Electrosteel Castings - A Blue Chip

BSE 500128, CMP Rs 52.90

The biggest spun pipe manufacturer in the country-Electrosteel Castings is entering a new era of exciting growth, which will propel the corporate into the big league of Integrated Steel producers like Tata Steel and Jindals.

For nearly 5 decades Electrosteel has made a name for itself in manufacturing Steel Spun pipes which are used for Civilian Water works across the country. Infact, the Electrosteel name is synonymous with the phrase "Making Water Move".

Some of the biggest water supply pipelines in the arid regions of Andhra Pradesh, Tamil Nadu and Karnataka have Electrosteel's spun pipes as the backbone. The corporate has also established its manufacturing footprint in parts of Asia and Europe, to serve local markets and meeting out the threat of import sanctions on third world imports.

The successful business strategy deployed by Electrosteel Castings is handed out as standard course material to budding management students at the HarvardBusinessSchool.

The financials speak for themselves. The corporate recorded a 18 per cent jump in Revenues at Rs 1123 crore in FY07, with after tax profits of Rs 106 crore (Rs 76 crore), a jump of 40 per cent.

FY07 EPS was placed at Rs 5 per share (Rs 3.7 per share), and Electrosteel paid out a record dividend of Rs 12.5 per share.

The promoter interest is close to 53 per cent and the FII/FI/MF holding is another 20 per cent. Leaving a small float with the public.

Electrosteel is now ready for its second leg of expansion worth Rs 10000 crore, which will be invested over the next 36 months.

This will include a 1 million tonne integrated steel plant with dedicated iron ore and coal mines to be set up under a new entity by the name of Electrosteel Integrated.

Electrosteel Castings will be investing Rs 500 crore as Equity into the project, with the promoters providing as much as Rs 100 crore by taking a preferential allotment of 20 lakh shares as per the Sebi pricing formula for preferential offers.

The Rs 10000 crore road map 2007-2010

Summation : Projects INR (Crs)

-1.2 MTPA Integrated Steel Plant Rs 3600 crore.

-
0.2 MTPA DI Pipe Plant Rs 250 crore

-Coking Coal Mine at Parbatpur Rs 600 crore.

-Iron Ore Mine at Kodolibad Rs 150 crore.

-1200 MW Power Plant Rs 4800 crore.

-Captive Non-Coking Coal Mine Rs 150 crore

TOTAL INR 9550 Crs.

A. Integrated Steel Plant
- Capacity 1.2 MTPA
-1.0 MTPA for Bars & Rods or other value-added products
-0.2 MTPA for Ductile Iron Pipe

Location –near Bokaro (acquired 350 acres of land, balance in process)

-Coking Coal Blocks near Bokaro (already allocated)

-Captive Iron ore mine at Kodolibad, 200 KM away.

-Captive Power plant of 50 MW, balance to draw from Grid.

-Cost of Project –Rs 4000 Crs (Approx) which includes :
-0.2 MTPA Ductile Iron Pipe plant Rs 250 Crs
-Iron Ore Mine at Kodolibad Rs 150 Crs
-50 MW Captive Power plants
-Project implementation time - 3 years (Approx.)

B. Ductile Iron Pipe Plant

Capacity 0.2 MTPA

Location -near Bokaro in the Integrated Steel Plant

Cost of Project -Rs 250 Crs.

Project Implementation Time -18 months

Raw Materials : Liquid Metal =Integrated steel plant

Power = Captive Power plant

C. Iron Ore Mine

-Kodolibad (Jharkhand) 12 KM from Chota Nagra.

-Reserve -More than 100 M Tons

-Mining Type –Open Cast

-Type of ore -Fe content over 65%

-Capital cost –Rs 150 Crs.

Present status –Allocation in advance stage.

D.Parbatpur Coking Coal Blocks

-Located at Parbatpur in Jharia coalfield near Bokaro (Jharkhand).

-Mineable Reserves –224.47 M Tons by CMPDIL

-Type of Coal –Prime coking coal

-Present status – Already allocated

-Capital Investment – Rs 600 Crs.

-Mine Type –Mainly underground

-Required Power from DVC & own railway siding

Purpose –Captive use for Integrated Iron & Steel Plant / DI Pipe at Khardah (Kolkata)

E.Power Plant

-Capacity 1200 MW

-Location –Pithead in Latehar Dist.(Jharkhand)

-Cost of Project -Rs 4800 Crores.

-Non-coking coal from Captive mine at North Dhadu having reserve more than 100 M Tons.

-Project implementation Time -3 Years

-Consultant: Tata Consultancy Engineers.

-Marketing of Power –By merchant trading.

F.Non Coking Coal Blocks

-Located at North Dhadu in North Karnapura coalfield (Jharkhand)

-Reserve – over 189 M Tons.

-Grade of Coal –F&E Grades

-Mining Type –Open cast

-Capital Investment –Rs 150 Crs.

Purpose –Captive use for 1200 MW Power plant at Pithead itself.

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)

Undervalued shares recognized with dividend yield

Oscar Wilde described a cynic as a man who knows the price of everything and the value of nothing. Alas, the same description applies to many investors. Recognizing true value and being able to identify quality are two of the greatest forces investors can have behind them in the stock market.

How to Identify Quality

There are many ways of measuring the quality of a share, but the most persuasive characteristic of all is a company’s standing as a blue-chip operation.

To save time and turmoil, to pave the way to profits and, most of all, to minimize risk, the dividend-yield theory should be applied only to the most prosperous and progressive corporations on the stock exchanges — the blue chips.

Why concentrate on blue-chip stocks when searching for quality? Don’t some young, growing companies have high-quality characteristics and potential for paying outstanding dividends? Aren’t there good values to be found in formerly troubled, turnaround companies under new and better management?

Perhaps. Sometimes the company on the brink of disaster does save itself. Small companies do sometimes break clear from the pack and achieve spectacular success.



But with such companies, risk too runs high. There is no way to be certain they will achieve their goals. Talk comes easy; evidence is harder to produce. A lot of young companies in growing industries have not been able to survive the competition. Even a chief executive with a brilliant record may not be able to pull a sinking ship out of deep, dark waters.

