STOCK MARKET INDIA

Stock Recommendation :- Sadbhav Engineering

2008-02-19T14:03:00.000+05:30

Sadbhav Engineering
CMP:- Rs 1330

Sadbhav Engineering, with a focus on the road segment, would be a key beneficiary of the ongoing investments in construction segment. Of the company's current order book of Rs 2,300 crore (Rs 23 billion), road projects account for over 70 per cent, including 32 per cent from BOT projects. Enhanced focus on BOT projects has seen the company win four BOT road projects in consortium with other players over the last six months; Sadhbav's equity contribution is pegged at Rs 92 crore (Rs 920 million).

Going forward, the BOT projects are expected to contribute significantly to revenues as the company has achieved financial closure of Aurangabad-Jalna and Nagpur-Shinoi project during Q3FY08. It expects the Mumbai-Nasik expressway project to achieve closure by December 2008.

From Q4FY08 onwards, its projects in the relatively higher margin mining segment (9 per cent net margin) would be a positive trigger, and will help in improving its bottom line. The revenue will accrue from its ongoing project with GHCL and the recent Rs 245.24 crore (Rs 2.45 billion) order from the Northern Coalfields.

Sadbhav Engineering currently has 15 per cent of its current order book from mining. However, the mix is expected to go up as domestic companies are allotted more mines and thus, reflects huge potential for excavation work.

Considering its current order book, which is over three times its FY08 estimated revenue, the company is expected to maintain revenue growth of over 50 per cent for the next two years.

Also, with the increasing share of mining and the captive resources, the operating margins are expected to improve from 11.9 per cent in the FY07 to 12.5 per cent in FY08 and 13 per cent in FY09. The expansion in margins will also lead to the higher earnings growth. While these positives are partly reflecting in the higher valuations, the stock has good potential.

Reliance Power IPO Refund Details

2008-02-14T14:11:00.000+05:30

For all those who have not received their Reliance Power IPO refunds ,they can check the full details over here. Click Here.

How do firms determine share price for an IPO?

2008-01-28T13:07:00.000+05:30

Have you wondered how firms determine the share price for an IPO.So here is an article from livemint answering your queries.

In stock markets, numbers speak louder than words. Whether it is quarterly results of companies or price discovery mechanisms in an initial public offering (IPO), numbers are our trusted signposts. But numbers don’t fall from the sky. There are well-known price discovery mechanisms in case of an IPO. Our friend Johnny thinks that one should clearly understand these mechanisms before investing in IPOs. So let’s try to understand how the book-building price discovery method is different from the fixed-price method.

Johnny: How is the price discovered during IPOs?
Jinny: Well, discovery of price in an IPO is both a science and an art. The issuer companies have two options for fixing the price. They can either fix the price themselves or they can let the investors determine it. The first method, in which the company itself fixes the price, is known as the fixed-price method and the second, in which investors determine the price, is known as the book-building method. It is important to keep in mind that even in the fixed-price method, the prices are not determined randomly and the company has to disclose all the quantitative and qualitative factors that justify the fixed price.

But the fixed-price method has one drawback. It does not take into account investor demand into price discovery. If you want to sell a piece of gold at its intrinsic value but there is no demand in the market, your piece of gold will not be able to fetch that price. Fixed-price issues also face a similar problem. The issuers arrive at the fixed price after taking into consideration the reasonable value of their company but if there is no demand in the market, the shares will fail to generate subscription. In the opposite scenario, if the demand in the market is high, the price fixed by the issuer may not reflect the true market value and the shares may get sold at a low price. To overcome these kinds of problems, issuers use the book-building method. It helps in matching the price of shares with the demand.

Johnny: How does the book-building method work?
Jinny: In the book-building method, the issuers indicate either a floor price or a price band within which the investors can place their bids. For executing the whole process, the issuers appoint the lead merchant banker as a book runner. The book runner appoints syndicate members who collect bids from investors. Both retail and institutional investors can take part in the bid. The bids received from investors are recorded in a book in electronic form. The book runner, in consultation with the issuer company, evaluates the bids and decides the final price, which is also known as the cut-off price. The cut-off price is the price at which the demand for the shares meets the price. In case your bid is below the cut-off price, you will not receive any allotment.

However, you can avoid this situation by submitting your bid without indicating any price. You have to simply indicate in your bid that you are ready to accept the offer of shares at whatever cut-off price the company fixes in the book-building process. This option is available only to retail investors and most of them submit their bid at the cut-off price.

Johnny: That’s interesting, Jinny. If all investors start submitting their bid at the cut-off price, the price discovery would become a discovery without surprise.

Correction or rally? History says rally...

2008-01-21T19:02:00.000+05:30

The question on every investor's mind is: Will the correction continue or will the markets bounce from current levels?

A brief look at historical data gives an encouraging clue - every sharp fall is invariably followed by a huge rally.

On the last seven occasions when the Sensex dropped over 600 points or more, the index ended higher on six occasions at the end of the month when compared with the day's close with the huge loss.

The only time the Sensex failed to recover was in May 2006 when the index had slumped 826 points on 18 May to 11,391, and then extended its fall (993 points) to end the month at 10,399.

SMART RECOVERY
Date Sensex Fall Month End Recovery
18-Oct-07 17998.39 (717.43) 19837.99 1839.60
02-Apr-07 12455.37 (616.73) 13872.37 1417.00
17-Dec-07 19261.35 (769.48) 20286.99 1025.64
16-Aug-07 14358.21 (642.70) 15318.60 960.39
21-Nov-07 18602.62 (678.18) 19363.19 760.57
01-Aug-07 14935.77 (615.22) 15318.60 382.83
18-May-06 11391.43 (826.38) 10398.61 (992.82)
21-Jan-08 17605.35 (1408.35) ? ?
Fall & Recovery in absolute terms

The best recovery, in absolute terms, was in October 2007. The index had plunged 717 points to 17,998 on 18 October from where it recovered sharply and ended the month at 19,838 - a solid recovery of 1,840 points.

The second best recovery was in April 2007. The index recovered from a 617-point fall on 2 April to 12,455 and ended the month 1,417 points higher at 13,872.

Strong Buy Bharti Airtel

2008-01-15T17:05:00.000+05:30

Strange case of Bharti Stock

In the last two days, stock of Bharti Airtel has taken a terrible beating on the stock markets. The trigger for this downward spiral is the fact that RCom has been successful to get licenses to additional GSM licenses. So the market believes that Bharti will face tougher competition and this will impact their earnings. It is out opinion that these fears are misplaced. It is not as if RCom was absent from these circles and also the CDMA prices are very competitive to GSM prices. So the competition is likely to intensify in acquisition of new customers and turnover rate. With Indian Telecom market still increasing at mind boggling rate, we do not think that this entry will have any meaningful negative impact on Bharti acquiring new customers in at least next 3-5 years.

In addition, if we see the relative stock valuations, Bharti is trading at around PE of 26.5 considering that their EPS for FY 2008 is likely is to be in the range of 32-33 while RCom is trading at PE of around 50. Similar or even more PE are given to Idea and Tata Tele. So fundamentally Bharti is currently at a very cheap level. So for a educated investor, this recent downslide in the stock is a good opportunity to enter into the script. We expect that the stock will at least give 25-30% return in next 12 months.

Reliance Power IPO Two Payment Options Explained

2008-01-14T12:15:00.000+05:30

Here is a article from Bullishindian that explains the Reliance Power IPO payment options.
Reliance Power IPO Two Payment Options Explained.

And if you have more than one demat account then you can apply through both of them for the Reliance Power IPO.

Reliance Power IPO -Applying without a demat account

2008-01-08T17:44:00.000+05:30

Now many retail investors would be interested in the Reliance Power IPO ,even those who dont have a demat account or are just starters in the equity markets. So here is a article from bulllishindian which i came across for all such investors answering their query.

Reliance Power IPO - Applying without a Demat account

Twenty stocks for 2008

2008-01-03T14:06:00.000+05:30

Stock selection will be the key factor in determining returns in 2008, given concerns of a global slowdown and premium valuations in domestic markets.

In our selection, we have looked at the fundamentals of companies and their potential to deliver earnings growth of over 20-25 per cent.

But, while growth is a must, valuations too need to be fair, which is why we kept a tab on the price earnings to growth (PEG) ratio. Here, most stocks are trading at a PEG of less than 1 times based on FY09 earnings estimates, which ensures that the price is not exorbitant.

To ease your effort of picking the juiciest fruits from the orchard, we have handpicked a few likely winners of 2008. Read on.

Adlabs Films
With a strong presence across the entertainment industry value chain of content production, distribution, and exhibition, Adlabs becomes the choicest pick.

Domestic consumption and leisure spends will remain buoyant as disposable incomes rise across the country fuelling growth at Adlabs.

Adlabs produces and distributes films, and is a dominant player in the multiplex segment. It has also acquired 51 per cent stake in television content producer Synergy Communications, the maker of Jhalak Dikhhla Jaa and Kaun Banega Crorepati.

In the FM radio business, its subsidiary, which runs Big FM has 44 FM licenses across India. This could also become a value unlocking opportunity going forward.

Over the past three years, Adlabs has impeccably delivered a top line growth of over 100 per cent y-o-y, along with high profitability. In the September 2007 quarter, it raked in a whopping 69 per cent operating profit margin.

But going by the past numbers, operating margins have remained in excess of 50 per cent consistently, with net profit margins at over 22 per cent. The stock has appreciated three-fold since January 2007 and should do well.

Bank of Baroda
Bank of Baroda has a strong presence in western India —a key zone for retail and industrial growth—with equally good rural network.

Further, the bank is one of the few banks having a substantial international presence, which contributes 18-20 per cent to total business and 30 per cent to profits. This business is expected to rise further with the bank growing its global presence.

The bank has improved its fundamentals over the past several years on key parameters such as net interest margins (NIMs) and asset quality despite growing at a robust pace (asset growth CAGR of 19 per cent in FY04-07). Going ahead, the bank's focus on NIMs backed by moderate growth augurs well.

Besides, its initiatives such as online trading services, and joint ventures in insurance and asset management, will help it create value for its shareholders.

Additional triggers could be in the form of consolidation within the public sector bank space. All this put together makes this stock, which is reasonably valued at 1.4 times its FY09 estimated book value, an attractive investment opportunity.

Bharat Bijlee
Though Bharat Bijlee has risen by a whopping 228.5 per cent in the last one year, even at current levels, it is inexpensive.

Consider this: The company has investment in various companies including Siemens, HDFC and ICICI Bank.

At current rates, their combined value works out to Rs 317 crore, or about Rs 560 per share. Excluding this, the core business is valued at attractive valuations of 20 times FY08 earnings and 15 times FY09 estimated earnings.

The company is capitalising on the emerging opportunities in the power transformer sector, which accounts for 65 per cent of its total revenues with the balance from motors.

In the Eleventh Five Year Plan, a total power generation capacity of 78,000 mw is planned. This augurs well for transformer manufacturers such as Bharat Bijlee.

The company on its part has recently expanded its transformer capacity to 11,000 MVA from 8,000 MVA. The motors business is also witnessing 25 per cent growth and Bharat Bijlee has forayed into higher frame motors of up to 400 kw. All this put together make Bharat Bijlee a good pick.

Bharati Shipyard
Stocks of shipbuilding companies have been re-rated on the back of rising order book-to-sales to over seven times. The stock price of ABG Shipyard has gone up 267 per cent, while Bharati Shipyard is up 107 per cent over the last one year.

The gain has been higher in the case of ABG Shipyard, thus stretching its valuation at 33 times its FY08 estimated earnings. Bharati Shipyard is still trading at a comfortable 18 times estimated FY08 EPS and 13 times FY09 EPS.

Also, its current order book of about Rs 4,639 crore (11 times its FY07 revenue) is strong enough for maintaining 50 per cent growth for the next three years.

Bharati is building a greenfield shipyard which will enable it to build six vessels up to 60,000 dwt (dead weight tonne) against 15,000 dwt currently by December 2008. This will enable Bharati to improve its execution speed and bid for more projects.

Besides, it is planning to invest Rs 2,000 crore along with Apeejay Shipping to set up a shipbuilding yard on the eastern coast, which will be commissioned in FY 2011. A relatively lower valuation and strong earnings visibility makes this stock an attractive investment.

Bhel
Today, the biggest constraint in the power sector is the supply of equipment, especially the critical power equipment required for the larger projects.

But, for Bhel, which commands about 65 per cent market share in the domestic power equipment industry, this provides long-term earnings visibility.

While competition is rising with new players like L&T and Chinese companies vying for a share, Bhel's order book of Rs 62,400 crore, almost 3.6 times its FY07 revenues, instils confidence. The successful acquisition of orders for super critical boilers and high technology gas turbines required for the bigger projects would only improve its order book further.

Considering the huge order backlog and the orders in pipeline, Bhel is expanding its capacities by 67 per cent to 10,000 mw by January 2008, which will further increase to 15,000 mw by December 2009.

Bhel is also expanding its forging and casting capacities and a new fabrication plant to help reduce its dependence on imports. These should also help lower costs in the years to come. Overall, a better industry outlook, strong order book and expansion of existing capacities will drive the stock from the current levels.

Bharti Airtel
With a mobile subscriber base of 51 million, Bharti Airtel is India's largest mobile service provider. While it has added an average of 2 million subscribers a month in Q2, it is expected to crack the 100 million subscriber mark by FY10.

While the company has experienced good growth, its ARPU has fallen by 10 per cent over the last three quarters, much ahead of the 4 per cent decline experienced by Reliance Communications. Even then, operating margins have improved, on the back of higher margin in broadband business and cost reduction.

Going forward, increase in scale of operations will keep costs in check. Capital and operating expenditure is also likely to come down after the formation of Indus, a tower infrastructure company, which will manage the tower infrastructure of Bharti, Vodafone and Idea.

A trigger for the stock could be the listing of Bharti Infratel, the tower division and which holds 42 per cent in Indus. Bharti Infratel already has 20,000 towers and plans to set up more.

RCOM will be the biggest threat for the company if it manages to soon roll out its GSM services across 15 circles. Additionally, any unfavourable outcome over the spectrum issue will have its impact; it could lead to increased investments in upgradation of existing equipment.

To conclude, Bharti's revenues should grow by 35 per cent in the next two years on the back of subscriber expansion, start of Sri Lankan operations by March 2008, and launch of IPTV and DTH. A sum-of-parts valuation puts the per share value of Bharti at Rs 1,200, a 27 per cent upside from the current levels.

Blue Star
The central air conditioning major, Blue Star, is a key beneficiary of the economic boom in the country across sectors like IT/ITES, retail and telecom.

This is reflected in the strong CAGR of 32 per cent and 40 per cent in sales and operating profit respectively in the past three years.

Notably, such strong growth traction is expected to continue as the company is sitting on a strong order book position, which is at Rs 1,030 crore as on September 2007. It is likely to get repeat orders from its existing customers as they expand operations.

It is expanding its capacities by investing about Rs 60-70 crore, which will lead to economies of scale and rationalisation of costs leading to margin expansion. Its return on equity and return on capital employed, which were at 34 per cent and 26 per cent respectively in FY07, will only improve.

However, the full benefits will be reflected only from the next financial year. The macro factors too continue to be robust, with huge investments planned in all the above mentioned sectors.

Dishman Pharmaceuticals
Dishman, a pharma outsourcing player, is moving up the value chain from being a commoditised chemicals supplier to a research partner for innovator companies.

Its acquisition of Swiss-based Carbogen-Amcis (CA), which offers drug development and commercialisation services, has helped it tap into the client base of CA that includes seven of the top ten US drug companies.

With three projects in phase-III development, and likely to hit commercial production in two years, CA's revenues are expected to grow 15 per cent annually to Rs 400 crore by December 2008.

Dishman caters to 50 per cent of Dutch pharma major Solvay Pharma's requirement of eposartan mesylate, an anti-hypertension medication. Its acquisition of Solvay's Vitamin-D business will boost revenues. Its foray into China to manufacture Quats, a catalyst, is also seen positively.

All these should help reduce Solvay's share of 25 per cent in Dishman's revenues going forward. With earnings expected to grow between 25-30 per cent in the next two years (Rs 12 in FY08, Rs 15 in FY09 and Rs 20 in FY10), the stock can deliver 28-30 per cent returns in one year.

Educomp Solutions
Educomp, the market leader in Kindergarten-12 education products, is a successful niche player. It has made some smart acquisitions, entered new areas. and garnered a client base of almost 6,000 schools across India besides, a small presence in Singapore and the US. Its first mover advantage makes it difficult for competition to catch up anytime soon.

Besides, the company has so far acquired and built the abilities to design and create content for schools, learning and school infrastructure management solutions, online teaching solutions, community building solutions and more recently into setting up its own schools.

Financially, Educomp's top line has almost doubled every year and operating margins have been maintained above 50 per cent.

Considering the growth potential in the Indian education industry, Educomp is likely to keep its juggernaut rolling for the coming few years. In FY09, Educomp will double its top line again and grow its earnings by 75 per cent. Although there has been a concern over valuations, the consistent earnings growth justify the same.

HDFC
HDFC is an ideal play on the gamut of financial services. Besides market dominance in housing finance, it provides huge potential for value unlocking from its investment in banking, insurance and mutual fund subsidiaries.

The proposed UTI Mutual Fund IPO, stake sale by Reliance Capital in its mutual fund entity and the probability of listing of insurance companies though in the long term, should provide triggers. Moreover, there is a possibility of a merger with HDFC Bank.

Its core business--housing finance will continue to do well. Its loan book is expected to witness a CAGR of 25 per cent over the next two years. Its net interest margins are expected to remain stable at around 3 per cent.

And, HDFC is known for its asset quality. HDFC's stock trades at about 5 times FY09 estimated book value (adjusted for the value of its subsidiaries, which is about 30 per cent of HDFC's market capitalisation), and is a worthy pick.

India Infoline
India Infoline is another company representing financial services, except the lending business.

Its stock price has grown more than fourfold in the last one year amid many positive triggers like capital raising for expansions, tie-up with strategic investors for investments in subsidiaries and restructuring of its various businesses.

Besides equity broking, it has expanded its product basket to include institutional equities broking, commodities broking, margin finance, investment banking and, distribution of life insurance, mutual fund and loans products.

It is investing towards building a strong distribution network (596 branches in 345 cities) and customer base (5 lakh clients) for its various services. Accordingly, the share of its traditional broking business of about 56 per cent in FY07 revenues is expected to come down over the years.

The stock trades at 51 times and 44 times estimated earnings for FY08 and FY09 respectively. While it looks cheaper than Edelweiss, in terms of market capitalisation to revenues, it trades at a higher P/E than Indiabulls.

However, it has the most de-risked business model compared to other players. Given India Infoline's aggressive growth strategy, the stock is ideal for long term investors.

Jain Irrigation
Jain Irrigation, which is in the businesses of micro irrigation systems, food processing and plastic pipes and sheets, is a direct play on the growing emphasis on agriculture. Irrigation systems account for 30 per cent of its revenue. It’s revenues from micro irrigation have grown at 70 per cent annually.

