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Recommendations
Tuesday, March 07, 2006
Monday, March 06, 2006
IPO Updates
Malu Paper - Avoid
Rohit Ferro Tech - Avoid
Gallant Metal - Avoid
Solar Explosives - Invest for Long Term
Midcap/Smallcap Recommendations
Newsletter Dated Monday, March 06, 2006
5Paisa Newsletter
S.No. Scrips BSE Code Recommended Rate Target Rate.
1. Mangalore Chemicals 530011 13.75 18.00
2. Oil Country 500313 15.75 20.00
3. Cheslind Textiles 521056 21.05 27.00
4. Shreyans Industries 516016 25.45 32.00
5. UCO Bank 532505 26.55 34.00
Newsletter Dated Monday, March 06, 2006
Midcaps Newsletter
S.No. Scrips BSE Code Recommended Rate Target Rate.
1. Jagsonpal Pharma (FV Rs. 5) 507789 32.05 41.00
2. Essar Steel Ltd. 500627 38.85 49.00
3. Zodiac-JRD-MKJ 512587 50.05 64.00
4. Su-Raj Diamonds 507892 63.35 80.00
5. Neyveli Lignite 513683 76.15 96.00
Friday, March 03, 2006
Wednesday, March 01, 2006
Tuesday, February 28, 2006
Budget 2006 - Update
Feel the FM has done well with Budget as he has not fingered with ant of the tax proposals. Increase in MAT by 2.5% could be considered negative in the short run for companies like Bharati but in my opinion nothing should be read as negative because these companies though may have to cough up 2.5% across the board, will get tax credit in the year in which they actually make profits and the period of such credit has been raised from 5 to 7 years. In any case, if the so called co is not likely to make real profits then there is no fun investing in such companies even if MAT is 0. Therefore the issue of MAT is inconsequential as far as Budget is concerned. Other negative is raising 2% service tax which I feel is more taxing but for industry it is sacrifice at the cost of growth of the country.
Positive ones are reduction in excise duty, custom duty, no fingering with capital gains and above all sticking with fiscal responsibility act for maintaining 3.8% fiscal deficit which is loved by FII across the board and will help bring more FDI. In fact, revised fiscal deficit for 05-06 from 4.3 to 4.1% was a real surprise from the FM. In order to maintain 3.8% fiscal deficit more and more revenue generation was must and FM has projected 30% rise in corporation tax and 16% hike in income tax and 48% from service tax which in my opinion is much achievable figures in comparison to previous year where doubts were cast on the sustainability of 4.3% fiscal deficit due to dynamic expectations. This one analysis is more than sufficient to keep FII interest alive in the Indian market.
Even the short term borrowing of the Govt has been reduced by Rs 8636 crs which is really heartening and welcome sign. Deficit financing is an indicator of weak economy. The Budget overall is oriented in the right direction and going forward in next three years practically everything will be net based and the speed at which efforts are being made are laudable and place in India ahead of US. This will re-rate all internet based companies in India and take them to new sky. Hardly a genuine internet company is listed on the exchange except Chamatkar.net India Ltd. Rediff and Sify the two leaders in the industry are listed on Nasdaq. Indiabulls and Indiainfoline are having different modules and cashing on franchise valuations which are not a real capitalisation method.
We maintain our initial target of 10800 before deciding the further trend. From tomorrow B gr shares will find takes as all fence sitters will jump into the band wagon.
Monday, February 27, 2006
Friday, February 24, 2006
Sharekhan Investor's Eye
Esab India
Cluster: Vulture’s Pick
Recommendation: Buy
Price target: Rs575
Current market price: Rs480
Price target revised to Rs575
Result highlights
- ESAB India's (ESAB's) Q4CY2005 net profit of Rs8.3 crore is in line with our expectations. The net sales for the quarter stood at Rs59.4 crore registering a growth of 17.5% driven by a very healthy 19.2% growth in the revenues of the consumables division. The revenues of the equipment division also recorded an impressive growth of 10.7%.
- However the operating profit margins (OPMs) for the quarter have declined by 460 basis points on account of the overall increase in all the expenditure heads. The raw material cost as a percentage of sales has increased from 51.5% to 53%. The other expenditure as a percentage of sales has increased from 14.5% to 15.1%. The employee cost has also increased by 23% during the quarter. Consequently the operating profit for the quarter was down 8.3%.
- The earnings before interest and tax (EBIT) margins of the consumables division declined by 280 basis points and the EBIT margins of the equipment division declined by 890 basis points.
- With a 12% decline in the depreciation, the net profit for the quarter was up 16.6% and stood at Rs8.3 crore. The company has declared a special dividend of 260% and on the face value of the share of Rs10 the same works out to Rs26 per share. At the current market price (CMP) of Rs480 the dividend yield works out to a handsome 5.4%.
Bajaj Auto
Cluster: Apple Green
Recommendation: Buy
Price target: Rs3,200
Current market price: Rs2,622
Price target revised to Rs3,200
We are upgrading our earnings estimates on Bajaj Auto on the back of a strong operational performance in Q3FY2006 and the expected success of its new launches. We maintain our BUY recommendation on the stock and are revising the price target to Rs3,200.
Thursday, February 23, 2006
Sharekhan Investor's Eye
JK Cement
Cluster: Cannonball
Recommendation: Buy
Price target: Rs225
Current market price: Rs170
Price target revised to Rs225
Key highlights
- JK Cement, one of the leading cement producers in north India, is proactively expanding its capacity of grey cement from 3.5 million tonne per annum (mtpa) to 4mtpa and the capacity of white cement from 0.3mtpa to 0.4mtpa. We believe this is in line with the demand surge in the northern region.
- One of the hindrances to JK Cement’s growth has been its high power cost, which stood at Rs780 per tonne in FY2005. However, the company’s plans to set up a 20-megawatt (MW) captive thermal power plant and a 13.2MW waste heat recovery system should lower the cost of power. Moreover, a 6MW captive power plant (CPP) is also planned to be set up at the Gotan facility. The company would be able to generate electricity at a much lower cost that should lead to annual savings of Rs70 crore.
- Amongst its peers JK Cement has the highest leverage to cement prices, ie in a scenario of rising cement prices the company would register the highest growth in its earnings before interest, depreciation, tax and amortisation (EBIDTA) as compared to its peers.
- At the current market price (CMP) of Rs170 the stock is discounting its FY2007E (diluted) earnings by 23.6x and its FY2008 earnings by 11.4x. The stock is trading at an enterprise value (EV)/tonne of US$72 on its FY2008 capacity (after factoring in the equity dilution on account of the public issue). We believe the valuations are attractive and do not factor in the huge earnings growth (earnings to grow at a compounded annual growth rate of 113% over FY2006-08) and JK Cement’s transformation to a very cost efficient cement producer. We maintain our Buy recommendation on the stock with a revised price target of Rs225.
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