Stocks Center

Rajesh Exports: Analysis of the Company in Brief

noreply@blogger.com (Chinmay) — Sat, 16 Jul 2011 18:30:00 +0000

Introduction about the business:
Rajesh Exports introduces itself as a gold and diamond jewellery manufacturer. They procure the raw gold from natural sources (mines), they refine that gold, they twist and turn it into jewellery at their Bangalore plant. And they also have a new and growing presence in the retail distribution, apart from selling the refined jewellery to the established retailers and other consumers. This is the broad picture of what they're doing.

Financials:
Their growth in the topline hasn't resulted to an equivalent growth in the bottomline. Their topline has a direct impact from world gold prices. As a refiner, you tend to benefit when raw material prices are in an uptrend, but since they don't grow perennially, they're bound to be ups and downs, and with gold, the downs seem to be less. The company hasn't been able to capitalize on the increase in gold prices, and the last quarter's margins were a poor 0.8%. However, given the country India, the gold and jewellery business is a sustainable one in and of itself.

The company has a reserve base of Rs. 1567 cr as of the annual figures posted for FY11. From 2006-07 to 2010-11, yearly profits have ranged from 80-250 crores on a topline ranging from 6,000cr to 21,000cr! There has been negligible depreciation, which makes me think if the entire business model is based on trading of gold and jewellery, which seems to be more likely. With rising interest expenditure (and slightly stable to rising gold prices in the past quarter), I would be interested to find out their performance for the June quarter.

The Board has recommended a dividend of Rs. 0.6 for the last year, as against Re. 1 for the "year des previous".

At Rs. 110 a share, the stock prices values the enterprise to 3,255cr. Now if we move in to the balance sheet (as at filing of '10 numbers), the company had total debt of around 2,086cr. It is operating and churning out meagre profits, the growth hasn't come (in terms of the bottom line) over the years. Assuming an upward of 250cr profit for the next two years, it still is an expensive proposition at 3,255 cr.

Verdict:
I would not understand why someone would buy this stock. Speculations aside, the business has historically not been heavy on the margins. The only significant thing about this entity is the enormous amount of business (only in terms of the turnover in currency). However, the value addition that entails the retail segment which they are pursuing opens up opportunities in a country like India. A steady business over the years, and goodwill will be of sure help. The risk factor would be the premium the stock has priced in at the current price. It may be a play for traders, but for a long term investor, it doesn't make sense for me to enter the stock at this price. Better put money in Gold ETFs directly if you're so fond of the metal. Either way, I would stay away. It's not the price to enter.

XL Energy: Fundamentals

noreply@blogger.com (Chinmay) — Sun, 09 Jan 2011 06:07:00 +0000

XL Energy was earlier known as XL Telecom & Energy Ltd.

The company used to supply telecom equipment and cables to service providers such as BSNL in its hey days. It has also been present in the field of solar energy.

The company saw its business fall down- in the telecoms space. The business that had grown with BSNL saw the decline as there was no more of it later. Since then the stock has taken a heavy beating, falling from levels as high as 500 to 19.

When people are considering buying into this stock, they should know the following at the least:

1) The company's business has been reoriented to energy. It claims to be supplying solar energy equipment. The clients are unknown, and the business is very less transparent.
2) It claims to have a subsidiary in Spain that has started building solar power plants and aims to expand rapidly in solar space in Italy and Spain. As of now, only one of these plants has been operational and the others may take a large gestation period.
3) The balance sheet has taken a huge hit, and the company has undergone debt restructuring.
4) The announcements of the company look vague, though they try to give a promising outlook.
5) Goldman Sachs has picked up a large stake (about 8%) as a result of FCCB conversion, and has recently offloaded some stake, booking a loss.

Although turnover had totally vanished, it is returning slowly. It has a market cap if 45 cr at current market price; has large debt on the books, has large operational expenditure and is clearly net cash negative. That the stock price is still at a premium to the nominal value is a surprise if you go look at the financial performance of the last few quarters.

The contrarian would still bet on it- if the sales are a result of sales of solar panels to real clients, and if they pick up once again in the coming quarters, the stock may show some improvement- although the really large debt on the books may never allow the sales to beat the expenditure, and we can see losses for consecutive quarters- if not years, by this simple fact. And mounting negative cash flows can defeat the business sense altogether- the company may raise more debt or expand equity.

A risk averse investor would avoid this stock, but if you really feel like betting your bucks on a really large turnaround, and booming sales of solar panels to european markets where clients are unidentifiable and the company's management unclear, and this may all turn out to be good, you can go ahead, and make a killing. The risk is there, the stock is battered. Goldman Sachs is still holding a large stake, waiting for a turnaround.

... and we're back!

noreply@blogger.com (Chinmay) — Thu, 06 Jan 2011 13:03:00 +0000

We've been inactive for almost a year now.

For those who've subscribed and have forgotten, you used to read this email/blog for economic insight and the fundamental stock views on BSE/NSE listed stocks.

A lot has changed in the past one year, and some of us have made money, while some, were not fortunate as much.

