VALUE PICK FROM INDIAN STOCK MARKETS

MANAPPURAM FINANCE - NEIGHBOUR ' S ENVY OWNERS PRIDE ?

2012-02-16T21:51:00.010+05:30

Listed businesses owned by first generation entrepreneurs prone to higher risk compared with businesses owned by families with decade experience. Many such examples happened even in our stock market in recent times and some of them even threatened the existence of such businesses .Story of the managing director of Orchid Chemicals Mr K Raghavendra Rao is one such example, but he escaped ( so far ) with the help of the deep pockets of Cyrus Poonawalla. The recent one in this episode is the happenings in Manappuram Finance ,which is one of the biggest wealth creator from the mid cap space in the last five years.By now, all of you may be aware about the happenings.I strongly feels some foul play and planned attack by business rivals or vested interest parties in this whole episode .Being a person keenly watching the growth of this company I don’t believe that the promoters of Manappuram will do anything to cheat the share holders or its investors .( Let time proves whether I am true or false) .Actually they try to utilise a loophole available in the system to raise funds for another company of the same promoter which is entirely a separate legal entity.Whenever RBI issued a notice ,promoter express his willingness to repay the amount with interest at any time. If our media and authorities like RBI , SEBI ..etc are vigilant like this ,where were they at the time of big frauds in the past ? . We have many past experience with Sahara’s , Essar Group,Sterlite,Sterling Group..etc.. but none of them become an issue and not sensationalized like this .Authorities' silence in the past and media’s and equity analyst’s aggressiveness this time creating many doubts.For example ,when there is some rebound in its share price either business channel s ( mainly CNBC) or PINC papers will come out with some day old negative news on it .Take today’s case where its share price moved up more than 5 % today ,ET online edition published a news

“ CARE DOWNGRADES RS.1550 CRORE NCD OF MANAPPURAM FINANCE” .But the fact is that this downgrade happened about two days back and the report is available in CARE website day before yesterday onwards. This is only a small example and when we read between lines I feels some strong vested interest parties are playing to prevent the aggressive growth of this company with even the help of some Government Authorities . Time will tell who will win , but I feels the faith of Keralites ( where majority of its branches are functioning )in the promoter of Manappuram Group will help the company to recover from this setback and grow without any black spots going forward to reach its target of 3000 branches by the end of this financial year.

Latest INTERVIEW with the Chairman

THIS IS ONLY A PERSONAL VIEW AND NOT A RECOMMENDATION TO BUY OR SELL THE SHARES OF THIS COMPANY.

WPIL - UPDATE

2012-02-15T19:49:00.000+05:30

WPIL - is one of my old recommendations @ Rs.187 on 20 July 2011 ( For old posting Click HERE).Today it hits its lifetime high @ Rs.311/-. In the latest December quarter company posted a turnover of Rs.75 Cr v/s Rs.40 Cr and a net profit of Rs.4.3 Cr v/s Rs.1.78 Cr .One may book partial profit ( 30 % ) and hold the rest for long term.

AHLCON PARENTERALS - BOOK PROFIT

2012-02-13T19:55:00.002+05:30

I have recommended a BUY on Ahlcon Parenterals on June 10 ,2010 @ Rs.64- ( Click HERE for old posting ). Today it hits its life time high and currently trading @ Rs.209/-, an appreciation of more than 200 % in less than 2 years .Considering the Risk Reward Ratio,advising to book full profit and Exit from this stock.

BRITANNIA INDUSTRIES - BUY

2012-02-11T09:09:00.004+05:30

No explanation is needed for Indian's about Britannia .Company having about 35 % market share in organised biscuit market and about 15 % in overall market.They are also in Ghee,milk powder ,cake ..etc.
Its major brands include Marie, Arrowroot, Bourbon, Milk-bikis, Nice, Snax, Coconut Crunchies,Pure Magic, Snax, Cream Treat Good Day, Jim-Jam , Chekkers ,Tiger. ,Digestive,Thinlite and Cream Cracker.In addition to this company now aggressively promoting baked wheat snack called Time Pass which is free from trans fat, MSG and cholesterol.Strong brand and timely introduction of new products backed by good R & D helping the company to face competition from unorganized sector and other biggies.After a decade long fight for management control and uncertainty which affected company's performance earlier but now under the able leadership of India's one of the most respected woman CEO Vinita Bali company is now back to growth path.Higher production of wheat in India will help the company to reduce the cost its main raw material.For the latest quarter ended December company posted a 15 % growth in sales and 45 % growth in its net profit.This is one stock to be included in your core portfolio with a long term view .CMP is Rs.493/-

* Always with a prayer to god to forgive the masterminds behind the tragic death of Rajan Pillai