The world of blue-chip stocks offers fewer unpleasant surprises. These companies are managed by the best, the most experienced leaders that money can buy. Their products and services are well known and widely distributed. They often are sold on international markets, especially in the lesser-developed countries, where growth potentials still are extraordinary. Blue-chip companies have the most sophisticated research centers, the most elaborate advertising programs, the largest sales organizations and the longest histories of profitable progress.

They are the most willing to share profits with their stockholders, paying dividends that can help investors keep pace with inflation and provide a safety net under the prices of stocks.

Secondly, understanding the cycles of blue chips will help you be positioned at the right place in the market at the right time. Blue-chip shares are generally in the forefront of every major market move. They are among the first stocks to rise in a bull market and nearly the last to fall when the market declines.

In good times, blue-chip companies outperform both their lesser competitors and the economy. In bad times, they resist adversity best. Time and time again, experience has shown, there is no profitable substitute for quality.

What is a blue chip?

Clearly, though, not every share that goes up is a blue-chip stock. To some investors, any share they own is a blue chip!

Confusion over the definition of blue chip in the stock market abounds. Maybe it is the term itself that gets our thinking off track. Originally, the expression comes from the blue chips used in a poker game. The blue chips are the highest denomination of money. They are the most expensive tokens — the most valuable chips in the game.

In the stock market, however, price has little to do with value, and even less to do with the definition of a blue-chip stock. Only as it relates to the dividend, to earnings, or to book value is price an important measure of blue-chip quality.

The term really refers to the quality of the company on which the stock is issued. A blue-chip company is one that has a long history of corporate excellence.

How to Identify Value

But recognizing quality is not enough to guarantee profits in the stock market. Even a top-quality share can be overpriced.

Without conscious effort, we automatically measure relationships of price and value every day of our lives. It doesn’t take a genius to realize that Rs. 1,000/- is an undervalued price for a new car, but an overvalued price for an umbrella.

Once you have identified a high-quality blue-chip share, investors should apply the measures of good value. In this way, both safety of capital and total return are maximized.

If concern about value persists, it makes sense to buy stocks as if buying a company itself — as close to its net asset value (book value) as possible.

Thus, the linking of quality and value in the stock market can help investors select timely — and undervalued — stocks. Close attention to fundamental investment precepts may not be the most glamorous approach to equity investing, but it is the safest and most sane way to ensure long-term investment success.

How Put/Call ratio reveals market’s future

The Put/Call ratio measures the sentiment of speculative option traders. A high Put/Call ratio indicates that option buyers favour puts, and are bearish. Historically, their pessimism has been ill rewarded, as the market has instead forged higher. A low Put/Call ratio signifies a relative dearth of put buying and a preponderance of bullish call buying. The record shows that option buyers’ optimism is usually shortlived, as the market declines instead.

A call is an option to buy common stock; a put is an option to sell common stock. A call buyer hopes prices will rise; a buyer of a put option wishes prices to fall. Both calls and puts receive their value from the price of the stock itself and option speculators’ judgments of the future course of the stock’s price movement.

Consider, for example, the valuation of a call option. If a stock sells at $25 and a speculator owns an option to purchase that stock for only $20, the value of the option is $5. Any price less than $5 would prompt a massive purchase of call options, an immediate payment of $20 and a resale of the acquired stock at $25, for a profit. Hence the theoretical value of the option is $5. Actually, because of a variety of other factors, the option price will usually be somewhat above $5.

One of these factors is the possibility of large percentage gains. If, in our example, the stock rises in price to $30, the option to buy it at $20 is worth $10. (Paying $10 for the option plus $20 for the stock by exercise of the option is akin to paying $30 for the stock in the first place.) Note that while the common stock has advanced 20%, from $25 to $30, the option value has doubled, from $5 to $10, a 100% gain and five times the percentage stock gain. This is obviously a highly leveraged and profitable situation.

Of course, there is a corresponding risk. If the stock declines from $25 to $20, the call option would be theoretically worthless. While a common stock investor would lose only 20% of his original investment, a call buyer would lose his entire investment. (Put options are diametrically opposite to call options. The space will not be devoted here to explaining their reward and risk opportunities. Suffice to say that the buyer of a put option only makes money when the stock declines in price, whereas the call option buyer makes money when the stock moves up.)

Option buyers are plainly a special breed. They shoot for large, highly leveraged profits. In return they risk catastrophic loss of capital. It often seems to be the case that the sentiment of extreme risk takers yields valuable clues to future market behavior. Option buyers are no exception.

If the volume of call options in a given period is greater than the volume of put options, one may logically assume that option speculators as a group are expecting higher prices and are bullish on the market. On the other hand, if the volume of put options is relatively greater than that of calls, these same speculators hold a generally bearish attitude.

Option traders lose money on balance. Their judgments of the direction of individual common stock prices, and of the market as a whole, are usually wrong. Therefore, a high Put/Call ratio (a large volume of puts relative to calls) usually precedes a period of rising prices, not falling prices as the option speculators would prefer. Conversely, a low Put/Call ratio (indicating relatively little put buying activity and greater call buying activity) is invariably followed by declining prices instead of rising prices as the preponderance of option buyers desire.

In the US from 1945 to 1976, the Put/Call ratio was computed using volume in the over-the-counter options market. In 1977, the options exchanges began trading both puts and calls on 25 stocks, and from 1977 to 1982 the P/C ratio was based on that volume. By 1983, the Ratio was expanded to use put and call volume on every stock with listed options.

To stabilise the indicator, we utilize contract volume only for those puts and calls with a striking (exercise) price within 10% of the current market price of the underlying stock. This eliminates far “in the money” options and far “out of the money” options from the tabulation.

First, a Put/Call ratio is computed for options in which the stock price is greater than the strike price but not more than 10% above it. A second P/C ratio is computed for options in which the stock price is below, but not more than 10% below, the exercise price. The two ratios are then simply averaged to derive the overall market logic P/C ratio.

