India Equity Analysis, Reports, Recommendations, Stock Tips and more!
Search Now
Recommendations
Friday, July 13, 2007
Short Term Trading Calls
Buy Kirloskar Oil Engines with a stop loss of Rs 300 for target of Rs 590.
Buy Shaw Wallace with a stop loss of Rs 250 for target of Rs 370
Buy Unitech with a stop loss of Rs 542 for a short-term (3 months) target of Rs 625
Buy Natco Pharma with a stop loss of Rs 125 for a short-term (3 months) target of Rs 166.
Reliance, Hindalco lift indices to record close
On the back of strong global cues and surge in metal and capital goods shares, the Sensex and Nifty set record closing highs on Friday. But small-cap and mid-cap stocks were pressured as traders booked profits at higher levels.
The Bombay Stock Exchange's Sensex ended 181 points or 1.2% higher at 15273. It touched a high of 15330.73 and low of 15216.83 intra day.
National Stock Exchange's Nifty closed up 59 points or 1.31% at 4504, making a high of 4514 and low of 4446 earlier in the day.
But the market breadth was negative, with 1,534 declines against 1,148 advances on BSE and 636 losers versus 489 gainers on NSE.
Biggest Sensex gainers were Hindalco Industries (up 6%), Tata Motors (3.8%), Tata Steel (3.35%), Reliance Industries (3%) and Satyam Computer (2.8%).
Index losers comprised Tata Consultancy Services (down 2.1%), Dr Reddy's Laboratories (2.03%), Hindustan Unilever (2.5%), Ranbaxy Laboratories (1.48%) and Reliance Communications (1.41%).
Metal shares were in the limelight on ArcelorMittal entering into an agreement with Nippon Steel Corp for a global strategic alliance and expansion of current joint business ventures in North America. Also, Rio Tinto Group has agreed to buy Alcan for $38.1 billion, trumping a hostile bid by Alcoa to form the world's biggest aluminum maker.
BSE Metal Index gained nearly 5% to 12,032. Hindalco rose 6% to Rs 174.45, Sterlite Industries gained 3.25% to Rs 663, Steel Authority of India surged 9.73% to Rs 158.50 and Tata Steel added 3.83% to Rs 698.
After the recent run-up in the real estate space, investors chose to book profits, pulling the BSE realty index down 1.31% to 7778. DLF shed 1.65% to Rs 600, Parsvnath Developers lost 3.7% to Rs 378 and Sobha Developers fell 2% to Rs 931.
Oil and gas shares were riding on the gains in Reliance Industries, which added nearly 3%. Intra-day, the scrip hit a life-time high of Rs 1,790 versus the previous high of Rs 1,785. ONGC was also up nearly 1% to Rs 900, IOC gained 0.6% to Rs 434 and GAIL India rose 1.22% to Rs 319.
CMC slumped 11% to Rs 1,299 despite the company posting nearly 48% rise in net profit to Rs 22.12 crore for the quarter ended June 30, 2007 compared with Rs 14.95 crore in the same period previous year. Total income decreased to Rs 216.89 crore during the June quarter from Rs 232.35 crore a year ago.
Sensex ends up 181pts; metal stocks sizzle
The buying momentum witnessed yesterday, coupled with positive cues from the global markets, saw the Sensex open today with a positive gap of 125 points at 15,217.
The index rallied to a new, all-time intra-day high of 15,331 - up 239 points from the last close. The Sensex finally ended with a significant gain of 181 points at 15,273.
The BSE Metal index gained a whopping 4.5% (526 points) to 12,001.
The market breadth turned negative towards the close as mid-cap and small-cap stocks witnessed profit-booking - out of 2,737 stocks traded, 1,529 declined, 1,154 advanced and 54 were unchanged today.
THE INDEX MOVERS....
Hindalco soared 6% to Rs 174. Tata Motors rallied 3.8% to Rs 767, and Tata Steel surged 3.4% to Rs 695.
Reliance gained nearly 3% to Rs 1,769. Satyam and Mahindra & Mahindra moved up nearly 3% each to Rs 493 and Rs 825, respectively.
