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!!! W E L C O M E !!!
In INDIA, people generally relate to stock market as “EASY MONEY” or “SATTA BAZAAR”. For them it’s purely a GAME or matter of sheer LUCK and nothing more than that. But seldom do they know, by following certain PRINCIPLES and taking INFORMED decision, this same platform has the power to take them from rags to riches. No doubt, it has a certain amount of RISK attached to it. But every business or investment has it. What more, the Finance Ministry has already made the long term capital gain as TAX FREE whereas the short term capital gain is taxed at merely 10%. On the economic front, India’s GDP is growing and is expected to grow at scorching pace of more than 8%. Unfortunately, even today our market is being ruled and dominated by FIRANGI’s money. But I can see, the day is not far when our general PUBLIC will change its perception and start putting MOST of their savings in equities as an ** Investment **.
Remember, "K N O W L E D G E" and "P A T I E N C E" are the key to success.
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SAARTHI

Sensex (LIVE- Intraday)

Sensex (LIVE- Intraday)

Saturday, April 5, 2008

STOCK WATCH

Couple of days back GM Breweries (85.00) came out with disappointing nos for March qtr. Sales improved marginally to Rs 49 cr but net profit declined by 25% to Rs 2.65 cr due to lower operating margin. Accordingly company declared 25% dividend (including 5% special dividend being silver jubilee year) which gives a yield of nearly 3% at CMP. Although the March qtr nos were below expectation still the entire FY08 figures are pretty decent as sales grew by 10% to Rs 186 and PAT increased by 25% to Rs 14.70 cr thereby registering a healthy EPS of Rs 16 on equity of Rs 9.40 cr. At the current market cap of Rs 80 cr scrip is trading at a PE ratio of merely 5x times. Having a gross block of whopping Rs 68 cr, low debt equity ratio, strong cash flow, decent margins etc, company deserves much better discounting. With 68% holding, promoters are investor friendly and have an uninterrupted record of dividend payment from the day of listing. At a modest discounting by 12x times, scrip has the potential to cross Rs 200 mark in medium to long term.

PBA Infrastructure (68.00) is engaged in execution of civil engineering projects and specializes in construction of highways, dams, runways and heavy RCC structures, bridges and other infrastructure projects of various govt bodies. It is executing projects from Kashmir to Kanyakumari and has taken up new works like toll collection and quarrying to augment its income. For the first three quarters its revenue increased by 45% to Rs 270 cr and NP increased by only 20% to 11.50 cr. Notably, company has been regularly bagging new orders and its current order book position is around 700 cr. Fundamentally, company is having a huge debt of 170 cr due to which its interest cost is very high. However, to fund its working capital requirement and reduce the high cost debt, company has finalized to make pref allotment of 30 lac warrants to promoter and promoter group. Meanwhile it is estimated to clock a turnover of Rs 375 cr and PAT of Rs 13.50 cr for FY08. This translates into EPS of Rs 10 on current equity of Rs 13.50 cr. Technically scrip seems to have bottomed out and investors should start accumulating from current levels.

Avantel Softtech (60.00) designs and manufacturers repeaters, filters, splitters, tappers, combiners, couplers & amplifiers to enhance the capacity and coverage of wireless communication networks for use in GSM, CDMA and 3G networks. Interestingly, it has developed customized solutions for INSAT based mobile satellite services with advance microwave, digital wireless communication and signal processing products for defence and commercial market. Hence it offers mobile satellite services for messaging, tracking and all locations based services with appropriate network security. Using this same technology it provides specialized products like Ship borne terminal, handheld terminal, S-band receiver, UHF transmitter, burst demodulator etc which are one of its kind. It has also signed a Transfer of Technology (TOT) agreement with ISRO for supply of hubs and satellite interactive terminals for EduSat networks. Thru its govt recognized R&D division, company has developed a number of products for defence sector by ensuring compliance of stringent defence standards. Being Q4 the best quarter for company traditionally, it may end FY08 with sales of Rs 35 cr and profit of Rs 5 cr i.e. EPS of Rs 10 on equity of Rs 5.15 cr. Buy before the nos are out.