Low readings (20% to 35%), signifying excessive call speculation, are bearish. High readings (above 140%), indicating excessive put speculation, are bullish. Bearish readings tend to be a bit early relative to market turns, but bullish readings frequently coincide to the very day with market, troughs. The market logic Put/Call ratio is one of the most sensitive and valuable of all market indicators now in use.

Option activity ratio: A derivative statistic of the put and call data is the so-called option activity ratio (OAR) calculated by dividing total put and call volume by NYSE volume. A high OAR is bearish for it signals the excessive option speculation that frequently accompanies market tops. A low OAR is bullish for the opposite reason: if there is a dearth of speculation, the market should be depressed and near a major trough. Recently the indicator has lost its usefulness. The sharp decline in over-the-counter option business during the last few years has thrown the OAR into a severe downtrend, rendering interpretation next to impossible. Several more years’ development of the registered option exchanges will be required to furnish sufficient data to construct the OAR anew.

Impact on investments when interest rate changes

That changes in interest rates affect returns from fixed-income investment avenues is obvious. Equally, changes in interest rates have profound impact on the direction of the stock market. In fact, interest rates are a key driver of the stock market

Unfortunately, many individual investors miss the many signals that the debt market offers the more astute investor. These signals can present opportunities — or serve as warnings — in a wide variety of personal financial matters, ranging from home loans, credit cards, personal and car loans to investing in the stock market, and, of course, fixed income investments.

The Indian debt market comprises broadly of government securities (G-Secs) and bonds — PSU Bonds, bonds issued by financial institutions such as ICICI and IDBI, and corporate bonds and debentures, with G-Secs being the most dominant. Unlike in developed countries such as the US where the debt markets are significantly larger than the stock market, in India the situation is the reverse. The reason: interest rates in India were till recently strictly regulated and the number of players in the debt market relatively few.

The de-regulation of interest rates, however, is now changing all that. A freer interest rate regime, with frequent changes in interest rates, obviously leads to fluctuation in the returns from fixed income instruments. Indian investors have of late discovered this to their dismay as the lowering of interest rates offered on ever-green instruments such as PPF, NSCs, bank deposits has eaten into their income returns.

How interest rates affect share prices

The impact of interest rates on your personal finances extends well beyond your debts. Interest rates affect your equity portfolio, too. There is plenty of evidence. Indeed, in history to prove that interest rates can have a profound impact on the stock market. As a result, the stock market watches the bond market like a hawk. Stock market professionals respond predictably to the RBI’s periodic raising or lowering of interest rates.

By gaining a better understanding of the debt market, you can recognise the potential risks and opportunities that movements of the debt market present for equity investment. A clear grasp of the goings-on in the debt market will help you understand how it affects the stock market and refine your investment decision-making process.

There are basically six ways in which changes in interest rates affect the stock market investor :

1. Changes in interest rates directly affect corporate profits. Companies need to borrow funds to finance expansion programmes, meet working capital requirements, purchase equipment and maintain inventories of raw materials and finished goods. Low interest rates lower the cost of money and increase the profit margins of companies. Since share prices are directly linked to corporate profits, the lowering of interest rates always has a bullish effect on the stock market.

2. Changes in interest rates affect the general demand for goods and services in the economy. When interest rates are lowered, people tend to spend more and save less. When interest rates are raised the reverse happens. Increased consumer spending as a consequence of lower interest rates leads to an expansion in the demand for the goods and services provided by the corporate sector.

3. Changes in interest rates have a direct effect on the sales of automobiles, commercial vehicles, two-wheelers, tractors, agricultural equipment, consumer durables (television sets, washing machines and kitchen appliances) and increasingly housing since the demand for these products is significantly dependent on borrowed funds. Lower interest rates also spur to construction activity through a reduction in the cost of housing finance. Therefore, falling interest rates are good for automobile, two-wheeler, tractors, farm equipment, cement, construction, steel, consumer durable and housing finance companies.

4. Changes in interest rates also alter the relative attractiveness of competing financial assets like shares, bonds, and other fixed-interest investments. Lower interest rates generally tend to cause a shift of investible funds from bonds, bank and company deposits to equity shares and vice versa.

5. Changes in interest rates affect the way companies finance their operations. During a high-interest-rate regime, companies prefer to raise funds through issue of equity shares rather than through bonds and high-cost bank loans. When interest rates fall, bank loans become a cheaper source of finance than equity, and companies prefer to borrow money from banks and raise their debt-equity ratios. In short, lower interest rates are bad for the primary market and good for the secondary markets.

6. Lower interest rates also reduce the cost of borrowing money for the purchase of shares. This is another way in which the lowering of interest rates has a bullish effect on the stock markets.

In sum, a lowering of interest rates generally lifts the stock market. Conversely, stock market tend to slip as interest rates rise. This is not to say that this happens in perfect co-ordination. It takes time for changes in interest rates to work their way through the markets in the manner described above. For an alert investor, though, changes in interest rates offer pointers to switch from debt investments to the equity market when interest rates fall and vice versa.

7 Indian firms among top 250 global energy companies

Its Time to Start Investing in Power Sector, Read Below to Know the Reason


As many as seven Indian companies figure in the list of the world's 250 top performing energy firms, with Reliance Industries, ONGC and NTPC grabbing the top Asian ranks.


In the annual rankings of Platts Top 250 Global Energy, ONGC and Reliance Industries have made into the top 50 with rankings of 23 and 39 respectively. ONGC has also been named as the third best performing energy company in Asia.

The ranking is published every year by Platts, a division of The McGraw-Hill Companies and a global energy and metals information provider.

Global oil and gas leaders have consolidated their energy businesses with the ranking led by Texas-based Exxon Mobil Corp, followed by the UK's BP Plc and Royal Dutch Shell Plc, Platts said.

Other Indian firms on the list include Indian Oil Corp (52), NTPC (103), GAIL (135), Bharat Petroleum Corp (203) and Hindustan Petroleum Corp (233).