COCHIN MINERALS AND RUTILES- RESULT UPDATE

2012-02-08T21:19:00.002+05:30

I have recommended a BUY on COCHIN MINERALS AND RUTILES @ Rs.78 on 28 October ,2011. ( Old Posting HERE) Yesterday company reported excellent result for the quarter ended December 2011, where its turnover moved from Rs.47 Cr to Rs.72 Cr and net profit vaulted to Rs.19 Cr from Rs.2 Cr . Nine months EPS is Rs.38 v/s Rs.5. Since the price of Synthetic rutile (its main product) is expected to move even higher from current level , CMRL may report good numbers in coming quarter too.Currently CMRL is trading at its lifetime high @ Rs.155/- .Considering the good performance and bright prospects in medium term , recommending a HOLD at current market price.

ANJANI PORTLAND CEMENT - BUY

2012-02-04T18:28:00.003+05:30

Many sectors are buzzing on expectation of a cut in interest rates and some policy initiatives in near future.Infrastructure and Real estate are few among them.Any positive developments in this sector will surely help the Cement Industry going forward.Even in tough times this industry has shown good resilience mainly through production discipline and cost cutting efforts.Just few months back we have discussed India Cement @ Rs.68 which is now quoting around Rs.94/-.Anjani Portland cement is another company from this sector mostly ignored by the investor fraternity even after good performance for many years.This Hyderabad based company was originally incorporated as Shez Cement and later taken over by the estwhile promoters of Raasi Cement and then renamed as Anjani Portland Cement.This promoters having vast experience in cement industry by running another well known cement company - Raasi Cement - successfully for many years.Raasi cement later taken over by India Cement in 1998 after a take over battle. Till recently Anjani was selling its product( PPC ,43 & 53 grade cement) mainly in Andhra Pradesh under the brand name' Anjani Super Gold' .After expanding the production capacity in last year to 1.2 million tons per year,now company is expanding its marketing to new areas like Tamilnadu, Kerala,Orissa, Karnataka and Maharashtra.To ensure the quality raw material for cement production Anjani having limestone mines in Nalgonda districtof AP.Company have two subsidiaries - Hitech Print Systems Limited and Vennar Ceramics Limited.HPSL is a security printing unit certified by IBA.VCL having gas based power generating plant with a capacity of 2.7 Megawatts which is sufficient to meet almost 55 % of the total power requirements of Anjani Portlant Cement . At a time of rising power tarriff and frequent power cuts ,this is a big advantage for the company. Company showing good performance for the past many quarters.In September it posted a turnover of Rs.71 Cr v/s Rs.30 Cr and a net profit of Rs.4 Cr v/s a loss of Rs.8 Cr.At current market price of Rs.37/- its market cap is just 68 Cr .Considering the recent expansion ,experience of promoters,dividend track record and chances of a re-rating in cement sector ,Anjani Portland Cement is a risk less bet @ CMP of Rs.37/-

EPC INDUSTRIE - RESULT UPDATE

2012-02-03T16:00:00.001+05:30

The Mahindra & Mahindra Controlled EPC INDUSTRIE posted excellent result for the quarter ended December 2011 , after the closure of market hours. Company posted a turnover of Rs.40 Cr v/s Rs.24 Cr and a net profit of Rs.2 Cr v/s Rs.30 Lac ( Up 560 % from same period last year) in this quarter. This is the first result from the company after the management control is taken over by M & M.

Recommending a HOLD at Current market Price.

For old postings on EPC click HERE and HERE

AVANTEL - Good Show

2012-01-31T21:38:00.000+05:30

This Hyderabad based Satellite and Telecom equipment manufacturer reported good performance for the latest December quarter. Its posted a turnover of Rs.12 Cr v/s Rs.3 Cr and a net profit of Rs.3 Cr v/s Rs.1 Cr .AVANTEL's products are used in Telecommunication,Defense and Aeronautics sectors.In recent past company was in news on its supply of P-8I Mobile Satellite Service System to Boeing . Successful execution of this prestigious order is expected to bring more business for this niche company in future.Recently company concluded a share buy back program at a maximum price of Rs.70/-.It is expected to re rate based on the good performance .Long term prospects depends on its ability to secure more orders going forward .Current market price is Rs.62.50/-

