forces, the DRDO, the Survey of India, the Airports Authority of India and a host of other governmental nodal agencies. This segment contributes to half its revenues, while engineering services (25 per cent) and enterprise IT solutions (about 25 per cent) are its other divisions.

The company derives 55 per cent of its revenues from Indian clients, with a strong concentration towards government customers, where spends are being enhanced. With a 45 per cent overseas currency exposure, across the dollar, euro and the pound, the impact of rupee appreciation on revenues has largely been muted (2.5-3 per cent).

Its client base is resilient in India. With Defence spends increased by four per cent in the 2010-11 Union Budget to Rs 1,47,344 crore, companies such as Rolta with existing relationships can look to a increased share of the pie.

The nuclear reactor segment, another key area where the company recently won a deal, is also set to improve contribution as India signs deals with various members of the nuclear suppliers group.

The company has an order book of Rs 1,770 crore (more than its expected current year revenues) executable over the next four-five quarters. The order book comprises healthy contribution from all three of its segments of operations, with geospatial services and engineering services accounting for nearly 79 per cent. This gives a fair degree of revenue visibility for the company across divisions.

Also, the billing rates have stabilised across all three segments and in cases, even marginally increased. IP services, which ensure strong margin-led growth, account for 8-9 per cent of Rolta's revenues currently. The company expects this proportion to go up to 20-25 per cent over the next three years.

via BL

Rolta India

We recommend a sell in the stock of Rolta India from a short-term perspective. It is evident from the charts that the stock's intermediate-term uptrend which started in March 2009 low of Rs 40.7, encountered significant resistance in the band of Rs 200 and Rs 210 in mid-January. Subsequently, the stock reversed direction triggered by the negative divergence displayed in the weekly moving average convergence and divergence, and the long-term resistance. Since then, the stock has been on budding short-term downtrend. While trending down, the stock conclusively penetrated the intermediate-term uptrend-line as well as 50-day moving average by tumbling 5 per cent on February 5. The selling pressure continued and it fell 3 per cent in the last trading session, reinforcing the downtrend. With this, the daily relative strength index lost strength and entered the bearish zone and weekly RSI is slipping towards this zone in the neutral region. The daily MACD has entered the negative territory. Our short-term forecast is bearish for the stock. We expect it to decline until it hits our price target of Rs 161. Traders with short-term perspective can consider selling the stock while maintaining stop-loss at Rs 188.

via BL

Rolta

Rolta

Rolta India

We recommend a buy in Rolta India from a short-term perspective. It is apparent from the charts of the stock that it has been on an intermediate-term uptrend, forming higher peaks and troughs since its March-low of Rs 40.70. However, the stock met with a significant long-term resistance around Rs 200 in early October and witnessed a corrective decline until it reached the support level at Rs 150, from where it bounced higher last week. On November 12, the stock gained 2 per cent accompanied with good volume and it is currently testing its 21- and 50-day moving averages. The daily and weekly relative strength indices are heading towards the bullish part of the neutral region. Considering that the stock’s intermediate-term up trendline is intact, we believe that it has the potential to surpass the moving averages and rally further until it hits our price target of Rs 196 in the approaching trading sessions. Traders with a short-term perception can buy the stock, while maintaining stop-loss at Rs 169.

via BL

Rolta India

Rolta India

Adhunik Metaliks, Biocon, Garware Offshore, Infoedge, Rolta, Yes Bank

Adhunik Metaliks, Biocon, Garware Offshore, Infoedge, Rolta, Yes Bank

Rolta India

Rolta India

Rolta India

We recommend a buy in the stock of Rolta India from a short-term trading horizon. It is evident from the charts of Rolta that it has been trending up, forming higher peaks and higher troughs since early March low of Rs 40. This low is apparently its 52-week low. However, after recording a high of Rs 152 on June 10, the stock was on a corrective decline till Rs 105 and found support. Taking support around Rs 105 the stock resumed its intermediate-term uptrend recently. The stock gained over 10 per cent over the past two trading sessions, reinforcing the uptrend. Both the daily and weekly relative strength index (RSI) are heading towards the bullish zone in the neutral region. Taking into consideration the intermediate-term uptrend line is intact and still in place, we are bullish on the stock from a short-term perspective. We expect it to move up further until it hits our price target of Rs 130 in the approaching trading sessions. Traders with a short-term perspective can buy the stock while maintaining a stop-loss at Rs 111.