This email/blog is just to say a hi! and a happy new year to all readers/patrons. And of course, remind you that this web page you once frequented for checking out fundamentals analysis and economic news and views is still un-dead.

:-)

Wait for my first post! (Again)

Fundamentals Analysis: GTL Infrastructure Ltd

noreply@blogger.com (Chinmay) — Mon, 18 Jan 2010 21:18:00 +0000

About the company
GTL Infrastructure Ltd ("GTL Infra") offers passive infrastructure to wireless telecom operators. In more colloquial wordings, it owns those mobile "towers". It is now the world's largest independent tower company, and aims to have a portfolio of 50,000 towers across India. The company is part of the Global Group and is a pioneer in its field. It has a massive network of towers, supporting the large passive infrastructure that is needed across the country for wireless telecom operations.

Sector Outlook
The telecom sector is maturing now, but with new entrants and the growing population- it remains an exciting place. The sector (telecom/infrastructure) where GTL Infra lies in is the backend of the telecom sector. The sector is particularly very important as it supports the basis of the future of telecommunications- wireless telecom. New technologies and innovations are the only ways to outperformance in this sector. "The more, the merrier" - as more and more telecom operators come to India, the telecom equipment/infrastructure sector will see growth. However, as the front end margins would crash as a result of negative competition, this might have an impact on the sector under consideration. This, however, remains to be seen- and is just a conjecture.

GTL Infra, per se
GTL Infra has been growing rapidly over the past quarters, with Quarter-on-Quarter growth in revenues clocking 10% plus. It offers its infrastructure to leading mobile operators in the country. It has built around 9400 towers in the country, and the tower portfolio is seen to expand- adding to the revenues. It is also working on in-building-solutions, and expanding its services portfolio in this direction.

Financials
The revenues are growing at a nice rate, however, due to the high capital expenditure incurred in setting up the business and allied activities, the company has high debt. This is reflected in the high interest expenditure in its accounts, and this impacts the net profit negatively. The operating profit margins are high, very high indeed- more than 70%. The net profit margins take a beating due to the high debt costs.

Valuation and Historic Price
It went for a rights issue in 2007, at the interesting ratio of 1:1, at par face value. The stock traded at an all time high of 106.5 on the BSE in 2008. Its all time low is Rs. 27.6 and its LTP is Rs. 44.7. At Rs. 44.7, the P/E notwithstanding, buying the stock implies betting bigtime on the prospects of its tower portfolio- which is rational too. This stock is and has been expensive, considering the price at which it is traded vis-a-vis the EPS (P/E). The total share capital is 956 cr of Rs. 10 shares. The EPS will take time to climb up, and so will the share price.

StocksCenter Verdict
The stock is expensively priced at the moment. If one is bullish on the telecom infrastructure sector, and one does have reasons to be so, GTL Infra is a good candidate for long term investing. Again, the EPS will take time to climb up, and a killing can be made in the long term- when, hopefully, its balance sheet recovers.

Fundamentals Analysis: Parekh Aluminex

noreply@blogger.com (Chinmay) — Sun, 10 Jan 2010 17:50:00 +0000

About the company
Parekh Aluminex is India's largest aluminum foil containers, aluminum foils and allied products manufacturer. It is an established company, and a leader in its industry. In the organized sector, it commands upto 70% market share.

Sector Outlook
The industry in which Parekh Aluminex operates is in a very nascent stage, and it is a pioneer. The raw materials command a large amount of operating costs, and thus affect margins very directly. Aluminum prices were down till now, and with demand picking up, they are seen to rise- a negative, if the company hasn't hedged well.

Parekh Aluminex's current position
The topline of Parekh Aluminex is growing at a CAGR of over 50%. From a topline of Rs. 102 cr in 2006, the company has grown to posting a topline of Rs. 421 cr in 2008. The company expects 30% growth in the next fiscal. Exports constitute more than a third of the total revenues of the company, so a revival in the world markets would augur well for the company.

Parekh Aluminex had concluded significant capacity addition last year- and this allowed them to increase their topline by a significant amount. This capacity addition was made possible by closure through debt, and interest costs for the company are rising rapidly. This is a negative.

They've already notched 270 cr of sales in the first two quarters. The company is indeed growing at a very high pace. Promoter holding is low, but it has increased over the past year from 24% to 34%. Long term debt programs of the company have received a rating of A- by CARE. This means, the credit risk is low- affirming the company's capacity to handle debt.

Valuation
The company now trades at a P/E of close to 5, against an industry P/E of 17. The market has discounted the debt of the company in this valuation- and it doesn't expect the company's bottomline (or topline too? maybe.) to grow as fast now. The results of the coming 4 quarters of this calendar year matter a lot. And that would gain the markets' sentiment. The stock had reached a high of Rs. 301 during the bull run of 2007, and now trades at Rs. 157 a share as on Friday's(8/jan/10) close. It reached a low of Rs. 45.15 in 2009. It seems to be trading at fair value- but a lot depends on the market sentiment, which would be affected by the Q3 earnings season and the budget.