SHAKTI PUMPS - BUY

2012-01-28T08:01:00.004+05:30

Shakti Pumps is an Indore based manufacturer of various type pumps.Company's product list includes Stainless steel submersible Pumps,Submersible motors,SH Pumps..etc .Shakti is in the process of setting up a new manufacturing facility to produce booster pumps and it is expected to start commercial production in next month. Company is also planning to start a plant to produce waste water pumps in near future. At present company generating about half of its turnover from exports and the brand is well known for its quality and energy efficiency.Growth in sectors like agriculture,irrigation,sewage treatment..etc are providing growth opportunities for the company.In the financial front company is showing steady growth for the past many quarters.Shakti Pump is one of the high margin pump maker in India.Booster pumps are expected to give a fillip to its bottom line from next financial year onwards.Company is targeting a sale of Rs.200 cr from the newly started booster pump division alone in 2013-14 financial year.For the latest December quarter company posted a turnover of Rs.65 Cr v/s Rs.47 Cr and a net profit of Rs.6 Cr v/s Rs 4 Cr ..Company having an uninterrupted dividend paying track record for the past five years.It also issued bonus shares in the ratio of 1:1 in 2011.In 2010 its share price touched a high of Rs.339/-(Pre bonus) .But due to the exit of a private equity investor, its share price crashed later.For the past few months promoters mopped up huge quantity from the open market which is really a confidence booster.At CMP of of Rs 53/- It is a good bet for medium to long term investors.Stock is listed both in NSE and BSE

VELJAN DENISON - RESULT UPDATE

2012-01-26T06:58:00.001+05:30

Veljan Denison is one of my old recommendations @ Rs.375 /-. After hitting a high of Rs.456 , it is now trading around Rs.307. Recently company allotted shares on rights basis in the ratio of 1:4 at a price of just Rs.10/-. Effectively cost per share reduced to Rs.320/- Company also declared a dividend of 75 % .For the quarter ended December 2011, company posted a turnover of Rs.23 Cr v/s Rs.18 Cr and a net profit of Rs.5.5 Cr v/s Rs.3 Cr .Nine month profit jumped to Rs.10.8 Cr v/s Rs.6.8 Cr and EPS is Rs.48/- on the expanded equity .Recommending a HOLD at CMP of Rs.307/-

Old posting HERE

SUZLON ENERGY -- BUY

2012-01-21T21:05:00.000+05:30

A BUY recommendation on Suzlon Energy at this point of time may raise the eyebrows of many of my readers.But I feels the risk reward ratio warrants a re-look on this wind power major in current situation.Suzlon was a shining star in Indian stock market till 2008.Then the company decided to take over a German Wind power company RE Power mainly to acquire the latest technology and designing capabilities owned by that company. There were many blade cracking issues at that time against Suzlon and the latest technology was inevitable to tide over these problems.As per the German laws technology transfer is not permitted if the company is not a 100 % Subsidiary. So suzlon forced to buyout the 100 % stake in RE Power which stretched the balance sheet of Suzlon with higher debt .On the other side ,company's business went through a tough time mainly because of the western recession which started in 2008.Whenever the recession starts cost of conventional energy sources like crude ,coal ..etc nose-dives and non conventional sources become less attractive. Such a situation created problems not only for Suzlon but all non conventional energy related firms.Suzlon posted losses in 2009-2011 period and even the existence of the company became a big question mark.Series of these incidents bring down the share price of this once considered blue chip from Rs.415 to just Rs.17/- ( after adjusted FV split) in this January. In order to tide over the difficult situation company even sold its acquired stake in Hansen transmission ..etc .

Now Suzlon is left with a debt of around Rs.11000 - 12000 Cr including the FCCB re payment liabilities.No doubt it is a real concern .But we should not ignore the positives as well and also the crash of its share price during this period due to these negatives.After a sharp crash in energy prices during the recessionary period , now it again started to move up with a vengeance .Coal and crude prices moved sharply even only with small signs of recovery in US economy .In 2007-08, the cost of one unit of power from wind energy was Rs. 5,compared to Rs. 2 to Rs. 2.75 for coal.Today, the cost of wind power has come down to between Rs. 3.25 and Rs. 3.5, while the price of power from coal has increased to Rs. 3 to Rs. 3.10.This situation is expected to continue in favor of wind power in coming years.This is one of the biggest positive for the entire industry and such a situation will surely increase the order flow to Suzlon which is considered as one of the word's low cost producer of wind turbines.Considering the policy paralysis in power sector ,no doubt India will face severe power shortage in coming years which may open up big opportunities for companies like Suzlon. The recently introduced wind turbine S9X which is designed for low wind area is receiving very good response from the customers. After many many years , now company is reporting good order flow on a consolidated basis and it crossed 5 GW for the first time after 2008 . This increases the visibility of cash flows and it is expected to post a profit of Rs 450- 500 Cr in current year and Rs.700 Cr in next year on a consolidated basis.This cash flow along with their plans to sell some non core assets and cash reserve of about Rs.1700 cr with RE power and about Rs.1000 Cr receivables from its debtors are expected to help the company to tide over the debt trap.Company management also expressed their confidence to reduce debt equity ratio in coming years.Regarding the selling of 2 % promoter stake in November ,Mr Tulsi R Tanti MD of Suzlon categorically cleared that the selling was a one-off event and will not repeat in future.Even after the selling still promoters are holding about 52 % stake in the company.Out of this 52 % stake about 94 % is pledged .But it is a point to note that 90 % of these shares are pledged as a secondary security and chances are very rare to come this shares in to market even if there is a fall in its share prices.All together I strongly feels that the worst is over for Suzlon and company will be able to repay its debt if something worst is not happening in Western economies again .Company's share price is expected to re-rate with the full year results and repayment of first installment which will happen in June of this year.An early improvement of European economies will surely help Suzlon a lot to capture the past glory.If the management can keep the promises of their decision to not sell the shares in open market again - at current market price of Rs.24 / - the risk reward ratio is positive for an investment.

