Stock Market Updates

Jindal Poly Films will announce buyback on July 14

noreply@blogger.com (Dr. Krishna) — Mon, 07 Jul 2008 15:12:00 +0000

India’s largest producer of Polyester (PET) and Polypropylene (BOPP) films, Jindal Poly Films, will discuss buyback plans on July 14th board meeting. Shares rose by 11.87% on Monday to end at 214.35. Jindal Poly Films touched intra-day high of 229 after hearing buyback news. Promoters want to hike their stake from the current 55.2% to undisclosed stake. Future price movement will depend on amount of stake and price at which promoters will buyback them.

Company has sound fundamentals but bear market kept the stock price at low valuations even after announcing 100% rise in net profits in the last quarter. Rise in crude oil price may have some effect on profits in the coming quarters. Company was world’s largest single location (PET and BOPP) plant at Nasik. Company laid out aggressive expansion plans to become world largest player in Polypropylene films.

Promoters: B.C. Jindal Group.

Jindal Poly Films stake report:

Promoters: 55.2%
FIIs: 16.99%
Institutions: 12.89%
Public: 10.46%
Other Corporate: 4.45%

Jindal Poly Films stock price analysis:

CMP: 214.35
P/E: 4.9
EPS: 43.3
Book value: 327.8
1 year high-low: 349-150.

1 year target for Jindal Poly Films:

Bear market target: 260 (EPS of 52 and P/E of 5).
Bull market target: 380 (EPS of 54 and P/E of 7).

Verdict: It is a fundamentally sound company with low valuations and high book value. Buyback plans augur well for this small cap company. This packaging firm recorded 100% increase in net profit in FY2008 over FY07 (Rs 134 crore Vs Rs 65 crore). Company is improving profit margins for the last 4 years. Crude oil end products are raw materials for this industry. So rising crude oil prices remain a concern.

Note: It is difficult to predict about stock future in short term unless we know about amount of buyback stake and price of buyback.

DLF Board will consider buyback proposal

noreply@blogger.com (Dr. Krishna) — Wed, 02 Jul 2008 18:44:00 +0000

India’s largest Real Estate developer DLF saved the current turmoil in Real Estate stocks by announcing proposal to buy back its shares. DLF along with other real estate stocks lost heavily in the last one month by 40-70% due to interest rate hikes, low demand, over supply and liquidity tightening. Many analysts expected another 15-20% correction in these stocks. But DLF by announcing buy back consideration saved the sector.

Breaking news: DLF board will consider the proposal to buy back shares at its meeting on June 10th.

DLF shares rose by 16% to Rs 423 after the buyback proposal announcement. DLF share price touched Rs 439 during intraday.

Why DLF is considering buy-back?

1. DLF management felt that share price is way below its intrinsic value.
2. DLF has huge cash to buy back shares.
3. Company believes in the future prospects of the real estate sector.

My estimation: As company believes in the intrinsic value, buyback price should be above IPO price. DLF IPO issue price was Rs 525. Promoters have 86% stake in the company. So company may not buy more than 2% in the buyback offer. DLF has a very good management and they will definitely offer reasonable price for buy back. My guess is it will be around Rs 550. Except this buy back, this sector has no positive triggers in the coming days. Interest rates will increase in the next 1-2 months and demand will decrease especially on the retail side.

Note: Price rise will depend on how many shares company will buyback. I will provide updates on DLF buyback issue. But Realty sector will some correction in the coming days.

Best blog for long term investors www.stockmarketguide.in/

Stock idea: Balaji Telefilms stake sale

noreply@blogger.com (Dr. Krishna) — Fri, 27 Jun 2008 02:00:00 +0000

India’s number one broadcaster Star India is planning to sell its 26% stake in TV content provider Balaji Telefilms to a potential bidder. Star is holding its stake through Asian Broadcasting. Promoters are not willing to buy Star’s stake even though they have first right of refusal. Malaysia based Astro All Asia Networks is the front runner to buy the Star’s stake for premium. The acquirer should also need to buy another 20% through open offer. All the companies declined to comment on this news.

