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Thursday, March 11, 2010
Pradip Overseas IPO Review
Promoted by Pradipkumar Karia, Chetan Karia and Vishal Karia, Pradip Overseas is one of the few niche textile companies in India focused on home linen products in wider and narrow width. Currently, the company has facilities at Changodar near Ahmedabad in Gujarat.
The company caters to both domestic and export markets. The order book as on February 15, 2010 was Rs 333.78 crore, comprising export orders worth Rs 101.51 crore and domestic orders worth Rs 232.27 crore. Exports constitute around 45-50% of the net sales in the past three years. Majority of the company exports are indirect exports and primarily shipped to American and European markets. The company has also makes small quantity of garments, dress materials and bottom wear fabrics, primarily for international markets and has drawn up plans to scale it up. Apart from these value added products, it is also looking at industrial textiles as potential opportunity. The company aims to grow business in all existing markets, i.e. India, Europe and North America and also intends to explore markets in Middle East, East Africa and Russia. The company is also focusing on value added products such as quilts and organic cotton home Lenin products.
The existing manufacturing facility at Changodhar has been granted authorization, according to Oeko-Tex Standard 100, to use the Oeko-Tex mark for articles, namely bed sets (made-ups), woven fabrics made out of 100% cotton and polyester, bleached, reactive dyed, reactive printed, dispersed dyed and dispersed printed and pigment printed (inclusive sewing threads, buttons and zippers), produced by/ using material certified according to Oeko-Tex Standard 100. In a move to strengthen the business presence, the company has also received permission from International Development LLC, Tampa, FL, USA (IDL) for using and marketing the brand, Lucy B Linens, for home linen products in India and other pertinent countries. The company distributes its home linen products through C A Patel Textiles, which has a retail network of more than 2,000 retailers across the country.
The company has drawn up plans to expand its current capacity from 136.5 million meters to 169.50 million meters per annum by setting up manufacturing facility in a proposed textile SEZ near Bhamasra Village, Ahemadabad, Gujarat. Expanded capacity is to be commissioned by January 2011. The capacity expansion will require Rs 99.95 crore and additional working capital will require Rs 99.95 crore. IPO funds will yield Rs 106-Rs 116 crore
Strengths:
* Capacity utilization continuously improving. From 86.32% in FY 2007, it has improved to 90.57% in FY 2008 and then jumped to 97.92% in FY 2009. In the nine month ended December 2009, it stands at 95.96% on increased capacity.
Weakness:
* The company operates in a highly competitive market and faces stiff competition from other organized players in this segment and also from the unorganized sector.
* The textile industry is cyclical and sensitive to the changes in the global economy. The home textile sector is export oriented and so is more vulnerable to global economic and liquidity factors.
* The company is also implementing textile SEZ. Funds have not been tied up and certain other formalities are yet to be completed.
Valuation
The company has posted a 78% jump in net sales to Rs 1170.58 crore. Of this, trading sales amounted to Rs 225.08 crore. There was a modest 8% increase in net profit to Rs 41.46 crore in FY 2009. Sales for the nine months ended December 2009 were Rs 1216.83 crore (trading sales Rs 200.40crore), with net profit being Rs 51.10 crore. The annualized EPS for the nine months on post issue equity works out to Rs 16.9. At the offer price band of Rs 100- Rs 110 per share, PE works out to 5.9-6.5 times. Alok Industries and Welspun India are trading at P/E of 7.2 and 5.2 times their nine-month annualized EPS.
Copper weakens
Red metal gives up earlier gains
Copper prices pared earlier gains and ended lower at Comex on Wednesday, 10 March 2010. Prices pared earlier gains due to demand concerns.
At USA, copper futures for March delivery ended marginally lower by 4.4 cents (1.5%) at $3.36 a pound. In February, copper ended higher by 7.1%. Copper ended FY 2009 higher by 140%.
At LME, copper for delivery in three months ended lower by 0.1% at $7,500. On 3 July, 2008, prices had touched an all time intra day high of $8,940.
Copper ended substantially higher last year on expectations of revived global economic growth along with a decline in the dollar. The dollar index had dropped almost 4.2% last year. The metal was also pushed higher by record first-half imports to China, the world's largest user.
The U.S. buys about 13% of the 17 million metric tons of copper sold annually and China buys about 20%.
Copper advanced earlier after a report that showed China's trade surplus narrowed further in February to $7.6 billion from $14.2 billion in January due to soaring imports, reflecting growing domestic consumption.
In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, fell by more than 0.3%.