Fundamentals Analysis: ABG Shipyard

noreply@blogger.com (Chinmay) — Sat, 09 Jan 2010 15:56:00 +0000

About the Company
ABG Shipyard is the flagship company of the ABG Group. It is India's largest private sector shipbuilding company. ABG Shipyard builds a variety of ships including bulk carriers, interceptor boats, anchor handling tugs, etc. As on May 2009, its order book was of Rs. 12470 cr. This is almost double the order book of its nearest competitor in the private sector, ie Bharati Shipyard. (We're not considering Pipavav, as it is yet to show results, and most of its orders are under arbitration.)

Sector Outlook
The shipbuilding sector is one of the worst hit sectors of the economy, due to the Great Recession. New orders have stopped coming in for most companies, as fleet owners opt for second hand vessels instead of new ones. Ship repair continues to be a recession free industry.

ABG Shipyards' current position
Currently, ABG Shipyard has a strong order book of Rs. 12,470 cr (as on May09). Much of the order book is unexecuted since ABG Shipyard is under capacity expansion, which would be concluded soon, if it hasn't already been. Consequently, the coming results should be very good. Also, ABG Shipyard is keen to buy Western India Shipyard, Goa. Western India Shipyard is mostly a Ship Repairs company and would add significantly to ABG's portfolio of services, apart from giving it a geographic location outside Gujarat, where both of its current yards are located. Also, the full operationalization of the Dahej Shipyard would mean tremendous capacity addition in terms of rig building. That was also a reason why ABG Shipyard was keen to buy a controlling stake in Great Offshore. ABG Shipyard has had to accept 15% of Great Offshore shares; which were tendered in the open offer. It will have to pay a hefty price of Rs. 520 per share, against the CMP of around Rs. 475. It already made short term gains on Great Offshore, when it sold its 8% stake at the start of the offer. It is believed that they will sooner or later sell this holding, in order not to stretch their interest costs.

Also, ABG Shipyard is promoted by Rishi Agarwal, nephew of Shashi Ruia. So, it is natural to assume that it will be getting orders from Essar Shipping.

Financials
ABG Shipyard has a lot of debt on its books, and interest costs would rise. It is, however, entitled to government subsidies worth around Rs. 1,700 cr. Its turnover is seen to rise, and will post increasing numbers this and the following quarters, as it executes pending orders. Dividend yield is low, and so are future expectations. The P/E ratio is 6.47.

(in Cr.)	Sep-09	Jun-09	FY08-09
Revenue	401.58	393.11	1,412.20
Net Profit	45.86	47.92	171.10
EPS	9.01	9.41	33.60
EPS-TTM	37.67	33.78	33.60
Cash EPS	9.92	10.30	36.45

Historic prices
ABG Shipyard reached a high of Rs. 1045 in 2007, and a low of Rs. 62 in March '09. It currently trades at Rs. 200+ (closing 217.5 on BSE, 8/Jan/10)

Year	Open Price	High Price	Low Price	Close Price	No. of Shares	No. of Trades	Total Turnover(Rs.)	* Spread (Rs.)
Year	Open Price	High Price	Low Price	Close Price	No. of Shares	No. of Trades	Total Turnover(Rs.)	H - L	C - O
2005	280.00	304.70	261.55	287.75	22455759	231630	6,343,297,450.00	43.15	7.75
2006	289.40	425.00	199.10	260.50	26094047	341819	8,418,558,769.00	225.90	-28.90
2007	262.80	1,045.00	260.00	992.30	18122640	289945	8,520,235,263.00	785.00	729.50
2008	1,029.95	1,029.95	80.05	133.40	8845336	168128	3,186,442,712.00	949.90	-896.55
2009	134.10	276.80	62.00	211.75	69718855	879860	10,413,725,832.00	214.80	77.65
2010	213.30	222.00	209.00	217.50	586072	10747	126,910,883.00	13.00	4.20

Investment opinion
ABG Shipyard is a long term investment candidate. As is with such companies, one has to give time to investments. Private shipbuilding will be in focus in the coming years. With a strong order book, and a new facility at Dahej, ABG Shipyard looks solid. However, debts are high. Government focus on this sector has been subdued, over the past few years, since 2002 when it announced subsidies for private shipbuilders. Also, what it does with the Great Offshore stake needs to be seen.

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noreply@blogger.com (Chinmay) — Fri, 08 Jan 2010 17:27:00 +0000

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Pipavav Shipyard- Cancellation of Order

noreply@blogger.com (Chinmay) — Fri, 08 Jan 2010 12:43:00 +0000

Pipavav Shipyard lost an order worth $ 36 million.

The announcement on the BSE, which came today, January 8 2010, is worded as:
Pipavav Shipyard Ltd has informed BSE that Setaf sas of France, one of the customers of the Company has cancelled the order for one 74,500 DWT Panamax Vessel with aggregate contract value of US$ 36.00 million.

This vessel was to have been delivered in 2009, but was delayed. The installation of the Gollath crane was delayed on account of delay in issue of visas for expatriate Chinese workmen.