Rohit Ferro Tech Ltd (53.00) is a leading producer of high carbon ferro chrome apart from manufacturing ferro manganese and silico manganese through submerged arc furnace route. It has set up a greenfield plant in Jajpur-Orissa thereby taking its total capacity to 165,000 MT from 55,000 MT earlier. Further it has set up fifth furnace with 15000 MT capacity in Bishnupur, which is expected to become operational shortly. To become an integrated player company has applied for mining lease to the state government of Orissa for chrome ore as well as manganese ore. Presently it is sourcing manganese ore from Australia besides local sourcing. On the other hand, due to higher production, better margins, and the better availability of raw-materials company is stressing more on production of ferro manganese in place of high carbon Ferro Chrome For future, it has chalked out a plan to setup a 110 MW captive power plant to being down its power cost. In order to fund this, it recently made a pref allotment of 80 lac convertible warrants @ 43 Rs per share to promoters as well as strategic investors like Kampani Finance, Foster Capital etc. On the back of stunning Q3 nos it may end FY08 with sales of more than Rs 500 cr and PAT of Rs 50 cr i.e. EPS of Rs 14 on current equity of 34.50 cr. Moreover company has the potential to post an EPS of Rs 20 on fully diluted equity of Rs 42.50 cr for FY09. Keep accumulating at declines

Friday, April 4, 2008

Mazda Ltd - Rs 65.00


Established in 1977, Mazda Ltd (Mazda) erstwhile Mazda Controls Ltd was founded by Mr. Sorab R. Mody with a small unit to manufacture automated valve packages. Today, it’s among the few engineering companies in the world, manufacturing very specialized, high technology and critical equipments for various industries like power, refineries, fertilizers, chemicals, nuclear, sugar, paper, food, pharma etc. Broadly its product profile can be segmented into Vacuum system, Valve division, Air pollution control equipment, Crystallizers and Evaporators. Hence its product range includes various types of vacuum jet ejectors, turbine bypass valve, desuperheaters, condensers, pressure reducing stations, pneumatic actuators, steam jet thermo compressors, process control equipments, scrubbers etc. In India, its products are installed at plants of Reliance group, United Phosphorus, IOC, BHEL, Alstom, Cadila, Grasim, GSFC, HPCL, Siemens, Triveni Engineering, GHCL, NRC, L&T, Nuclear Power Corp etc. Besides engineering, it also has a Biotechnology division dealing in carbohydrates, rare sugars and miscellaneous bio-chemicals. Recently, company has diversified into business of manufacturing food and drink concentrates, essence, jams etc in a small scalae.

Mazda has two manufacturing facilities located at Ahmedabad, Gujarat. For vacuum systems and air pollution control equipment, it has a technical collaboration with market leaders Croll-Reynolds Inc. USA, who also holds 12% stake in the company. Accordingly, the designing and engineering is done jointly by them, whereas manufacturing of equipment is done by Mazda and marketing is done by Croll across the globe. Mazda also has the collaboration with Germany-based Kauer Engineering for manufacturing various types of valve. Importantly, Mazda has the coveted ASME 'U' stamp accreditation certificate from the American Society of Mechanical Engineers (ASME) which very few Indian engineering companies can boast off. Hence, company can fabricate pressure vessels and heat exchangers confirming to ASME standards and are authorized to stamp them as 'coded Vessels'. Offlate, Mazda has designed vacuum systems for applications like steel De-gassing & expects good growth in this line of business. In future company intends to increase its export substantially with having Siemens, Alfa Laval, APV Asia Pte, BASF, Petronnas, Bachtel, Colgate Palmolive, European Space Agency, IDE Technologies Ltd, Ministry of Oil & Gas Industry Turkmenistan etc as its international clients. It is also expecting some good order from German firm for supply of fabricated valves for gas pipeline in Europe.

Due to increased business and unavailability of space in its two existing units, Mazda is setting up third manufacturing unit with an investment of approximately Rs 5 to 6 cr and has finalised the acquisition of land at Naroda, Ahmedabad. It is well poised to harness the growth opportunities and is continuously upgrading its manufacturing facilities, technology, production processes and its marketing reach to maintain its growth in future. For FY07 it recorded 40% growth in sales as well as NP to 53 cr and 5 cr respectively. Hence, it reported an EPS of 12 Rs on small equity of 4.25 cr. For FY08 it is estimated to report sales of Rs 65 cr and profit of Rs 6.5 cr which means EPS of Rs 15. Therefore the scrip is trading at a P/E ratio of 4x times which is extremely low considering its expertise and future prospect. Investors are strongly recommended to buy as scrip can easily double within 12~15 months.