Growth will be maintained on the back of its plans to launch new irrigation systems, higher replacement demand, focus on geographical diversification.

Jain's five overseas acquisitions, including a 50 per cent stake in NaanDan of Israel, the world's fifth largest micro-irrigation company, will help in terms of access to technology and access to large markets such as South Africa, US, and Europe.

In food processing, which accounts for 14 per cent of total income and grew by 74 per cent in FY07, Jain produces juices and dehydrated vegetables for companies like Coco Cola, Nestle, etc. This business to grow at healthy from hereon.

In plastic pipes and sheets, its products find application in agriculture (30 per cent market share) and telecom (70% share) among others and, should continue to grow at a healthy pace.

To sum up, Jain is operating in high growth areas, while exports too are expected to grow rapidly, which makes it a good investment case.

Jindal Saw
Jindal Saw, the most diversified Indian pipe manufacturer, makes submerged arc welded (Saw), seamless and ductile iron spun pipes, which are used in diverse applications like oil & gas and water-based infrastructure.

The company is expanding its capacities in phases which will bring economies of scale– longitudinal Saw pipes (by 25 per cent), helical Saw pipes (233 per cent) and seamless pipes (150 per cent) -- by FY09. These expansions are well-timed due to strong demand for pipes on account of surging demand for oil and gas globally.

Over the next three-four years, global demand (including India), for Saw pipes is estimated at 200,000 km involving an investment of $60 billion.

Jindal Saw is likely to gain due to restructuring of the investment holdings in Jindal Group companies, wherein it has substantial investments in Nalwa Sons, Jindal Stainless, JSW Steel and Jindal Steel & Power, are worth about Rs 2,200 crore. Excluding the value of investments, the stock trades at 9 times its FY09 estimated earnings, which is attractive as compared with 17 times for Welspun Gujarat.

Larsen & Toubro
Reinventing itself and successfully developing new businesses are among L&T's key strengths. That, along with the domestic infrastructure and global hydrocarbon investments, is responsible for the rising revenues and order book. It is now targeting a turnover of Rs 30,000 crore by FY10 as compared with Rs 18,363 crore in FY07.

Going forward, there is more business to come, as the government has estimated an infrastructure investment of $500 billion during the Eleventh Five Year Plan. Besides, a lot of money will also be spent by domestic players in the metal, oil and gas, power and other industries.

Little wonder, L&T's order book has been rising. As of September 2007, the engineering and construction division had an order book of Rs 42,000 crore.

Going forward, L&T is also focusing on the overseas markets and has targeted exports to increase to 25 per cent of 2010 sales. It is entering shipbuilding, railway locomotives, power generation and power equipment as well.

While all these investments in different businesses will help sustain future growth, the medium term continues to be robust. Some of it is already rubbing off positively on the share price. Although the stock seems richly valued, it can fetch good returns.

Maruti Suzuki
On the back of a sound foundation of existing products (13 models priced between Rs 2 lakh and Rs 15 lakh), strong distribution, efficient service network and new product launches, Maruti Suzuki will maintain its dominant position.

The company has 52 per cent market share by volume of the Indian car market and 62.5 per cent of the small car segment, which is commendable given the stiff competition from global majors.

Maruti grew at a scorching 18 per cent, compared with the 13 per cent recorded by passenger car market in H1 FY08. For eight months ended November 2007, sales volume was up 19.7 per cent to 500,108 vehicles led by 49 per cent growth in exports. Notably, exports are expected to grow 40 per cent annually for the next two years; its share in total sales is likely to move up to 12 per cent in 2010 from 7 per cent in FY07.

Maruti is already augmenting capacities by 3 lakh in a phased manner by FY10 to a million units. Besides, it has lined up Splash (A2 segment) and the concept car A-Star (A1 segment), while a Swift sedan is on the cards. These will help earnings grow by 20 per cent annually in the next two years. Aggressive pricing, enhanced margins on the back of improved product mix, indigenisation and scale benefits, will help Maruti do well.

ONGC
Oil exploration companies are set to benefit from the current high oil prices and firm outlook. India's largest oil exploration company, ONGC is the best bet in this space. ONGC with interest in 85 domestic blocks including 52 offshore fields, has made 28 discoveries in the past two years, of which, 14 were made in FY08 itself.

Further, its 100 per cent subsidiary, ONGC Videsh has stakes in 26 blocks across 15 countries and is expected to be the key growth driver with its share in ONGC's consolidated revenues and profits expected to rise to 20 per cent (14 per cent now) and 14 per cent (9 per cent now) respectively.

ONGC's substantial interests in MRPL, Petronet LNG, GAIL and Indian Oil Corporation are the topping. Moreover, the IPO of Oil India in the next few months could provide further triggers.

What also makes ONGC attractive is that it is the cheapest among its Asian peers trading at 10.1 times estimated FY09 earnings and enterprise value per barrel oil equivalent of about 7.5 times for FY09.

Going ahead, exploration successes especially in the KG basin and favourable announcement on various issues like sharing of subsidy burden, cess and deregulation in gas prices will be big positives.

Patel Engineering
Patel Engineering, which is having an order book of Rs 5,400 crore almost 4.8 times its FY07 revenues, would be the key beneficiary of the boom in the construction, power and real estate sectors.

Within power sector, the 11th Five Year Plan has an outlay of Rs 70,000 crore, adding another 18,000 mw in hydropower generation. Patel Engineering has 22 per cent market share in the domestic hydropower construction, which accounts for 60 per cent of its current order book.

Also, the company has pre-qualified for new projects worth over Rs 6,000 crore as on September 30, 2007.

Besides, its entry into own power generation setting up of 1,200 mw thermal power plant at an investment of Rs 5,000 crore are positive triggers. Meanwhile, its core businesses including construction of dams, transportation and micro-tunneling are growing at a faster pace thus providing sustainable earnings growth.

The immediate trigger would come from its real estate business. Patel Engineering has transferred a land bank of about 1,000 acres spread across Bangalore, Chennai, Hyderabad and Mumbai to Patel Realty India, a 100 per cent subsidiary.

According to estimates, the real estate business is valued between Rs 500-520 per share. All of these make Patel Engineering an attractive investment.

Reliance Communications
Reliance Communications (RCOM) has a mobile telephony market share of 18 per cent and subscriber base of 38 million, which is rising by a million every month. And this should continue to rise as RCOM penetrates into smaller towns.

What's more interesting is that despite concerns over declining, operating margins have improved to 42.2 per cent in Q2 FY08, thanks to the benefits of larger scale.

This is expected to improve further if RCOM gets the go-ahead to operate an additional 15 GSM circles as 65 per cent of passive infrastructure such as telecom towers, is common to both GSM and CDMA technologies and the investments in its existing networks will be incremental.

Additionally, it is the value unlocking in its subsidiaries that are likely to provide further triggers.

In 2008, RCOM is likely to announce a stake sale and subsequently list its tower subsidiary, Reliance Telecom Infrastructure, list its submarine cable subsidiary, FLAG Telecom, hive off of its SEZ and BPO businesses and the launch IPTV and DTH services by the first quarter of 2008.

Analysts estimate that a conservative sum-of-parts valuation based on FY09 numbers for RCOM comes to Rs 850-Rs 900 per share, which indicates an appreciation of 17-24 per cent from current levels.

Reliance Industries
In 2008, Reliance Industries' (RIL) exploration and production (E&P) division, which accounts for 50 per cent of its sum-of-parts valuation, will start selling gas from the KG Basin. The only ambiguous aspect here seems to be the pricing of gas and settlement with the ADA group and NTPC.

Within a few months, Reliance Petroleum will also start operations, all of which should lead to a jump in RIL's profits.

Also, the bids for NELP VII will be awarded by July 2008. While further wins will add to reserves, new discoveries at existing reserves should further add to valuations and the possible de-merger of RIL's E&P division would unlock value.

While the company is yet to prove its mettle in its retail and SEZ initiatives, given its track record managing mammoth projects, one can hope to see positive results here as well.

Notably, analysts maintain their bullish outlook on the core businesses. Refining margins for RIL, already the best among global players, should remain firm until FY11, while petrochemical margins are expected to be stable with good growth in volumes. At a P/E of under 12 times FY09 estimated core earnings, RIL is a worthy investment.

State Bank of India
SBI’s move to merge State Bank of Saurashtra with itself has the potential to trigger the re-rating of public sector banking stocks by pushing the much needed consolidation process.

To further expedite consolidation, the boards of SBI and its other six associate banks are meeting in January to consider merger. Should that happen, SBI's standalone balance sheet size will grow 1.5 times to Rs 8.20 lakh crore, almost double the size of ICICI Bank's.

Also, its branch network will jump 50 per cent to 14,400 branches. But, the improvement in valuations (re-rating) should get a boost when the merged entity is able to rationalise costs and extract benefits from the merger.

SBI will raise Rs 17,000 crore through a rights issue that should provide fuel for future growth. In a competitive Indian banking business, it is important for banks to achieve size and scale to be globally competitive.

And for investors, it is more important to find such banks at reasonable valuations. SBI meets both these criteria. SBI's stock trades at 2.2 times and 2 times its estimated consolidated book value for FY08 and FY09 respectively.

Further, SBI has investments in mutual fund and life insurance subsidiaries, which make valuations more compelling.

Source:- Business-Standard

Dish TV India :BUY Recommendation

2007-12-12T13:40:00.000+05:30

The Hindu Business Line has recommended a buy in Dish TV India at current market price. It is clearly evident from the charts of Dish TV that it was on a long-term downtrend from its life high of Rs 142 (touched in June 2007). However, the stock found support in November at the low of Rs 50 and reversed direction. Since then, the stock has been on a medium-term uptrend, which is still in place. Moreover, we note that the stock’s price action between August and November has formed an inverse head and shoulders pattern with neckline at Rs 90. Following a break out of this inverse head and shoulders pattern in early December, the stock has witnessed a pull back to the neckline (which generally occurs after the breakout of these patterns). Currently, the stock is hovering just above a significant support level of Rs 90 and the next support is pegged at Rs 71. The daily momentum indicator is featuring in the bullish zone. Short-term investors can buy the stock while keeping their stop-loss at Rs 85. We expect the stock to bounce up and reach our price target of Rs 105 in the short-term.

NRI investments: Some FAQs

2007-12-11T14:58:00.000+05:30

If you have just joined the NRI club, congratulations! With the Indian economy booming and the country attracting huge foreign investments, surely you would like to be a part of the India growth story?

Till date, you may have made all your investments in shares, mutual funds, bank deposits and other debt instruments as a resident. Given your changed status, are you allowed to continue investing here? Are there any new regulations to be complied with? Here is a article from The Hindu Business Line regarding NRI Investments.

Bank Accounts

One of the first things you should know as an NRI is that your existing bank accounts are no longer valid. The Foreign Exchange Management Act (FEMA) requires you to inform all the banks where you have an account, be it savings or deposits, about your changed residential status.

The banks will then classify your account as NRO (Non-resident Ordinary). Except for the change in nomenclature, there is nothing new about the account. You can continue using it as before. Payment of EMIs (Equated Monthly Instalment) can go on. You can also hold the NRO account jointly with a resident. But the balance in the NRO account cannot be remitted outside India.

If you want the funds in your account to be freely repatriable outside India, an NRE (Non-Resident External) account would be ideal. This account will be maintained in rupees and any debit or credit of foreign exchange will be converted into rupees.

It cannot be opened jointly with a resident but you can allow a resident to operate it on your behalf.For example, you can authorise your mother to make local payments or even remit money to you through this account by giving her a power of attorney.

Investment options

NRI s can invest only in five asset classes in India — bank deposits, stocks, mutual funds, real-estate and insurance. You can also invest in government securities and company deposits. But you cannot invest in PPF (Public Provident Fund), or bearer instruments such as NSC (National Savings Certificate) or Kisan Vikas Patras once your residential status changes.

Though you are barred from making any fresh investments, existing ones can be left undisturbed. However, they cannot be extended beyond maturity. You can continue to make periodic contributions to the existing PPF account even when you are abroad through your NRE or NRO account. When the investments mature, the proceeds will be credited to the NRO account.

Banks allow NRIs to invest in deposits through FCNRB (Foreign Currency Non-Resident (Banks) accounts. These are term deposits and can be maintained in some currencies such as the US dollar, pound sterling and yen. The funds in this account can be repatriated.

Equity Investments

With the stock markets on a roll, you are welcome to join the party. As an NRI, you are allowed to invest to your heart’s content in both stocks and mutual funds.

While you can continue investing in IPOs (Initial Public Offers) unmindful of your NRI status, there are some procedures to be followed when investing in the secondary market. All along, as a resident, you would have used a demat account to buy and sell shares.

Now, this demat account has to be closed and the shares are to be transferred to a new NRO Demat Account. After this, you can either continue to hold those shares or sell them.

Although an NRO account means that funds are non-repatriable, the Reserve Bank of India allows funds from the sale of financial assets to be remitted outside India after some paperwork. Hence, wherever you are, you can enjoy the proceeds from the sale of shares.

To invest from abroad, you need to open a fresh NRI PINS (Portfolio Investment Scheme) demat account. PINS is a scheme of the RBI under which NRIs can buy and sell shares by routing them through their NRE/NRO account. (An NRE account is preferable, since you can freely transfer the funds abroad after selling the shares). Speculative transactions are not encouraged under PINS. Hence, you need to take/give delivery of shares.

For mutual fund investments, there are no procedural changes. Money can either be remitted from abroad or moved out of your NRE/FCNR accounts maintained at a local bank.

The redemption or the dividend proceeds will be credited to the same account. Again, investments can be made both on a repatriable and on a non-repatriable basis.For these purposes, the PAN card you obtained when you were a resident will hold good. You need not apply afresh.

Insurance and Real-Estate

Presently, NRIs can invest in life insurance policies in India without any limit on the cover. Some companies offer foreign-currency denominated policies and also allow you to pay the premium in foreign currency.

You can also invest in residential and commercial property in India without obtaining any special permission from the RBI. Investment in agricultural land/plantation property/farm house is, however, not allowed.

OPC --One Person Company

2007-11-26T13:32:00.000+05:30

There is a news on Business-Standard that the draft Companies Bill, 2007, has proposed a new entity called a one-person company (OPC) as a measure to provide start-up entrepreneurs and professionals the much- needed flexibility in setting up a business in India.To Read the full article click here. But it would be interesting times for prospective entrepreneurs.

OPC FAQs

What is an OPC?
It is a one shareholder corporate entity, where legal and financial liability is limited to the company only.

Is it prevalent in India?
No. Existing Indian law currently requires at least two shareholders. That is why even for wholly-owned subsidiaries, an individual shareholder has to hold one share as a nominee.

What will be the impact of OPC in India?
Most small companies are actually owned and managed by a single individual, but currently are required to bring in another shareholder. This increases compliance requirements, for example, shareholder meetings require the presence of both the shareholders. OPC will help small single entrepreneurs, who are currently operating under a proprietorship model, move to the corporate structure with benefits of limited liability but with minimal compliance.

Various Brokerage Recos

2007-10-30T12:41:00.000+05:30

With the markets scaling new highs everyday and the sensex crossing the 20K mark every small investor is worried as to where he should put his money.So here are some stocks recommended by various brokers on money control.But the investors should be cautious while investing and invest only in parts so that they can take advantage of every dip in the markets.

House Stocks Views
DSP Merrill Lynch Cairn India Buy; with a target of Rs 218

Religare Dabur India Accumulate; with a target of Rs 120

Morgan Stanley Dishman Pharma ;Overweight; with a target of Rs 392
Indian Hotels Overweight; with a target of Rs 180
Pantaloon Retail Overweight; with a target of Rs 668

Citigroup Gujarat State Petronet Buy,with a target of Rs 74
Sun Pharma Buy with a target of Rs 1150

HSBC Global ABB Underweight, with a target of Rs 1228

SSKI JSW Steel Outperformer, with a target of Rs 1042

ICICI Securities SBI and ITC Buy
Tata Steel Buy; with a target of Rs 1090

CLSA Tata Steel Outperformer
JSW Steel Buy, with a target of Rs 1100

Edelweiss Tulip IT Buy
Bharat Forge Accumulate

SENSEX JOURNEY TO --20000!

2007-10-29T18:16:00.000+05:30

The bulls run the Indian markets have achieved another milestone with Sensex hitting the 20,000 mark. It was a solid 700 points rally on the Sensex and Nifty hit 5,900 levels scoring over a double century. It was third biggest single day absolute point fot the Sensex.

It took 10 sessions for the Sensex to gain 1000 points after it first hit 19,000 level on 15 October 2007.The sensex journey from 5000 to 20000 is as follows

20,000 Oct 29,07
19,000 Oct 15,07
18,000 Oct 9, 07
17,000 Sep 26,07
16,000 Sep 19,07
15,000 July 6,07
14,000 Dec 5, 06
13,000 Oct 30,06
12,000 Apr 20,06
11,000 Mar 21,06
10,000 Feb 6, 06
9,000 Nov 28,05
8,000 Sep 8, 05
7,000 Jun 20,05
6,000 Feb 11,00
5,000 Oct 8, 99

Also here is a article from rediff which gives the sensex journey from 1K till 20K!

A guide on how to invest abroad

2007-10-25T15:19:00.000+05:30

Check out this article from rediff which gives u step by step information on how to invest abroad.

Indian stock market blues & P- Notes issue

2007-10-18T17:01:00.000+05:30

P-Notes ie Participatory Notes have been making rounds everywhere in the news in the last couple of days. The Indian stock market crashed hugely when SEBI made a proposal to tighten the regulations for P-Notes. But does the retail investor really knows about the P-Notes? So here is article from The India Street"Participatory notes:Good or Bad ? " which explains in detail the P-Notes and how does the SEBI proposal affects the market.
The article highlights the following points

What are (Participatory Notes) P-Notes?
How are P-Notes regulated?
Proposal by SEBI
Are the P-Notes being discussed for the first time?
Is this really a crisis to Indian stock markets?
Where does the Indian retail investor stand?

Stock Recommendation : Mindtree Consulting

2007-08-22T13:11:00.000+05:30

Mindtree Consulting
CMP: Rs 533.05
Target price: Rs 575

Morgan Stanley has upgraded its rating on Mindtree Consulting to ‘equal-weight’ from underweight, but lowered the price target for the stock to Rs 575 from Rs 625.

“In our view, MindTree is among the more promising mid-sized offshore IT services companies and offers some compelling business positives including a high-quality management team and good employee brand equity,” the Morgan Stanley note to clients said.

“We have always thought that growth expectations by the street were high for this stock and consequently valuations were rich. The stock is down nearly 30% in the past three months, and while we still do not view valuations as attractive, we do not see them as overly excessive either,” the note added.

Stock Recommendation : Gokaldas Exports

2007-08-22T13:09:00.000+05:30

Gokaldas Exports
CMP: Rs 252.10
Target price: Rs 285

Citigroup Global Markets has retained its ‘buy’ rating on Gokaldas Exports with a price target of Rs 285 after the Blackstone Group’s decision to buy a 50.1% stake in the company.