Putting things into perspective, Pipavav Shipyard came out with an IPO in September last year. In the red herring prospectus, they had mentioned the following:

are engaged in arbitration with Setaf s.a.s. (“Setaf”) regarding whether it has the right to cancel one or more of four firm order agreements for Panamax bulk-carriers of 74,500 DWT each, such orders having an aggregate value of US$ 144 million (Rs. 6,893 million), but we are also engaged in simultaneous discussions with Setaf in respect of the refund guarantees relating to these orders and are seeking to preserve these orders

If the vessel had to be delivered in 2009, then Pipavav Shipyard is certainly hiding something more. Also, will this hit the stock or not? That would be interesting to see on Monday.

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noreply@blogger.com (Chinmay) — Wed, 06 Jan 2010 10:04:00 +0000

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Is BNP Paribas extremely bullish on India?

noreply@blogger.com (Chinmay) — Wed, 06 Jan 2010 06:49:00 +0000

I turned on CNBC TV18 this morning to find Manishi Raychaudhuri (MD and Head of Research, BNP Paribas Securities) talking about the Sensex and the Rupee. He expected a 10-15% correction from current levels, but also said that they've put a 21,000 target for the Sensex for the year.

While he said that fund flows would be muted in emerging markets in 2010, in the same stead, he did not rule out the possibility of a repeat of last year's flows into India. If that happens, the Sensex can shoot to 25k+, but that looks unrealistic to us, at least for now.

He also looked quite bullish on India, and said that India would be at a 20% higher P/E than the rest of Asia- and gave a year end target of 42 for the INR (rupee) versus the USD (dollar).

You can read/view the interview online on moneycontrol .com

Stockscenter view:
Putting the contradictions aside, it really makes sense to be bullish on India. India is a growing democracy- with a large consumer base, with growing purchasing power. On the other hand, many of the developed countries aren't going anywhere- the stocks moved up, yes, but that was much of an upward correction to their rational values. We're where we should be right now, and if things do not go wrong at the macro level, we should see strong gestures from the economic indicators (for India) that would push the markets upward. Downward corrections shouldn't spook one, unless they're triggered by the collapse of another major bank in the USA! Ergo, what BNP Paribus says might just be true- expect a correction, but do not let it spook you. While that's difficult, we really advise investors to stay cautious.

Reliance: Sale of Shares by Petroleum Trust

noreply@blogger.com (Chinmay) — Mon, 04 Jan 2010 14:54:00 +0000

In early morning trades, Petroleum Trust sold approximately 258.5 lakh shares of Reliance Ltd.

The Trust will get Rs. 2675 crore at an average price of about Rs. 1035 per share.

This will get reflected in the consolidated financial statements of the Company.

Petroleum Trust is a promoter in the company.

China, India and Food Prices

noreply@blogger.com (Chinmay) — Sat, 02 Jan 2010 15:30:00 +0000

Well, what a year has it been! Begin January 2009, and foreign investors were ready to pull out money, de-leveraging their positions, going into their shells. Everyone was "playing safe", and money was becoming expensive, and scarce. To counter that, interest rates were lowered, bail outs were carried out, and in what scale. Then, as money became cheaper, it became abundant, "in every rich man's pocket". That money was cheap, borrowed at dirt cheap interest rates. When money becomes cheap, it goes places- it goes everywhere. One of the places it went, was commodities. Food prices soared, with a definite support (in India- the debated MSP) And the double whammy was bad monsoons.

The bad, and irregular monsoons meant less supply to a hungry lot of a billion people in India. Food prices were going to increase, as indicated by their futures- and they did. Now, India is talking about importing food items. That has the capacity to send enough speculation in the international market to keep the prices up. The price elasticity itself has been tampered with. Oh, and did the farmer benefit? No. They had not much to sell- well, most of them didn't. Their crops were doomed, and on a lighter note, so was deflation in food prices! And of course, that did not and will not save the economy! It has been lack of supply, and so it should be increased supply that would solve the problem. But then, when the economy improves and starts creating jobs at a faster rate, when the purchasing power of more than a billion people in India and roughly two billion people in China increase, they would certainly buy more food- that is sufficient for them, or more than sufficient for them. And when the per capita food/related consumption reaches the level of USA, that would send the food prices flying into the never ending sky. This can only be softened by a proportionate increase in food supply- and both the countries become self sufficient. In other words, a Malthusian catastrophe has to be averted.

Then comes China, and its obsession with a weaker yuan. There are two cases here- either China lets the yuan appreciate against the dollar, or it maintains status quo. In the first case, China would start offloading its US Treasury portfolio (if it gets irritated!), and start selling the dollar. When that would happen, interest rates would have to go up- but when there is an already large amount of cheap money lying around, that wouldn't make much of a difference. The size of the cycle, as we say, would increase, and the next bubble would be humongous. That would be due to the second chance given to a failed US-styled free movement of funds, in the same tax havens, and more liberty to greedy punters in the commodities futures, and more expensive food. But then, in a capitalist economy, people argue, this is good. But then, China has to let things be, freely, free. The economy at its core is a free economy, which takes care of itself.