According to Platts, China and India have dominated the sector leadership position. While ONGC has been named as the top Asian firm in the exploration and production (E&P), Mukesh Ambani-promoted Reliance Industries has topped the refining and marketing (R&M) list and NTPC has emerged as the top player in the independent power producers (IPP) category.

Both India and China have seven companies each on the list. However, China is represented by just Petrochina in the top 50 compared with two from India.

There were eight Indian companies on the list last year. However, Neyveli Lignite Corp, ranked 227 in 2006, is not on the list this time. While GAIL India has improved its ranking from 156 last year to 135 this year, ONGC, RIL, IOC, NTPC, BPCL and HPCL have all moved down the rankings. ONGC was ranked 20th, RIL at 30th, Indian Oil at 41st, NTPC at 90th, BPCL at 110th and HPCL at 122nd position last year.

Platts said the list scores the world's top performing energy companies on a combination of assets, revenues, profits and return on invested capital. Also, all the ranked companies have assets greater than $ 2 billion and are publicly listed companies.

Best performing Asian energy business was Petrochina, placed sixth worldwide, and ahead of many long-established western energy companies. It is followed by China Petroleum & Chemical Corp (Sinopec), India's ONGC, Thailand's PTT, and CNOOC from Hong Kong in the top five.

"Under the current volatile and competitive market environment, this year's rankings are more important than ever in highlighting the truly world class performers in the energy industry," said Victoria Chu Pao, Platts President in a statement.

The best performers in Europe, Africa and the Middle East were BP, Shell, Total, Norways Statoil and Italys ENI, in that order. In the Americas, Exxon Mobil, Chevron, Brazils Petrobras, ConocoPhillips and Valero Energy topped the table.

Meanwhile, the only non-oil and gas companies to break into the top 20 positions were French super-utilities EDF Energy and Suez, ranked 14th and 20th, respectively. Also, Germanys E.ON, Gaz de France, Italys Enel, Belgiums Electrabel and the UKs BG Group are among the top 30 in the list.

ABB-Powerful Forecast

ABB Ltd., the Swiss power technology company, has raised its outlook for the next five years, forecasting strong demand for new and upgraded power infrastructure in China, India and the Middle East.

The electrical engineering company is now targeting sales growth of between 8 percent and 11 percent. Operating profit, meanwhile, should rise at an annual rate of between 11 percent and 16 percent.

Both the figures are significantly above ABB's previous sales growth and margin expectations, but in line with market forecasts. ABB had widely been expected to lift its targets amid a global infrastructure boom and investors had already priced in their forecasts.

The company predicted its Asian market will expand by more than 50 percent by 2011, twice as much as in Europe and the Americas. The market in the Middle East and Africa is expected to increase 40 percent.

"Initiatives to optimize our global footprint will continue to bring both cost and growth benefits," said Chief Executive Fred Kindle. "At the same time, we will look for value-creating external growth opportunities."

The new targets from ABB, which has been performing strongly since facing near bankruptcy in 2002 amid a global economic downturn and costly asbestos litigation in the United States, are really strong.

This also shows how much ABB has improved over the past few years. Importantly, ABB's healthy position could enable it to make major acquisitions or pursue a multibillion dollar takeover in the automation sector, where ABB already is already a global leader. ABB could raise as much as $10 billion to sponsor a takeover.

A global economic downturn could still slow the company's growth, even though a feeling of rosiness prevails at present.

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints

Investment bankers upbeat on India

India is largely insulated from the subprime crisis and will continue to see mergers and acquisitions, said investment bankers, speaking at a banking seminar.



“Indian corporates are largely under-leveraged and we will not see any drying up in the financing of large Indian contracts. Pricing of these deals may, however, be higher than what has been in the last few years,” said Tarun Kataria, Head, Investment Banking & Markets, HSBC, speaking at a FICCI-IBA seminar.

He added that the uncertainty due to a global credit slow down could continue for a while. Deals that are stuck will get repriced and restructured.

India may benefit

India, however, stands to benefit since most acquisitions are cash transactions and there are few leveraged buy-outs.

In 2007, there were more outbound deals in India than inbound ones both in terms of number and value. “There were 121 outbound deals for $27.98 billion while there were 51 outbound deals for $27.98 billion. This includes the Tata Steel-Corus and Hindalco-Novalis deal,” said R. Sridharan, MD and CEO, SBI Capital markets

Around 57 per cent of merger and acquisition deals (in terms of value) involved Europe and 34 per cent North America.

Investment bankers believe that the liquidity position in Asia, particularly India, is comfortable.

“However, globally, there is a backlog of $300 billion worth of loans, which are waiting to be syndicated,” said Nalin Nayyar, Managing Director-India investment banking, Lehman Brothers.

TVS Finance - Excellent Investment

TVS Finance: Embracing Temasek

BSE 532319; Rs 16.75

Closed door parleys have been concluded between the TVS group owned TVS Finance and the Government of Singapore clone Temasek, which will allow the entry of the latter as a strategic investor into the company. Temasek-is the investment arm of the Government of Singapore that manages close to $ 100 bn and has made substantial investments in the Indian financial services and infrastructure segments over the past 5 years.

The fact that TVS Finance is owned to the tune of 89.77 per cent by TVS Motors (39.74 per cent), TVS Electronics (35.84 per cent) and TVS Investments (14.17 per cent) makes the entry of a financial investor into the corporate an easier task.

TVS has a large Equity of Rs 41 crore, in addition to Rs 70 crore of Preference Capital. The fall in commercial lending rates and better access to credit offered by Banks has taken away the bread and butter business of NBFCs. Temaseks fund infusion will thus allow TVS Finance to grow once more, cleaning the red on its books .

Background

TVS-FS commenced operations in 1982 as Harita Finance. It was the brainchild of Mr.T.S.Srinivasan, the youngest son of T.V.Sundaram Iyengar, the founder of the TVS group of Companies. Starting off as a player in the corporate finance market, TVS-FS built a large and loyal base of customers who invested vast amounts in the Company’s debt instruments.

Within a decade of its existence, the Company created a very formidable ‘brand’ of personalized service in the non-banking finance sector, which other companies could only aspire to match.