Disc :I have vested interest in Suzlon

AGROTECH FOODS - RESULT UPDATE

2012-01-19T13:06:00.001+05:30

Agrotech Foods Ltd is one of my old recommendations @ Rs.327 /-( Click HERE for the old posting ) .For the quarter ended September , company posted a 7.2% decline in net sales to Rs 180.84 crore and an increase of 14.9% to Rs 11.23 crore in net profit.These results are satisfactory considering the fact that the company sold its Vanaspati business recently and this quarter result is excluding this business. A HOLD at current market price of Rs.420/-

ROSSELL INDIA LTD - BUY

2012-01-14T14:26:00.006+05:30

Last week we have discussed the long term prospects of sugar sector stocks.Many of them appreciated in an average of 20% in last week itself.Tea is another agriculture commodity having cyclical nature like Sugar.But the government control over this sector is very low compared with Sugar sector hence the supply demand scenario determines the price for a large extent.Tea prices showing a declining trend for a long time and now it is showing some signs of uptrend after a consolidation.As a true reflection of this trend , share prices of many of the listed tea sector stocks are hovering around multi month lows.From this tea pack I am selecting one company which is not so familiar for many of you - Rossell India Ltd.There is many other companies in this sector but I feels this company's diversification plans makes it more attractive than other companies from the same sector.
Company having Five tea estates in Assam in an area of 4000 hectares.For the last financial year Rossell posted a turnover of Rs.80 Cr and a net profit of Rs.18 Cr EPS is Rs.5/- ( FV Rs,2 Shares). In addition to the conventional Tea business company having two more divisions- Aerospace/defense , and Hospitality. Potential of these sectors differentiate this company from other tea companies.Under the Bangalore headquartered Aerospace and defense division - Rossell Techsys- company is offering services like custom embedded systems product design and development, product support services including Installation, testing, commissioning and maintenance, test solutions including test jigs, rigs, and simulators etc , and wire harness engineering and looming.Company representing many foreign companies like MacSema in India for their various products and services in Aerospace and defense.This division having an approximate employee strength of 70.

Recently company started a hospitality division to increase its presence in this sector.It is a point to note that company already having some experience in this field through their strategic investments in a company which is running the franchise of 'YUM'( owners of brands like KFC, Pizza Hut, and Taco Bell) in Nigeria.Few months before Rossell decided to start fast food chains in various cities in India too .It is not clear at this point that whether this is through a master franchise agreement of any well known brands or not.Anyway their previous experience in this field will be an added advantage.Apart from this ,company also having some interest in Lemon Tree Hotels which is running 12 hotel properties across India.

Company's share price is currently trading at Rs.40 /- with a P/E of 6 on the expected full year EPS of Rs.7/-. Considering the chances of an improvement in Tea prices, it is at the lower level .If the upcoming fast food chain venture turn as a success and defense and aerospace division posts decent growth after the expected opening of private sector in defense , this unknown stock may be re rated sharply. Only on the valuation of Tea division itself it is a better pick from the tea pack @ Rs.38/-

* Some of the information's ( About their Nigerian ventures) are taken from Company website .No guarantee for its Authenticity