In the second case, if China maintains status quo- which it shouldn't, the dollar remains strong when it shouldn't. China has that "geopolitical" advantage, which it really doesn't, and it continues to spoil the world markets with its cheaper substitutes. This has to phase out quickly, if equitable distribution of global wealth has to ensue. Now, if China has been a gainer, it has to show it in its currency as US did. And, the world has to stop thinking about things as they used to be and start thinking about what they will be in the future. China can be the new US, with its large trade surplus, if it follows true capitalist rules (which i doubt), and Shanghai is allowed to become a financial center like New York, with lesser constraints. But then, that takes time, and a lot of stomach to change ideologies. China has to care for its billions, and it's doing that all right, in the left way, which is the wrong way!

To sum it all, food prices are going to remain high, if the supply side is not taken care of- which would be very difficult in the long term because of the Malthusian catastrophe. The purchasing power has to increase, along with employment in the emerging markets. The focus in the next decade would be seen to shift from the US and the Euro zone to Asia and South America, with the capitalist American's help.

Market timings change from Monday Jan 4, 2009 | News

noreply@blogger.com (Chinmay) — Fri, 01 Jan 2010 04:48:00 +0000

NSE		BSE
MARKET OPEN 09:00 hrs. to 15:30 hrs.		MARKET OPEN 09:00 hrs. to 15:30 hrs.
CLOSING SESSION 15:50 hrs. to 16:00 hrs.		CLOSING SESSION 15:40 hrs. to 16:00 hrs.

Nakoda Textile enhances production capactiy

noreply@blogger.com (Chinmay) — Fri, 25 Dec 2009 07:12:00 +0000

Nakoda Textile ( BSE: 521030 ) has informed BSE regarding a Press Release titled "Nakoda Textile Industries Ltd, sponsored Surat Super Yarn Park Ltd. enhances production capacity to 1,51,000 MTPA of Texturised yarn".

The stock trades at 68.2 at a P/E of 5.8. It has witnessed lows of 10, this year.

You can read the official announcement to the BSE here

Maruti Suzuki plans world premiere for first compact MPV Concept at Auto Expo 2010

noreply@blogger.com (Chinmay) — Fri, 25 Dec 2009 07:11:00 +0000

Maruti Suzuki plans world premiere for first compact MPV Concept at Auto Expo 2010.

Click Here for more detail (link to BSE Announcement)

Rolta repurchases US $ 15.00 Mn FCCBs

noreply@blogger.com (Chinmay) — Fri, 25 Dec 2009 07:10:00 +0000

Rolta India Ltd has informed BSE that the Company has further repurchased US $ 15.0 Million of the outstanding Foreign Currency Convertible Bonds's (FCCB's), of the original issue of Zero Coupon FCCBs of US $ 150 Million due in 2012. The Boands of the accreted value of US $ 17.8 Million have been repurchased at a discount of 15.25% resulting in a gain of US $ 2.80 Million (approx. Rs 13.00 crores). (from BSEindia.com)

BSE Announcement URL: http://www.bseindia.com/xml-data/corpfiling/announcement/Rolta_India_Ltd_241209.pdf

Glenmark receives Tentative Approval from USFDA for Generics

noreply@blogger.com (Chinmay) — Fri, 25 Dec 2009 07:04:00 +0000

Glenmark has received tentative approval from USFDA for Pramipexole Dihydrochloride tablets and Atomoxetine Hydrochloride capsules, it informed the stock exchanges in a release statement.

The estimated market size for Pramipexole Dihydrochloride tablets is $487 mn.
The estimated market size for Atomoxetine Hydrochloride capsules is approx $500 mn.
Read the entire press release here: http://www.bseindia.com/xml-data/corpfiling/announcement/Glenmark_Pharmaceuticals_Ltd_241209.pdf

Seamec Ltd | Fundamentals Analysis

noreply@blogger.com (Chinmay) — Sat, 19 Dec 2009 02:24:00 +0000

Company Introduction
Seamec Ltd is a company that provides support vessels for offshore installations (for oil exploration and drilling). Its major shareholder and promoter is a French offshore company. The company was the first to manage an ONGC owned vessel. Its fleet currently comprises of 4 vessels - Seamec I - IV and Seamec Princess.

Industry Overview
The global market for offshore operations was a growing market till oil prices crashed. Now a revival is seen, albeit a slow one. The Indian offshore industry has players like Aban Offshore, Great Offshore, GE Shipping- just to name a few. This business is directly related to the Exploration and Production (E&P) activities of oil companies, and E&P activities -it is generally acknowledged- are related to crude oil prices. Most of the offshore supply vessels are old, and would be scrapped in the coming years. This does mean procurement of new ships for these companies- and an increase in expenditure. Companies such as Seamec, which provide ships for offshore activities, would have to pay- but that's part of the business. The good thing about this is, ships once deployed are like cash cows- they generate a lot of money. Deployment rates can be like $23,400 per day (Seamec 1) to $105,500 per day (Seamec Princess).