In FY 2008, copper prices dropped by 54%. Prior to 2008, copper prices ended FY 2007 with a gain of mere 5.5% after a whopping 44% gain in FY 2006. The price of copper gained every year since 2002 as global economic growth boosted demand for the metal used in pipes and wires.
At the MCX, copper for February delivery closed lower by Rs 0.8 (0.2%) at Rs 341.3/Kg. Prices rose to a high of Rs 345/Kg and fell to a low of Rs 335/Kg during the day's trading.
Among other metals traded in the LME on Wednesday, lead ended 0.2% higher at $2,250 a ton and zinc ended 0.5% higher at $2,390 a ton. Nickel ended 0.4% lower at $22,050. Aluminum ended 0.4% lower at $2,201 a ton.
Bullion metals shed more glaze
Prices pare earlier gains
Precious metal prices ended little lower on Wednesday, 10 March, 2010. Prices pared earlier gains. Prices increased earlier during the day following China's economic data.
Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.
On Wednesday, gold for April delivery ended at $1,122.3 an ounce, lower by $1.7 (0.2%) an ounce on the New York Mercantile Exchange. It rose to a high of $1,128.3 earlier during the day. Last week, gold gained 1.4%. In FY 2010, gold touched a high of $1,154 in January.
On Wednesday, May Comex silver futures ended lower by 5 cents (0.3%) at $17.29 an ounce. Last week, silver ended higher by almost 8%.
Gold and other metals advanced earlier after a report that showed China's trade surplus narrowed further in February to $7.6 billion from $14.2 billion in January due to soaring imports, reflecting growing domestic consumption.
In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, fell by more than 0.3%.
Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.
Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end. Silver futures had hit a low at $10.42 on 15 January 2009 and hit a high at $19.30 per ounce on 2 December 2009. Like gold, silver also ended lower than its all time high level.
At the MCX, gold prices for April delivery closed lower by Rs 20 (1%) at Rs 16,707 per ten grams. Prices rose to a high of Rs 16,783 per 10 grams and fell to a low of Rs 16,561 per 10 grams during the day's trading.
At the MCX, silver prices for May delivery closed Rs 40 (0.2%) lower at Rs 26,993/Kg. Prices opened at Rs 26,832/kg and fell to a low of Rs 27,020/Kg during the day's trading.
Crude closes above $82
Prices rise on demand hopes and less than expected buildup in crude supplies
Crude prices ended higher on Wednesday, 10 March 2010. Prices closed above $82. Prices rose as crude supplies rose less than expected for last week and due to anticipation of higher demand in the coming months.
On Wednesday, crude-oil futures for light sweet crude for April delivery closed at $82.09/barrel (higher by $0.60 or 0.7%). Prices rose to a high of $83.12 during intra day trading. Prices gained 2% last week.
Crude prices rose 9.3% in February as supply-and-demand issues began to take hold in a market for months dominated by moves in the dollar. Prices have ranged between $69 and $84 a barrel since October. Crude has risen 72.7% in last one year.
In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, fell by more than 0.3%.
In the latest weekly inventory report, the EIA reported today that crude-oil supplies were up 1.4 million barrels in the week ended 5 March as against an expected figure of 2.1 million barrels. The EIA also reported a drop of 2.9 million barrels in gasoline stocks and a drop of 2.2 million barrels in supplies of distillates, which include heating oil.
In the latest report, OPEC reported today that it now expects world oil demand to grow by 900,000 barrels a day in 2010. This represents an upward revision of 100,000 barrels a day from the previous assessment.
Yesterday, in the latest monthly report, the EIA had reported that it now expects oil consumption growth of 1.5 million barrels a day this year, up from 1.2 million barrels a day in last month's outlook. As per the report, with that demand, oil prices should stabilize above $80 a barrel. The report also detailed that with this, price of crude oil is to average above $80 a barrel this spring, then rise to about $82 a barrel by the end of the year. Crude should climb to $85 a barrel by the end of 2011.
Among other energy products on Wednesday, gasoline for April delivery finished up 3 cents at $2.29 a gallon, while heating oil for the same month rose 3.1 cents to $2.12 a gallon.
Also on Wednesday, April natural gas rose 4.4 cents to $4.56 per million British thermal units.
Crude ended FY 2009 higher by 78%, the highest yearly gain since 1999. It reached a high of $82 earlier in October 2009 and hit a low of $33.98 on 12 February 2009. Oil prices had reached a high of $147 on 11 July, 2008 but have dropped almost 45% since then. Crude prices had ended FY 2008 lower by 54%, the largest yearly loss since trading began at Nymex.
At the MCX, crude oil for February delivery closed Rs 32 (0.9%) higher at Rs 3,757/barrel. Natural gas for March delivery closed at Rs 206/mmbtu, lower by Rs 0.5 (0.18%).