Valuable Lessons for Stock Market Investors

2012-01-11T21:06:00.001+05:30

Courtesy :Stock Market Guide

LESSON 1: There is no such thing as a good stock
There are only good companies. When someone tells you ‘this is a good stock’ you need to look beyond the stock chart. Why is the company a good company? How will it grow its business? If you can’t answer these questions, you don’t know what you own.
LESSON 2: Have a premise
When you buy a stock you must have a premise. A premise is a reason why that particular stock will go up. For best results, the premise will be one that explains why the company’s line of business will increase, and why the marketplace will value that business at current or higher multiples. Without a premise, you don’t own an investment, you just own a stock.
LESSON 3: Think trends. Buy stocks
If you really want to invest in big growth stocks, you need to invest in secular trends. Secular trends are events unrelated to either the economy or individual company events. The advent of the PC, the birth of the Internet, and the desire for wireless phones, are all secular trends. The biggest investment winners are those companies which are ideally placed to reap the benefits of large secular changes.
Microsoft and Intel rode the transition to PCs as computing power became cheaper and cheaper. Nokia, Motorola, Qualcomm, and Ericsson all found them-selves unable to keep up with demand in the mid 1990s, when wireless phones finally reached the critical price points. If you want really big winners, find the trend, then find the stocks.
LESSON 4: Know your risk tolerance
The biggest mistake most investors make is to buy positions with more risk than they can really tolerate. This is where most people got hurt in the Internet bubble burst. They had no idea they owned risky stocks. If you can always tolerate, both financially and emotionally, the complete loss of your entire position, you obviously will be okay. But most people aren’t in that position. Figure out how much downside you can live with without having to sell. Figure this out before you buy the stock.
LESSON 5: Don’t average down to feel better
‘Averaging down’ is often a way to lose more. If you believe in the company, and the price goes down, you may want to invest more. But if you, like many others, purchase more simply to lower your ‘break even’ stock price, you are making a mistake. If you find yourself calculating new ‘average price per share’ points, you might be averaging down for the wrong reason.
LESSON 6: Don’t miss the train to shave a dime
If you are investing in a major trend through a stock, and have a multi-year investment horizon, what difference does a few cents per share make on your purchase? Many investors try to place buys with limit orders just below the ask, and wind up missing the purchase.
If you really want a stock, particularly a big position, place a limit order at the ask, or even slightly higher. You will at least get the order. This is especially important if you are trying to buy far more shares than the current ask size. If you are right about the trend, you will never miss the extra ten cents per share.
LESSON 7: Don’t buy hot and watch cold
Many investors buy a ‘hot stock’ and immediately look for big gains. When they don’t happen, the stock falls away from the daily attention list. Pretty soon it starts to edge downward, and, emotionally, the investor stops watching it.
Pain avoidance is common to us all. But you can’t let pain avoidance prevent you from watching your stock. If you do, you often take a look two months later and find the stock is far from hot, and you are now presented with a really painful decision.
LESSON 8: A hold is as good as a buy
There is no such thing as a ‘hold’ decision. If you wouldn’t buy the stock again today, assuming you had additional money, you should either sell, or admit that you are confused. Resolve the confusion. The hold condition often happens when you have owned a stock for years, are way ahead of your basis, and are basically happy.
But what is driving the stock today? What will make the price rise in the future? Why would you buy the stock today, assuming you didn’t own it? If you don’t know, you don’t have a premise for this stock.
LESSON 9: Don’t be an inadvertent long-term holder
When your premise doesn’t work out, or you no longer believe in the stock, you must sell, even if it means a loss. Holding on just to ‘get my money back’ is the single biggest reason for losing more money. Who owned all those stocks that lost 98 per cent of their value in 2000? A good percentage was owned by people who turned into long-term holders inadvertently, when they made the decision to just stick it out.
LESSON 10: You will lose money
You won’t be right every time. If you are going to be an investor, you need to become accustomed to losing money on some positions. This rule is the natural consequence of living up to rules 5, 7, and 9. Taking losses is often the only way you can save your capital from further losses.

OFF SEASON DISCOUNT SALE OF SUGAR SECTOR STOCKS - GRAB IT FOR LONG TERM

2012-01-07T16:36:00.005+05:30

I know, many of you will not support an idea of buying the shares of companies from sugar sector at this point of time.Yes, there is lot of negatives like lower sugar price,high interest burden,excess government control ...etc.But we can't ignore the fact that all these negatives and more are reflecting in the stock price of each and every sugar company. Most of them are trading at their 5 to 10 year lows and such a situation is surely an opportunity to buy these type cyclical stocks at rock bottom prices for investors with patience.Sugar companies are currently going through rough weather mainly because of lower product price worldwide .But this situation is expected to reverse in one year due to lower production.( Generally it is the nature of many agri commodities) .The expected rise in crude prices going forward may also influence the sugar price positively in coming years.Whenever the crude price moves higher and sugar price comes down large manufactorors like Brazil will surely give much preferance for the production of Ethanol over sugar and such a situation will create lower supply situation of sugar in world markets.Moreoevr the current worst situation may lead to the closure of many small sugar mills and the chances of a consolidation in this industry is very much.The most important factor at this point of time regarding the sugar industry in India is the high probability for a reduction in goverment control in this sector.Chances are very high for some favourable developments in this direction after the upcoming state elections.All together, I feels many sugar companies are value buys at current market price for a genuine investor with long term view.Consider at current market price , Shree Renuka @ Rs.26/- , Rajshree Sugar @ Rs.32/-,Dhampur Sugar@ Rs.31/- and Thiru Arooran @ Rs.70/-

Disclosure : I have vested interest in all these stocks.