via BL

Rolta India

We recommend a buy in the Rolta India from a short-term trading horizon. It is evident from the charts of Rolta that it has been on a medium-term uptrend since its 52-week low of Rs 40.7 recorded on March 12. While trending up, the stock conclusively penetrated the intermediate-term down trendline drawn from September 2008 high of Rs 360. On April 13, the stock jumped 43 per cent with heavy volume, penetrating it 50-day moving average. Subsequently, the stock managed to stay above this average and is currently trading well above this line. A positive divergence in the weekly relative strength index backs the stock’s trend reversal. The daily RSI is hovering in the bullish zone. The stock surged 11 per cent on May 21, reinforcing the bullish momentum. Besides, we observe that there is an increase in volume over the past three trading session. Considering that the medium-term up trendline is intact, we are bullish on the stock from a short-term perspective. We expect the stock to move up until it hits our price target of Rs 122 in the forthcoming trading session. Traders with short-term trading perspective can buy the stock while maintaining a stop-loss at Rs 104.

via BL

Rolta Ltd

Rolta

Rolta

Rolta

Motilal Oswal, Rolta, TCS, NIIT

Motilal Oswal, Rolta, TCS, NIIT

Rolta India

Rolta India

Rolta India

Investors with a two-year horizon can buy the shares of Rolta India, a niche software provider offering geo-spatial information and engineering design services.

At Rs 120, the stock trades at a historic low of six times its likely 2008-09 earnings. This is the valuation that most mid-tier IT companies enjoy currently.

But given Rolta’s superior net profit margin (greater than 21 per cent) vis-À-vis most mid-tier IT companies and its business prospects over the next few years in areas such as power, oil and gas, and geographic mapping for the defence forces, the stock appears attractive.

The current difficult business environment means that only select mid-tier IT companies with differentiated offerings and those with strong domestic focus would be reasonably placed to stem the tide.

Rolta, with a strong domestic revenue base and catering to clients which are mostly government institutions and large core engineering industries, might fit this criterion.
Key domestic presence

Rolta derives 55 per cent of its revenues from services rendered in India. The US contributes 31 per cent of its revenues, while BFSI as a whole less than 4 per cent. The domestic exposure is the highest among IT companies in India.

The company provides geospatial information to clients such as the armed forces, DRDO, Survey of India, Airports Authority of India and a host of other governmental nodal agencies.

This segment contributed 50 per cent of its revenues in FY-08. With spends on internal security and defence capabilities enhancement, this segment provides Rolta with a fair degree of revenue visibility over the long term.

The nature of services that the company delivers are also such that there would be constant upgrades and maintenance required, thus providing a steady stream of revenues.

The company has managed to create software products by using its own and third-party software such as Intergraph to cater to segments such as government, Defence, infrastructure and utilities.

The company has a joint-venture with Thales, a player in critical information systems working with aerospace, Defence and security market. This JV may help Rolta bag any outsourcing deals to the JV done by Thales’ clients.
Engineering services strength

Rolta derives over 30 per cent of its revenues from delivering high-margin engineering services to clients. Its design services cater to engineering, power, refinery and the shipping industries and cover a good part of the value chain.

Domestically, with refining capacities and power generation set to improve manifold over the next few years, the company may be well-placed to tap such opportunities for delivering its services.

Here too, JV has been forged with Stone & Webster in the engineering services space, enabling the company to work in areas such as nuclear power engineering.

The JV is revenue-accretive to Rolta, and is executing projects in Singapore. The two companies are also seeking to capitalise on opportunities arising out of the Indo-US nuclear deal.
Other services and order-book position

The company delivers traditional IT services in partnership with players such as Oracle and Computer Associates.

This is a low-margin service, but has been growing in triple digits over the last couple of years.

Its presence here results in an end-to-end offering to engineering clients. But this business segment has to withstand competition from a host of Tier-1 and mid-Tier IT players.

The company has a current order-book position of over Rs 1,500 crore to be executed over the next 12-18 months across all segments of operation. This is about 1.5 times its FY-08 revenues, and lends visibility.
Risks

For Rolta, high dependence on governmental clientele means that receivables cycles could be much longer than is the case with other software companies.

There are certain projects where complete payment is received only after the warranty period. These may place higher demands on working-capital requirements.

This apart, the company derives 34 per cent of its revenues from new clients, which means lower annuity-based revenues.

However, the company’s focus on products-driven business may improve this situation.

Rolta India Ltd

Rolta India