With spreads in corporate financing falling rapidly in the late 1990s, the Company was in the throes of change. Continuously reinventing itself in an industry that has gone through turmoil several times in the past, TVS-FS has emerged as a dominant player in retail financing, particularly two-wheeler finance for TVS Motor vehicles.

By penetrating deep into the pockets of the Southern States, the Company has made financing options available in areas that were hitherto untapped by players in the industry. With a slew of products to come in the retail financing space, TVS-FS is all set to rewrite the rules of the game, yet again.

At TVS-FS, continuous innovation and value-addition to customers, is a way of life. Trust forms the base of any relationship. And, at TVS-FS, building sound working relationships has been the primary focus. The corporation believes that the customer’s needs are better met when an entity makes an attempt to understand those needs. This allows greater flexibility through diverse offerings.


(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)

Markets Poised at a Make or Break Stage

Markets are Poised at an extremely Important stage,

It seems that the Political showdown in curtaining and we might have a Mid Term Election.


Operators might use this chance to correct the market which has shown keen buying, But once the correction is over We do not think the market will or can end up more than 16300 Point this year.

Markets Poised at Knife Edge.

Markets seems to be at a very crucial point, from here it can be a meltdown to 15300 or to a new height.

Thoughthe US markets posed smart gains, our own market can be in for some suprise in the negative factor. We might see some correction followed by buying.

As usual trade at Lows with STRICT STOP LOSSES.

It would be wise to take fresh positions after Sept 18th

Market is at make or break stage.

Intra Day - Recommendations

Nifty at a supp of 4473 and 4433 levels with resistance at 4530 and 4550 levels .

Buy : Intraday : APIL target 780 s/l of 749


Markets at a support of 15342 & 15432 levels with resistance at 15696 & 15786 levels .

Buy : REL & RPL
Buy : JpHydro , TTML , Nagarfert & IFCIBuy : NTPC & Gujambcem bullet

Kotak , Kajaria , Aptech , Tisco

Stock Recommendation

Our prediction( Yesterday) of IDBI doing well against all odds turned out to be Exact.


Today :

The overall view this week seems to be sideways,

Though there is selling, its equally matched with clever positional buying,


Watchout for

KOTAK BANK SL 739, TVS MOTOR SL 69, CHOWGULSTM SL 46

CHENNAI PETRO.

Red Opening - Weak

Market is expected to be Weak,

A Weak opening is expected.

Buy Bombay Dyeing at DIPS &

ADOR WELDING


Trade with strict stop losses

Market will be BEARISH on Monday - Except IDBI

Friday’s trading activity witnessed bear pressure. However, the sentiment reading of the tradable counters remains bullish. Bear move on Monday is likely to change the sentiment reading in their favour. On the contrary, the prevailing bullish sentiment is likely to continue undisturbed.



Nifty Futures

The September month contract opened with a bull gap of around nine points from its previous close. However, bulls were not able to sustain their initial momentum and gave way to bear pressure. The September month contract moved within a range of around 47 points. The September month contract closed with a loss of around 23 points from its previous close.

The long position in the September month contract is undisturbed. The long exit and short entry levels are placed nearer to its last traded price. Bear domination on Monday is likely to reverse the prevailing trend in Nifty September month contract.

The composition and the ranking of the top-10 tradable list had minor changes. Tata Motors made its way to top-10 list pushing out NTPC. Reliance Capital moved from first to third position in t he list. Tata Steel and Reliance Industries moved one step higher in the list. IDBI and SBI interchanged their positions. The long exit level for NTPC is placed at 176.30.

All the counters in the list are in uptrend. Except IDBI and Reliance Energy all other counters are likely to be under threat for Monday’s trading. There are no buying opportunities for Monday’s trading.

Selling opportunities are likely to exist in all the counters except IDBI and Reliance Energy. The best among the above is likely to be selling in Reliance Industries. This counter is in uptrend. Bear move on Monday is likely to reverse the prevailing trend in this counter.

Cash Segment

The composition of the top-10 tradable list had no changes. However the ranking of the top-10 list had minor changes. IDBI and Reliance Energy interchanged their positions. BHEL and Infosys interchanged their positions. The short exit level for Satyam is placed at 455.05.

All the counters in the list are in uptrend. Except IDBI all other counters are likely to be under threat for Monday’s trading. There are no buying opportunities for Monday’s trading. Selling opportunities are likely to exist in all the counters except IDBI.

The best among the above is likely to be selling in Reliance Industries. This counter is in uptrend. Bear move on Monday is likely to trigger the short position in Reliance Industries.

Sept - 6 Stock Recommendation

We will be Updating this till Market Begins and at 11 AM

Be Cautious, once you get a minimal Profit exit without any second thoughts. Be careful on Placing Stop Losses.


Intra Day Tips

Sell VSNL TARGET 396, 392 SL 410

SELL PURVANKARA below 371 TARGET 365, & 360


Also watch out for and buy these at LOWS

DLF & UNITED SPIRITS

Remain Extremely Cautious - Market Will Witness Profit Booking

Remain Extremely Cautious - Market Will Witness Profit Booking
Today is crucial in the context of the world markets falling and due to the 8 days rally. Our markets may witness profit Booking for sure, but as usual there might be some Suprise too.


US markets we down, watch out for the asian clues and Buy at Lows in small quantity and average if it goes still lower. Once you get profit exit from today do not wait for targets.

Markets News - Visu International to raise funds

Sep 5, 2007

Visu International to raise funds

The members of Visu International has decided to issue and allot, in the course of international offerings in one or more foreign markets, in the form / GDRs or equity shares / any securities convertible into equity shares at the option of the company / holder of the securities representing either equity shares or convertible securities representing either equity shares or convertible into equity shares subscribed in foreign currency to foreign investors upto an amount of US $ 20 million and an aggregate number equity shares or such receipts or instruments equivalent to 50 million equity shares of Rs 10 each including the over allotment option.

Further, the members have decided to increase the authorized share capital of the company from Rs 52,00,00,000 to Rs 100,00,00,000.

This was decided at the extra ordinary general meeting held on 31 August 2007.