Balaji Telefilms which announced very good results in the last quarter is one of the few stocks which gained in the last one month. Being a zero debt company is another plus point for the company in these high interest rate times. If Star sells its stake, Balaji will be in better position to sell its content to a wide number of broadcasters which it is unable to do now due to its exclusive agreement with Star India.

Balaji Telefilms stake report:

Promoters: 41.8%
Star: 26%
Other foreign investors: 22.2%
Others: 10%

Balaji Telefilms Stock analysis:

CMP: 199.8
Probable open offer price: Above Rs 230
Short term target: Above Rs 220.

Verdict: Balaji Telefilms is a zero debt company and stake sale by Star will unlock value in the company for benefit of shareholders. Small holding by retail investors is another plus point. Buy Balaji Telefilms for short term gains.

Note: Closely follow news on stake sale.

Warning: All the global markets are trading in heavy losses and Indian markets will also fall heavily due to global sentiment and domestic political uncertainty. OPEC chairman statement about crude prices is another big worry. Finance Minister statement on inflation and probable inflation number on Friday will be around 11.2% are other negative triggers. Short term pull back rally will halt today.

Best blog for long term investors http://www.stockmarketguide.in/

Amara Raja batteries announced Bonus

noreply@blogger.com (Dr. Krishna) — Wed, 25 Jun 2008 04:09:00 +0000

Amara Raja board announced 1:2 bonus issue means you will get 1 share for every 2 held. This company is always an outperformer even in falling markets in most of the times. But Amara Raja results are disappointing. They announced fall in sales and net profit which is a really bad news.

Stock price:

CMP: 153.4

Best blog for long term investors http://www.stockmarketguide.in/

Breaking news: RBI increased repo rate and CRR

noreply@blogger.com (Dr. Krishna) — Tue, 24 Jun 2008 18:51:00 +0000

Reserve Bank of India raised short term lending rate (repo rate) and Cash Reserve Ratio (CRR) by 50 basis points to contain inflation. Inflation which was at 11.05% (13 year high) in the last week may cool off in July due to these monetary measures and fresh crop supplies into market. Banks will increase interest rates on home loans and personal loans which will affect the spending power. These measures will affect the economic growth and earnings will be downgraded for most of the sectors. RBI is scheduled to meet on July 29th for the quarterly review of monetary policy. RBI monetary steps to curb inflation:

1. Repo rate is increased from 8% to 8.5% with immediate effect.
2. CRR is increased by increased by 50 basis points to 8.75 per cent in two stages.
July 5: 8.5%
July 19: 8.75%

Effects on stock markets: Banks will increase PLR (prime lending rate) which will affect loan takers and also deposit rates. Those who have already taken loans need to pay high EMI due to increase interest rates.

This is a severe blow to Banking, Real Estate and Automobile sectors. Consumption power of people will reduce and people will spend less and these measures will have severe effect on liquidity.

Companies need to borrow money at higher interest rates which will show its impact in the Q2FY09 onwards. Government sacrificed growth to contain inflation. It will take 2-3 weeks to know the real effects of these monetary measures on inflation.

Note: Sensex will fall to below 14,000 levels and it is the best opportunity for long term investors who believe in India growth story to accumulate fundamentally good stocks. Stay away from inflation and crude oil sensitive stocks.

Best blog for long term investors http://www.stockmarketguide.in/

Gail India board will discuss Bonus issue

noreply@blogger.com (Dr. Krishna) — Sun, 22 Jun 2008 17:10:00 +0000

India’s largest natural gas transmission company Gail (India) will discuss about bonus issue at its board meeting on June 23rd. Investors are expecting 1:1/1:2 bonus announcement from the company. Even inter-ministerial committee (IMC) discussed recently about GAIL bonus announcement. So this is really a good news from PSU in these troubled times. Public held just 7.3% stake in the company while Government is the largest stake holder in GAIL India with 57.34% share.