BHEL and HDFC Bank advanced 2.5% each to Rs 1,684 and 1,231, respectively.
ACC, Ambuja Cements, ITC and Grasim gained around 2% each at Rs 1,096, Rs 129, Rs 156 and Rs 2,871, respectively.
Reliance Energy, Infosys and Larsen & Toubro were up 1% each at Rs 675, Rs 1,940 and Rs 2,400, respectively.
....AND THE SHAKERS
TCS and Dr.Reddy's slipped 2% each to Rs 1,137 and Rs 668, respectively.
Hindustan Unilever and Ranbaxy shed 1.5% each to Rs 203 and Rs 353, respectively.
Reliance Communications, Cipla and Bajaj Auto were down 1% each to Rs 555, Rs 211 and Rs 2,175, respectively.
METAL STOCKS SIZZLE
SAIL zoomed 10.5% to Rs 160. Hindustan Zinc soared 8% to Rs 798. Jindal Steel, National Aluminium, Sesa Goa and Sterlite Industries gained 3-6% each.
MOST ACTIVE COUNTERS
GMR Infrastructure topped the value chart with a turnover of Rs 396.60 crore followed by India Infoline (Rs 187 crore), Reliance (Rs 175 crore), Infosys (Rs 169.30 crore) and DLF (Rs 152.50 crore).
Bellary Steel led the volume chart with trades of around 1.70 crore shares followed by Silverline (1.08 crore), Reliance Natural Resources (97.50 lakh), IFCI (93 lakh) and SAIL (64.20 lakh).
Sensex hits another high as metals shine
The benchmark share index Sensex rose to its eighth record high for this month as metal stocks registered heavy gains. The market opened 125 points above its previous close and zoomed to touch the early high of 15305. The Sensex remained steady on the back of firm metal and capital goods stocks. Strong support also came from Tata Motors, Reliance Industries and few cement stocks. The metal stocks were in the limelight on the reports that ArcelorMittal, the world's largest steel company, is signing Nippon Steel Corp for a global strategic alliance and Rio Tinto Group agreeing to buy Alcan for $38.1 billion. The Wholesale Price Index rose to 4.27% for the week ended June 20, higher than previous week's increase of 4.13%, but the same had a little or no impact on the market sentiment. The Sensex touched the lifetime high of 15331 by the afternoon. After exhibiting some range-bound moves the Sensex finally closed the session at 15273, up 181 points. The broad based Nifty also hit the record high of 4514 in the afternoon and the index ended the session by adding 58 points at 4504.
Surprisingly the breadth of the market was negative. Of the 2,735 stocks traded on the BSE, 1,534 stocks declined, 1,148 stocks advanced and 53 stocks ended unchanged. Among the sectoral indices, the BSE Metal index flared up by 4.58% followed by the BSE Oil & Gas index (up 1.79%), the BSE PSU index (up 1.49%) and the BSE Auto index (up 1.04%). However, the BSE Realty index, the BSE HC index and the BSE CD index ended in the negative territory.
Except a few most of the index stocks ended at higher levels. Hindalco was the day's star performer and shot up by 5.99% at Rs174. Among the other major gainers Tata Motors surged 3.75% at Rs767, Tata Steel vaulted by 3.35% at Rs695, Reliance Industries spurted 2.89% at Rs1,769, Satyam Computers jumped by 2.82% at Rs493, M&M scaled up by 2.72% at Rs825, BHEL advanced by 2.58% at Rs1,684, HDFC Bank added 2.48% at Rs1,231 and ACC rose 2.18% at Rs1,096. Among the laggards TCS slumped by 2.10% at Rs1,137, Dr Reddy's Lab dropped 2.03% at Rs668, HLL slipped 1.51% at Rs203, Ranbaxy shed 1.48% at Rs353 and Reliance Communication fell by 1.21% at Rs555.
Metal stocks were in limelight today. SAIL vaulted by 10.49% at Rs160, Hindustan Zinc soared 7.99% at Rs798, Sesa Goa zoomed 6.12% at Rs1,909, Shree Precoated advanced 6.02% at Rs407, Hindalco shot up by 5.99% at Rs174 and JSW Steel added 5.17% at Rs723.