“Prima facie, we believe that the open offer at a 20% premium from current levels provides a good upside. While the company is unlikely to witness any major operational impact, the fact that promoters have sold a significant stake does raise some concerns,” the Citigroup note to clients said.

“With Gokaldas’ large capacity, good relationships with global brands and healthy order-book position, we believe the company is well positioned for growth. Its strategy to focus on outerwear, enrich its wide product range and expand customer base should lead to a lower-risk business model,” the note added.

Stock Recommendation: Maruti Udyog

2007-08-22T13:07:00.000+05:30

Maruti Udyog
CMP: Rs 767.95
Target price: Rs 980

CLSA has maintained its ‘buy’ rating on Maruti Udyog with a price target of Rs 980, citing reasonable visibility of volume growth as a key trigger.

“The key concerns in investors’ mindset regarding Maruti from an FY09 perspective are domestic volume growth after a slew of competitive car launches and sustainability of margins post increase in exports as a percentage of sales.

Our scenario analysis throws up a worst-case value of Rs 750 and a best-case value of Rs 1,050 for Maruti on FY09 basis,” the CLSA note to clients said. “Our estimates assume 10% domestic volume growth, 1 lakh units of export volumes and a 100 bps year-on-year margin decline in FY09, resulting in an EPS of Rs 74.4.

In our view, Maruti is the only auto stock that offers reasonable visibility of volume growth till FY10 on the back of rising exports,” the note added.

Reliance Communication : Buy

2007-07-31T16:19:00.000+05:30

Here is a Report by UBS on Reliance Communication recommending a Buy on the stock.
Company Name: Reliance Communication
CMP: Rs 559
Target Price: Rs 675
Recommendation : BUY
DOWNLOAD FILE

Beware of "Vishers" & "Phishers"

2007-07-17T11:56:00.000+05:30

Here is a article in ET which tells you about the latest virtual crooks,called the "Vishers". So if you receive an automated call from 0800, beware! Check out the article here

Here's the gist of the article
--If you receive an automated call from 0800, beware!

--The phone number is often 0800 number with a spoofed caller ID of the financial company it is pretending to represent. If you happen to ever receive such a call, it’s better to hang up.

--Dont divulge any account related information such as credit card number/bank account number etc.

Stock Recommendation : Infosys Technologies BUY

2007-07-12T17:18:00.000+05:30

Infosys Tech announced its 1st quarter results yesterday which were quite in line with the expectations.

The company reported consolidated net profit of Rs 1079 crore (including tax write back) in the first quarter of FY08 as against Rs 1,144 crore in the previous quarter, down 5.68%, which was above the market expectations.

The consolidated net profit (excluding tax write back) was up by 5.89% to Rs 1079 crore from Rs 1019 crore (Rs 10.19 billion). Its consolidated net sales has gone slightly up at Rs 3,773 crore (Rs 37.73 billion) from Rs 3,772 crore (Rs 37.72 billion).

The reported net profit and sales of the company was below its given guidance on the back of weak rupee. (The quarter Q1 revenue guidance of was at around Rs 3,896-3,913 crore and the net profit at Rs 1,005.37 crore).

The company has added 35 new clients in the first quarter and 3,730 employees. The attrition rate for the quarter was at 13.7%.The revenue from its top clients grew by 1.2% (QoQ) and from top 10 clients declined by 3.26%.June-end cash reserves of the company stood at USD 1.6 billion.

Infosys Q2 and FY08 guidance
The company is expected to post growth of 17-18.2%% in the revenues at Rs 16,238-16,433 crore and net profit at Rs 4,454-4,499 crore. Infosys is going to deliver growth of 15.5-16.8% in FY08 EPS at Rs 78.20-79.

FY08 EPS (Excluding tax write back) is seen at Rs 77.31-78.11.This FY08 revenue outlook is based on rupee rate of 40.58 per USD.The Q2 revenues are seen at Rs 3,952-3,993 crore, a growth of 4.74-5.83% and EPS seen at Rs 18.88. Net profit is expected to go down 0.05% at Rs 1078 crore.Infosys revised guidance in the dollar terms in upward and in Rupee terms down.It is going to add 26,000 employees in FY08.

Reapreturns Outlook
Looking at the results and taking in to account the trailing four quarters EPS of Rs 74,the stock is currently trading at a PE of Rs 26 which is near to its Minimum PE value. Also if we take the Infosys guidance for the year FY08 EPS of Rs 79 then the stock is trading at a PE of Rs 24 which is quite below is minimum PE. The stock is trading near to its minimum price at current levels.

So Reapreturns maintains a BUY on the stock with a long term price target of Rs 2650 and a target of Rs 2400 with a time frame of 3-6 months.

Book Partial Profits In Geodesic Informations Systems

2007-06-21T11:41:00.000+05:30

Geodesic Informations Systems
Current Price:Rs 294
Recommendation:Hold (investors) Sell(traders)

We had recommended Geodesic Informations Systems on May 7 07 with a target price of Rs 325.The stock had attained a high of Rs 317 in the past 4-5 days.The company has recommended a dividend of 10% and bonus of 1:2(1 share for every two)to the shareholders.So our advice would be to hold the stock if you are a long term investor.But if you have bought the stock for a short time then you should book partial profits and then wait and see where the stock price turns.

Recommendation

2007-05-07T13:36:00.000+05:30

Geodesic Informations Systems
Current Price:Rs 234
Target Price:Rs 325

This company has got very strong fundamentals and has been posting very good results for the past quarters.Inspite of the rupee getting strong the small caps and mid caps are attracting a lot of attention. And Geodesic Informations is a strong player in this sector.

If we see their trailing four quarters PE calculations, then the average PE for the company is around 19 while the min and max are at 14 & 35. At the forecasted EPS for FY 07 of approximately Rs 15, we can say that currently the share is trading near to its average PE of 15.

Also if we take a look at the Technical charts of the company then the MACD signal is well below the zero line which indicates that the stock is a good buy.The RSI and W%R also indicate a buy signal.The stock might consolidate more at this level,so short term traders might want to wait till the stock starts showing some momentum.But for long term investors this stock is worth buying now.

Image Source: Yahoo

India slowing down?

2007-04-16T17:47:00.000+05:30

One of my friends is pretty much obsessed with how the markets are going to come down. He tends to send me articles about it. Here is another one from today’s economic times in India which states how the indicators say that we are in for another slow down in global economy. Now I think that when most of pundits, say something, it usually should be taken seriously.

Some of the hard facts are that top Indian scripts which make the marquee indices are valued very fairly & even aggressively in some cases. If we look at trend over last 5 years, the indices are up & up mostly. Coupled with fundamental growth, it makes sense. If we accept the advice that world markets are due for some sort of slowdown & Indian growth will be hampered by systematic limitations it faces, we are still in scenario of pretty stable growth. Due to recent recovery, the large correction which was expected has not materialized & now markets are again on upswing. So the big correction will come, question is when.

Our advice to average investor is to keep on periodically investing in strong stocks (see recommendations on our blog) & also keep a good amount of cash reserve. As a thumb rule, we would advice to keep 50-50% allocation on additional money to be invested & kept liquid in current scenario. Also short term risky strategies should not be pursued at present moment. It will pay well to remember that things might go in downward direction pretty rapid anytime.

Does Jet require “Sahara”

2007-04-12T14:47:00.000+05:30

So Jet is in negotiation to acquire Air Sahara for a value around 2000 Cr. Based on the reports I have read, this seems to be a very dodgy deal. The CEO was supposedly totally unaware of the deal & the valuations according to most analysts seem highly overstretched. If we look at the synergies, honestly there are not too many. Sahara is in trouble & Jet should have pushed to buy it at discount & not at a premium. But then, as reports suggest, other forces are at play about which we know nothing about.

What should the investors do? currently the stock is taking a beating. Fundamentally Jet is average bet so even with Sahara hit, it should not matter too much. Our advice to investors is that they should think about their position & then decide.

1) If you have Jet shares bought at level lower then current market price: SELL today. Share is likely to go down post the merger & will firmly pick up later on. So it can be bought at its next upward swing.

2) If your buying price is higher then current price: HOLD. And try to buy more as the share goes down to average out your buying.

3) If you don’t have share: Don’t do anything. Let the thing get blown over. Once things start cooling down & there is clarity on how the merger will affect operations, take a decision then.

All About a PAN Card

2007-04-02T19:54:00.000+05:30

All that you wanted to know about a PAN card is summarised below.This a article from livemint in which they have tried to summarize everything about a PAN card.

WHAT
Permanent Account Number (PAN) is a 10-digit alphanumeric number, issued in the form of a laminated card, by the Income-Tax (I-T) department.WHYIt is mandatory to quote the PAN on return of income and all correspondence with any I-T authority. From 1 January 2005, it has been made mandatory to quote the PAN on challans for any payments due to the I-T department.

It is also compulsory to quote the PAN in all documents pertaining to financial transactions notified from time to time by the Central Board of Direct Taxes. Some such transactions are sale and purchase of immovable property or motor vehicle or payments in cash, of amounts exceeding Rs25,000, to hotels and restaurants or in connection with travel to any foreign country. It is also mandatory to mention the PAN for obtaining a telephone or cellular telephone connection. Likewise, the PAN has to be mentioned for making a time deposit exceeding Rs50,000 with a bank or post office, or depositing cash of Rs50,000 or more in a bank.

WHO
• All existing assessees or taxpayers or persons who are required to furnish a return of income, even on behalf of others, must obtain a PAN.
• Any person who intends to enter into a financial transaction where quoting the PAN is mandatory, must also obtain a PAN.
• The assessing officer may allot a PAN to any person either on his own or on a specific request from such person.

HOW
•If you have been putting off getting a PAN because of the hassles involved, there’s help at hand. You can apply for a PAN card online through http://www.utitsl.co.in/pan/ of UTI or https://tin.tin.nsdl.com/pan/index.html run by National Securities Depository Ltd (NSDL).
•All you need to do is fill the required details in Form 49A and pay Rs67 (processing fees: Rs60; service tax: Rs7 at 12.24%) through credit card or a cheque to the NSDL office in Mumbai (I Floor, Times Tower, Kamla Mills Complex, SB Marg, Lower Parel, Mumbai—400013).
• However, you can’t apply online through NSDL if you don’t have a passport. In that case, you need to apply through a UTI website or in person, with documents such as bank account papers and high-school mark-sheets serving as identity and address proofs. On an average, it takes 15-20 working days to get a PAN card.
• And if you are too busy to even apply online, there is a booming middleman industry to see you through. The agents do everything, right from getting a form to submitting it for you. Several financial consultants and personal finance portals offer this facility at a fee ranging from Rs70 to Rs300.
• The I-T department has also authorized UTI Investor Services (UTIISL) to set up and manage I-T PAN service centres in all cities or towns where there is an I-T office. NSDL has also been authorized to offer PAN services from their Taxpayer Identification Number (TIN) facilitation centres.
• Location of I-T PAN service centres or TIN facilitation centres in any city may be obtained from I-T department websites (www.incometaxindia.gov.in or www.utiisl.co.in) and NSDL (http://tin.nsdl.com).
Source:http://incometaxindia.gov.in/PAN/Overview.asp

Would markets break the circuit filter?

2007-04-02T16:54:00.000+05:30

Sensex circuit breaker set at 1,300 points of gain or loss.

A gain or loss of 1,300 points in the stock market’s benchmark index ‘Sensex’ would be necessary to trigger a nationwide trading halt in equity as well as derivatives markets in the first quarter of the current fiscal.

As per the latest Index-based market wide circuit breaker set by the Bombay Stock Exchange, which is revisited at the end of every quarter, the circuit breaker becomes applicable after a movement of 10%, 15% and 20% in the benchmark index.

The circuit breaker would bring about a coordinated trading halt in all equity and equity derivative markets nationwide and these circuit limits would be triggered by movement of either the Sensex or National Stock Exchange’s 50-share Nifty index, whichever is breached earlier, the BSE said in a statement.

The percentage movement is calculated on the closing index value of the quarter and are translated into absolute points of index variations with a rounding off to the nearest 25 points.At the end of each quarter, these absolute points of index variations are revised and made applicable for the next quarter.

The Sensex closed at 13,072.10 on 30 March, the last trading day of the previous quarter. According to the circuit limits set for the current quarter, 10% trigger would be effective after a 1,300 points movement, while 15% and 20% triggers would come into effect after a movement of 1,950 and 2,600 points in the Sensex.

Summer woes for Nifty & Sensex

2007-03-28T20:41:00.000+05:30

The markets are currently very volatile and retail investors are worried as to what approach they should take.Whether the markets will go up or down is a very hard thing to predict.But we analyse the markets and stock prices on a historic trend.So if we take a look at the historic trend of Nifty 50 Index for the past years here are some facts to be noted.During past 4 years markets have seen lows during the summer periods consistently.It may be seen from the charts below.

If we take the time period from 1st of January 2003 to 31st December 2003 then Nifty had seen lows( 924.30) during the april period and highs (1879.75) during the december period.The chart from the NSE website shows the historic trend for the Nify index.

For the same period of year 2004 ie January to December the respective lows and highs for the Nifty were 1388.75 in may and 2080.50 in december.

For the year 2005 Nifty saw a low of 1902.50 in april and a high of 2821.95 in the month of december.

Last year ie in the year 2006 Nifty was down till 2663.30 in june and a high of 4015 in december.

If we look at the 3 months chart for the year 2007,then Nifty was trading high during the first 2 months of Jan and Feb and since then it has been going down.If we see the data for Sensex for the past 4 years then the same is true.In sensex terms the lows were at 2904 in may 2003,4227 in may 2004,6118 in april 2005 and 8799 in june 2006.Market has seen lows around the summer time consistently during the last four years.So going by this observation we can expect more downside ahead around the april -may period.So instead of panicking and selling the stocks investors should take this as a apportunity to buy into some fundamentally strong stocks.
Chart Source:NSE Website

Bet on these 7 shares

2007-03-26T15:27:00.000+05:30

"Stock markets are funny. They behave like a yo-yo."Now everyone will agree with this statement ,and looking at the past few days it seems so true.The markets are very volatile and retail investors are very afraid to put their money.So here is a article on rediff which tells you about 7 shares on which u can bet our money.Check out the article for more details

"These seven companies have taken concrete initiatives (highlight of recent developments) to boost their profits and earnings per share, EPS.
Why should you go for these stocks
They cover the sectors that show tremendous growth potential in India like retail, petrochemicals, telecom, pharmaceuticals, banking and engineering
* None of these represent the volatile commodity stocks
* Recent budget proposals are positive for these stocks
* These companies have fundamentally good business models and are controlled by sound and experienced managements
* Most of these companies are amongst the top five in their line of businesses
* Profitability, sales, and financial results of these companies are quite encouraging
* These are exactly the parameters that successful investors have looked at to make money in the stock markets
So the 7 companies are
Reliance Industries
Reliance Communication
Wochkard Ltd.
Voltas Ltd.
Tata Motors Ltd.
ICICI Bank Ltd.
Tata Steel

Crystal Gazing on the Indian Stock Market

2007-03-22T14:17:00.000+05:30

There is a article on rediff in which six stock market experts have expressed their opinion about the indian stock market future.Now it would have been quite easy if the predictions would come out true,but still the investors can use this as guidelines and invest accordingly.

Here is a short summary from the article.If you want to read the entire post click here
Ramesh Damani
Investment Advisor, Member-BSE
FY08 Sensex estimate: 12,000-15,500
Investors can look to buy some good scrips in this market - ideally, look for companies that are debt-free.

Motilal Oswal
Chairman and Managing Director, Motilal Oswal Securities Limited
FY08 Sensex estimate: No projection
Top bets are Bharti Airtel, Reliance Communication, Maruti Udyog, ICICI Bank, Punjab National Bank, Infosys Technologies, Dr Reddy's, Grasim and SAIL. We are also upgrading our ratings for HDFC Bank, Satyam Computers, HCL Technologies and L&T from 'Neutral' to 'Buy' after the recent correction.

Amitabh Chakroborthy
President, Equities, Religare Securities Limited
FY08 Sensex estimate: 16,100
Investors should look at the current fall in the markets as an opportunity to buy.

N Sethuram
Chief Investment Officer, SBI Mutual Fund
FY08 Sensex estimate: Difficult to give
The stocks from construction sector will definitely bounce back and those who had bought them must sit tight and not panic and sell. The longer term fundamentals are strong, investors can exit later.

Nilesh Shah
Chief Investment Officer, Prudential ICICI
FY08 Sensex estimate: Don't have one
Investors need to be careful with equities, there is no doubt that over a three-year period, the market will deliver positive and sound returns. Investors should certainly stay invested in this market.

A Balasubramanian
Chief Investment Officer, Birla Sunlife Mutual Fund
FY08 Sensex estimate: 15% higher than present level
Investors must bring some of their funds into debt. However, the current volatility does not take away the attractiveness of equity. It will even out and the longer-term fundamentals are quite strong.

First gold ETF debuts on NSE

2007-03-21T14:16:00.000+05:30

Benchmark Asset Management Company, a Mumbai-based mutual fund house, listed Gold BeES, the country’s first gold exchange-traded fund (GETF), on the National Stock Exchange on Monday.

Listing at Rs 1,000.30 a unit, or a gram, Gold BeES gained momentum surging to Rs 1,104, but slumped to Rs 947 within an hour of the launch due to profit booking. The unit closed at Rs 947.80, a marginal rise of Rs 2.10 over the allotment price of Rs 945.70, witnessing a total traded quantity of 66,436 units and a turnover of Rs 631.28 lakh.

The article in Business Standard states that "Physical gold buyers have always been at the receiving end, suffering losses when converted the yellow metal into ornaments or when selling it. But, a buyer of GETF can be proud of owning gold without touching, handling and storing it." So this might be a beginning for investors to save in small amounts for future commitments. And many more MF's are set to launch the instrument very soon.

Wanna get rich?

2007-03-20T14:27:00.000+05:30

Now you would think what is this stupid Q,if u didnt want to then you would not have taken the effort to look at this article.Everyone wants to get rich in a short time with less effort.And what better place than the stock markets.But not within short time and less effort.So am I going to suggest some magic mantra and all.No surely not.But as the markets are choppy these days, investors must be cautious and reluctant to put their money.So here is a article from rediff 5 money lessons to get rich which offers you some time and again underlined, but gr8 tips.Here are the tips to sum up

1.Buy businesses, not stocks.
2.Watch business growth, not rise in stock prices.
3.The stock market is a serious long-term business, not a make-money-overnight casino.
4.Don't be fooled by others' so-called success stories.
5.Time in the market is more important than timing the market.

Growth or Dividend?

2007-03-19T14:05:00.000+05:30

The tax season is here and everyone must be looking at the available investment options .So investing in mutual funds is a easy way for most of the people. But there are a number of Q's which a investor has,some confusions and misconceptions still persist in the mind of many investors.I remember when my dad had to invest his money, he also had some of these misconceptions like "dividend, which an investor assumes to be some extra benefit; whereas it is already part of the corpus and hence reflected in the NAV".Here is a article from rediff which tries to answer some of them.