Market Closing Summary

Sep 5, 2007

Market snaps eight-day winning streak

Domestic stock markets snapped their eight-day winning streak today, 5 September 2007, as profit booking emerged at higher levels in late trade. The market saw volatile movements towards the later half of the day, in sync with Asian and European markets, which also swung in and out of positive zone. Buying was seen in software, sugar and realty stocks. Selling was witnessed in capital goods and oil & gas stocks.

The BSE 30-share Sensex declined 19.25 points or 0.12% at 15,446.15. It opened higher at 15,535.35 and advanced further to hit a high of 15,580.86. It hit a low of 15,407. Sensex oscillated in a range of 173.86 points for the day.

The Sensex had surged 1,301 points, or 9.18%, in eight trading sessions, from 14,163.98 on 23 August 2007 to 15,465.40 on 4 September 2007. A fall in inflation and robust economic data along with steady inflow of FIIs helped the market rally in the recent past.


The S&P CNX Nifty slipped 3.40 points or 0.08% at 4,475.85. The Nifty September 2007 futures settled at 4416.15, a sharp discount of 59.70 points as compared to spot closing

The market breadth which was strong throughout the day, eased in late-afternoon session. On BSE; 1,403 shares advanced as compared to 1,331 that declined, while 65 remained unchanged. This is in contrast to morning session, when 1253 shares advanced, 324 declined and 29 were unchanged.

The BSE Mid-Cap Index rose 0.11% to 6,773.34 while the BSE Small-Cap Index gained 0.23% to 8,289.81. Both these indices outperformed the Sensex.



Most of the sectoral indices on BSE settled higher. The BSE Health Care Index (up 0.50% at 3,698.69), BSE Consumer Durables index (up 1.07% to 4,448.64), BSE Realty index (up 0.77% to 7,520.04), BSE PSU index (up 0.08% to 7,200.09), BSE FMCG Index (up 0.35% at 2,001.21), BSE Metal Index (up 0.17% at 11,598.59), BSE TecK index (up 0.02% to 3,635.58), BSE Auto Index (up 0.05% at 4,876.96) BSE Bankex (up 0.15% at 8,018.42), and BSE IT Index (up 0.44% at 4,646.29) outperformed the Sensex.

However, BSE Capital Goods Index (down 0.48% at 13,566.71) and BSE Oil and Gas Index (down 0.56% at 8,141.59), were underperformers.

Turnover on BSE spiked today to Rs 5,167.23 crore as compared to Rs 4207 crore on Tuesday, 4 September 2007. NSE’s F&O turnover was Rs 42642.91 crore as compared to Rs 39013.75 crore on Tuesday, 4 September 2007.

From 30-member Sensex pack, 18 slipped while the rest gained.

India’s third largest pharma company by sales, Cipla gained 2.17% to Rs 183.50 on 9.27 lakh shares. It was the top gainer from Sensex pack.

Ambuja Cements, India's third-largest cement maker, gained 1.98% to Rs 138.80 after the company said during trading hours on Wednesday, 5 September 2007, its cement shipments rose 3% to 1.15 million tonnes in August 2007 over August 2006.

India’s largest power generation company by sales NTPC advanced 1.74% to Rs 184.50. The stock hit an all-time high of Rs 188.60. As per reports, NTPC is looking at the possibility of acquiring Karnataka-based public sector firm Tungabhadra Steel Products (TSPL). TSPL is a supplier of hydraulic gates, radial and vertical gates for hydel power plants, equipment for sponge iron and thermal power plants, and even oil rigs.

ICICI Bank (up 1.45% to Rs 917.25) and Grasim (up 1.06% to Rs 3055) were the other gainers from the Sensex pack.

IT pivotals gained on fresh buying. Wipro (up 1.08% to Rs 471), Infosys (up 0.20% to Rs 1892.30) and TCS (up 0.87% to Rs 1075) rose

However India’s fourth largest software company by net profit, Satyam Computers slipped 0.72% to Rs 446 on high volumes of 14.26 lakh shares after a block deal of 11.61 lakh shares was struck on the counter on BSE at Rs 453.30 by 09:58 IST.

The rupee was hovering at 40.94, slightly firmer than Tuesday (4 September 2007)’s close of 40.97/98.

India’s largest private sector entity and oil refiner Reliance Industries (RIL) slipped form an all-time high of Rs 1999.30 struck earlier during the day. It shed 1.28% to Rs 1946.20 on 6.56 lakh shares. CPI (M) on Tuesday, 4 September 2007, joined the row over pricing of gas to be produced from RIL’s Krishna Godavari basin, asking the government to reject what it feels is an artificially inflated price proposed by the company.

RIL said after market closed on Tuesday, 4 September 2007, it had acquired a majority stake in Gulf Africa Petroleum Corp for an undisclosed sum.

India’s top small car maker in terms of net profit Maruti Udyog slipped 2.68% to Rs 869.95 after it hinted that it may continue to offer discounts on its car models to boost sales in the upcoming festive season. It was the top loser from the Sensex pack.

Ranbaxy Laboratories (down 2.09% to Rs 398.20), and ACC (down 2.05% to Rs 1075.10) were the other losers from the Sensex pack.

India’s largest listed cellular services provider in terms of profit, Bharti Airtel slipped 1.51% to Rs 846.40. As per reports, in the Karnataka circle, Bharti Airtel cannot acquire any operator as it already has a 39.7% market share. The 40% market share cap suggested by the Telecom Regulatory Authority of India (Trai) is likely to make mergers between existing telecom operators extremely tough.

Larsen & Toubro (L&T), India’s largest private sector engineering company in terms of sales lost 1.82% to Rs 2575.55. It’s ECC division in consortium with Paul Wurth, Italy bagged a Rs 1205 crore order from Bhushan Steel. L&T’s share in this project is pegged at Rs 760.5 crore.

Among side counters, Escorts (up 8.94% to Rs 103), Omnitech Solutions (up 20% to Rs 155.30), and Allied Digital (up 9.58% to Rs 350.10) surged.