According to rules, Public Sector Companies (PSUs) should have reserves and surplus more than three times of their paid-up capital. GAIL has 12 times more reserves than paid up capital. So GAIL is a strong bonus candidate. But company disappointed in the recent meetings and has not issued bonus shares in the recent times.

GAIL paid up capital: Rs 845.65 crore.
GAIL free reserves: Rs 10,547.26 crore.

GAIL (India) stock price analysis:

CMP: 379.6
Resistance: 391
Support: 371

Note: We have to wait and see how GAIL will be affected on Monday by political uncertainty and market sentiment.

Best blog for long term investors http://www.stockmarketguide.in/

Updates on GAIL:

GAIL board announced 1:2 bonus issue means you will get 1 bonus share for every 2 held. Another good news is advance tax numbers for GAIL are up by 149%.

Target for GAIL: 420440.

Stock idea: Atlas Copco India buyback offer

noreply@blogger.com (Dr. Krishna) — Sun, 22 Jun 2008 14:01:00 +0000

Industrial productivity solutions giant Atlas Copco India is planning to buy back its shares and the final decision will be announced on June 25th board meeting. This Swedish compression equipment major may delist the company after increasing promoter stake to more than 90% through buyback offer. Atals Copco is the number one player in the Indian air compressor market followed by Elgi equipments in the second place. It has 40% market share in the Rs 1,500 crore air compressor market. Parent company holds 84% stake in the company. They will announce buyback to increase their stake in the company to more than 90%. They will delist after that. That may be the company strategy. Atlas Copco announced 38.77% increase in net profit in the last quarter while sales rose by 28%.

Company shares rose touched upper circuit (20%, 1078) on June 16th after the announcement. Stock still has some upside as company may announce buyback price with 30-40% premium.

Atlas Copco shareholding pattern:

Promoters: 83.77%
Public: 12.73
Remaining 3.5% stock holding is held by institutions and FIIs. So public may demand huge price to sell their holdings.

Atals Copco stock price analysis: Stock gained more than 30% since the news came out but stock lost 5% on Friday due to market meltdown. Stock touched 1,218 during intra-day.

CMP: 1121.5
EPS: 39
P/E: 28.7
1 Year high-low: 1799-680

What will be the buyback offer price?

Many analysts are expecting that buy back price will be definitely above Rs 1,500.

Best blog for long term investors http://www.stockmarketguide.in

Contra stock pick: Asian Electronics

noreply@blogger.com (Dr. Krishna) — Thu, 19 Jun 2008 18:35:00 +0000

Asian Electronics fell sharply in the last 6 months due to very poor results in the Q3 FY07-08. After finding strong support at around 100, it is moving slowly upwards on the hope of good results. Risk takers can find short term opportunities in this stock.

Significant news: Results which will be announced on June 30th will decide stock future.

Asian Electronics stock price:

CMP: 117.4
P/E: 3.7
Book value: 118 (more than share price!)
EPS: 31.4
Face value: 5
1 year high-low: 589.9-101.5

Why this stock fell from 589 to 102?

Profit after tax in September 2007: 29.8 crore (sales 96.6 crore).
Profit after tax after December 2007: 4 crore (sales 44.3 crore).

Will it make a turn around?

1. Joint venture with Home Solutions Retail India, Future Group Company.
2. More than 220% fall in stock price.
3. Book value is more than share price.

Verdict: This stock is only for high risk takers who bet on turn around it its fortunes in Q4 FY2008 results on June 30th. If it announces good results, Asian Electronics will five quick 25-30% returns in bear market. If not, another bloodbath to below 100 levels.

Best blog for long term investors http://www.stockmarketguide.in

Sterlite and Tata Power in BSE Sensex

noreply@blogger.com (Dr. Krishna) — Sun, 15 Jun 2008 12:57:00 +0000

Bombay stock exchange index committee made changes to the indices of BSE i.e. BSE Sensex, BSE 100, BSE 200 and BSE 500. These changes will reflect in the indices of Bombay Stock Exchange from June 23rd onwards. Foreign investors still prefer Bombay stock exchange (BSE) while Indian investors and mutual funds prefer National Stock Exchange (NSE). Heavy weight Reliance Industries command 15% weightage in the BSE Sensex while Reliance commanded only 11.9% weightage in the Nifty.