Multi Manager Equity Fund

2007-03-19T12:58:00.000+05:30

The article from livemint higlights the new Multi Manager Equity Fund which can invest directly in stocks based on the recommendation of a selected panel of fund managers as well as portfolio managers.
TO READ MORECLICK HERE

Foreign Banks allowed to list in India! Will it achieve anything?

2007-03-14T14:30:00.000+05:30

There is news that RBI is going to allow foreign banks to list in India. Is this good news? We do not think so. We think that based on the available information it is just no value announcement. If we look at the restrictions placed on foreign banks then due to their listing not much will change. They will still have to depend on RBI to open new branches & still cannot own the banks outright. On the other hand, being listed will mean that they will have to spend a lot of money in meeting regulatory guidelines. Main reason why companies list is to have cheap access to capital. In case of foreign banks, this is not applicable as they have access to much cheaper credit outside India. Another possible incentive might be the greater operational freedom that they can have due to listing but that is not the purpose of bourses. If RBI has to create a positive environment for foreign banks to participate in Indian Economy, it should do it by modifying the regulatory environment & not by giving such meaningless piece of directives.

Looking at some of the announcements that come out of establishments, one does get his theory reaffirmed that the bureaucratic mindset that plagues organizations like RBI is still there & kicking. There are a lot of good things that can be done to make the Indian banking sector efficient but this is certainly not it.

Round off for the Nifty 50 companies

2007-03-12T19:34:00.000+05:30

AS i mentioned the article from Investment guru Marc Faber,he states that the retail investor should sell at any rebounds.So here are some recommendations from reapreturns for the retail investor to make a exit from these stocks.which we feel are near their target prices.

ONGC:The stock is currently trading at Rs 793.We advise to sell the stock above Rs 850 and book the profits.

Reliance:The stock is trading at Rs 1315.Investors looking to book profits and exit from the stock should do so around a target price of Rs 1450.

Bharti Airtel:The stock trades at Rs 769 currently. Long term investors can hold on to the stock,but those looking to book profits should do so at around Rs 830.

Dr. Doom's Prediction

2007-03-12T19:09:00.000+05:30

I read an interview today on Rediff with Investment Guru “Dr Doom” or known with the Christian name as Marc Faber. He gives his views on current state on Indian stock markets. He says:“Based on the position of overseas markets and international liquidity, I am leaning toward the view that we are faced with something more serious.”

This sentiment is more or less in tune with the prevailing opinion of the pundits. But more interesting is his advice to investors to sell at any rebounds. We at Reapreturns think that though pessimistic, this statement has more then some truth in it for investors to think about it seriously. One of the major drawbacks of retail investors is their inability to move out of markets at opportune time resulting in loss of profits that they make in bull run. What we think is that current situations warrant investors to be slightly more wary as it is easy to get stuck in emotions. Investors should look at their portfolio & for companies that are trading near their high’s, they should exit.

Fixed Deposits: Another way of investing

2007-03-12T15:01:00.000+05:30

This article from ET Dealing with different types of FDs is worth reading for considering the option of investing some of your money in FD's.It outlines the various pitfalls and the best way to invest in FD's.The most common are
* It’s better to opt for an FD with a bank or well-known financial institution, as they offer higher rates, especially for the short term, and are much safer.

* Investments in FDs should be carried out in phases because interest rates may rise further in the near future.

* Investors should ensure that the deposit is not taken for a very long time so as to avoid being locked into a lower rate.

Recommendation:ICICI Bank

2007-03-12T13:04:00.000+05:30

ICICI Bank
Research: Edelweiss
Rating: Buy
CMP: Rs 877
12-Month Price Target: Rs 1,063

ICICI Bank’s board has approved the setting up of ICICI Holdings (100% subsidiary). The bank will transfer its investments in insurance and asset management business to this subsidiary. These investments will be transferred to ICICI Holdings at the book value. ICICI Bank currently holds approximately 74% of ICICI Life and ICICI General and 51% of ICICI AMC and ICICI Trust.

The bank may consider diluting stake in ICICI Holdings to meet capital requirements of ICICI Life and ICICI General. Edelweiss believes this reorganisation will reduce the capital burden on ICICI Bank, prevent equity dilution over the medium term and facilitate capital infusion, as the bank is close to the statutory limit (20% of its net worth) on its investments in subsidiaries, which is restricting capital flows to its growing subsidiaries.

The new growth engines, international and rural banking, are also operational and will push asset growth as the business matures. ICICI Bank is diversifying its business rapidly and gaining market share in all its segments. It enjoys considerable pricing power, given its high retail exposure.

Its wide distribution reach and growing asset book enable rapid expansion of its insurance, asset management, venture capital, investment banking and equity brokerage businesses. Over the past week, ICICI Bank has corrected by 19%, in line with weakness in the market. Post correction, the stock trades at 1.9x FY08E book, which is attractive.

PAN to replace MIN tomorrow

2007-03-01T16:54:00.000+05:30

Now here is a post in which i had outlined how MIN (Mutual Identification Number) was made mandatory for mutual fund purchases of Rs 50,000 or more. And within 3-4 months of this announcement it is being replaced by PAN.

Here is the detailed news
Permanent Account Number (PAN) will tomorrow replace the Mutual Fund Identification Number (MIN), which was earlier this year made mandatory for mutual fund investments worth over Rs 50,000.

"MIN will be withdrawn from tomorrow and PAN will replace it as the sole identification number for mutual fund transactions from March 2," Association of Mutual Funds of India Chairman A P Kurien told the media over phone from Mumbai.

Finance Minister P Chidambaram had in his Budget speech yesterday proposed making PAN the sole identification number for all participants in securities market.

"Investors need to have PAN number and other documents under the KYC (know your client) norms of the Prevention of Money Laundering Act," he said.

About 2,00,000 mutual fund investors are estimated to have already been allotted MIN, which was introduced in January as an enhanced KYC measure to comply with regulatory norms.Central Depository Services Ltd (CDSL), the country's second largest depository, had established a separate company for allotting MIN to investors.

The relieving part is that,those investors, who have already been allotted MIN, need not provide their PAN details afresh.

Budget 07 and ESOPs taxability

2007-03-01T12:57:00.000+05:30

If u were wondering how the Budget 07 and ESOP's taxability would be affecting you then here is a analysis by Nikhil Bhatia,partner at BSR & Co.
The first and the most important is the quoting of PAN number
Obtaining and quoting the Permanent Account Number (PAN) would be the sole identification number for all participants in the securities market.

The Finance Minister has made only a few changes. But those impact the existing individual tax regime in this Budget.

There is no change to the individual tax rates. But the maximum effective tax rate on the highest tax slab of Rs 10,00,000 has increased to 33.99% from the existing 33.66%.

This increase is due to the Secondary and Higher Education Cess of 1 per cent over and above the existing 2 per cent edu cess. This is partially offset by the token increase of Rs 10,000 in the basic exemption limits for all individuals.

Consequently, where senior citizens and others could save Rs 2,000 and Rs 1,000 respectively in taxes, the Secondary and Higher Education Cess on income tax could neutralise such benefits.

This may consequentially adversely impact an individual's take-home salary with a taxable income over Rs 510,000 (assuming he is only claiming a deduction for savings specified under Section 80C).

One important change in this Budget is the taxability of Employee Stock Options (ESOPs). Till now, ESOPs were taxable at the time of sale of shares in the hands of the employees. There was no perquisite taxation for employees.

With the recent increasing trends of multinationals granting huge amount of incentive compensation to attract and retain talent in the form of ESOPs, the value of the ESOP benefit will fall under the Fringe Benefit Taxation (FBT) regime.

The FBT would be leviable at 33.99% on the difference between the fair market value on the date of exercise of ESOPs and the exercise price. This would entail a significant outflow of taxes for the employer.

For plans not compliant with the Central Government Guidelines, there is no perquisite taxation. But the employer would be subject to FBT on similar basis. Such expenditure would not be tax deductible for the employer.

On the sale of shares, the difference between the sales consideration and the fair market value on date of exercise will be subject to Capital Gains Tax.

Stock options issued to globally mobile employees may, under this new amendment, suffer double taxation without corresponding tax credits due to differential tax treatments in India and overseas jurisdictions.

Investment in art is gaining popularity. Such investors could be making substantial gains without payment of any taxes currently on the basis that such art is a personal effect.Budget 2007 decrees that art collections (drawings, paintings, sculptures or any work of art), would not be considered personal effects and will be subjected to capital gains tax on transfer.

Capital gains arising out of transfer of Long Term Capital Assets is generally taxable at 20% (plus applicable surcharge and education cess). Such gains, when invested in bonds of National Highways Authority of India and Rural Electrification Corporation Limited (or other notified assets), are exempted from tax.Last year by virtue of a notification, such investments were restricted to Rs 50,000,00 per taxpayer. This ceiling is now incorporated in the statute itself.

The deduction for contributions to notified pension schemes has now been extended to employees of other employers as well. It was limited only to employees of the Central Government earlier.

This opens up avenues for future notifications of pension schemes which will open doors for non government employers to contribute to such schemes as may be notified in future.

Currently, deduction on interest paid on loan taken from any financial institution or approved charitable institution to pursue higher education is not allowed to parents, only to the student when s/he starts repaying the amount.

Now, the spouse/ children of the individual can claim deduction of interest on loan taken for higher education.The existing limit of Rs 10,000/ Rs 15,000 for deduction for medical premiums for regular/ senior citizen assessees has been increased to Rs 15,000/ Rs 20,000 respectively.

The Banking Cash Transaction Tax will be applicable to individuals and Hindu Undivided Families (HUFs), on cash withdrawals above Rs 50,000 (the earlier limit was Rs 25,000) on any single day from an account (other than a savings bank account).

Reapreturns Recommendation Buy Bharti Airtel

2007-02-28T12:53:00.000+05:30

BHARTI AIRTEL
CMP:Rs 708
TARGET PRICE:Rs 970
CLSA Recommendation: Buy
ReapReturns Recommendation :Buy

CLSA is bullish on Bharti Airtel and has recommended buy rating on the stock with a target of Rs 960. Tower Power raising target price to Rs 960.ReapReturns also recommends a buy on bharti with a target price of Rs 970.Also with the markets shedding a lot of points this is good oppurtunity to enter Bharti airtel at this point.

New target price on the tower option:
We incorporate an option value of Rs158 for Bharti’s towerco based on improving visibility in tower dynamics in India. Maximum leverage on many value drivers to robust Indian wireless growth keeps Bharti our top regional telco pick and a India model portfolio constituent.

Many drivers to more tower sharing in India:
Significant build-out ahead largely in rural areas – sharing bodes well for significant capex savings; (2) potential cost savings could see low tariffs go lower to drive penetration growth: a national objective; and (3) policy and regulatory forces are all in favor. Sharing at ~25% now; we estimate this will rise to 60-70% by FY11.

TowerCo: opportunity to further leverage Bharti’s competitive edge:
Bharti’s demonstrated rollout capabilities, tower share of 36-38% (versus 22% subs share) and early initiatives on infrastructure sharing (asset spin-off, tower sharing MoU with Vodafone) open up the opportunity for Bharti Infratel to become the largest towerco in India.

TowerCo potential: numbers and value
On a DCF, we see US$6.1bn of NPV from the towerco initiative. The implied EV/EBITDA of 17.5x FY08E and 11.7x FY09E are at discounts to a US peer group trading at ~20x on the same metric.

Valuation implications for Bharti, and risks
TowerCo NPV is Rs145/Bharti share. We estimate cost savings at Rs13/share – all of which add to an option value of Rs158/share from its tower initiatives. We see this gradually building into the stock price as execution data points filter in. Slower tower sharing uptake would be the key risk to our argument.

Recommendation:TCS

2007-02-26T13:01:00.000+05:30

TCS
Research: Macquarie
Rating: Outperform
CMP: Rs 1,275 (Face Value Rs 1)
12-Month price target: Rs 1,672

TCS’ products business is relatively lesser known in the industry, but it is comparable to the banking products of Infosys and i-flex. In FY06, TCS’ products business posted a revenue of Rs 358.7 crore, which represented 2.8% of its total revenue (comparable figures for Infosys and i-flex were Rs 360 crore and Rs 720 crore, respectively).

With over 200 clients and the world’s largest core banking deployment (Bank of China), the segment’s contribution to TCS’ global revenue is expected to rise to 5% by FY10. TCS is expected to effectively cushion the impact of salary hikes on margins, largely maintaining margins at the current level of 25% till FY11, and then falling to 20% by FY13.

Macquarie expects the tailwinds from various margin levers to cancel the headwinds from salary hikes and recommends an ‘outperform’ on TCS, given its better-than-peer performance on historical PAT growth, its lower projected price to earnings ratio (PER) for FY08 and almost zero debt. TCS can deliver higher PAT growth (CAGR of 42%) in the three fiscal years through FY09E.

Recommendations:BPCL

2007-02-21T13:21:00.000+05:30

BPCL
CMP: Rs 337
Target price: Rs 540-566

ICICI Securities has upgraded its rating on Bharat Petroleum Corp to ‘buy’ from sell and estimated the fair value of the stock between Rs 540 and Rs 566 per share. “A revival in retail margins, fall in under-recoveries under softer oil prices as well as expansion benefits and earnings from NRL (BPCL’s subsidiary) would result in 45.4% earning per share compounded annual growth rate (CAGR) through FY06-10(estimated); this would also improve future cashflows and returns,” the ICICI Securities note to clients said.

“Further, BPCL’s 66.5% year-on-year underperformance versus the Sensex has priced in policy concerns, lack of transparency in fuel pricing and subsidy sharing,” the
note added.

Recommendations

2007-02-21T13:18:00.000+05:30

Mahindra & Mahindra
CMP: Rs 900
Target price: Rs 1,032

Citgroup Global Markets has maintained its buy rating on M&M, but hiked price target for the stock to Rs 1,032 from Rs 702, factoring in higher cash earnings over the next couple of years and also increase in valuations of its subsidiaries. “M&M has recently recouped nearly 9% market share in the UV segment (market share currently at 53%), due to performance of the Maxx pick-up variant it launched in September 2006.

We expect M&M’s core auto volumes to post a 10% CAGR over FY07E-09E. Operating leverage benefits should continue, mitigating material cost pressures,” the note to clients said. “M&M might further consolidate its leading position in the tractor industry through inorganic initiatives,” the note added.

Recommendations

2007-02-19T13:12:00.000+05:30

Guajrat Ambuja Cements
CMP:133
Target Price:155
Recommendation:Netwoth Stock Broking "Buy"

Networth stock broking recommonds a "Buy" on Gujarat Ambuja Cement at Rs 133, with a target price of Rs 155, an upside potential of 19 per cent.

The stock trades at 12.07 times of its CY07 standalone earnings. On EV/Tonne basis, the stock trades at $248 per tonne of its CY07 capacity of 16.2 million tonne cement.

Though the result for the Q6CY06 were below expectation on account of lower sales volume, higher raw material cost, freight cost and other expenses, the copany posted 72 per cent y-o-y increase in sales to Rs 1329 crore. which is considered on account of 21 per cent growth in dispatches and 41 per cent growth in realisation to Rs 160 per bag as against the assumption of Rs 161 per bag.

On account of lower interest, higher other income and lower tax provision the net profit surged by 285 per cent to 338 crore.The company has announced a capex of Rs 3,350 crore over the next three years towards setting up 6 million cement capacity. And it will also set up 178 MW power plants at various locations.

With firm price outlook on the cement price, cost saving from power plant and possiblity of incresased sale through higher blending the prospects remain positive for the company.

Recommendation: Gujarat Ambuja Cement

2007-02-12T14:59:00.000+05:30

Gujarat Ambuja Cement
Research: Enam Securities
Rating: Hold
CMP: Rs 133 (Face Value Rs 2)
12-Month Price Target: Rs 141

Gujarat Ambuja Cement’s performance during the December ’06 quarter reflects a 20% YoY increase in volumes and higher realisations. While the company reported a 72% YoY growth in revenue, EBIDTA grew by 137% due to improved realisation.

Pre-tax profit was up 214% YoY. Ambuja Cement Eastern has been merged with the company w.e.f. January 1, ’06. So, figures for the December ’06 quarter are not strictly comparable with the corresponding quarter in the previous year, as well as with the quarter ended September ’06.

Demand for cement in CY06 rose ~11.3%. Enam expects demand to grow at ~10% p.a., in line with GDP growth, on the back of strong commercial/industrial activity, and supported by steady residential demand. At the current market price, the stock trades at 15.9 times FY07E earnings and is fairly valued.

LARSEN & TOUBRO

2007-02-06T12:44:00.000+05:30

Larsen & Toubro
Current Price: 1680.3
Target Price: 1710

The stock has jumped out of a trading range. It has a short-term target of about 1710 and it could go further. Keep a trailing stop at 1655. Move the stop up 10 points for every 10 point move. Book only partial profits at 1710 and consider converting to a delivery position with a 15 session perspective.

Bharti Airtel:ReapReturns Recommendation Buy

2007-02-05T14:08:00.000+05:30

Bharti Airtel
Current Price:782
Target Price: 900
ReapReturns :Buy

The stock is in the middle of a strong bull run which is backed by excellent volume expansion. It's not possible to compute a target for this sort of formation. Keep a trailing stop loss at 735 and move it up 10 points per 15 point move. Try to convert to a delivery position with a 10 session perspective.

But with a investment perspective the target price of the stock can be computed around Rs 900.So with the telecom sector buzzing we recommend a buy rating on the stock with a target price of 900 in next 3 months.

TATA TELESERVICES

2007-02-01T17:20:00.000+05:30

Tata Tele has target of Rs 26.60

Anil Manghnani of Modern Shares & Stock Brokers is of the view that Tata Tele has target of Rs 26.60."Tata Teleservices finally after a long time broken out and now we know that it has crossed that range of Rs 17-20, every time it has traded Rs 20-21 and fall, it has broken decisively above that. Now it's definitely moving upwards. The first target would be around Rs 26.60 on the stock, but the next major target would be closer to Rs 29 on the stock."

Recommendations

2007-01-31T12:12:00.000+05:30

Gujarat State Petronet
Cmp: Rs 52.40
Target price: Rs 60
Citigroup Global Markets has maintained its ‘buy’ recommendation on Gujarat State Petronet, and has raised the target price for the stock from Rs 55 to Rs 60. “We are raising our earnings forecasts by 14% for FY07 and FY08 on higher spot LNG volume assumptions.

Our new target price is based on our revised DCF (discounted cash flow) value for the stock following our earnings upgrade,” the Citigroup note to clients said. “With greater visibility of gas supplies ensuring better utilisation of GSPL’s network, we remain positive on the stock despite its very strong performance over the past month,” the note added.