Over 1.07 crore Silverline Technologies shares changed hands on the BSE followed by Reliance Natural Resources (97.56 lakh shares), IFCI (92.95 lakh shares), SAIL (64.22 lakh shares) and G V Films (57.61 lakh shares).
Value-wise GMR Infrastructure registered a turnover of Rs396 crore on the BSE followed by India Infoline (Rs186 crore), Reliance Industries (Rs175 crore), Infosys (Rs169 crore) and DLF (Rs152 crore).
Alpa Laboratories
Indore-based Alpa Laboratories (promoted by Purshottam Patel, M S Chawla, and Pravin Shah) manufactures pharmaceutical formulations with a range of products such as ethical drugs, generic drugs, over-the-counter drugs (OTC) and veterinary products in various dosage forms and markets them under the trademark, Alpa. It also undertakes contract manufacturing of formulations for a number of other pharmaceutical companies such as Cipla, Zydus Cadila, Lupin, Glenmark, Genom Biotech, and Jenburkt located both in India and abroad mainly in unregulated and semi-regulated markets in Africa, Latin America and Asia. For its own products, the company has established a marketing network covering both metro and mini-metro cities through a number of distributors and dealers spread across the country.
Alpa Laboratories is currently operating its capacities at nearly 90% utilisation. To cater to rising demand, it has planned a massive expansion program to add 1.5 times its existing overall capacity at a capital cost of Rs 58.21 crore with the commissioning scheduled for April 2008. The new plant is planned to be US FDA-compliant considering export prospects. The company is approaching the capital markets to mop up around Rs 65 crore to finance this expansion besides augmenting working capital and other contingencies.
Holding approvals to manufacture 1,366 formulations based on around 50 active pharma ingredients (APIs), Alpa Laboratories routinely manufactures 300 to 350 formulations based on market demand and limited formulation lines. The existing flexible manufacturing infrastructure helps it to change product-mix in response to changes in market demand. The company has been continually World Health Organisation(WHO) Good Manufacturing Practices (GMP)-certified since 2001. In the overseas semi-regulated markets, which contributed around 11% of sales in the year ending March 2007 (FY 2007), Alpa Laboratories holds registrations for around 40 formulations. Nearly 90 more are likely to get registered over the next 12 months.
After converting its veterinary segment, generating around 4% of its annual revenue, to ethical marketing in five states in India with an initial range of 27 products, Alpa Laboratories plans to start ethical marketing for human formulations as well, particularly for the high-value products that it manufactures.
Efforts are on to reduce the low-margin contract manufacturing business, contributing around 30% of the revenue. But once the expanded capacities come into play, Alpa Laboratories will try to include MNC pharmaceutical companies in its clientele for contract manufacturing.
Strengths:
Alpa Laboratores plans to venture into segments such as pro- and pre-biotics and pre-filled syringes due to consistent demand. Will also diversify into lifestyle disorder segments including diabetes, cardio-vascular and gynecology. Entry into such higher-end segments is likely to improve operating profit margin (OPM)..
Export is a lucrative market giving better margin compared with the domestic business. On completion of the expansion programme, the company will be able to ramp up exports, helped by the rising number of overseas product registrations.
Weaknesses:
Although implementation has started, the expansion project is behind schedule by three months and may get further delayed due to factors such as government approvals or delivery of equipment. So far has not placed orders for any of its capital equipment requirement.
Incurred negative cash flows in three out of the last five years including year ended March 2007.
The promoter group company, Alpa Labs (India), owns the trademark, Alpa, which the company has licensed. Alpa Labs (India) has common objects as per its memorandum of association, which could give rise to conflicts in future.
Valuation:
Alpa Laboratories has set a price band of Rs 62 to Rs 68 per equity share of Rs 10 each face value. At the lower band of Rs 62, P/E works out to 20.7. At the higher band of Rs 68, P/E is 22.7 based on FY 2007 EPS of Rs 3 on post-issue equity of Rs 21.56 crore. There are several listed pharmaceutical players focusing on the formulations business. The group of such companies is trading at a composite P/E of 13.2 only.
Subscribe to:
Posts (Atom)