DR AGARWAL'S EYE HOSPITAL - BOOK PROFIT

2012-01-03T05:55:00.001+05:30

I have recommended a BUY on Dr Agarwal's Eye Hospital on July 28,2010 @ Rs.71/- ( Click HERE for old posting ). Today it hits its life time high and currently trading @ Rs.127/-, an appreciation of about 75 % .One can book profit at current market price.

KIRLOSKAR ELECTRIC - REPEAT

2012-01-01T13:40:00.003+05:30

Kirloskar Electric company is the first company makes electric motors in India.

Started before independence, company’s portfolio includes more than 70 products

 related with power.It has 9 manufacturing units across India with a wide network

of sales and service team.Company’s products finding applications mainly in sectors

like Steel,Fertilizer, cement plants, Refineries ,Power generation and transmission,

Railway ..etc.Products List of Kirloskar Electric includes various types of A C Motors,

Transformers,Switchgear,D C Motors,D G Sets …etc.Most of the products are finding

applications in core sector industries and the demand for the same is reviving now.

Last year Company integrated its business and bring three companies – Kirloskar

Electric Company ,Kaytee Swithgear ltd and Kirloskar Power equipments

ltd under single fold.Company also  acquired Germany based

‘Lloyd Dynamowerke’ which makes electrical machines and drive systems for

industrial applications.

                                                                 Because of the lack of policies to generate

more power and higher coal prices ,in coming years chances are very higher for

severe shortage of power.In such a circumstances KSCL's DG set business is

expected to perform well. After few bad quarters KECL back into black in September

with a sale of Rs.232 Cr and a net profit of Rs.5.6 Cr .

At current market price of Rs.34/- there is not much risk in it.

AHLCON PARENTERALS - BOOK PROFIT

2011-12-27T16:02:00.001+05:30

I have recommended AHLCON PARENTERALS on June 10,2010 @ Rs.64/- ( Click HERE for old posting ). Today it hits its life time high and currently trading @ Rs.141/-, an appreciation of more than 100 % .One may sell at least half quantity at current market price and keep the balance cost free .Those who are not interested to take higher level of risk may exit completely .

SABERO ORGANICS GUJARAT LTD - BUY FOR LONG TERM

2011-12-25T09:42:00.003+05:30

Sabero Organics Gujarat is an agrochemicals manufacturer promoted by Chuganee family.Company producing various fungicides, herbicides , insecticides and other speciality chemicals. Company having manufacturing facilities in Gujarat,Jammu Kashmir ,Tamilnadu and marketing offices in Europe, Brazil, Argentina, Phillipines and Australia other than various parts of India..Sabero's products includes Acephate, Mancozeb, Chlorpyriphos, Glyphosate, Dichlorovos, Methamidophos and Propineb.A major portion of its products are exported to various countries in their own brand names and also supplying products to other companies including well known MNC's.About 65% of its total sales is generated from exports and company's major asset is its product registration of more than 250 products in 50 countries.Company having many products registrations and strong presence in Brazil which is one of the biggest agrochemical markets in the world.Sabero came to limelight in recent past after the acquisition of the company by south based Murugappa group .'Murugappa group'is a well reputed business group from South India with deep knowldge in Agriculture related businesses along with others.Success of companies like Coromandel International and EID Parry is best example for their expertise in this field.Other listed companies from the same group includes Carborundum Universal,Cholamandalam Investment,Tube Investment,Coromandel Engineering..etc
Coromandel bought this company at a steep premium of 80 % to then prevailing market price and the deal concluded @ Rs.160/- per share.Also it paid Rs.38.47 extra per share as a non compete fee to the promoters of Sabero.Coromandel's strong marketing network is a big boost to Sabero where the largest customers are more or less the same.Management expertise and deep pockets of Murugappa group is added advantages.Due to lower capacity utilisation and higher overhead costs Sabero posted losses in first two quarters of this FY.In a recent interview Mr.Kapil Mehan MD of Coromandel indicated that they have took over the management of Sabero only in third week of December and their first priority is to enhance the capacity utilisation.He also mentioned that they are expecting the company will back to black in another two quarters. Earlier in FY 2011, Sabero posted a turnover of Rs.412 Cr and a net profit of Rs.10 Cr.I believe the massive capacity of its plants and the ability of Murugappa group makes its a multibagger from current price of Rs.55/- which is almost 1/4 of of the acquisition price ( Rs.160 + non compete price of Rs.38.4/share) by Coromandel.