SEL Manufacturing (down 17.58% to Rs 147.40), JCT (down 6.90% to Rs 9.99) and Indiabulls Financial Services (down 5.81% to Rs 532.50) slipped

Sugar shares surged on renewed buying. Dwarikesh Sugar (up 2.50% to Rs 55.40), Sakthi Sugar (up 2.99% to Rs 75.75), Triveni Engineering (up 5.09% to Rs 81.55), Balrampur Chini Mills (up 2.18% to Rs 60.95), Shree Renuka Sugars (up 1.10% to Rs 528.90), and Bajaj Hindustan (up 0.75% to Rs 135.05) advanced.

Everonn Systems (Rs 86.77 crore), Reliance Industries (Rs 129.19 crore), Lakshmi Machine Works (Rs 125.48 crore), Take Solutions (Rs 124.66 crore), and Reliance Energy (Rs 117.57 crore) were among the turnover toppers on BSE.

Akruti Nirman moved up 4.34% to Rs 568 on reports that the company has tied-up with a Dubai-based firm Limitless, a subsidiary of Dubai World, to bid for the project for redevelopment of Asia’s largest slum, Dharavi in Mumbai.

Kernex Microsystem (India) jumped 5% to Rs 342.30 on rumors that it may bag a 6-year long railways contract worth Rs 2,000 crore in joint venture with Konkan Railways.

Ashok Leyland had gained 0.91% to Rs 38.70 on reports that the company is open to acquisitions and alliances in medium and heavy truck sectors.

Shreyas Shipping & Logistics had jumped 14.62% to Rs 103.50 after it bought 51% in Sri Lankan transportation and freight forwarding firm Haytrans (India) for an undisclosed amount.

Saregama India jumped 10% to Rs 275.10 after Sonata Investments acquired 10.58 lakh shares of the company, at Rs 260 per share in a block deal on Tuesday, 4 September 2007 on BSE.

Kirloskar Brothers slipped from a high of Rs 477.70 to settle 1.12% lower at Rs 464.95. Its joint venture firm KBL-PLR bagged a Rs 118.27 crore project from Andhra government's irrigation department. Of the total value of the contract, Kirloskar's portion is worth Rs 94.27 crore.

Autoline Industries rose 1.92% to Rs 199. As per reports, it is in advanced talks with a US-based maker of sheet metal-based assembled products with $25 million (Rs102.5 crore) in sales. The firm is also in initial talks with a European sheet metal component supplier which it is interested in acquiring.

Gayatri Projects gained 0.10% to Rs 287.35 on bagging a 3-year long road contract worth Rs 311.89 crore in Orissa.

Cambridge Technology Enterprises rose 1.21% to Rs 50.15 after it said before trading hours on Wednesday, 5 September 2007, its board has approved raising Rs 23.37 crore through the issue of 4.25 million convertible equity warrants at a price of Rs 55 each.

Bombay Burmah Trading Corporation surged 5% at Rs 488.50 on BSE on reports that the company may use its cash reserves to buy Danone’s 25.5% stake in Britannia Industries. As per its latest annual report, it has Rs 608.27 crore in consolidated reserves and surplus.

Hindoostan Spinning & Weaving Mills jumped 5% at Rs 56.10. It had gained 5% yesterday, 4 September 2007 on reports that the firm has sold 8 acres of its defunct mill located near the Siddhivinayak temple at Prabhadevi, Mumbai, for Rs 350 crore to Mumbai-based builder Akruti Nirman.

Gujarat Industries Power Company spurted 8.62% to Rs 69.95. Recently, its board approved expansion of its lignite-fired power generating capacity at an investment of Rs 1300 crore by installing two units of 250 mega watts each.

Exide Industries advanced 4.88% to Rs 64.45. Earlier on 28 August 2007, the company’s board had approved to raise Rs 150 via rights issue in the ratio of 1:15 i.e one rights share for every 15 shares held at Rs 30 per share.

Puravankara Projects was down 1.04% to Rs 371.50. As per reports, it is close to signing a memorandum of understanding (MoU) with France-based hospitality group Accor for the former’s first hotel project in Bangalore.

Pyramid Saimira Theatre (PSTL) was down 4% to Rs 336.90. It hit a high of Rs 361.90 on repots that it is bidding for Hoyts, the largest Australian chain of multiplexes owned by the Kerry Packer group, for around $360 million (Rs 1500 crore).

Jet Airways rose 0.55% to Rs 830, on reports it is delaying a planned $400-million rights issue because of the recent turmoil in the global credit markets.

The government late on Tuesday, 4 September 2007, announced setting up of a 15-member UPA-Left committee which will look into the concerns raised by Left parties on the Indo-US civil nuclear deal. External Affairs Minister Pranab Mukherjee will be the convenor of the committee. The committee will have six members each from Congress and Left parties and one each from UPA constituents RJD, DMK and the NCP.

European markets which opened after the Indian markets, were trading lower. Key benchmark indices in Germany (down 0.80% to 7,660.35), France (down 1.12% to 5,609.40) and United Kingdom (down 0.97% to 6,314.70) slipped.

Asian markets that began trading before the Indian markets, settled on a mixed note. Hong Kong's Hang Seng (up 0.77% at 24,069.17), Shanghai Composite (up 0.31% to 5,310.76) and Singapore's Straits Times (up 2.04% at 3,445.08) advanced.

However, Japan's Nikkei (down 1.60% at 16,158.45), Taiwan Weighted (down 0.10% at 8,913.85), and South Korea's Seoul Composite (down 0.49% at 1,865.59) slipped.

US stocks advanced yesterday, 4 September 2007. The Dow Jones industrial average rose 91.12 points, or 0.68%, to 13,448.86. Broader stock indicators also advanced. The Standard & Poor's 500 index added 15.43 points, or 1.05%, to 1,489.42, and the technology-dominated Nasdaq Composite index surged 33.88 points, or 1.30%, to 2,630.24.

Crude oil rose towards $75 today, 5 September 2007, after predictions of more hurricanes in the Atlantic Ocean raised concern over potential oil and gas outages. US crude was up 70 cents at $74.74 while London Brent crude was up 45 cents at $73.86.