BSE Sensex: Sterlite Industries and Tata Power are included in the BSE Sensex in place of Cipla and Ambuja Cements. Tata Power once again enters into Sensex after it was replaced by Reliance Communications in 2006. DLF and M&M are the recent entries into the Sensex.

New stocks in the BSE 100: Asian Paints, Bajaj Auto Limited, Bajaj Financial Services, Educomp Solutions, HDFC, MMTC, Mundra Port, NALCO, NMDC, Reliance Power and Welspun Gujarat are the newly inducted stocks in the BSE 100 index.

Stocks removed from BSE 100: BF Utilities, Bharat Electronics, Bosch Limited, Cummins India, Glaxo Smithkline, Hindustan Zinc, I-Flex Solutions, Patni Computers, Tech Mahindra, Titan Industries and Ultratech Cement.

Analysis: Index changes reflect the changes in sector preference. Have you seen the removal of many IT stocks from the index? Have you observed the inclination towards metal stocks? You should observe the changes in the macroeconomics of various sectors and invest accordingly.

Natco Pharma tied up with Mylan for Copaxone

noreply@blogger.com (Dr. Krishna) — Wed, 11 Jun 2008 03:37:00 +0000

Hyderabad based Natco Pharma tied up with Mylan to market “Copaxone”. Copaxone is a blockbuster drug developed by Teva which is used for Multiple Sclerosis. It has sales over $ 2 billion and many companies failed to crack the Copaxone. Natco Pharma succeeded in cracking this complex drug technology.

Natco Pharma along with other Hyderabad based Pharma companies Dr Reddys and Aurobindo Pharma are the underperformers in the stock market for the last 1-2 years. Natco Pharma may have to face legal hurdles before benefitting from this block buster drug. But tie-up with Mylan will help in this regard. Teva will go any extent to delay the launch.

Natco Pharma stock price:

CMP: 70.8
P/E: 6.3

Verdict: Natco Pharma stock will benefit in short term due to this news and sentiment of investors towards Pharma sector. Long term benefits will depend on legal outcomes. Mylan may take 18-24 months to launch Copaxone in American markets.

Welspun power bought Grasim’s sponge iron business

noreply@blogger.com (Dr. Krishna) — Tue, 10 Jun 2008 16:27:00 +0000

Welspun Power and Steel Limited bought sponge iron business (Vikram Ispat) of Grasim Industries for 1,030 crore. Grasim will form A SPV and Welspun later will bought it. Whole process will be completed within 6 months. Grasim shares will rise due to this news on Wednesday. Grasim is a flag ship cement company of Aditya Vikram Birla group.

Grasim Industries:

CMP: 2,214.5
Target: 2250 and 2279.
Support: 2196.

About Vikram Ispat:

1. This is a sponge iron business unit of Grasim.
2. Annual sales stood at Rs 950 crore.
3. Unit was located at Raigad in Maharashtra.

Welspun Steel is an unlisted sponge iron company of Welspun group which is operating from Gujarat.

Divis Labs announced good FY08 results

noreply@blogger.com (Dr. Krishna) — Sun, 08 Jun 2008 01:54:00 +0000

Hyderabad based Divis Labs announced good results for FY2008 while another Crams major Dishman announced ordinary results. Divis Labs is the safe investment option for long term investors.

Divis Labs FY08 results: Divis Labs announced 87% growth over previous year. It announced net profit of Rs 348 crore in FY08 over Rs 186 crore in FY07. Sales grew by 43% over the previous year. Divis once again gave importance to profits over sales. Company announced dividend of Rs 4 per share (200% dividend). Investors expected bonus issue from Divis but they kept money for expansion.