Petronet LNG
Cmp: Rs 53.20
Target price: Rs 70
Ask Raymond James has reaffirmed its ‘buy’ rating on Petronet LNG, and raised its price target for the stock from Rs 66 to Rs 70, citing sustained growth in volumes over the next few quarters. “Higher-than-expected volumes arriving from Qatar and four spot cargos led the surge in earnings ((for October-December) for PLL. We believe these volumes would be maintained in 4Q FY07 and expect this trend to continue for next 4-5 quarters,” the ASK Raymond James note to clients said.

“We have upgraded our earnings estimate for Petronet by 8-18% for FY07(estimated)-FY09E. Based on our upgraded earnings, we expect PLL to clock 25% CAGR growth in revenues over FY06-09E and 33% CAGR growth in PAT over the same period,” the note added.

Recommendations

2007-01-29T13:13:00.000+05:30

Bhel
Current Price: 2446
Target Price: 2520
The stock has made a useful-looking upwards breakout on volume expansion. It has a minimum target of 2520 and it could go further though there is a lot of upside resistance. Keep a stop at 2425 and go long. Book some profits above 2505.

Cipla
Current Price: 243.9
Target Price: 230
The stock has seen a sell-off from the 260 levels on expanding volumes. It’s likely to find some support at about 230 and if that breaks, at 215. Keep a stop at 247 and go short. Cover below 232. Go short again if it breaks 230 with a stop at 232.

Hindalco
Current Price: 175.45
Target Price: 185
The stock has seen a trend reversal jumping on high volumes after excellent Q3 results. It’s likely to hit some resistance at 180 and cross that to top around 185-186. Keep a stop at 170 and go long.

Sail
Current Price: 111.9
Target Price: NA
Sail has seen an almost vertical rise on strong volumes. It’s impossible to calculate targets on such a formation. Set a sliding stop-loss at 105 and go long. Move up the stop loss by 5 for every 10 advance. On long-term charts, there’s a target projection of 125 for what that is worth.

Wipro
Current Price: 651
Target Price: 690
The stock has almost completed a saucer formation, rising from a bottom at around 615. It has a likely target of 690, which it’s almost bound to touch on an intra-day basis. Since we’re in new territory here, projection of sustainable targets is difficult. Keep a stop at 645 and go long. Book profits above 685.

Bharti Airtel: Buy

2007-01-24T12:52:00.000+05:30

Broking house, Macquarie Research has recommended an outperformer rating on Bharti Airtel with a target price of Rs 750.

Macquarie Research report on Bharti Airtel:
Impact
Q3 results well above our expectations: For 3QFY07, revenue was Rs49.1bn, up 12.8% QoQ and 62.4% YoY (in line with our estimates). PAT in 3Q was Rs12.2bn (up 30%QoQ and 123% YoY), ahead of our estimate of Rs11bn, primarily because of better-than-expected EBITDA margins. In addition, PAT was aided by forex gains of Rs2.19bn due to sharp appreciation in the Indian rupee against the US dollar and the Japanese yen in 3Q.

Highest-ever EBITDA margin: EBITDA margin for 3Q was at 40.8%, an expansion of 170bp QoQ and 380 bp YoY. The increase was supported by better EBITDA margins from all businesses. This is historically the strongest EBITDA margin registered by Bharti, led by savings in network opex (flat QoQ) and SG&A expenses (down 2.4% QoQ), driven by economies of scale.

Mobility business revenue grew 13.8% QoQ and 72.8% YoY to Rs37.6bn. ARPU in the quarter stood at Rs427, compared to Rs438 in 2QFY07 and Rs441 in 1QFY07. MoU per month increased to 467 minutes compared to 451 minutes in 2Q, implying increased usage by existing customers even as it adds low MoU/ARPU subscribers. We see continued increase in MoUs.

Capex in 3Q was Rs19.1bn, down 42% QoQ led by much lower capex in the wireless division. Bharti hived off its portfolio of 34,000 towers into a 100%-owned subsidiary, Bharti Infratel. Bharti is entering the Sri Lanka wireless market as the fifth operator (capex not disclosed yet by mgmt).

Bharti is acquiring the i2i submarine cable link between India - Singapore for a consideration of US$110m, its first submarine cable asset.

Price catalyst
12-month price target: Rs750.00 based on a DCF methodology.
Catalyst: 1) Completion of network expansion in all urban centres in the next 12 months; 2) Sequential EBITDA margin improvements; 3) Significant capex and opex savings from network infrastructure sharing.

Action and recommendation
Bharti is our top pick in the India and Asia telecom sectors. We expect Bharti to maintain its revenue/subscriber leadership in Indian wireless in the coming years. We reiterate our strong Outperform rating with a target price of Rs 750.

Recommendations

2007-01-22T12:26:00.000+05:30

Biocon
Current Price: 420
Target Price: NA
The stock has seen a huge jump on volume expansion. It’s difficult to make a projection with this pattern but a target in the 440 range is certainly possible. Keep a stop at 410 and go long. Expect fairly high intra-day volatility.

Grasim
Current Price: 2891
Target Price: 2950
The stock is displaying a stable bullish pattern after a breakout past the 2845 mark. However volumes have declined post-breakout so, that’s not a great sign.

The price pattern can project to a target between 2950-3025. Stay conservative due to the low volumes and assume the lower end of that zone as a target. Keep a stop at 2870 and go long.

IVRCL
Current Price: 403
Target Price: 415, 445
The stock is generating massive futures volumes although the spot is displaying a range trading pattern between 385-415. A breakout past 415 would set up a target in the range of 445-450.

On Friday, it was bullish in a fairly bearish market. Go long with a stop 395 and book partial profits above 410. If it closes above 415, increase the position with 410 as the stop.

L&T
Current Price: 1569
Target Price: 1630
L&T completed a breakout at the 1505 level and it set up a target of 1630. A small reaction has since set in with support at 1555. Keep a stop at 1550 and go long.

Satyam
Current Price: 489
Target Price: 460
A sell-off on disappointing results has pushed the stock down from 520 levels. The bearishness may not be over. There is a chance that the stock will continue to fall till it hits a support at about 455-460. Keep a stop at 495 and go short. Cover below 465.

Use Rs 3-4 correction to go long in Dabur India

2007-01-19T12:32:00.000+05:30

VK Sharma of Anagram Stock Broking is of the view that one can use Rs 3-4 correction from current levels to go long in Dabur India.

Sharma told CNBC-TV18, "Dabur is one stock, which made a skyscraper both in terms of volumes and in terms of the price. You don’t usually see this kind of volumes, this kind of price rise in an FMCG stock, but nevertheless it has taken to an all time high of Rs 175 yesterday, it closed slightly lower at around Rs 171, it has now set up a higher base which would means that the stock is unlikely to go below the level of 160-163. Probably this is the range in which this stock will settle now. But any Rs 3-4 correction from here could be use by investors to go long in the stock."

Recommendations

2007-01-16T13:49:00.000+05:30

BPCL
Current Price: 367
Target Price
The stock bottomed in the 320 region sometime in late December. It is developing a very promising chart formation. There is resistance at current levels but if BPCL closes above 375, it has a target of 390-plus.

It is testing the 365-375 resistance on higher volumes so that could happen fairly soon. Keep a stop at 360 and go long. A delivery position with a 4-week perspective may see a target of 415 being achieved.

ICICI Bank
Current Price: 972
Target Price: 1010
The stock has jumped out of a trading range on Friday though the rise has not come on extra volumes. The formation since early November could be interpreted as a flat reversed head & shoulder with a target of about 1010.

It's difficult to set stops given that it was a one-session move of about 65 and it's an absolutely new zone. Set a stop at 955 and go long.

MTNL
Current Price: 164
Target Price: 185
MTNL has just completed a bullish price formation on high volumes. The target would be about 185 and there's good support at about 160. Keep a stop at 159 and go long.

There appears to have been a change in the long-term trend so, a delivery position can also be contemplated with a time period of about 4-6 weeks.

RIL
Current Price: 1339
Target Price: 1370
RIL has just climbed out of a trading range and the price gains to a record high have come on a volume expansion. The target would be about 1370. Keep a stop at 1305 and go long. The long-term trend is also looking more promising.

TCS
Current Price: 1324
Target Price: 1375
The price has spurted on the basis of result expectations and volumes have expanded. It's difficult to set a clear target but an expectation of 1375 seems reasonable. Keep a stop at 1290 and go long.

Recommendations

2007-01-15T13:14:00.000+05:30

Hindustan Zinc
CMP: Rs 806.50
Target price: Rs 1,160

Macquarie Securities has retained its ‘outperform’ rating on Hindustan Zinc with a 12-month price target of Rs 1,160 following the company’s strong third-quarter numbers. “Given the bullish view on zinc prices in FY08 and expected 50% volume growth in FY09, we estimate sustained high profitability.

We expect earnings upgrades to drive the stock price,” the Macquarie note to clients said. “HZL — with one of the best mining assets, and huge possibility to add more reserves — is trading below its NPV (net present value) of Rs 804 and is one of the cheapest on this basis among its global peers,” the note added.

Reliance Industries
CMP: Rs 1,340.10
Target price: Rs 1,660

Goldman Sachs has upgraded its rating on Reliance Industries to ‘buy’ from ‘neutral’, saying the company’s new exploration and production (E&P) and organised retail ventures are of materially higher value than the market is currently factoring in.

“In our view, the current price factors in the company’s estimated total capex of $8 billion for these new ventures till FY2010E, but is not giving full value to the potential upside this expansionary capex could bring to the stock,” the Goldman note to clients said.

HCC
CMP: Rs 159.75
Target price: Rs 198

HSBC Securities has rated Hindustan Construction Company as ‘overweight’, with a price target of Rs 198. “Our valuation is based on sum-of-the-parts method, with the real estate business contributing 30% to total value,” the HSBC note to clients said.
“HCC is in a sweet spot, with the core construction business on a growth trajectory, driven by infrastructure investments.

To add to this, its foray into real estate would provide added value to the overall company,” the HSBC note to clients said. “

We expect HCC’s core earnings to record a CAGR of 41% over FY06-08(estimated), driven by 27% revenue CAGR (compounded annual growth rate) over the same period, and stable margin,” the note added.

Reliance Comm
CMP: Rs 433.75
Target price: Rs 508

JM Morgan Stanley Securities has raised its target price for Reliance Communications to Rs 508 from Rs 435, citing higher net subscriber additions, average realisations per unit, and higher data revenue. Between FY06-09, the brokerage expects the company’s operating profit to rise 69.3% 157.5%, respectively per year. Morgan Stanley is bullish on the telecommunications sector as a whole.

“Indian wireless penetration has risen 81% last year and is only 13% so far, versus China at 34%. Stable regulation, innovative products, increased capex by operators and falling equipment prices are key growth drivers,” the Morgan Stanley note to clients said.

Bonus, stock splits... India Inc’s set to play Santa

2007-01-15T12:47:00.000+05:30

If the announcements over the past few weeks are any indication, we might see a large number of bonus issues and stock splits this year. A large number of companies have announced or approved bonuses or share splits. Market watchers believe good earnings prospects would see a further increase in the number of companies announcing bonus issues and stock splits.

In the past four weeks alone, about 25 companies have announced bonuses or made their intention to do so in the near future. Meanwhile, about 15 companies have announced stock splits.

Read More

Infosys Technologies Predictions

2007-01-11T13:34:00.000+05:30

Infosys Technologies today announced their results for the Third Quarter ended December 31 2006.The results were mostly in line with the expectations and there were no positive or negative surprises.

Infosys Technologies on Thursday posted a 51.5 per cent increase in net profit at Rs 983 crore for the quarter ended December 31, as compared to Rs 642 crore for the same quarter last year.

So here are some recommendations from various Research companies predicting the targets Infosys may reach.

Buy Infy with target price of Rs 2340: Citigroup

Infosys can add another Rs 100-150:Darashaw & Company

Infosys Technologies can touch Rs 2750:Edelweiss Capital

Do you have your MIN?

2007-01-09T15:56:00.000+05:30

Although quoting a Mutual Fund Identification Number (MIN) has become mandatory for mutual fund purchases of rs 50,000 or more, from January 1, 2007, Barely 2,000 investors had their MINs in place at the beginning of the New Year. This is a rather insignificant number, considering that there are around 2.5 crore folio numbers in existence.

This may be partly due to the fact that the MIN Guidelines came out as late as December 27, 2006, and investors have not had the time to go out and get themselves MINs. It may also be due to the fact that some investors do not realise how simple it is to obtain this number and how all pervading it will become in future.

Here’s an FAQ on MIN and its importance.
What is a MIN? For what do i need it?
A Mutual Fund Identification Number (MIN) is a unique number that is allotted to mutual fund investors. If you plan to make a fresh investment of Rs 50,000 or more in any mutual fund scheme, you must quote your MIN on the application form.

Do all mutual fund investors require a MIN?
At present, those who make fresh investments in any scheme from any fund house require a MIN. If you are investing via a Systematic Investment Plan (SIP), you will need to obtain a MIN even if the SIP was registered prior to January 1, 2007. However, any switches made from existing investments or dividends re-invested do not require quoting of a MIN. Another class of mutual fund investors, who are exempt from furnishing their MIN, are existing investors, irrespective of their current holdings, as long as they do not purchase units worth Rs 50,000 or more.

Do I have to get a new MIN each time I invest in units of mutual funds?
No. Once you acquire a MIN, it can be quoted on all future mutual fund unit purchases that you make, irrespective of which mutual fund house you invest with and which scheme you choose. What’s more, you do not have to mention your MIN, each time you purchase fresh units. Once it is linked to your folio number, the fund house in question will use it in all future account statements. In case you possess multiple folios/accounts with a single mutual fund, you can request them to update the MIN in all your folios/accounts.

Suppose i hold a joint folio with another investor. Do we receive a joint MIN?
No. In the case of joint holdings, each of the holders should have a MIN of their own, which must be quoted across all their holdings, single or joint.

If someone is managing my portfolio for me and investing on my behalf by using my power of attorney (POA), whose MIN must be quoted?
In such cases, the person who holds your POA is required to obtain a separate MIN and quote it along with your own MIN while investing on your behalf.

Can minors apply for A MIN?
Minors will not be allotted MINs. So, while investing on behalf of a minor, the guardian of the minor must quote his or her MIN in the mutual fund form. However, once no longer a minor, the investor must obtain a MIN of his or her own.

What are the charges that must be paid to obtain a MIN?
This number can be obtained free of cost, simply by submitting the appropriate form along with certain basic personal documents.

Where can I get the form? What documents are required?
The form can be downloaded from AMFI’s website (www.amfiindia.com) or from the websites of mutual fund houses with whom you plan to invest. Alternatively, mutual fund distributors will guide you about where a physical form can be obtained. You have to submit proof of identity and address, your photograph and a copy of your PAN card along with the form to designated Points of Service (POS) which comprise select branches/ offices of mutual funds, registrars and select branches of banks.

How long will it take for me to receive a min once I submit all my papers?
After checking your documents, you will be allotted a MIN across the counter. Then, your documents will be subjected to a more detailed verification and in case of any discrepancies, the MIN may be cancelled or rejected. You will be informed about the cancellation/rejection of your MIN through a separate communication.

How can an NRI obtain a MIN?
An NRI must send the filled in form along with a certified true copy of the passport, certified true copy of the proof of overseas address and permanent address to a representative or distributor who can then obtain the MIN for him. These documents can be attested at the Consulate’s office or overseas branches of scheduled commercial banks registered in India.

Can I apply for a MIN even if I do not plan to invest Rs 50,000 in mutual fund units right away?
Of course you can. It will hold you in good stead for the future.

Recommendations

2007-01-09T12:54:00.000+05:30

Here are some stock from the Nifty which are recommended for short term.

BPCL
Current Price: 352.
Target Price: 365, 380
The stock has started climbing on strong volumes. It has a clear run till the 365 level where it will hit resistance and a fair chance of moving further, until about 380, where it will hit another resistance. Keep a stop at 350 and go long. Book partial profits at 365.

GAIL
Current Price: 275.95
Target Price: 295
The stock has cleared a critical resistance and completed a bullish formation on good volumes. It has a likely target of 295 and it may travel further. Keep a stop at 270 and go long.

Hero Honda
Current Price: 749.95
Target Price: 785
The stock has seen a lot of selling and the price has eased from the 790 level. It is now sitting on a good support and the trend may be due for a turnaround.There’s a potential downside till about 740 and a likely upside till about 780. Go long with a stop at 745 and book profits above 780.

ITC
Current Price: 165
Target Price:
The stock has seen high-volume selling which has not been absorbed by the market. It broke a key support at 170. The downside would be until 160 and if that support is broken, until 145. Keep a stop at 170 and go short.

Book partial profits at 160 and increase the short position if ITC closes below 160, assuming a target of 146.

Reliance Communication
Current Price: 446.75
Target Price: 480
The stock has been sold down from about the 480 level. It is likely to see support which will create a range-trading pattern with the stock oscillating between 440-480. Keep a stop at 440 and go long, booking profits at 480. If 440 is broken, go short with a target of 420.

Beating the Sensex?

2007-01-08T16:41:00.000+05:30

Is It possible to beat the index by using a simple mathematical formula? Most of us would agree that it is not possible to develop such a formula to beat the market consistently. However, an equal-weighted BSE Sensex can precisely do that.

Market indices can either give the same weightage to all the stocks or give more importance to the market capitalisation of the blue chip stocks. That means an ONGC or an Infosys has greater influence on the value of the index than, say a Hero Honda.

Now, assuming that the market capitalisation of the Sensex is Rs 300, and you allocate Rs 10 to each stock and maintain this weight, there is a very high chance that you will end up beating the index.

The equal-weighted Sensex (EWS) over the past 10 years has given a 27% annual return as compared to the market capitalisation-weighted Sensex, which gave a return of 15.5% for the same period. Actively-managed diversified mutual funds managed to return 26%.

Read More

Markets in 2007?

2007-01-08T12:52:00.000+05:30

The year 2006 was quite an important year for the Sensex and Nifty.The indices breached many important levels and acheived many all time highs.But with 2006 a past story everyone wants to have a peek as to what 2007 holds for the stock markets.So what do the charts foretell? Here are some key points from a article from business standard in which a panel of technical analysts forecast how markets will behave this year.For a more detailed article Click Here

YEAR OF THE BULL
Milind Karandikar
Neowave Analyst
The most optimistic forecasts by many analysts, for the year 2007, are not exceeding 16000.Of course, the future course of the markets would resolve the validity of my pattern interpretation. But if it is right, then there is a great buying opportunity even today.

Many stocks in the small and mid-cap segments seem to be in a huge accumulation phase and are likely to give an upward break-out. Once such breakouts are confirmed one can buy these stocks on declines that follow the swift rallies and hold for at least 8-12 months.

My advice to small investors is to overcome this fear of heights and invest. They should take this opportunity; else the other wise men will take it away.

BE CONSERVATIVE
Mukul Pal
CEO, Or-phe-us Capitals
BSE Bankex was the next best performing index after capital goods sector. Credit expansion is the highest in late expansion stage.This boosts banking profitability on one side and makes banking sector very vulnerable to corrections. We are near our price targets on the sector and sector components and recommend pre-Budget reductions on the sector.