ORCHID CHEMICALS & PHARMACEUTICALS LTD - UPDATES

2011-12-21T21:07:00.001+05:30

Share price of Orchid Chemicals crashed from a level of Rs.300 to Rs.115 in this calendar year. Overall market crash and not so encouraging second quarter result was a reason for this down trend .But the most important reason was the uncertainty related with the redemption of FCCB ,which is due for redemption in February 2012.Now in a filing to stock exchanges , company informed that they have already tied up funds for FCCB redemption . This is a good news and share price is expected to recover .Those with a long term view may enter @ CMP of Rs.136/-

BIOCON LTD - BUY

2011-12-17T17:41:00.003+05:30

Biocon is one of the largest Biopharmaceutical company in India.Till recently company was mainly concentrating in statins which is a cholesterol lowering drug .But now company is seeking various growth opportunities in other segments and paying much attention for developing other biotechnology based branded formulations and contract research activities through its subsidiary Syngene and Clinical research through Clyngene.Branded formulation business is expected to grow about 30% in the coming year.Recently company launched 'INSUPEN' which is a reusable insulin pen.Company's agreement with foreign pharma companies for supply of products are also a positive step.Biocon's overseas operation in the countries like Malaysia ,Germany..etc are also moving in the right direction.Oral insulin is another important step which is going through clinical trials.Biocon's last quarter performance is a tad below expectations but the sharp cut in its share price makes it an attractive buy for long term investors .CMP is Rs.261/-

AUNDE INDIA - BOOK PROFIT

2011-12-15T11:50:00.001+05:30

Aunde India is one of our recommendation at Rs.18/- on 8th June 2011, which is currently trading around Rs.35/- ,an appreciation of about 100 % .One may book profit @ CMP .

Old Posting HERE

The Ups And Downs Of Investing In Cyclical Stocks

2011-12-13T20:41:00.001+05:30

Courtesy :Investopedia

Imagine being on a Ferris wheel: one minute you're on top of the world, the next you're at the bottom - and eager to head back up again. Investing in cyclical companies is much the same, except the the time it takes to go up and down, known as a business cycle, can last years.

What Are Cyclical Stocks?Identifying these companies is fairly straightforward. They often exist along industry lines. Automobile manufacturers, airlines, furniture, steel, paper, heavy machinery, hotels and expensive restaurants are the best examples. Profits and share prices of cyclical companies tend to follow the up and downs of the economy; that's why they are called cyclicals. When the economy booms, as it did in the go-go '90s, sales of things like cars, plane tickets and fine wines tend to thrive. On the other hand, cyclicals are prone to suffer in economic downturns. (For more on the business cycle, see Recession: What Does It Mean To Investors?)

Given the up-and-down nature of the economy and, consequently, that of cyclical stocks, successful cyclical investing requires careful timing. It is possible to make a lot of money if you time your way into these stocks at the bottom of a down cycle just ahead of an upturn. But investors can also lose substantial amounts if they buy at the wrong point in the cycle.

Comparing Cyclicals to Growth StocksAll companies do better when the economy is growing, but good growth companies, even in the worst trading conditions, still manage to turn in increased earnings per share year after year. In a downturn, growth for these companies may be slower than their long-term average, but it will still be an enduring feature.

Cyclicals, by contrast, respond more violently than growth stocks to economic changes. They can suffer mammoth losses during severe recessions and can have a hard time surviving until the next boom. But, when things do start to change for the better, dramatic swings from losses to profits can often far surpass expectations. Performance can even outpace growth stocks by a wide margin.

Investing in Cyclicals
So, when does it pay to buy them? Predicting an upswing can be awfully difficult, especially since many cyclical stocks start doing well many months before the economy comes out of a recession. Buying requires research and courage. On top of that, investors must get their timing perfect.

Investment guru Jim Slater offers investors some help. He studied how cyclical industries fared against key economic variables over a 15-year period. Data showed that falling interest rates are a key factor behind cyclicals' most successful years. Since falling rates normally stimulate the economy, cyclical stocks fare best when interest rates are falling. Conversely, in times of rising interest rates, cyclical stocks fare poorly. But Slater warns us to be careful: the first year of falling interest rates is also unlikely to be the right time to buy. He advises that it's best to buy in the last year of falling interest rates, just before they begin to rise again. This is when cyclicals tend to outperform growth stocks.