Thursday, April 3, 2008

Small & Beautiful (Guj)

Click here to download Gujarati version

Couple of days back GM Breweries (85.00) came out with disappointing nos for March qtr. Sales improved marginally to Rs 49 cr but net profit declined by 25% to Rs 2.65 cr due to lower operating margin. Accordingly company declared 25% dividend (including 5% special dividend being silver jubilee year) which gives a yield of nearly 3% at CMP. Although the March qtr nos were below expectation still the entire FY08 figures are pretty decent as sales grew by 10% to Rs 186 and PAT increased by 25% to Rs 14.70 cr thereby registering a healthy EPS of Rs 16 on equity of Rs 9.40 cr. At the current market cap of Rs 80 cr scrip is trading at a PE ratio of merely 5x times. Having a gross block of whopping Rs 68 cr, low debt equity ratio, strong cash flow, decent margins etc, company deserves much better discounting. With 68% holding, promoters are investor friendly and have an uninterrupted record of dividend payment from the day of listing. At a modest discounting by 12x times, scrip has the potential to cross Rs 200 mark in medium to long term.

Paramount Cables Infratech (25.00) is among the few Indian companies manufacturing the entire range of power cables, railway cables, telecom cables and specialized cables & wires needed by all sectors of the economy. On the back of robust demand company is constantly expanding its production capacity and by end of this calendar year is expected to have an installed capacity of 90,000 km for low tension and 6,000 km for high tension from 55,000 km of LT and 3500 km of HT cables currently. Besides, in Sept 2007 it acquired UK based AEI Cables which claims a market share of 10-15% in UK and currently operates at 60-70% capacity level at its plant in Birtley, North East of England. For FY08 it is estimated to report sales of Rs 450 cr and profit of Rs 35 cr on standalone basis. This works out to an EPS of more than Rs 3 on diluted equity (post conversion of all FCCB @ Rs 53) of Rs 21.50 cr with face value as Rs 2/-. On consolidated basis, the key trigger will be the turnaround of AEI cables. The scrip is trading at almost two year low and its worth a buy.

Royal Orchid (92.00) operates in hospitality sector with major presence in Bangalore. Currently it manages eight properties including five star hotels, budget, resort, serviced apartments etc with a total room strength of around 655 rooms. Interestingly, company follows a unique “Asset light” business model of taking properties on lease or entering into a contract for managing & operating the existing hotel instead of owning them outright. This has helped the company manage its funds efficiently, have lower payback period on its projects & earn attractive operating margins. In the next few months, it is planning to open “Royal Orchid Central” – four star category hotels at Pune (120 rooms) and Hyderabad (65 rooms) to cater the business class. Subsequently it has plans to open five star hotels at Mumbai, Bangalore and Delhi. But for major growth, company wants to target the lower end of the hospitality pyramid and has plans to set up a chain of 50 budget hotels across India under the brand ‘Pepper Mint’ in next 3 to 5 years. Recently it bought 30 acre property in Tanzania and also formed a joint venture with Parsvanath to develop 10 hotels at an investment of Rs 500 cr. Couple of days back company also acquired 50% stake in Galaxy Beach Resort (65 rooms) in Goa. For FY08, it may report total revenue of Rs 140~150 cr and NP of Rs 35 cr on consolidated basis i.e. EPS of Rs 13 on equity of Rs 27.25 cr.

ADF Foods (40.00) is engaged in manufacturing, processing and marketing a wide range of canned, bottled and processed spices, vegetables and readyto-eat foods for exports. Today, it boasts of having more than 300 varieties of traditional and ethnic Indian food products including pickles, cooking pastes, chutney, spices in whole and ground form, IQF Indian vegetables, instant mixes, canned ready to eat vegetables, canned vegetable in Brine, frozen foods, various Indian curries and snacks. Moreover, it has also expanded its menu by introducing / developing non-Indian dishes viz. Asian dishes and Mediterranean dishes. Company’s products are quite popular in USA, UK, Canada, Australia & Middle East apart from being sold in leading supermarkets and retail chains across other countries like New Zealand, Japan, Hong Kong, Singapore, Germany, France, Spain and Denmark. Ashoka, Camel, Truly Indian, Aeroplane etc are few of its very popular brands. To cash on the ongoing retail boom and increased spending culture, company is also looking to enter domestic market as the demand for ready-to-eat foods is on rise in metro/urban cities. It is expected to report total revenue of Rs 90 cr and PAT of Rs 8.50 cr i.e. EPS of Rs 5 on current equity of Rs 18 cr. In Dec 2007, company made a pref allotment of 15 lac warrants to be converted @ Rs 70 to promoter and group. Considering its strong brand value company is available reasonably cheap at current enterprise value of Rs 80 cr. Accumulate at sharp declines.