Technology: Despite the noise that Indian tech companies generate abroad, the sector has under-performed every other sector in 2006. This under-performance should continue.

Technology is in a middle expansion sector and does not do well in late expansion sectors (current). We still believe the technology sector prices should correct sizeably from current levels. We will not be surprised if technology gives negative returns in 2007.

The automobile sector should see negative surprises. The index and its constituent stocks should decline further from here. This push and pull of various sectors should result in sideways to net negative movement till the first quarter of 2007.

CORRECTION AFTER THE MARCH QUARTER
Devangshu Datta
Technical Analyst
Since April 2003, the Nifty has climbed some 324 per cent. Despite several corrections, and the sheer unlikely length of the bull run, the upwards trend has got even steeper since April 2005.

I do think that a major correction sometime in 2007 is extremely likely. We may see a repeat of the situation that occurred in May-July 2006. The market dropped by 30 per cent before it made a recovery. If such a deep correction occurs, it will have one of the following potential fundamental triggers:

* Interest rates are getting tighter – that automatically makes a correction more likely. Another rate hike in the next RBI review could trigger a sell-off.
* The Budget could fail to satisfy the market which is, as usual, making miraculously optimistic consensus estimates about reform possibilities.
* There may be some global event that adversely impacts all stock markets and leads to an FII pull-out. (The foreigners have been strong buyers in the first week of 2007).
* The current highly optimistic earnings estimates for 2006-07 and 2007-08 may not be met if there's even a minor dip in economic demand.

WHERE TO INVEST AND WHEN?
Rajat K Bose
Technical Analyst
The moot question is where to put our money and when. Before we move in to specifics of sectors that look attractive, let’s put things in perspective so that we can come up with some low risk ideas.

It makes sense to look at stocks belonging to sectors that have not been fancied like consumer durables, pharmaceuticals, paper, energy-related sectors (except power equipment manufacturers).

Most of the stocks belonging to these sectors are either at the bottom or have been range-bound for a considerably long length of time. Some of them are really good businesses with good earnings potential.

Some of these stocks are also showing accumulation signs over the last few months. These stocks could probably turn out to be low-risk decent-return bets for 2007. However, they may test your patience before they produce any good gains for you.

Recommendations

2007-01-08T12:19:00.000+05:30

Here are some of the stocks which are recommended by some broking houses.

Tech Mahindra
Research: Enam Securities
Rating: Neutral
CMP:RS 1,640 (Face Value Rs 10)
12-Month Price Target: RS 1,721-1,748

Tech Mahindra’s (TML) recent $1-billion 5-year deal propels it into a high growth orbit. The order involves servicing the global external client base of BT Global Services (BTGS), a key business unit of British Telecom (BT).

The quantum of deal was higher than expected. The first year will entail investments and transition pains, which may result in lower margins. Revenues will scale up from the second year onwards. Based on the revised FDEPS estimate of Rs 65.5 for FY08E, Enam has assigned a higher P/E multiple of 25 times, largely to factor in the higher than industry average growth and better earnings visibility.

Material contribution from the present deal is expected from FY09 onwards. Given the recent outperformance and 3-5% price upside, Enam initiates coverage with sector ‘neutral’ rating. TML currently trades at 25.5 x FY08E FDEPS of Rs 65.5 and 17.1x FY08E EV/EBITDA.

Bajaj Hindustan
Research: Karvy Stock Broking
Rating: Market Performer
CMP:RS 205 (Face Value RS 1)
12-Month Price Target:RS 235

For Q4 FY06 (standalone), Bajaj Hindusthan (BHL) reported a healthy revenue growth of 30.5% y-o-y to Rs 360 crore on the back of 81% increase in cane-crushing capacity. Revenues in the sugar segment grew by 30% to Rs 340 crore, while revenues from the distillery division grew by 100% to Rs 43 crore.

The total revenues were in line with Karvy’s estimates of Rs 360 crore. Operating margins declined by 495 bps to 14.6% due to higher raw material cost and increase in other expenditure. Overall, adjusted net profit declined by 31.5% y-o-y to Rs 38.2 crore, translating into an EPS of Rs 2.5 on diluted equity, against Karvy’s estimates of Rs 4.6.

For consolidated FY06, revenues increased by 77.2% to Rs 1,480 crore, while net profit grew by 31% to Rs 180 crore. At current levels, the scrip is trading at a P/E of 12.1x FY07 and 10.4x FY08 earnings.

Karvy Broking expects revenues to grow at a CAGR of 55% to Rs 3,560 crore and adjusted net profit to grow at a CAGR of 32% to Rs 320 crore in FY08. It is maintaining valuation at 11x FY08 and revising target price from Rs 305 to Rs 235.

Stocks that can make you a millionaire

2007-01-05T15:54:00.000+05:30

Identify stocks
Motilal Oswal Securities Ltd. has been studying wealth creators in the Indian equity markets for over a decade. Every year its Wealth Creation Study looks at the capital markets over the past 5 years to discover trends in wealth creation. Here are some interesting insights, gleaned from these studies.

The Key Points:
Qualitative and quantitative aspects of wealth creators
Good businesses, which get better
Competitive strengths of wealth creators
Characteristics of growth and valuation of growth
Outstanding management
Three components of value
Value of a stock
Transitory or enduring wealth creators
Multi-baggers are of two types: transitory and enduring
Business cycles in commodity businesses
Understanding price and value

For Detailed Article Click Here

Tata Teleservices: Citigroup & ReapReturns

2007-01-04T13:16:00.000+05:30

Broking house, Citigroup Equity Research is bullish on Tata Teleservices and has recommended buy rating on the stock.

Citigroup Equity Research report on Tata Teleservices:
Buy: Laggard Catching Up Slowly

Earnings adjusted, new target price reflects higher dilution
We lower our FY07-08E EBITDA (by 22-25%) based on lower-than-expected performance in 1HFY07 even though sub adds have witnessed acceleration in the 2H. Coupled with higher-than-expected dilution in rights issue (at 19%), we cut our target price to Rs24 (from Rs31.44) based on March-08 DCF.

Operational turnaround on course
TTML has been getting its act together operationally with its share of net adds at 12% for the past six months. However, in the context of its lowest-in-the-industry tariffs, the cumulative share of 7% in Mumbai/Maharashtra remains sub-optimal and appears constrained by its CDMA network.

Returns could be back-ended though
Given TTML’s likely net breakeven in FY09, returns could be back-ended, especially in relation to its peers. We expect financial milestones to drive stock performance. Demonstration of operating leverage, which we expect to improve by 10% during FY07-09E, would be critical.

Corporate action could act as an external trigger
We expect Tata Group to consolidate its telecom holdings relative to VSNL, TTSL and TTML for the next 12-18 months. The process could begin with Tata’s option to buy out the government’s remaining stake in VSNL (the call option for which expires in Feb-07). We think TTML (along with VSNL) offers a route to gain exposure to the consolidated entity.

ReapReturns Recommendation
Based on this recommendation by Citigroup & Reapreturns own analysis, it is clear that Tata Tele is a HOLD at present. We expect the share to break even and enter into positive EPS territory by Q3/Q4 of FY 08. This means that till that time there is likely to be no spectacular movement in share. In addition, currently Tata Tele is long way from even challenging to be a contender for top 3 spots in Indian telecommunications market. So we can summarize the situation as:

If you don’t hold the share: There is no need to buy as it is not going anywhere presently & also in near future.

If you own the share: Hold it. Assuming that you have paid a price of Rs 20 for the share, we expect share to reach Rs 40 by FY 2009. This would mean 100% returns in 4/5 year timeframe which is not too bad.

Other then normal business, we expect special movement in the share only in case of Tata deciding to rope in a foreign partner or making a disrupting change in the company’s strategy, not considering the rumours.”

Have you missed the PAN bus?

2007-01-04T12:40:00.000+05:30

The deadline for providing proof of permanent account number (PAN) for operation of demat accounts has expired. An extension of three months was granted to investors to do so at the end of September. It is now time to understand the implications for those who have not been able to meet the requirements.

Demat accounts are an integral part of the trading process. When shares are bought or sold, they have to be delivered through the demat account in the name of the buyer or seller. While trading in stocks, it is now compulsory to use the demat route. Post the demat scam, strict guidelines were put in place with regards to operation of demat accounts. Now, it is necessary to provide proof of PAN for operating a demat account.

This was implemented in two steps. In the first step, any new demat account opened compulsorily required a PAN. In the second step, PAN was made mandatory for all existing demat accounts. The latter requirement is creating problems for investors. One of them is that the name on the card should match that of the demat account.

Moreover, non-submission of the PAN proof can result in problems for investors. There are two types of entries in a demat account. The first is when the shares come into the account and the second is when the shares go out of the account.

When a share comes into the account, it is called a credit to the account. If you examine the transaction statement that your depository participant sends you along with your demat account, you will notice that whenever an investor buys a share, a credit takes place. On the other hand, whenever an investor sells a share, a debit takes place.

In case of non-compliance of the PAN requirement, the account is suspended for debit. This means that the account will not be debited for any transaction that takes place. Debit in the account can happen in two ways. The first is the normal transaction when the shares are sold in the market and hence, there has to be a debit in the accounts for the shares to exit.

The second transaction is when there is an off-market deal and hence, the shares have to be transferred from one demat account to another. In this case, there is a debit in the account, but the off-market route has to be adopted. Both these types of transactions are halted when the account is suspended for debit and investors cannot operate the account. Hence, individuals who fail to provide the PAN proof are severely affected.

HDFC Securities :Everest Kanto Cylinder: Buy

2006-12-19T13:03:00.000+05:30

Everest Kanto Cylinder
CMP:Rs 642
TARGET PRICE:Rs 970
Recommendation:HDFC Securities:BUY

HDFC Securities has given a ‘buy’ recommendation on Everest Kanto Cylinder with a price target of Rs 970. The company is the market leader in high-pressure gas cylinders with over 90 per cent market share in CNG cylinders in India. The Supreme Court mandate for 28 cities to shift to CNG will benefit the company to a great extent.

Till date, only 15 cities have shifted to CNG, leaving ample scope for the remaining 13 cities. CNG consumption in Mumbai has risen over 374 per cent over the past three years. The demand for CNG cylinders has been growing exponentially at over 40 per cent per annum for the last three years.

The linking of additional cities through CNG pipeline will enhance the market for ONGC cylinders by over 3 lakh cylinder per annum, from 1.78 lakh sold in FY06. The company’s manufacturing facility at Dubai caters to the demand for CNG cylinders in other countries like Pakistan, Iran, CIS and Egypt. Everest Kanto enjoys economies of scale and hence is cost competitive compared to its peers.

On completion of expansion programs, Everest Kanto will become the second largest in the world next to Faber Industries, Italy. The topline is expected to grow at a CAGR of 43 per cent and the bottomline, at a CAGR of 59 per cent over the next three years.

Recommendations

2006-12-18T13:03:00.000+05:30

Dr Reddy's
Current Price: 806.75
Target Price: 820
The stock has just completed a low-volume upwards breakout by closing above 800. The target projection would be about 850 but this is not likely to be achieved in the short-term because of the low volumes. Keep a stop at 800 and go long. Cover above 820.

Grasim
Current Price: 2728
Target Price: 2775
The stock is showing a promising price pattern, rising with decent volumes but it has also hit strong resistance. It is likely to move up until 2775 before reversing direction. Keep a stop at 2715 and go long. Cover above 2770.

ICICI Bank
Current Price: 870.8
Target Price: 840-845
The stock has clawed its way back to pretty much the same levels as on December 8 following a 3-session downturn. It could be a bellwether for the banking industry.

There's strong resistance at 885 and it would be very positive if that was broken. There's strong support at 820-825 and an intermediate downturn should end there.

By Friday evening the momentum was down. We would expect another dip till support at 840 in the short-term. Go short, keep a stop at 885 and cover below 845. If 840 is broken, go short and cover at 825.

Lupin
Current Price: 575
Target price: 600
The stock has broken out up of a range but its done so on low volumes. The target would project to about 590-600. Keep a stop at 560 and go long. Book partial profits at 590.

Reliance Communications
Current Price: 466.25
Target Price: 510
Reliance Communications has made a classic V-shaped upwards breakout, moving to a new high on excellent volumes. It has a target projection of about 510. Keep a stop at 455 and go long. Book partial profits above 485. Consider keeping a delivery position for about ten sessions.

Impact of Zee Tele De-merger on Nifty

2006-12-18T00:46:00.000+05:30

Edelweiss : Impact of Zee Tele De-merger on Nifty

"Zee Telefilms Ltd has approved the de-merger of the company within 4 entities viz. Zee Telefilms Ltd (ZTL), Zee News Ltd (ZNL), Wire and Wireless (India) Ltd (WWIL) and Siti Cable Network Ltd. The exdate for the de-merger has been fixed on 18th December."

According to the brokerage house, current market cap of ZEE Tele is Rs 148 bn corresponding to a weight of 0.77% in Nifty. On 18th December, the de-merged entity would trade without any adjustment in the base market capitalization of Nifty i.e. NSE will not hold any separate price discovery mechanism for adjusting the Index value for the impact of fall in market capitalisation.

Click Here To Read The Complete Report

Mid-caps are the flavour

2006-12-18T00:41:00.000+05:30

Mid-caps Riddhi Siddhi Gluco Biols, Universal Cable, Bhagyanagar India, Maxwell International, Balkrishna Industries, Zodiac Clothing and Rayban Sun Optics are the favourite stocks. The stocks were recommended by brokerage houses Religare Securities, Sharekhan, Networth Stock Broking and Anand Rathi Securities and India Infoline for the medium term.

Riddhi Siddhi Gluco is not just the largest domestic corn starch company, it is also one of the lowest-cost quality starch producers.
To Read MoreClick Here

Karvy recommends a `BUY` on Rolta India

2006-12-15T12:32:00.000+05:30

Rolta India
CMP: Rs 235
TARGET PRICE: Rs 320
Recommendation:Buy Karvy

Karvy recommends a `BUY` on Rolta India (CMP: Rs 235) with a target price of Rs 320.

Over the last 2 decades, Rolta has emerged as a leading CAD/CAM/GIS solutions provider and is also a leading provider of AM/FM services, as it has executed numerous multi-million dollar projects.

In the geospatial space, Rolta has a 70% market share of the domestic Rs 5 billion market working in verticals like telecom, power, internal and border security, town planning and urban development, infrastructure and environment protection.

To consolidate its leadership position, Rolta has entered into a joint venture with Stone & Webster (of US) to provide cost effective engineering design and procurement management services to power, refineries and petrochemical projects worldwide.

In addition, Rolta recently has also entered into a joint venture with Thales of France to provide wider range of advanced technologies and systems for developing state-of-the-art command, control, computers communications, intelligence, surveillance, target acquisition and reconnaissance information systems for the military and internal security.

At Rolta, there is a clear focus to be on the top of the value chain and the joint venture initiatives are in that direction. Over the last four years, it has grown its revenues and profits by 26% and 33% CAGR respectively.

The company`s revenues are expected to grow by 33% for FY07 and 31% CAGR for the next two years, with revenues from CAD/CAM/GIS & PDA solutions accounting for 89% of revenues in FY07, declining to 85% in FY09.

S&P finds stocks overvalued

2006-12-14T13:21:00.000+05:30

Global credit rating agency Standard & Poor’s (S&P) has indicated that Indian stock markets are overvalued currently, recommending underweighing of the markets next year.

For Detailed ArticleClick Here

Correction rather a boon in disguise.

2006-12-13T13:28:00.000+05:30

Correction brings ELSS within reach
The 984-point correction in the benchmark index may not be all that bad for retail investors. It’s rather a boon in disguise. Here’s why: December is the month when a lot of retail investors start tax planning.

With the current 7% plus correction, many equity linked tax savings instruments such as equity linked savings schemes (ELSS) and unit linked insurance plans (Ulips) have seen massive correction in their net asset values (NAVs). In many of these funds, the correction in NAV is more than 7%.

This is because, these funds invest in the broader market and not just the benchmark indices. And since the second rung (small and mid-cap) stocks have fallen much higher than the benchmark indices, NAVs for both ELSS and Ulip schemes have plunged more than 7%. So, suddenly, ELSS and Ulips might see a lot of inflows. Already domestic institutions are said to be sitting on piles of cash, which might start finding its way into equities, once the market shows signs of stabilising.

Tax payouts can be cut down by investing in 80C investment vehicles, and investments up to Rs 1 lakh in 80C eligible instruments qualify for the same. Assuming a flat 30% tax rate, you can save nearly Rs 30,000 in taxes per annum by investing in 80C instruments.

There are seven investment categories where you can invest to save taxes — provident fund, PPF, NSC, infrastructure bonds, pension plans, Ulips and ELSS. But, with a marked rise in the equity market, many small retail investors are heading for equity linked savings option in order to save taxes.

ELSS, as the name suggests is an instrument investing in equities, and as such is a high-risk strategy, never mind the fact that the market has been rising for the fourth year in a row. There is a chance of losing more than what you save by way of taxes, if the bullish phase suddenly reverses. Remember, what happened in the recent past when the technology bubble had burst! ELSS is offered by almost all mutual funds. The lock-in period is three years only.

Historically, these schemes have generated annual returns of 12-18%, depending on the market performance. In the recent past, most ELSS have offered around 40% returns, on the back of a surge in the equity market. However, as MFs never fail to point out, past returns should not be taken as an indication for future performances. The capital appreciation, when the units are sold, is taxable. However, dividends distributed, if any, are tax-free. Insurance companies have started offering Ulips of late. These products have started becoming popular with the boom in the equity market.

There are no fixed returns on such products and as these schemes are new, it would not be correct to give a historical returns perspective. In the previous years though these schemes have generated 8-15% returns. This is part of your insurance planning. The amount invested by you is allocated to equity and debt. You have the option to choose a low, medium or high equity option, based on your risk profile. The investment lock-in period is around 10-20 years and more. Withdrawals may be permitted, but you will lose a lot of your capital appreciation if you go for that option.

Limited loans are, however, available and there is no cap on investment. However, tax benefits are available only up to Rs 1 lakh as defined under Section 80C. The capital appreciation, when encashed at the time of retirement, is taxable but dividends distributed, if any, are tax-free.

India, most attractive investment destination

2006-12-12T17:21:00.000+05:30

The `Annual Survey 2005 Report` of A.T. Kearney has rated India as the most favoured off-shoring destination, said Dr. Ashwani Kumar, minister of state for industry in the Lok Sabha today.

The government has put in place a liberal policy for foreign direct investment (FDI), according to which FDI upto 100% is permitted in most sectors and activities under the automatic route.
The policy also allows FDI upto 100% in infrastructure sectors, such as roads & highways, ports & harbours, shipping, power generation/transmission/distribution and development of airports. The FDI Confidence Index 2005 by A.T. Kearney has rated India as the second most attractive investment destination.