Nutraceuticals facility which was started operations from June 1st will add to the balance sheet in the coming years along with CRAMS. Both Are high margin businesses. Its marginal fall in net profit in Q4FY08 (94.3 crore) over Q7FY07 (101 crore) is mainly due to huge investments and forex losses.

Verdict: Good stock for long term. Click here to know more about Divis Labs share. Accumulate this great stock on every fall.

Bajaj Financial Services will list on Monday

noreply@blogger.com (Dr. Krishna) — Sun, 25 May 2008 07:20:00 +0000

Bajaj financial services (BFL) will list on Monday (May 26) in both BSE and BSE. It may list around Rs 550 and touch 650-700 during intra-day. Bajaj Financial Services Limited has interests in high growth sectors like insurance and wind farm business. They are also planning to enter into asset management business. Even though company announced Rs 32.7 crore loss in FY2007-08, future prospects are looking bright. BFL has 7% share in life insurance business and 8.5% market share in general insurance. They are also searching for partners to enter into mutual fund business.

Details of de-merger:

Bajaj Auto Limited board approved for de-merger of Bajaj Auto into three companies on March 17, 2007.

3 new companies:

1. Bajaj Auto Limited (BAL).
2. Bajaj Financial services Limited (BFL).
3. Bajaj Holdings and Investment Limited (BHIL).

BFL FY2008 Results:

Revenue: Rs 12,230 crore.
Loss: Rs 32.7 crore.

Bajaj Financial Services stock price target:

Face value: 5.

1. List around Rs 500-600.
2. Touch 650-700.

Verdict: BFL will good returns if you can stay invested in the stock for 2-3 years. I prefer Reliance Capital for better returns over long term than BFL. But traders can make some on Monday if market sentiment is good which is unlikely due to Karnataka results and global pains.

Angel Broking launched Mobile Connect service

noreply@blogger.com (Dr. Krishna) — Wed, 21 May 2008 05:53:00 +0000

Angel Broking launched “Mobile Connect (M-Connect) service to get stock market news, alerts and analysis from your mobile. This service is available for both Angel customers and non-Angel clients. But Angel Broking customers can only have access to back office data from their mobile phones. This M-Connect mobile application is free for both Angel clients and non-Angel clients. It is the first Indian stock broking arm to offer complete integration of customer portfolio with their mobile phone. Angel broking has the largest sub-broker network on NSE with 9,600 trading terminals. M-Connect service is especially useful for its 4.5 lakh retail customers.

Features of M- Connect service:

1. Real time stock market news and important BSE and NSE announcements.
2. Live updates of major world stock market indices (American, Asian and Brazil stock markets). 3. You can able to track your favourite stocks by setting up watch list.
4. You will get expert advice on stock market moments and stock price targets.
5. Real time price updates of stocks, mutual fund NAVs and commodity prices.
6. All the above features are available on a single platform on your mobile.
7. Angel Broking clients can have access to their portfolio and margin positions.

Note: You need to have Java enabled Mobile phone with GPRS connectivity. Your phone should have a mobile browser.

How to download M-Connect service?

you are an Angel Broking customer: You can use Mobile Connect service through the following options.

1. Send MCON to 5757587 to receive a link to download M-Connect on Mobile.
2. Go to http://mcon.angeltrade.com from your WAP Browser.

If you are not an Angel Broking customer:

Click here to register for “Mobile Connect” service or send SMS MCON to 5757587.

opelling stock brokers to provide innovative services to their clients. We can expect more value added services from stock brokers to attrat new investors.

Indian Stock Market investment ideas

noreply@blogger.com (Dr. Krishna) — Mon, 19 May 2008 03:29:00 +0000

I am here listing short term investment ideas for Indian investors. Alert investors can make quick gains if they exit smartly after making quick gains.

6 Stock investment ideas:

1. Crude oil will touch $ 150 within one month: Offshoring companies like Aban Offshore and Great Offshore will continue to make new highs. Cairn Energy will also benefit. More losses for oil marketing companies like HPCL and BPCL etc.