Financials
In the September Quarter, Seamec posted revenues of Rs. 97 cr vs Rs. 68 cr the quarter last year, and vs Rs. 100 cr in the June Q. The company pays negligible interest, and thus would have very less debt. Margins are good as well. According to last year's filings, the company has reserves of Rs. 278 cr. The company was having all the four vessels deployed in Q2 this year, doing a good show in difficult times. If we compare to other listed offshore companies like Great Offshore or Aban Offshore, the company has better margins on the books and less debt and leverage. The company has posted good profits this year, in sync with its peers- however, with no debt thus good net profit margins, the company looks better than its peers, financially. The company doesn't pay dividends, however.

Valuations
At Rs. 220, the stock trades at a P/E multiple of 3.11. As we had discussed before, P/E never gives a direct buy or sell call. The stock had gone down to levels of 30 in the great bear era. People who had bought shares at lower levels, between last October and March may come out selling after their "1 year" of holding the stock has ended (they would pay no taxes that way). That would be selling pressure, and the stock would dip and then one may buy. Current valuations are high, and price of 170-200 would be reasonable. The operationalization of Seamec Princess has led to increased revenue and profits. As the company would upgrade its fleet, the capacities would increase, and that would also increase the revenues. Seamec's P/E is 3.11 whereas the industry P/E is 6.51. So, expectations are low. If the company posts good results in both the coming quarters, we should see the stock price move up considerably- to the levels of 400-450 and then to 700-750. Otherwise, the stock would follow the general market sentiment, and in case of a bearish environment, it may go down to levels of 150-175.

Year	Open Price	High Price	Low Price	Close Price	No. of Shares	No. of Trades	Total Turnover(Rs.)	* Spread (Rs.)
Year	Open Price	High Price	Low Price	Close Price	No. of Shares	No. of Trades	Total Turnover(Rs.)	H - L	C - O
2007	194.00	304.70	164.00	286.85	12895566	173997	2,821,721,508.00	140.70	92.85
2008	290.00	304.00	30.20	37.75	4091909	60041	635,951,363.00	273.80	-252.25
2009	38.75	254.70	35.00	220.20	11892532	128430	1,584,551,176.00	219.70	181.45
* Spread H - L -> High - Low C - 0 -> Close - Open

Stockscenter Verdict
The company looks strong fundamentally. With no debt on its books, it has great net profit margins. Again, with the operationalization of Seamec princess, the company has increased its revenues. Upgradation of current fleet and addition of newer vessels would further the company's revenues. Also, the addition of Seamec princess in the fleet hasn't resulted in debt- and that is noteworthy. The company is doing all the right things the right way. The stock price is good, however, the market expects the future to be bleak for the segment in general and Seamec in particular. If Seamec continues its growth for this year, it would be a definite multibagger, in a bullish market.

Opinion: Food for thought | World Markets & Economy

noreply@blogger.com (Chinmay) — Sun, 13 Dec 2009 04:03:00 +0000

It's time we overhauled our own perspective, and opened our eyes to what is going on around us apart from the monotonous bull run. We will be reviewing the economic condition at the moment, by considering what we've really been through in the past two years.

Economic scientists that come on news channels are of the opinion that the Great Recession has ended, and the next inflationary cycle has begun. While this statement may be good news for the stock market bull, it might just not be- for the consumer community and for the stock market bull too! While stock markets are always ahead of the other economic indicators - volatile as they are, in depicting the state of the economy, considering them to be the only indicators would be wrong.

Considering what has transpired out of the two year drama on the stock markets, as a direct consequence of what happened due to, (what i like to alliterate as) the stock markets, as a direct consequence of what happened due to the invention of the incomprehensible and now impossible financial instruments; the real prices of commodities and real estate in many emerging markets hasn't gone down while the purchasing power went down significantly during the downturn. Credit (no pun intended) has to be given to the governments for this fiasco. They made credit super cheap to the irresponsible borrowers, increased the MSPs of food grains - when they could have done a lot else, and made plans to bail out the hubristic realtors. Then there was the double whammy of the bad monsoons, and whoa, the economy is still looking good.

The economy had never really turned sour in our case. The Indian economic stimulus was in the form of lower taxes and cheaper credit. Lower taxes meant better margins for the producer and cheaper stuff for the consumer. Cheaper credit never really got taken- as it was not really cheap, and it was not really required. Buying debt, and then paying off bills and then repaying that debt is a risky affair. Whole economies are built on debt nowadays, and when the real production from the available sources of raw materials doesn't make up for the debt, problems happen. And that is what exactly the capitalist world is risking at the moment. Coverups and hypocrisy cement capitalistic economic growth, and this time, a lot has been covered up; and as we used to say, the cycle has just grown bigger.