The major initiatives taken for the development of physical infrastructure include greater public investment, encouraging private investment and facilitating public private partnership.

HCL Techologies:BUY

2006-12-12T14:00:00.000+05:30

HCL Technologies
CMP:Rs 580
TARGET PRICE:Rs700
Recommendation :Buy

"HCL Technologies, HCLT has raised the daily working hours for employees by 0.5 hours, and effectively has a shot at gradually passing on some of this to its time & material clientele as quasi-price hikes. Continued ramp-ups in some large deals should ensure mid-to-high single digit QQ revenue growth in the near term. The stock has under-performed over most of the last year, with revenue growth falling short of industry comps on both a full company and core IT services basis. Valuations at 18xMar08 adjusted PE, limit upsides."

This implies 9 billable hours daily vs. 8.5 earlier, a 5.8% increase. 70% of business is based on time and material billing, and assuming half of clients accept higher per day billing, HCLT could realise a ~2% quasi price hike gradually over the next 12- 15 months. There is a precedent for this – Wipro moved offshore billing to 8.50- 8.75hours in 2005, from 8 hours earlier. A 2% quasi price hike implies a 140bps margin tailwind, half of the annual wage inflation hit of near 300bps."

If we see their trailing four quarters PE calculations, then the average PE for the company is around 20 while the min &amp;amp; max are at 15 & 35. At the forecasted EPS for FY 07 of approximately Rs 35, we can say that currently the share is trading near to its average PE.

Currently the markets have cooled down.The stock is top loser on Nifty. The share is quoting at Rs 583.05 down Rs 21.9, or 3.62%. It has touched an intraday high of Rs 602 and an intraday low of Rs 578.It is trading with volumes of 1,77,006 shares. Yesterday the share closed down 3.01% or Rs 18.75 at Rs 604.95.

The short term prospects might not look good,as investors have not yet pulled out of this market by and large.But taking advantage of the correction HCL Tech would be a good buy keeping a target price of Rs 700 in mind.

Source:ReapReturns

State Bank Of India:Under Performer

2006-12-12T12:38:00.000+05:30

Karvy downgrades State Bank of India as`Under Performer`

Karvy downgrades State Bank of India as `Under Performer` with a target price of Rs 1200.

The bank is contemplating coming out with follow-on public issue in the next fiscal year. Karvy believes that the bank`s follow-on public issue would be priced at Rs. 1225 per share (1.5x of estimated BVPS of Rs 815 after 1 Q FY08). If the central government`s dilutes its stake in SBI to 51%, after the proposed transfer of SBI`s stake then there would be 90 million equity shares on the block for follow-on public issue.

Due to continuous decline in the 10-year benchmark bond paper yield, karvy has increased estimated write-back of mark-to-market loss provisions. The bank has already marked its AFS and HFT investment books at 8.1% at the end of 1 Q FY07, since then the yield has coming down therefore
write-back would be quite significant.

Karvy has increased its target price to Rs 1,200 per share from the previous target of Rs 1,145.

Recommendations

2006-12-11T13:25:00.000+05:30

AUROBINDO PHARMA
Current price: 678.5
Target price: 690, 720
The stock completed a bullish breakout when it climbed over 662. Volumes were fair though they dipped post-breakout. The short-term target would be 690. There is a fair chance that the stock could move till around the 720 mark. Keep a stop at 665 and go long.

ACC
Current Price: 1105
Target Price: 1025
The stock has seen a strongly bearish move in the past four sessions, moving down from a high of 1195. The move only has reliable support in terms of chart patterns between 1025-1055.

A Fibonacci retracement calculation also suggests a bottom somewhere between these two level. Keep a stop at 1120 and go short. Cover below 1060.

I-FLEX
Current Price: 2046
Target Price: 2100
The stock has climbed on another burst of frantic buying after Oracle revised its open offer to Rs 2100. Impossible to judge how high it could go but 2100-plus is guaranteed.

The problem is more likely to be an all-buyer situation. In an event-based trade like this, it’s also difficult to set stops though there will be a plunge if Oracle refuses to be stampeded into moving even higher. Set a stop at 2000 and go long, if you can stomach the risk.

POLARIS SOFTWARE
Current Price: 147.6
Target Price: 160
Polaris completed a bullish breakout when it climbed past 143 on high volumes. The projected target on the basis of the breakout formation would be 160. Keep a stop at 143 and go long. Book some profits above 155 because there is a resistance at 156, which would slow down the move or halt it.

RELIANCE ENERGY
Current Price: 554.9
Target Price: 585
The stock started a recovery from 460 levels after bottoming in late-October. The long-term pattern is still bearish but showing signs of a possible trend reversal. Even if this move flatters to deceive, it could still move till about 585 before it runs into serious resistance. Keep a stop at 540 and go long.

Source: Business Standard

Analysts reduce their ‘weight’ behind Nifty cos

2006-12-08T15:00:00.000+05:30

Greed is good. So said Gordon Gekko in the cult movie Wall Street. Greed and fear are the alternating emotions that drive markets across the globe, and at present it is the god of greed (if there is one) who is having a sway on the investors. Investors are heading for the highest possible returns, which they believe is within their risk tolerance.

Consensus rating has a score between 1 and 5 where 1 is ‘sell’ and 5 means ‘buy’ on any particular stock. Out of the fifty stocks, 16 stocks have marginally been upgraded and 26 stocks have been downgraded while eight stocks have seen no change in their ratings.

TO READ MORECLICK HERE

Ranbaxy Labs:BUY Sharekhan

2006-12-07T13:27:00.000+05:30

Ranbaxy Labs
CMP:Rs 385.10
TARGET PRICE:Rs 558
Recommendation:Buy

Broking house, Sharekhan keeps buy rating on Ranbaxy Laboratories with a price target of Rs 558.

"Ranbaxy Laboratories (Ranbaxy) has acquired a 100% stake in Be-Tabs Pharmaceuticals Limited (Be-Tabs) of South Africa, for a total consideration of USD 70 million (500 million ZAR)."

"Be-Tabs is the fifth largest generic company in South Africa. It is the largest manufacturer of penicillin formulations and markets and manufactures a portfolio of ethical and over-the-counter (OTC) solid-oral and liquid formulations in South Africa. Be-Tabs has annual sales of approximately USD 30 million, with earnings before interest, tax, depreciation and amortisation (EBITDA) margin of about 13%."

"The acquisition of Be-tabs will complement Ranbaxy's existing business in South Africa. Ranbaxy currently derives USD 20-25 million of revenues from South Africa. The acquisition of Be-tabs will double Ranbaxy's South African business. With a combined turnover of USD 50-55 million, Ranbaxy will now enjoy a market share of 1.6% in South Africa."

"At USD 70 million, the deal is valued at 2.2x sales and 7.7x EBIDTA. Even though the deal appears cheap when compared to other acquisitions, the price seems fair when viewed in light of the relatively lower EBIDTA margin and growth rate of Be-Tabs."

"Based on the back-of-the-envelope calculations, we believe that Be-Tabs would add USD 2.4 million (approximately Rs11 crore) to Ranbaxy's bottom line in CY2007E. Due to Ranbaxy's large equity base, we believe that the impact on the earnings per share would be marginal."

"At the current market price of Rs 385.10, Ranbaxy is quoting at 20.8x its CY2007E estimated earnings, on a fully diluted basis. We maintain our Buy recommendation on Ranbaxy with a price target of Rs 558."

Valuation & view

"Ranbaxy's year-till-date performance has been below expectations primarily due to a slower-than-expected pickup in its revenues. Given the strong challenges for organic growth due to an absence of definite growth triggers, the company has been aggressively trying to grow inorganically. Ranbaxy has already announced four acquisitions in the current year in order to meet its growth targets. Given the company's comprehensive business model that includes aggressive new launches, in-licencing, strategic partnering, widening geographical presence etc, we maintain our confidence in Ranbaxy."

"At the current market price of Rs385.10, Ranbaxy is quoting at 20.8x its CY2007E estimated earnings, on a fully diluted basis. Our current sales and earnings estimates do not reflect the impact of the Be-Tabs acquisition. We are revising our estimates and will update them shortly. Meanwhile, we reiterate our Buy recommendation on Ranbaxy with a price target of Rs 558."

99 midcaps cos that are riding the bull

2006-12-05T19:14:00.000+05:30

The Midcaps are slowly waking up to join the feast. A good 99 midcap companies have started participating in the rally are now trading above their May 10 highs. Out of these 98 stocks had fallen between 54% to 5% between May 10, 2006 and June 14, 2006 (when Sensex touched its lowest).

Here is a article which lists the companies that have joined the recent bull run.Want to know more Click Here

HDFC BANK : HOLD

2006-12-05T12:54:00.000+05:30

HDFC BANK
CMP:Rs 1107.55
TARGET PRICE:Rs1350-1400
Reap Returns recommendation: HOLD

In recent days, bank stocks have seen strong resurgence. HDFC has long since been the most attractive bank to investors. With a very good reason as well as their EPS has grown pretty consistently over the last decade. Current the stock is trading at Rs 1107 & our advise to investors is to HOLD with a target price of Rs 1350-1400.

Fundamentals of the banking industry are not much changed though there is greater expectancy of further banking reforms by the regulatory bodies. Also,“RBI is likely to allow fresh branch licenses to the bank, which should help it in growing the low cost deposit franchise.Technically HDFC has always been at higher PE then most of other banks. If we see their trailing four quarters PE calculations, then the average PE for the bank is around 27 while the min & max are at 22 & 36. At the forecasted EPS for FY 07 of approximately Rs 37, we can say that currently the share is trading near to its average PE. Also, another factor to keep in mind is the strong 4th quarter results that HDFC Bank usually announces. We recommend people to keep a target price of Rs 1400 for the script which it can reach by April 2007.

Currently the rating is at HOLD as the share is trading at fair PE & markets are super heated. If you want to buy this share, the investment horizon has to be at least medium term as any down turn in the market will directly affect this share as well.

Recommendations

2006-12-04T13:27:00.000+05:30

Biocon
Current price: 378
Target price: 387, 425
The stock is interestingly poised below a strong resistance at 387. If that resistance is broken and Biocon closes above 388, it is likely to make a target of 425. Volumes haven't expanded yet. Keep a stop at 370 and go long. Book partial profits at 387. Take a fresh long position if the stock closes above 388-390.

Hero Honda
Current Price: 771
Target Price: 805
The stock has completed an impressive recovery from 680 and it seems to have completed a low volume inverted Head & Shoulder. The target would be about 810 but it's likely to be underperformed due to low volumes. Expect resistance between 785-795 that will be crossed over a couple of sessions. The second resistance at 805 will probably not be crossed.

I-Flex
Current Price: 1678
Target Price: 1720
The stock made an important-looking breakout when it crossed 1660 on volume expansion. It has a target in excess of 1720 though it's difficult to project targets with a stock at record highs. Keep a stop at 1665 and go long. Book profits above 1710.

Jaiprakash Associates
Current Price: 687
Target Price: 720
The stock seems to have cleared resistance at the top of a trading range by closing above 677 on high volumes. The target computes to roughly 720. Keep a stop at 665 and go long. Book partial profits above 705.

SBI
Current Price: 1362
Target Price: NA
The stock is in a huge bull run with an uptrend running at a (daily) slope of almost 45 degrees. The pattern is such that its impossible to compute targets except through a linear regression, which assumes that the trend will continue at exactly the same slope and momentum. Keep a stop-loss at 1325 and raise the stop by 10 points for every 20 point advance.

SOURCE:Business standard

Recommendation Sonata Software:BUY

2006-12-04T12:14:00.000+05:30

Company: Sonata Software
CMP:Rs 46.90
TARGET PRICE:Rs 70
Business: IT solutions. Two verticals: product development & enterprise solutions

Sonata software has been in news recently due to their acquisition of 51% stake in TUI InfoTec GmbH for the consideration of 18 million euros. It will be interesting to investigate the current prospects of the company.

Currently the share is trading at R 45.60 & is up around 5% in last trading session. If we see the results posted by the company for the latest quarter, then their net sales have been Rs 482.62 million while the operating profit & net profit has been Rs 123.42 million & Rs 92.64 million resp. This means that their operating profit has been around 22% of their sales while their net profit has been around 17% of their sales. This is not quite as impressive as maybe for infosys for which the operating profit margin is 43% while net profit margin is app 28%. Main reason for this difference is ratio of expenditure to the revenues which is quite high compared to Infosys.

If we see the results posted for the last four quarters, the company has been growing at around 7% QoQ which translates to 31% annual growth rate which is impressive but not more then most of other IT companies. Last year the company’s EPS was quoted as 0.73 but we have to remember the fact that company had taken one time write off of cost in couple of overseas investment in the last quarter. According to our rough calculation, the company had a real EPS of 2.48 for FY 06. Based on current growth projects, the company should be in the range of Rs 3.5 for the FY 07.

If take the company’s performance on the stock markets, the share has been valued between the range of 8-20 on the stock markets based on trailing four quarter results. We believe this valuation is fair depending on position of company in second/third tier of Indian software vendors & low operating margins.

Currently the share is trading just below its average valuation & we also expect that the recent acquisition of the TUI to have positive effect on company’s revenue growth though the operating profit margins improvement is slightly harder to foresee considering that the acquisition is in Germany making it hard to ship the jobs off to India & firing local workers.

Overall, the company is in good shape & without any write off’s as happened last year should deliver good results. Our recommendation of the stock is BUY under 50 & SELL once the stock reaches 70. We also expect stock to hit around 70 by APRIL 07.

Source: Reapreturns

How your Rs 10,000 becomes Rs 70 lakh

2006-12-01T12:25:00.000+05:30

It’s an accepted fact that few investors are able to catch the bottoms or peaks in the stock market. But assume that a few investors did manage to get into the right stock at the beginning of the bull run that began in May 2003, and are still holding on to their shares. What would have been their profits?

Believe it or not, these investors would have made 700 times or 70,000% on their original investment. An amount of Rs 10,000 invested in the biggest gainer in the current rally would have given you Rs 70 lakh. In contrast, Rs 10,000 invested in Sensex stocks would be currently worth only Rs 39,000, a gain of only 3.9 times or 390%.

If you think that is an exception, here are some more statistics. More than 550 companies or nearly 28% of the companies traded per day have out performed the Sensex feat of 390% returns since May ’03. Further, there are around 15 stocks that have delivered returns of over 100 times or 10,000% since the beginning of the bull run. Another 25 have delivered 50-99 times or 5,000-9,999% returns.

And for 241 companies, share prices have risen 10-49 times or 1,000-4,999%. So, your chances of making some big money were in the range of 15-20%, considering some 2,000-odd stocks get traded on a daily basis. This average number of stocks traded per day has increased since the beginning of the bull run when only 1,300-odd stocks were traded per day.

There has been at least one star performer in almost every sector - from construction to computers, real estate to textiles, financials, engineering, electronics, breweries, sugar, steel, shipping - that has given returns above 100 times or 10,000% since the beginning of the bull run.

But, an important element is that if you were one of the few fortunate enough to own these stocks, did you hold on to the golden goose since the beginning of the current bull run? The answer is mostly no. Very few small retail investors have actually kept their portfolios static. A check through the various holdings in India Inc reveals that retail holdings have actually declined since the beginning of the bull run.

Equities are a long-term investment, but the moot question is identifying the scrip that would help you retire early.

Agreed, that it may be a difficult task but it’s not impossible. There is a fair chance that you could be sitting on a winner considering more than 550 companies have outperformed the Sensex. Remember, your hit rate is 28% considering the 2,000-odd stocks traded per day on an average. If you take into account only those stocks which have been traded on every single day during the year, your chances of hitting the jackpot move further up to around 38%.

This is unfortunate because it reveals that many small retail investors have not taken the benefit of such a stupendous rise in the equity market.

INFOSYS:BUY

2006-11-30T14:16:00.000+05:30

INFOSYS TECHNOLOGIES
CMP:2166
TARGET PRICE:2450-2500
RECOMMENDATION : BUY

The sponsored American depository shares (ADSs) issue by Infosys Technologies have been priced at $53.5 each excluding the underwriting discounts and commissions. The aggregate size of the ADS issue works out to $1.6 billion, taking the total market capitalisation of Infosys’ overseas float to over $5.5 billion.Also, Infosys is likely to get included in the Nasdaq-100 index in the forthcoming review of the index constituents in December.

The probable inclusion in the Nasdaq-100 index and the sponsored ADS issue tend to have a positive impact on the share price.

Currently the stock is trades at 33xFY2007 estimated earnings.So we have a buy recommendation on the stock with a target price of around Rs 2450 -2500.

For Investors wary of Stock Market

2006-11-29T16:35:00.000+05:30

Here is a good news for investors who are wary of investing in stock markets.Leading telecom service provider Reliance Communication has come up with a new game "STOCK MANIA",with an aim to develop the stock market skills of its subscribers at Rs 3 for each session.

On downloading this application the user is provided with a virtual fund of Rs 10 lakh as part of the registration with which he can start trading in stocks and also monitor his portfolio on a real-time basis, without having any financial investments or implications, a release said.

"Stock Mania would provide the mobile customers with the opportunity to experience a simulation of real-time trading with shares listed on the Bombay Stock Exchange and managing their 'virtual stock portfolio'," Reliance Communication Application and Solutions President Mahesh Prasad said.

SBI: SELL

2006-11-29T15:46:00.000+05:30

The Reapreturns has given a SELL signal for STATE BANK OF INDIA.
STATE BANK OF INDIA
CMP:1299
HIGH:1323.85

The stock hit a liftime high of Rs 1323.85 today.A block deal of 4 lakh shares was executed on the counter in the FII segment at Rs 1552.10 per share, about 20% premium over Tuesday’s closing price.

SBI had reported 2.5% fall in net profit for Q2 September 2006, to Rs 1,184.49 crore (Rs 1215.36 crore). Net interest income rose 8% to Rs 3,898.65 crore (Rs 3,608 crore). Operating profit rose 24.6% to Rs 2,472.5 crore (Rs 1,982.9 crore).

Looking at the fundamentals and the technical charts the stock is over valued at the current levels.The MACD signal shows that the stock is in an upward trend,but the signal is also confusing.But the RSI and W%R signals clearly show the stock are in the overbought territory.
So it might be a good idea for the investors to book profits now and exit the stock at the current levels.

Recommendations

2006-11-28T12:36:00.000+05:30

Bajaj Hindusthan
CMP: Rs 262.90
Target price: Rs 360
Sugar major Bajaj Hindusthan has been assigned an overweight rating by brokerage house JM Morgan Stanley Securities with a price target of Rs 360. “BJH’s mills are currently seeing realisations between Rs 17,000/MT to Rs 17,600/MT. We think, on the downside, the net realisation could decline to around Rs 16,500/MT,” the Morgan Stanley note said, adding that a lot of the downside in sugar prices was already factored in the current stock price.