2. No entry for new and foreign players in 3-G spectrum auction: Quick gains in Telecom stocks. Watch out for Reliance Communications.

3. Rubber is at new high:Invest in Harrisons Malayalam and stay away from Tyre companies.

4. Rupee depreciation: Contrary to popular expectations, it is a loss for IT companies. They have hedged against Rupee.

5. Coke will rise in medium term: Invest in Gujarat NRE Coke with 6-9 month duration.

6. Inflation: It will continue to rise. Stay away from sensitive sectors like Banking, Real Estate, Auto, Cement and Steel etc.

Smart investors can make quick gains in the coming days if they carefully invest in these stock ideas. Good Luck.

Note: Due to rupee depreciation, Foreign investors are making little money in dollar terms. So they may opt for selling.

Stock split: MIC Electronics

noreply@blogger.com (Dr. Krishna) — Sun, 11 May 2008 15:08:00 +0000

MIC Electronics will consider splitting its shares from face value Rs 10 to 5 shares of face value Rs 2 in the board meeting which will be held on May 19. Company informed regarding stock split to the Bombay Stock Exchange. MIC Electronics is in the highly profitable LED business and is a safe investment for long term investors.

This stock gave phenomenal 150% returns to investors in the last 9 months. But stock split may not give much return to the new investors in the short term as MIC Electronics gained more than 40% in the last one month. Due to large order book and insignificant competition, this scrip will have good growth opportunities in the display business.

Analysis of MIC Electronics stock:

CMP (BSE): 905
P/E: 30.

Verdict: Long term investors can safely buy this stock for 50-60% returns within 12-15 months. MIC Electronics once again exceeded analysts’ expectations in the recently announced results. Conservative investors should wait for any fall which is common in this scrip due to unknown reasons.

Click here to read more about MIC Electronics stock analysis.

REL is now Reliance Infrastructure

noreply@blogger.com (Dr. Krishna) — Wed, 07 May 2008 10:07:00 +0000

Reliance Energy of ADAG was changed its name to “Reliance Infrastructure Limited”. Reliance Infrastructure is better suited than Reliance Energy as the company is now not only in the power business but also into SEZs, Real Estate, Airports and other infrastructure related activities. Management is aggressively buying back shares as company valuations will raise in coming quarters. They are in the process of designing new logo for Reliance Infrastructure. Investors learn to differentiate between Anil Ambani led “Reliance Infrastructure Limited” and Mukhesh Ambani led “Reliance Industrial Infrastructure Limited”.

Trading symbol:

Old symbol: REL
New Symbol: RELINFRA.
New symbol will come into effect from May 16, 2008 onwards.

Reliance Power bonus issue record date:

Reliance Power issued bonus shares in 5:3 ratio means you will get 2 shares for every 5 shares you held. Record date is June 2 means you need to held Reliance Power shares in your demat account on that record date.

Indian Stock pick: Sun TV network

noreply@blogger.com (Dr. Krishna) — Mon, 05 May 2008 02:22:00 +0000

South Indian media giant Sun TV network was in limelight in Indian stock markets on Friday. Sun TV which had grown rapidly in the last 5 years has slowed down a little bit. Its investments in FM and Sun Direct will take time to give profits. But Sun TV strengthened its TV business in southern states. Its print media business is also doing well. But this stock needs fresh triggers to break its resistance levels. Top 3 pay broadcasters in South Asia:

1. Sun TV network: It occupied first slot in South Asia.
2. Zee Network.
3. On Media: Korean company.
4. Star Network: Margins are shrinking.

CMP: 346.
P/E: 34.

Why I am bullish on Sun TV Network?

1. Numero Uno in all four Southern states.
2. Sun Direct, its DTH arm was launched in FY08 and will see better revenues in the coming years.
3. They are patching up with DMK which will enhance its business prospects.
4. It has Kalanithi Maran, young genius in media business.
5. Rumours of stake sale to foreign investors which will raise valuations.
6. Sun TV holds FM licenses for 45 radio stations. It already launched 32 FM radio stations.