Wednesday, March 10, 2010
RIL, HDFC, ITC lift Sensex higher; TECk, IT slip
The benchmark 30-share index, BSE Sensex ended in the positive terrain led by Hero Honda Motors, ACC and Reliance Industries. Oil & gas, FMCG and realty stocks edged higher, while teck, IT and healthcare stocks declined. Broader markets also dropped marginally. Whereas Nifty sustained above the crucial 5,100 level. It opened on a flat note with positive bias and later gained further ground on sustained buying seen in index heavyweights. In the second half, the index pared most of its gains due to profit taking seen at higher levels. Finally it ended in green after touching a high of 17,183.51.
At the close, the Sensex gained 45.79 points or 0.27% at 17,098.33 with 18 components registering rise. Meanwhile, the broad based NSE Nifty climbed by 14.75 points or 0.29% at 5,116.25 with 31 components posting rise.
On global front, European stocks open in green as the Stoxx Europe 600 Index remained near a seven-week high for a third straight day. US futures were also little changed. On the other hand, Asian stocks ended mixed as shipping lines and oil companies declined, while Australia`s largest telephone company rose on speculation it will avoid a breakup.
Sensex Movers
Reliance Industries contributed rise of 39.08 points in the Sensex. It was followed by Housing Development Finance Corporation (13.48 points), ITC (10.68 points), Tata Consultancy Services (8.77 points) and Hero Honda Motors (7.4 points).
However, Infosys Technologies contributed fall of 15.32 points in the Sensex. It was followed by ICICI Bank (10.26 points), Larsen & Toubro (8.97 points), NTPC (6.16 points) and Bharti Airtel (5.63 points).
Biggest gainers in the 30-share index were Hero Honda Motors (2.94%), ACC (2.21%), Reliance Industries (1.80%), Jaiprakash Associates (1.75%), Housing Development Finance Corporation (1.52%), and Tata Consultancy Services (1.49%).
On the other hand, NTPC (1.38%), Maruti Suzuki India (1.34%), Bharti Airtel (1.10%), Infosys Technologies (0.90%), Sun Pharmaceutical Industries (0.80%), and Larsen & Toubro (0.78%) were the major losers in the Sensex.
Mid & Small-cap Space
The BSE Midcap index was at 6725.94 down by 8.71 points or by 0.13%. The major losers were Andhra Bank(2.19%), Anant Raj Industries (1.26%), Allahabad Bank (1.16%), Reliance MediaWorks (0.4%) and Alfa-Laval (India) (0.06%).
The BSE Smallcap index was at 8512.57 down by 18.15 points or by 0.21%. The major losers were Allied Digital Services (2.16%), Provogue (India) (1.14%), Alembic (0.65%), A B G Infralogistics (0.45%) and Genesys International Corporation (0.25%).
Sectors in Limelight
The TECk index was at 3,264.11, down by 13.56 points or by 0.41%. The major losers were Bharti Airtel (1.1%), Mphasis (1.1%), Aptech (0.57%), Idea Cellular (0.32%) and Balaji Telefilms (0.29%).
The IT index was at 5,290.71, down by 19.47 points or by 0.37%. The major losers were Mphasis (1.1%), Infosys Technologies (0.9%), Oracle Financial Services Software (0.7%), Aptech (0.57%) and H C L Technologies (0.39%).
The IPO index was at 1,956.68, down by 6.76 points or by 0.34%. The major losers were Greenearth Resources and Projects (6.72%), Aqua Logistics (1.76%), Anu`s Laboratories (0.82%), Adani Power (0.78%) and ARSS Infrastructure Projects (0.73%).
On the other hand, the Oil & Gas index was at 9,739.25, up by 89.50 points or by 0.93%. The major gainers were Essar Oil (0.72%), G A I L (India) (0.36%), Aban Offshore (0.33%), Bharat Petroleum Corporation (0.3%) and Indian Oil Corporation (0.11%).
Market Breadth
Market breadth was negative with 1,186 advances against 1,674 declines.
Value and Volume Toppers
Texmo Pipes and Products topped the value chart on the BSE with a turnover of Rs. 4,624.81 million. It was followed by Reliance Industries (Rs. 1,161.31 million), Tata Motors (Rs. 901.55 million) and Tata Consultancy Services (Rs. 848.76 million).
The volume chart was led by Texmo Pipes and Products with trades of over 33.70 million shares. It was followed by Unitech (10.66 million), Shree Ashtavinayak Cine Vision (7.44 million) and Greenearth Resources and Projects (6.20 million).
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