The stock markets have recovered to the levels they should really be, the premium being the wealth created as a result of the exploitation of natural resources, and the discount being the debt incurred in doing so. The drying up of available capital in the international markets was offset by TARP funds and such schemes in an experiment which can go either way. At the same time, if the focus shifts on the real drivers of global growth- ie, the emerging markets and the US economy is allowed to stagnate, and then pick up as a result of the growth in the former, then i would be clapping. China needs a stronger yuan to reflect its real strength, and has to rightly do so instead of flexing the right muscle the wrong way. The punters expect the western region and China to restart overconsumption and overproduction respectively; where the former is not really possible very quickly and the latter has never ceased! At such times, the focus shifts, as it has, to economies with domestic consumption and production stories such as India. Countries should start protecting their own economies from those who want all the good things for themselves- such as China who want to keep exporting, and still want their currencies to be undervalued. You can definitely not have everything for yourself, and also at a time when you've invested so much into the US Treasury.

There is a lot of money lying around for now, which will soon be sucked up by the governments as they realize it's not needed. We can, as investors, only hope it will disappear before it goes to the stock markets. As that would again invoke greed, when it should be invoking fear. Or may be, it has already happened. "Anytime, now." is the chant, as we stand at an inflexion point on the economic chart; (and the problem is, every situation seems to be an inflexion point, and everytime, it seems, "it's different", while it's always the same!).

IPO Alert: D B Corp Ltd

noreply@blogger.com (Chinmay) — Fri, 11 Dec 2009 14:16:00 +0000

Issue Detail:

Issue Open: Dec 11, 2009 - Dec 15, 2009
Issue Size: Rs. 336.24 - 385.31 Crore
Issue Price: Rs. 185 - Rs. 212 Per Equity Share
Market Lot and Minimum Order Quantity: 30 Shares

IPO Grade: 4/5 (CARE - above average fundamentals)

EPS:

fyo7: 3.66
fy08: 6.01
fy09: 4.06
Weighted: 4.64

P/E: 45.68 (at upper price band)

P/E of Peer: 18 (Deccan Chronicle)

About the Company

Incorporated in 1995, D B Corp Ltd is one of the leading print media companies in India, publishing 7 newspapers, 48 newspaper editions and 128 sub-editions in three languages (Hindi, Gujarati and English) in 11 states in India. Company's flagship newspapers are Dainik Bhaskar, Divya Bhaskar and Saurashtra Samachar have a combined average daily readership of 15.5 million readers making them one of the most widely read newspaper groups in India.

Dainik Bhaskar, with a total average daily readership of 11.7 million readers is a widely read newspaper in Madhya Pradesh, Chattisgarh, Rajasthan, Haryana, Punjab and Chandigarh. Divya Bhaskar is the number one Gujarati daily newspaper in terms of circulation in Gujarat. Comapny's other newspapers are Business Bhaskar, DB Gold, DB Star and on a franchisee basis DNA (in Gujarat and Rajasthan).

In addition to newspapers D B Corp publish 5 periodicals namely Aha Zindagi, a monthly magazine published in Hindi and Gujarati, Bal Bhaskar, a Hindi magazine for children, Young Bhaskar, a children’s magazine in English and Lakshya, a career magazine in Hindi. D B Corp also have a significant presence in the radio business under the brand name MY FM. They operate 17 FM radio stations.

Objects of the Issue

Setting up new publishing units
Upgrading the existing units
Covering Marketing expenditure
Covering existing loans

Stockscenter Verdict
Company fundamentals are strong; however, the IPO is priced expensively. Also, there were news reports that the company was under a lot of debt. It may be available in the secondary market at a cheaper price. Avoid.

Nirma's 'controversial' cement project gets government nod

noreply@blogger.com (Chinmay) — Fri, 11 Dec 2009 14:14:00 +0000

Gujarat government has given its green signal to Nirma Ltd's controversial cement plant in Mahuva. The company has been aiming to foray into cement production by setting up a 2.4 million tonnes cement plant in Bhavnagar district for an estimated investment of Rs 1000 crore, according to industry sources privy to the development.

Read the entire news article on Business Standard

Update on Asian Electronics

noreply@blogger.com (Chinmay) — Fri, 11 Dec 2009 13:52:00 +0000

Asian Electronics is under restructuring at the moment. The much awaited Rights issue in Asian Electronics was announced earlier this week.

1. Rights Issue:
Issue of 1,53,59,139 Equity Shares of Rs. 5/- each in the Equity Share Capital of the Company to be issued to the existing Shareholders in the proportion of 1 Equity Share of Rs. 5/- each for every existing 2 Equity Shares of Rs. 5/- each at the issue price of Rs. 20/- per Equity Share on the terms and conditions as contained in the Draft Letter of Offer which has been approved by the Board. The said Draft Letter of Offer is subject to approval of SEBI and Stock Exchanges.

2. Allotment of 8,33,333 warrants convertible to Equity shares to Investors at Rs. 40/- a share.

In separate filings to the BSE, Shah Investments, Financials, Developments & Consultants Pvt. Ltd. (SIFDC) informed that they have sold 0.84% of the shares in the open markets. SIFDC is the major share holder in Asian Electronics.

A Social Investing Community

noreply@blogger.com (Chinmay) — Wed, 09 Dec 2009 05:33:00 +0000

Hello readers,

At StocksCenter, we believe knowledge and information should be available freely to everyone. After all, there should be equity in equity. We hear about cases almost everyday- about people getting duped by speculators, scammed by fraudsters and the like. So, we provide free fundamental analysis of stocks and also opinions on the state of the economy to everyone, without any discrimination.