7. It may launch English news daily in the coming days, according to insiders.

Company weaknesses:

1. Negligible presence in the fast growing internet business.
2. If Marans will not patch up immediately with Karunanidhi family, they will face political obstacles.

3. Needs to strengthen its position in Northern India.

Verdict: It is a good stock for long term investors. But Marans need to act aggressively in DTH sector otherwise Big TV will grab lion's share. Don’t hesitate to take long positions in this stock if it falls to below 310 levels. With rising consumption and affluence levels in southern states, Sun TV network is ideally placed to grab new opportunities.

Stock Analysis: Power Grid Corporation of India

noreply@blogger.com (Dr. Krishna) — Thu, 01 May 2008 20:23:00 +0000

Power Grid Corporation of India (PGCIL) got “Navaratna” status from Government. Power Grid is also planning to share its huge infrastructure with broadcasters. Other Navaratna companies are NTPC, ONGC, and BHEL etc. Power Grid operates in Telecom, Construction, Consultancy, and Transmission and operation businesses. Government is planning to spend Rs 75,000 crore on transmission of which 55,000 crore will be invested in Power Grid. Government holds 86.4% stake in Power Grid Corporation of India. Benefit: Power grid board can now take independent investment decisions up to 1,000 crore or 15% of net worth due to Navaratna status.

Power grid Stock analysis:

CMP: 105.5.

P/E is at 31 – which is somewhat high for a Government company.

Power Grid announced net profit of Rs 1420 crore for financial year 2008 against Rs 1230 crore for financial year 2007. In the IPO, Power Grid shares were issued at Rs 52 and listed at around 90. During bull phase, it crossed Rs 160.

Verdict: It is a fundamentally sound company and is doing business in high growth power sector. But being a public sector company to justify such valuations, it needs to do miracles which are generally not happen in Government companies. Only BHEL did such miracles. Can Power Grid do?

India Stock analysis: Reliance Communications

noreply@blogger.com (Dr. Krishna) — Thu, 01 May 2008 10:01:00 +0000

Reliance Communications announced 46% rise in net profit in the last quarter and 70% increase in annual net profit. Like Bharti Airtel, Reliance Communications had also beaten analyst expectations in this quarter. R-Com has 48 million customers and is second largest telecom operator behind Bharti Airtel. It added over 18 million new subscribers in the current financial year.

Negative news: Supreme Court ordered Reliance Communications to pay ADC of Rs 400 crore to BSNL.

Reliance Communications:

CMP: 577.8

P/E: around 32. Its real value will be unlocked when Reliance Infratel and Globalcom are listed.

Short term: Difficult to estimate. Profit booking and market sentiment will affect stock price.

1-year target: 700- 720.
2-year target: 950-1000.

Road ahead:

Short term is looking a little bit complicated but a safe investment for long term investors.

Positive aspects:

1. It will roll out GSM services from December onwards. This will be a major trigger for new growth opportunities. Reliance Communications is the only national operator providing GSM and CDMA services.

2. Telecom story is still intact. New subscriber numbers are still encouraging.

3. It entered into lucrative IT space by announcing Reliance Technology Services- another growth opportunity.

4. It will soon launch its DTH service through “Big TV” brand.

5. Reliance Communications will list its global arm “Globalcom” as a separate entity.

6. It will list tower business (Reliance Infratel) within a short period of time. Both the above listings will unlock value in this communications giant.

7. Broadband usage will increase in the coming years.

8. Strong and aggressive Anil Ambani leadership skills.

Negative aspects:

1. Price wars will reduce margins. Mobile number portability will affect subscriber numbers.
2. “Big TV” DTH service will need big funding in the initial years.
3. Drop in Average Revenue Per User (ARPU).
4. Drop in average minutes of usage per subscriber from 449 to 430.