Sep 5 - Stock Recommendation

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Sept 4 - Stock Recommendation

These are Short Term Recommendations. Can be used for Intra day, Exit once you have your Profit of 1 or 2 %


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New Service - Daily Share Recommendation

Starting from 4th Sept 2007 we will be Recommending 3 - 4 Stocks Daily for Intra day or Short Term trading.

Check this page Daily till the market Begins, we will Update once during the market Hours too

Stock Recommendatio Before market opening
Stock recommendation (once) during market Hours

These recommendations are Purely on merit based,

Our Recommendation of SAINT GOBANI yesterday was at 24.20 at the close it was 26.00

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Time to be Cautious

Market almost back with a bang in 6 sessions.

Though a lot was due to Short Covering, it has also added an element called PANIC BUYING.

Markets could feel some selling pressure this week,

As usual average at lows and you can certainly take some profit.


Long Term Recommendation :

Buy SAINT GOBANI for a 3 year perspective - Expect atleast 50% Growth

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Weekly Stock Recommendation

INFOTECH ENTERPRISES



PRICE : RS.270 RECOMMENDATION : BUY

TARGET PRICE : RS.388

FY08E PE : 16X




The Reason to Buy this Stock :


We spoke to the management of Infotech Enterprises. We wanted to update
ourselves on the latest developments within the company and the impact, if any,
of the sub-prime issues prevalent in the US and Europe. We also spoke to Infotech
on the strategic partnership with Continental DataGraphics, a Boeing subsidiary.
The discussion reinforced our view that the recent sub-prime mortgages related
issues will not directly impact the company. As of now, Infotech does not operate
in this area. Hence, the company has no revenue exposure to the same. Infotech
is actively looking at a few acquisitions, for which it had raised close to Rs.3bn
recently. We expect the company to announce these in FY08.


We maintain our earnings estimates of Rs.16 per share in FY08 and Rs.22.8 in
FY09, based on fully diluted equity. We upgrade the stock from HOLD to BUY post
the recent correction. The price target remains unchanged at Rs.388.


The main takeaways are as under:
No direct impact of US sub-prime issues expected
n Infotech operates two businesses engineering, manufacturing and industrial
(EMI) and geospatial solutions design (GSD). The major verticals services by
Infotech are manufacturing, aerospace, telecom, government utilities, etc.
n The company has got no exposure to the financial services space. Thus, the
problems faced by the US sub-prime mortgage segment are not expected to
directly impact Infotech.

n The company has not faced any slowdown or cancellation of orders from any
of its clients, till date.

n However, a recession in major user economies may impact Infotech's customers.

In turn, this will impact revenue visibility for Infotech.

Strategic partnership with Continental DataGraphics

Infotech has entered into a strategic partnership with Continental DataGraphics.

As part of this partnership, Infotech and CDG will jointly bid for technical
publications businesses outside Boeing. The Boeing work will be handled by
CDG.

CDG is expected to handle the critical engine parts. The other work may flow
to Infotech, based on specifications. We also believe some work may be
outsourced by CDG to Infotech, which has got the requisite talent pool.

CDG specializes in the creation, production, and distribution of complex
engineering publications. It provides services like technical authoring and
illustration services, digital imaging. It hosts portal services in the US and
Europe.

The major verticals services by CDG including aviation, aerospace and defense,
manufacturing, energy and government.

CDG has developed complex technical and engineering publications for Boeing
aircraft and other heavy equipment manufacturers for many decades. In 2007,
it is expected to produce more than 2 mn hours in support of technology
initiatives related to the development, management, and delivery of technical
data and publications.

n Infotech is also working on technical publications. This partnership is expected
to help Infotech in reaching out to a larger set of customers.

n The financial details about the expected revenues and margins are not available.

n By virtue of being a vendor to aerospace companies like Bombardier and Boeing,
Infotech may be able to source additional business. This could come in from
the offset clause inserted by the Government in all large defense deals.

n Under the offset clause, foreign companies to which India awards defense
contracts, have to either manufacture 50% of the order value in India or
outsource goods and services amounting to 50% of contract value from Indian
suppliers.

n Infotech is currently executing a small contract under the offset clause.

n The company has formed a 50: 50 joint venture with Hindustan Aeronautics
Ltd (HAL). The JV is expected to target engineering design services for aero
engines, technical publications and the offset program for aerospace sales.

n The JV is close to appointing a CEO. We expect revenues to start kicking in
from Q3FY08.

n As the company had not hedged itself effectively against the rupee appreciation,
Infotech's Q1FY08 profits were impacted.

n The company has now raised its hedges. Currently, Infotech has receivables of
$80 mn hedged at an average rate of 41.61 per US dollar. This should allow
the company to protect its profitability in the event of a sustained rise in the
rupee.

Acquisitions on the anvil
n Infotech had raised about Rs.3 bn in Q1FY08 to fund potential acquisitions.

n We expect the company to complete the acquisitions by FY08 end.

n However, in the absence of any further information, we have not made any
changes to our estimates.


Future prospects
(Rs mn) FY07 FY08E YoY (%) FY09E YoY (%)
Income 5,425.4 6,764.1 24.7 8,984.8 36,312.2
Expenditure 4,291.7 5,427.1 7,217.5
EBDITA 1,133.7 1,337.0 17.9 1,767.3 9,754.9
Depreciation 256.0 334.9 430.0
EBIT 877.7 1,002.1 1,337.3
Interest 13.9 18.0 18.0
Other income 66.8 98.9 187.0
PBT 930.6 1083.0 16.4 1,506.3 9,095.1
Tax 186.5 229.0 346.5
PAT 744.1 854.0 1,159.9
Share of Profit 92.5 76.0 83.0
Adj PAT 836.6 930.0 11.2 1,242.9 11,035.3
Shares (mn) 46.2 54.5 54.5
EPS (Rs) 18.1 17.1 22.8
Margins (%)
EBDITA 20.9 19.8 19.7
EBIT 16.2 14.8 14.9
PAT 15.4 13.7 13.8