Another community that shares this belief is Stockezy. Stockezy is a website where people come together to discuss stocks, commodities, trends and also share insights.

StocksCenter's main author and editor Chinmay Shah also participates at Stockezy. You can view his stock recommendations on Stockezy by clicking here.

We recommend you to check out and join Stockezy. The benefits of such a community are many. Stockezy advocates the idea of independent investment, bringing you out in the open- to many more experts and helpers. You can also help out others, and this is the best thing about it. And, as Stockezy says, Collaborate, invest-smart and make more money!

Important URLs:
Register for a Stockezy account (free): http://stockezy.com/accounts/register/
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Analysis: BPL Ltd

noreply@blogger.com (Chinmay) — Tue, 08 Dec 2009 12:55:00 +0000

One of the companies that failed in the Consumer Electronics market due to lack of innovation on the part of the promoters is BPL Ltd. It is a classic example of how management energy fizzles out and the company starts charting dangerous routes for itself and its shareholders. We've picked some good companies in the past- to invest, as far as equity is concerned. So, this time, we thought, how about a not so good company. How about a company that has failed, for now- left for the vulture investors of the bourses. There would also be people who would've bought shares of this company when everything was fine globally, money was coming in, and people were betting on all kinds of things. BPL Ltd was one of those things then. It went up to 170 plus levels, and then when things got worse globally, and stock markets plummeted, the stock went down hard, to sub 20 levels, never recovering much and now trading in the thirties.

So, how would one approach such a company? Is this really an opportunity? Let's see.

Financial Performance - Weak
The company has been regularly posting losses. However, the sales are there and that's the plus and indicative of the company doing business. We won't consider the magnitude of the losses in our analysis, just because there's no point. The company doesn't have much interest expenditure, losses are due to increased general expenditure. Many of the loans that the company took were classified as Non performing assets, and were bought by ARCIL (Asset Reconstruction Company India Ltd).

Opportunities
The company is engaged in the industries of Telecom equipment, Healthcare equipment, Electric and Electronic equipment. The markets are huge, and a bull would be betting on the company taking advantage of these huge markets. The company has also entered into an MoU with the govt of Chhattisgarh for commissioning a 300 MW coal based power project in Chhattisgarh. The power project may take at least five years for operationalization. The company is yet to obtain necessary approvals, provisions for coal allotment, land, licenses, etc for the project. The company has been planning to enter the energy segment for quite some time, but it doesn't seem to have made any headway.

BPL was also recently in the news for a tie-up with an American diagnostics products company called Welch Allyn. BPL's healthcare division may manufacture and sell Welch Allyn's products in India. The company is also looking at PPP projects to boost sales, according to the news report.

Verdict
The bull has reasons to bet. A turn around here would mean stock prices going to levels of 150 plus. The company is generating the right news. If the balance sheet follows suit, this would augur very well for the investors. Our suggestion would be to put this on the watchlist. Wait for the next results if you're a cautious investor. Otherwise, there's no harm buying this stock at these prices if you're ready to hold for a really long time. For those who already hold shares of this company, there's no point selling if you do not need that money. If you require the money, go ahead an sell- the stock price won't be seen rising very quickly. Spurts in the stock price are not sustainable when the underlying financial performance doesn't keep up. Having said that, the coming years are crucial for the company. This may prove to be a multibagger.

JSW Energy Ltd IPO opens tomorrow, Dec 07 | Snapshot

noreply@blogger.com (Chinmay) — Sun, 06 Dec 2009 13:34:00 +0000

IPO Details:

Issue Price: Rs. 100 - Rs. 115 Per Equity Share
Discount to Retail Investors: Rs. 5 /share to issue price
Issue Open: Dec 07, 2009 - Dec 09, 2009
Issue Size: Rs. 2,700.00 Crore
Face Value: Rs. 10 Per Equity Share
Lot and Minimum Order Quantity: 60 Shares

About the Company
The company has been in the business of power generation since 2000 and its consolidated revenue increased from Rs1,326 crore in FY2008 to Rs1,852 crore in FY2009. The
company is also involved in power transmission and plans to foray into power distribution space.

Objective of the Issue
To part-finance the construction and development of the Identified Projects aggregating to 2,790 MW in capacity; 400 KV transmission project and a mining venture.

IPO Grade
CARE: 4/5 (Above Average Fundamentals)

Current/Existing Operations
The company has 995 MW of operational power generation.

Quantitative Factors
EPS: (Standalone 2009) 4.22
EPS: (Consolidated 2009) 2.04

Valuation View
The IPO is not cheap. It is expensive. The difference here, in this Energy IPO is that the company is operational. But at an EPS of 4.22, the P/E of Price Band is more than 25, and this more than doubles if you consider the consolidated EPS. The Jindals have presumptuously priced in a premium for and operational Energy company (going for an IPO) with large expansion plans. So, the higher pricing is for this aspect of difference in terms of operationality and transparency.

Download: Red Herring Prospectus