Verdict: Reliance Communications is in a better position to capitalise on new opportunities in telecommunications sector than the new entrants. But R-Com margins will be affected in short term due to increase in price wars and rise in input costs due to DTH foray. But for long term investors, it is one of the best stocks in the market today. Accumulate on every fall and invest in R-Com for 2 years.

Sesa Goa announced dividend, stock split and Bonus

noreply@blogger.com (Dr. Krishna) — Wed, 30 Apr 2008 01:40:00 +0000

Sesa Goa reported 250% increase in net profit in the last quarter (7.98 billion Vs 2.52 billion). This growth is partially aided by increased demand from China and rise in iron ore exports. Total income rose to Rs 17.32 billion from Rs 8.32 billion. Sesa Goa board approved stock split and 1:1 bonus issue.

Sesa Goa is now trading at Rs 4,172 due to sharp rise in the last 2 days.

Sesa Goa board decisions:

Dividend: Rs 30 per share.

Stock split and Bonus:

Sesa Goa announced 1 bonus share for each share held and stock (face value 10) will be split into 10 stocks of face value 1. So if you bought 10 shares at current face value of 10, you will get 200 shares of face value 1 and Rs 30 dividend per share. Bumper Bonanza for share holders. Thank you.

Ex: If you buy 10 shares at Rs 3,000 (Total initial investment is 30,000). Your investment now stands at 88,000 (considering yesterday’s price if you include split, bonus and dividend). Phenomenal returns in a bear market.

Stock picks: India Infoline and Triveni Engineering

noreply@blogger.com (Dr. Krishna) — Sun, 27 Apr 2008 18:56:00 +0000

Financial company India Infoline and Sugar manufacturer Triveni Engineering announced wonderful results in this quarter. India Infoline board approved stock split and share rose steeply on Friday. Sugar industry will see good time in the coming days due to decrese in sugarcane production.

India Infoline:

Consolidated net profit of the India Infoline jumped by 2.67 times for the quarter ended March, 2008.

Stock split: Board approved stock split from face value Rs 10 to Rs 2 and also announced dividend.

CMP: 988; Face value: Rs 10.
Target Price: 220-230; Face value: Rs 2.

India Infoline has beaten expectations and Congrats to Prabhudas Leeladhar research team for recommending this stock at around Rs 750. Some cool investors will earn good money who invested in this share after seeing their advanced tax numbers.

Triveni Engineering:

Triveni Engineering net profit increased by 6 times from Rs 5.4 crore to Rs 34.2 crore. Sugar industry will be going to see good times in the next 2-3 quarters due to decrease in production of sugarcane. According to Reuters, Triveni Engineering will see more profits in the next 2 quarters.

CMP: 122.
1 monthTarget: 150.
6 month target: 180-200.

I am more bullish on Triveni Engineering than India Infoline. Stock split coupled with good numbers will make India Infoline - a good buy for short term.

Stock alert: Sesa Goa - Stock split and Bonus issue

noreply@blogger.com (Dr. Krishna) — Sun, 27 Apr 2008 06:21:00 +0000

India's largest Iron ore exporter Sesa Goa will be the stock of the week for Indian Stock Market investors. Its board will discuss stock split and bonus issue matters at its meeting on April 28. About Sesa Goa stock:

Current market price: 3,500.

Target: 3,800-4,000.

Current face value: 10.

Why I am bullish on Sesa Goa:

1. Stock split which will increase liquidity.
2. Bonus issue.
3. Low valuations (P/E is just around 15).
4. Results are going to be good.
5. Regular dividend payer which is a good omen in bear market.
6. Sesa Goa is the number one iron ore exporter in India.

Note: Government interference over steel prices and RBI monetary policy may spoil the honeymoon. Sesa Goa already discounted some of its positives as some brokers already knew the inside news about stock split and bonus.

Sesa Goa activities:

1. Iron ore mining activities in Goa, Karnataka and Orissa and exports Iron ore.
2. Manufacturer of metallurgical coke and pig iron.
3. Partial activity in ship building.

Note: I have Sesa Goa in my stock portfolio. I am not responsible for your investment decisions.