Before selecting a cyclical stock, it makes sense to pick an industry that is due for a bounce. In that industry, choose companies that look especially attractive. The biggest companies are often the safest. Smaller companies carry more risk, but they can also produce the most impressive returns.

Many investors look for companies with low P/E multiples, but for investing in cyclical stocks this strategy may not work well. Earnings of cyclical stocks fluctuate too much to make P/E a meaningful measure; moreover, cyclicals with low P/E multiples can frequently turn out to be a dangerous investment. A high P/E normally marks the bottom of the cycle, whereas a low multiple often signals the end of an upturn.

For investing in cyclicals, price-to-book multiples are better to use than the P/E. Prices at a discount to the book value offer an encouraging sign of future recovery. But when recovery is already well underway, these stocks typically fetch several times the book value. For instance, at the peak of a cycle, semiconductor manufacturers trade at three or four times book value.

Correct investment timing differs among cyclical sectors. Petrochemicals, cement, pulp and paper, and the like tend to move higher first. Once the recovery looks more certain, cyclical technology stocks, like semiconductors, normally follow. Tagging along near the end of the cycle are usually consumer companies, such as clothing stores, auto makers and airlines.

Insider buying, arguably, offers the strongest signal to buy. If a company is at the bottom of its cycle, directors and senior management will, by purchasing stock, demonstrate their confidence in the company fully recovering. (For more on how to research insider activity, see Keeping An Eye On The Activities Of Insiders And Institutions.)

Finally, keep a close eye on the company's balance sheet. A strong cash position can be very important, especially for investors who buy recovery stocks at the very bottom, where economic conditions are still poor. The company having plenty of cash gives these investors more time to confirm whether their strategy wisdom was a wise one.

Conclusion
Don't rely on cyclicals for long-term gains. If the economic outlook seems bleak, investors should be ready to unload cyclicals before these stocks tumble and end up back where they started. Investors stuck with cyclicals during a recession might have to wait five, 10 or even 15 years before these stocks return to the value they once had. Cyclicals make lousy buy-and-hold investments.

TATA CHEMICALS - REPEAT

2011-12-11T10:28:00.000+05:30

Tata Chemicals is a familiar company for Indian Investors.Considering the potential of Agriculture related sectors worldwide , this company deserves a position in the portfolio of any investor. Company is a leading manufacturer of Fertilisers and Soda Ash even in a global level.Through several acquisitions company has grown many fold in recent years. Company is also selling Iodised salt in different brand names like "TATA SALT','I-shakti''TOPP SALT'..etc.In the Fertiliser sector TCL manufacturing and selling Urea,Single super phosphates,Di-ammonium phosphate,Nitrogen phosphorous potassium complexes..etc The sharp rise in fertiliser prices in recent times is expected to help the company to post improved realisation in this sector.Company also having a joint venture with Ireland based Total Produce . Total Produce is the third largest fruit and vegetable distribution company in the world and Europe’s largest fresh produce provider.Through this joint venture company - named 'Khet Se '- Company offering fresh fruits and vegetables.As a brand extention , Tata Chemicals recently started selling pulses like chana, toor, urad and moong under the brand name I- Shakti.Along with its subsidiary Rallis India , Company is initiating a campaign called 'Grow More Pulses' as a knowledge sharing platform for farmers.Company's another initiative is 'The Tata Kisan Sansar'which is a network of about nearly 700 farmer resource centers that caters to more than 3.5 million farmers in 22000 villages in the northern and eastern part of India.Since it is not a micro cap and lot of reports are easily available about this company, I am not explaining much on this,but I feels this is the company from TATA group having maximum potential to grow in the next 10 year period.For the latest quarter ended September , on a consolidated basis company posted a jump of 116 % in its net profit. One should include it in your portfolio at CMP of Rs.350/-

HI-TECH GEARS - BUY

2011-12-06T18:47:00.002+05:30

Hi-Tech Gears is one of the largest manufacturers of auto components in India .Its product list includes Precision forging components,Engine Components and two wheeler parts.Company is a major supplier to Hero Motocorp,Honda Motors,Tata Motors,Caterpillar, Cummins..etc.It is also in export market and recorded a jump of 80% in exports in last financial year.Now company is developing some new products and also adding new markets like Brazil and U K. Company's management is share holder friendly and paying good dividend and issuing liberal bonus in regular interval.For the financial year ended March 2011 , Company posted a turnover of Rs.427 Cr and a net profit of Rs.35 cr .In the latest September quarter Sales were Rs.118 Cr and net profit were Rs.10 Cr .At current market price of Rs.121, Hi-Tech Gear is one of the safest bet from auto component sector.