Click here to download Gujarati version

Wednesday, April 2, 2008

Hind Rectifiers Ltd - Rs 130.00

Established in 1958, with the collaboration of Westinghouse, Brake & Signal, U.K. (who still holds 16% equity stake as on today), Hind Rectifiers Ltd (Hirect) has a rich experience in developing, designing, manufacturing and marketing power semiconductor, power electronic equipments and railway transportation equipments. Currently company derives 50% of its revenue from railways, 20% from power sector and the rest 30% from various industries like telecommunication, electronics, defence, aviation, R&D organizations, electro-chemical, steel, cement etc. Basically, its business is segmented into following four divisions:-

A. Equipment division: manufactures power supply equipments for R&D, Defence & Aviation, DC power system for electrochemical plants, rectifier for metal finishing, battery chargers and dischargers etc. It also offers specialised services such as customisation, automation and optimisation of controls and safety. Notably it has a technical tie-up with M/s Friem S.P.A., Italy in design & technology transfer of high current water cooled rectifier system for Electro-chemical applications.

B. Semi Conductor division: manufactures power diodes, power modules, thyristors & assemblies apart from supplying special devices and assemblies on request. To complement this, a full range of heatsink assemblies using IEC circuit configuration as well as custom design is also manufactured. These semi-conductors find use in industrial, military and transportation applications. Recently, company has signed a technical collaboration agreement with M/s. Infineon Technologies AG, Germany for manufacturing of IGBT based primeSTACK which will compliment its other products. These stacks will also be used for inhouse consumption for manufacture of equipments.

C. Railway Transportation division: manufactures transformer for rolling stock, auxiliary converter and inverter, track side DC substation equipment, rectifier for rolling stock etc. Out of 50% revenue from railways, 10% comes from locomotive transformers, 20% from rectifiers and rest 20% from invertors. Hirect has a technical collaboration with M/s Transtechnik, GmbH of Germany for design and development of inverter and auxiliary converters for traction application. In Collaboration with M/s. Nieke, Germany, company has upgraded its technology and infrastructure for manufacture of main transformer for AC/DC Dual Voltage EMU and BG AC EMU. It also has a tie-up with M/s Microelettrica Scientifica of ITALY for supply of resistors for railway application.

D. Trading division: Hirect has a separate small trading division under which it imports and markets semi-conductor fuses from BUSSMANN-Denmark, capacitors from ICAR-Italy and resistors from MICROELETTRICA SCIENTIFICA, Italy.

Hirect has two manufacturing plants spread across Mumbai and Nasik. Its Equipment division has an ISO 9001 & Semiconductor division has an ISO 9002 quality system. Although railway is its major customer, still it has a huge and reputed clientele including HLL, Indian Navy, Ordnance factory, ISRO, Bhabha Atomic, Hindustan Aeronautical, Nuclear Power Corp, BSNL, BHEL, BEML, Grasim, L&T, Tata Steel, Hind Zinc, Siemes, ABB, Crompton Greaves etc. The products are also exported to Australia, Bangladesh, Canada, Columbia, Italy, Malaysia, Middle East, Pakistan, South Africa, South Korea, Spain, Sri Lanka, Thailand, UK and USA.

Recently, Hirect has modernized all its plants in Mumbai and has setup green-field plants in tax free zone of Uttaranchal for manufacturing of equipment, semiconductor and the railway transportation system. Although this new plant is ready, still Hirect is completing the earlier orders from its old plant in Mumbai and Nagpur in order to get the Cenvat paid on raw material. However the new orders booked by the company will be manufactured at Uttranchal plant, hence the excise and income tax benefits will be visible from FY09. Based on the first three quarter nos, it may end FY08 with sales of Rs 95 cr and PAT of around Rs 11 cr i.e. EPS of Rs 15 on a very tiny equity of Rs 1.50 cr having a face value of Rs 2/- per share. But importantly, company is estimated to report an EPS of more than Rs 20 for FY09. So investors are strongly recommended to buy at current levels as at a fair discounting by 14x times share price can double in 12~15 months. Moreover company is in its 50th year of operation, hence chances of declaring a liberal bonus is also high.


Tuesday, April 1, 2008

Smart Investment (Guj)

Lok Housing & Construction Ltd



Spanco Telesystem & Solutions Ltd