Ranbaxy Laboratories
CMP: Rs 381.10
Target price: Rs 320
French brokerage CLSA has maintained its ‘underperform’ rating on Ranbaxy Laboratories with a 12-month price target of Rs 320 on concerns over its future profitability due to limited cost-cutting opportunities and stretched balance sheet. The brokerage noted that the stock valuations at 2.3 times sales look cheap because of its underperformance in the past 2 years, but feels valuation is in line with those of global peers. CLSA estimates the company’s ’06 EPS at Rs 13.5, ’07 EPS at Rs 18.3, in comparison with ’05 EPS of Rs 7.

Sterlite Industries
CMP: Rs 546
Target price: Rs 725
Enam Securities has rated Sterlite Industries as an outperformer, relative to the sector, with a price target of Rs 725. It believes that Sterlite is well placed to benefit from additional funds that would be deployed for the new growth/high return business.

Enam believes Sterlite provides an indirect play on zinc and offers diversification in the non-ferrous metals and captive coal-based energy space. The brokerage also says that Sterlite’s energy business will be a profitable venture and will provide an additional growth platform to the company.

Also, the consolidation of the company’s holding in HZL is a positive development that would result in incremental consolidated EPS.

Cement Stocks: Poised to defy gravity

2006-11-27T20:37:00.000+05:30

Cement industry’s performance once again has beaten the market expectation in the recent quarters and has registered spectacular growth. Looking at the demand supply mismatch, firm price realization, and operational efficiency it is believed that this sector still has potential to perform in the near future.

The cement prices have witnessed appreciation of Rs.5 per bag second time post monsoon on account of robust demand in construction and infrastructure segment. Currently Indian cement industry is witnessing a growth of 9.5% - 10% in consumption whereas supply is growing at 8% rate annually, thereby creating a shortage in the domestic market.

Quarterly Performances:
In the quarter ended September, 2006, the industry registered a growth of 47.5% in top line and 185% in the bottom line. Operating margin has reached 28% on account of firm realization, demand-supply mismatch and reduction in coal prices. The net profit margin has almost doubled to 17% despite a huge tax provision and higher deprecation cost.

For Detailed ArticleClick Here

Market to be range bound on Tuesday

2006-11-27T20:18:00.000+05:30

On Tuesday, the market will be range bound as it was on Monday. No major volatility is expected. Some stocks may perform, but the overall sentiment will be nervous due to nearing F&O expiry, which is on November 30 (Thursday).

Some positive movement is expected towards the close, on Tuesday. The rally is expected to continue in the coming days as well, says technical analyst, Vishwas Agarwal.

As far as the levels go, Nifty 3986 and 3996 are vital for further upside with a downside support of 3946 and 3936. Reliance Industries is at a very important level, at Rs 1240. If it ends or trades below this level, some selling pressure might be seen, says Vishwas.

Long positions are recommended in Bharti Airtel and Wipro in the December F&O series.

Recommendations

2006-11-27T12:47:00.000+05:30

Bank of India
Current Price: 200
Target Price: 210
The stock has shown a stable uptrend with a little burst on Friday that pulled it above resistance at 195. It has a target of 210. Keep a stop at 195 and go long. The long-term trend looks very promising, so it's possible to keep a delivery position for around 3-4 weeks.

i-flex
Current Price: 1649.45
Target Price: 1700
i-flex broke out of a trading range on fairly high volumes last week. It has a probable short-term target of 1700 and it may go further. Keep a stop at 1630 and go long. The long-term formation suggests that a target of 1900 may be within reach in the timeframe of three-four weeks.

IVRCL
Current Price: 424
Target Price: 465
The stock has risen vertically on high volumes in the past five sessions. It's possible to project a target of about 465 using weekly charts but this sort of formation is notoriously difficult to accurately project.

Keep a stop at 400 and go long. The huge moves have unfortunately made it imperative to keep wide stops since there are no reliable supports close to the last price.

NTPC
Current Price: 150.15
Target Price: 170
NTPC saw a big session on Friday when the price moved through a range of 133-151 and closed near the top. The likely target is about 170-175. Keep a stop loss at about 144.

Zee Tele
Current Price: 369.4
Target Price: 385, 410
The stock has made a breakout but it has come on average volumes. Depending on how optimistic you feel, it's possible to project targets of either 385 or 410.

Keep a stop at 360 and go long. Book partial profits above 380 - the lower target is more likely because of the relatively low volumes.

Profit booking may continue on Friday

2006-11-23T21:01:00.000+05:30

Technical View: Profit booking to continue on Friday
As expected, the market saw a correction on the back of profit booking. Correction is likely to continue even for tomorrow.

Breaching the level of Nifty 4000 is not an easy job. At the same time, no panic or crash is expected, but some correction is warranted and expected. In last of couple of days, all bullish stocks performed very well. Any profit booking at this level must not be construed as a surprise. NSE 4000 level might not be trigger for buying, but still FIIs attitude is more important.

For an upside, 3996 is very important with a downside support of 3936 and 3916,

Open Interest at historic high, IS IT TIME TO EXIT?

2006-11-23T13:29:00.000+05:30

The open interest in the derivative segment on the NSE hit a record high of Rs 571,580 million on Wednesday, with both the Nifty and Sensex at their all-time highs, reports Business Line.

This overshadows the previous open interest high of Rs 569,910 million on the NSE, which was hit on April 27 this year, which was the last day of the expiry of the April contracts in the F&O market.

Open interest can hover above Rs 500,000 million for extended periods, without affecting the bullish market sentiment, like it did between April 19 and April 27 and the other time between May 8 and 17.

But before the panic buttons are pressed, a few factors can lend some cheer. First, the average daily traded turnover in the derivative segment has still not touched the euphoric levels seen in April, when it hit a high of Rs 409,910 million.

The average daily turnover in November is still at a sedate Rs 27,000 crore. Secondly, Sensex is now trading 8% higher than the May peak of 12,671.

When we compare the composition of the open interest on May 12 and November 22, the proportion of Nifty futures in the total open interest has edged up to 22% now against 18% on May 12.

The portion of stock futures has moved down from 62% on May 12 to 46%. This is a positive as retail traders generally play in the stock futures. It is the more mature traders who play the Nifty futures.

Reduction in stock futures and increase in index futures can be interpreted as reduced participation from the retail sector in the current derivatives market.

A major portion of the Nifty open interest also consisted of portfolio hedges.

The significant jump in the Nifty `put` options this time around too points towards larger players hedging their other holdings through derivative instruments.

But the fact remains that the open interest in the stock futures is still more than double the open interest in index futures. 46% of the total open interest at this point consists of stock futures where positions are predominantly bullish.

The unrelenting rally seen since August may be lulling investors into a false sense of complacency that could spell trouble.While this does not mean that the rally will end tomorrow, retail investors need to exercise caution as far as leveraged positions are concerned.

Balrampur Chini:SELL

2006-11-23T13:25:00.000+05:30

BRICS PCG recommends to `SELL` Balrampur Chini
CMP: Rs 89
TARGET PRICE: Rs 88.

This is a downgrade from its earlier recommended target of Rs 103.
The company`s net sales for the quarter ended September `06 grew 35% to Rs 3.9 billion. Higher sugar sale volumes and increased co-generation revenues contributed to the overall revenue growth.

Operating margins for Q6FY06 declined more than 400 bps at 15.2% as against 19.5% in July-September last year. This was led by a substantial decline in margins of the sugar business. BCML operated at 47,500-TCD crushing capacity during FY06. Its distillery and co-gen capacities stood at 220 KLPD and 63.2 MW respectively.

The company will be adding 8,000-TCD of crushing capacity, whereas the distillery and co-gen will be increased by 100 KLPD and 22 MW respectively. Sugar prices in India are expected to remain subdued. The bumper production estimated at 23 million tonnes coupled with the ban on exports would keep the prices low.

According to the management, the company will crush 85 lakh tonnes with a recovery rate of 10.25% for sugar season 2006-07. It also expects the Uttar Pradesh state government`s incentives to start flowing in from March `07 onwards.

In view of the subdued sugar prices and uncertainty over the company`s expansion plans (being subject to legal ruling), Brics has maintained a SELL recommendation on the stock. Using its base sugar price assumption, it has arrived at an FY07 EPS of Rs 8.8.

Apollo Tyres :BUY

2006-11-22T16:30:00.000+05:30

BRICS PCG recommends a `BUY` on Apollo Tyres
CMP:Rs 312
TARGET PRICE:Rs 475

The company is setting up a Rs 4.5 billion radial tyre plant in Tamil Nadu and has already signed a MoU with the state government for the same. ATL is venturing into the re-treading business with a focus on the cold process segment. ATL is looking to draw upon the experience of its South African business (the recently acquired Dunlop Tyres) to capture a large chunk of the re-treading market.

The report from BRICS says that the company is expected to generate strong cash accruals of about Rs 1.7 billionn per annum, which Brics PCG believes will be adequate to meet its capacity expansion plans.

ATL has further tied up with Tata Motors for exclusively selling Apollo tyres at all Tata Motors service outlets. This tie-up is in its nascent stage. ATL is expected to forge more alliances of this nature in the future.

ATL`s revenues are expected to grow at a CAGR of 24.2% during FY06-08, aided by a 15% growth in tonnage volumes and a 8% rise in realizations. The operating profit margin is expected to improve by 120 bps to 9.5% in FY08 as against 8.3% in FY06.

As per a company press release, ATL plans to raise funds to the tune of Rs 3.6 billion through placements to Qualified Institutional Buyers (QIB) and a preferential allotment of 4 million warrants to the promoters. As a result of this, the company`s equity capital is expected to increase by 33% post dilution.

At the current market price of Rs 312, ATL is trading at 11.6x EPS, 7.1x cash earnings and 5.7x EV/EBIDTA on 12-month forward basis (standalone).

What is disgorgement?

2006-11-22T12:55:00.000+05:30

Disgorgement is a common term in developed markets across the world, though most market participants in India would have heard of it for the first time on Tuesday.

Disgorgement means repayment of illegal gains by wrongdoers. Funds that were received through illegal or unethical business transactions are ‘disgorged’, or paid back, with interest to those affected by the action. It is for the first time in India that the capital markets regulator, Sebi has passed this order of disgorgement; internationally it is the civil courts that have this mandate along with the markets regulator.

Disgorgement is a ‘remedial’ civil action, rather than a ‘punitive’ civil action. In the US, individuals or companies that violate Securities and Exchange Commission regulations are typically required to pay both civil money penalties and disgorgement. Civil money penalties are punitive, while disgorgement is about paying back profits made from those actions that violated securities regulations.

Interestingly, disgorgement payments are not only demanded of those who violate securities regulations. In the US, anyone profiting from illegal or unethical activities may be required to disgorge their profits.

The money disgorged from the violating parties is used to create a “Fair Fund” — fund for the benefit of investors who were harmed by the violation. The market regulator then provides for payment of funds into a court registry or to a court-appointed receiver in any case pending in federal or state court against a respondent or any other person based upon a complaint alleging violations arising from the said wrong doing.

According to American Securities law, no person can challenge an order of disgorgement or creation of a Fair Fund. In its order, Sebi has said, “Disgorgement is intended not to impose on defendants any demand not already imposed by law, but only to deprive them of the fruit of their illegal behaviour.”

The Sebi report states that 24 key operators opened as many 59,000 demat accounts to corner the shares reserved for retail investors in IPOs. The depositories and depository partcipants have been asked to compensate the investors because they are registered intermediaries with Sebi.

At the same time, the Sebi order has made it clear that the depositories and DPs can recover the money from those who have profited from the scam, but have not been named by Sebi. While Sebi’s order on Tuesday against the two major depositories and eight depository participants is laudable, the regulator has not spelt out how it plans to go about the process.

Also, the latest Sebi order is an interim one. In April, the regulator had passed orders against a host of market intermediaries allegedly involved in the IPO allotment scam. A Sebi adjudicating officer is currently conducting an enquiry into the charges against these players.

“There will be no separate hearing granted to the parties, as the findings of this order will be co-terminus with the findings of the enquiry. A final order on the substantive area of wrong-doing will render a person liable under this order and conversely, any final order exonerating the person will free the person from any liability from this order,” the Sebi order said.

Divi's Laboratories

2006-11-22T12:30:00.000+05:30

On a high
Divi's Laboratories is the only major pharma company to see its stock price go up 100 per cent a year for the past two years. Has the stock run up too much, too fast?

The stock of contract research and manufacturing (CRAMS) player Divi’s Labs is the top-performing pharmaceuticals stock of recent times. If you had picked up the stock a year ago, it would have doubled your investment in less than a year, and between June 2006 and now, the returns would be 150 per cent!

Even over the past week, it has shot up by 7 per cent against the 1 per cent gain in the Sensex, and is hovering around the Rs 3,000 mark.

The Divi’s labs stock has moved up on the back of an impressive set of results in the second quarter of FY07 which saw its sales and net profit double to Rs 160 crore and Rs 31 crore.

With the company set to increase its share from the high margin custom chemical synthesis (CCS) segment and getting ready to launch Astaxanthin ($300 million market worldwide) in the coming fiscal, there is no dearth of growth opportunities.

Integration helps
Divi’s Labs is one of the few companies in the pharma sector (Dishman and Jubilant being two others) to have a presence across the CRAMS value chain.

The life cycle of a new drug starts at the drug discovery stage and offers outsourcing opportunities in the pre-clinical, clinical and the manufacturing stages.

Divi’s Labs is developing its expertise in the first two stages which involves creating samples and optimising the manufacturing process. Since the difficult part lies in the initial stages, the margins at 40 per cent too are the highest in these stages.Thus far, the company has been focussing on the manufacturing of active pharmaceutical ingredients (API) and intermediates which still account for up to 70 per cent of its revenues.

To boost its revenues in the CCS segment, the company is eyeing the global CRAMS market which is estimated to be at $27 billion. At $100 million, Indian players have less the one per cent of the manufacturing segment and a negligible share of the research market.

The Indian share in both these segments is expected to jump ten-fold to cross the $1 billion mark in the next five years.

Domestic pharma companies such as Divi’s which have domain knowledge, lower manufacturing and labour cost advantages, and the largest number of FDA approved plants outside of the US are banking on the Rs 10,000 crore CRAMS opportunity to step into the big league. However, there are risks that Divi’s Labs will have to address if it wants to take a chunk of that number.

Lucrative, but...
The biggest risk is the long gestation period--it takes up to six years from the time of negotiations to product delivery.

Indian companies will have to first set up the facility, start production and have their facilities approved by various regulatory authorities before shipping the product. The initial capital requirement, thus, would be very high.

Procuring and executing contracts is another major risk as India is still evolving as a preferred CRAMS destination. Failure to execute a contract could affect players in this sector.

The relationship with the innovator also plays a key role in ensuring a steady stream of business. A delay in picking up the manufactured quantities or a cancellation will result in piling of inventory at the Indian partner’s end and under-utilisation of facilities.

Divi’s Labs had a taste of this when an MNC cancelled its contract after Divi’s Labs set up a dedicated facility and supplies were to start in April 2006. The company, however, recovered its costs and analysts believe that it is a one-off event, unlikely to repeat itself.

The downside for investors who have put their faith in CRAMS companies is a lack of visibility of earnings due to confidentiality agreements of the innovator company and its Indian partner.

Neither the drug, the size or the tenure of the contract is known which makes it difficult to put a number to earnings.

Going long on CRAMS
Analysts and fund managers we spoke to believe that the fundamentals of Indian CRAMS companies and especially those of Divi’s Labs are strong and provide a long term and stable revenue stream with sustainable margins till 2010.

Analysts believe that such companies deserve better valuations as compared to other pharma players not just due to the outsourcing opportunity but also due to the strong relationship that Indian companies have been able to establish with innovators.

Valuations
The numbers at Divi’s Labs continue to impress. While top line has doubled in the second quarter FY07, operating profit is up by 63 per cent. Its margins, however are showing a decline both at the operating and the net profit levels for the full year as well as quarter-on-quarter basis.

For the latest quarter however the decline was due to ESOPs of Rs 6 crore and expenditure incurred on shifting production of some products from domestic tariff area (DTA) to its Export Oriented Unit (EOU ). The good numbers however are not limited to the September quarter.

RIGHT PRESCRIPTION
(Rs crore)	FY06	FY07E	FY08E
Sales	389.00	616.00	795.00
Operating profit	123.00	183.00	238.50
Y-o-Y growth (%)	18.27	48.00	30.33
Net Profit	69.00	103.00	145.00
Y-o-Y growth (%)	6.15	49.28	40.78
EPS	54.00	80.00	113.00
P/E (x)	37.00	36.29	25.69

For the six months period ended in September, operating profit grew by 91 per cent while net profit doubled. No wonder interest in the stock is at a peak with volumes shooting through the roof.

At 2,903, the Divi’s stock is in the expensive territory with a trailing 12-month P/E multiple of 37. Its peers Jubilant and Dishman are trading at 18 and 26 and are more reasonably priced.

Unless there is a fresh trigger in terms of a new contract from an innovator company, there is no reason for it to continue its gravity-defying march.

Recommendation

2006-11-21T20:24:00.000+05:30

Gujarat Ambuja Cement
CMP:Rs 136.05
Target Price: NA
Brokerage house First Global Research is now betting on Gujarat Ambuja Cement as it feels the stock is more attractively valued compared to ACC. "The margin gap between GACL and ACC has not changed over the last four quarters, although the valuation gap has definitely narrowed and, in fact, GACL appears to be less expensive than ACC," the brokerage said in a note to clients. According to First Global, ACC is trading at a price earning ratio of 17 times estimated FY08 earnings, while GACL is available at a forward PE of 14.

Recommendations

2006-11-20T12:28:00.000+05:30

ACC
Current Price: 1097
Target Price: 1150
The scrip has jumped sharply in the past two sessions, rising from 1020 levels on high volumes. The likely minimum target is 1150. This breakout looks important even on a weekly chart and the move could actually extend a lot further. Keep a stop at 1080 and go long.

Dabur
Current Price: 139.75
Target Price: 130
The stock has plunged from 155 levels in the last four sessions. It has a likely target of 130, where there is strong support. Keep a stop at 145 and go short. It's likely to make a sharp recovery from 130 till around 145 so, it could be profitable to double-plus) - cover the short and take a fresh long position.

Hero Honda
Current Price: 694.9
Target Price: 675
The stock broke an important support when it dropped below 700. There was also a sharp volume expansion. The downside target would be about 675. There is support at 670, which is likely to hold. Keep a stop at 702 and go short. Cover below 680.

NTPC
Current Price: 139.05
Target Price: 150
The stock is on the verge of a breakout and it has developed a very promising volume expansion. If it closes above 140, it will touch 150 and may move further. Keep a stop at 135 and go long. It's possible to project a long-term target of 165 but that is unlikely to be achieved inside the calendar year.

UTI Bank
Current Price: 485
Target Price: NA
The stock continues to display a strong uptrend across all timeframes. It is in another phase of good volume expansion. It's impossible to set reliable targets with this sort of pattern. But you can set a sliding stop-loss at 475 and go long. Move the stop up 5 points for every 10 point advance in the stock.