Friday, October 28, 2011

COCHIN MINERALS AND RUTILE LTD - BUY




As the name indicates, this company (CMRL) is based in Cochin,Kerala having manufacturing facilities to produce Synthetic Rutile (45000 TPA), Ferric Chloride (24000 TPA), Ferrous Chloride (72000 TPA) and Cemox18000 TPA.These products are made from Ilmenite using indigenous technology.These products are used in Welding electrodes,abrasives,paints,Effluent treatment,inks,pigments,bricks and tiles..etc.Raw material for these products - ilmenite-is mainly sourced from the beach sands of Kerala.Water desalination plants in Gulf countries are one of the major customers of company's products.Since the number of companies producing these products are very few in India , company is enjoying good margins.For the latest quarter ended September 2011,CMRL posted a turnover of Rs.47 Cr v/s Rs.31 Cr and a net profit of Rs .8.2 Cr v/s Rs.90 lac .Six month EPS is Rs.13.75/-Company is a consistent dividend payer too.Since company is earning major portion of income from exports ,favorable exchange rate situation also helped the company to post good results.Proximity of the source of raw material is one of the biggest advantage of CMRL .One of the major concern about the company is the frequent opposition of local people against sea sand mining.There is also some allegations about some transactions between a public sector unit and CMRL.Being a 20 year old company ,it is expected to handle these local issues effectively .Based on the robust performance there is reasonable chance for appreciation from its current market price of Rs.78/- 

Wednesday, October 26, 2011

WISHING A HAPPY DIWALI TO ALL MY READERS...










Happy Diwali
Diwali wishes, scraps graphics


 
MY DIWALI PICKS 


KAVERI SEED COMPANY

FORTIS HEALTHCARE

 ADITYA BIRLA NUVO

TATA CHEMICALS

YES BANK



Sunday, October 23, 2011

ZICOM ELECTRONIC SECURITY SYSTEMS LTD - In an Industry- with- Good potential and not so good Promoters.




Zicom Electronic Security Systems  is probably the only pure BSE  listed company from the   Electronic Security systems manufacturing industry.It produces various security systems solutions includes Home Alarm Systems,Video door phones,Fire alarm Systems,CCTV Surveillance,Fingerprint Locks,Metal Detectors..etc.Due to the increasing number of theft and burglary incidents scope of such business is increasing in recent times.Company recently introduced 24 x 7 burglary protection at a cost of Rs.16/- per day in the name of of '8 Ka Dum'.Zicom also introduced Security systems for telecom towers.All together the prospects of industry is very bright .The negative side of this company is the background of promoters and some of their recent actions which is not minority shareholder friendly. One of the promoter Mr Pramoud Rao earlier promoted a company(jointly) named Jayanthi Business Machine .After collecting money through an IPO company vanished in few years.In recent times Zicom sold its Building Solutions Group and Special Projects Group,which are mainly focused on government and institutional sales to Schneider electric and now left with retail business.The sold division had a turnover of approximately Rs.180 Cr and the business sold for Rs.224 Cr.In many recent cases this type asset sales are benefiting only the promoters and nothing to the minority share holders and this case too may not  an exception.If promoters are really like to save the minority share holders there were many other options like de-merge this business into a separate company ,issue the shares of this company to all share holders in proportion and then sell the entire company to the foreign buyer...etc. Another cause of concern is the lowest promoter holding as low as 20 %. But two points are attracting at this point of time.First one is its improving financials and second is the effort of promoters to hike their stake through open market purchases.We don't know what they are planning now but one thing is sure - this company is in an industry with good potential.If promoters are ready to change their attitude towards minority share holders and willing to utilize the amount generated from the sale of institutional business to grow the retail business, still there is chance.Only high risk investors can take limited exposure at CMP of Rs.38/-

Tuesday, October 18, 2011

SRI ADHIKARI BROTHERS TELEVISION NETWORK LTD - BOOK PARTIAL PROFIT

I have recommended a BUY on SRI ADHIKARI BROTHERS TELEVISION NETWORK LTD @ Rs.27 on
February 7,2010 . Currently this stock is trading @ Rs.80/-. One may book at least partial profit at CMP and keep the balance cost free.

Old Report HERE

Tuesday, October 11, 2011

INDAG RUBBER - RESULT UPDATE

I have recommended a BUY on Indag Rubber @ Rs.95 on July 2,2011. Company reported good numbers for the quarter ended September , where its turnover moved from Rs.36 Cr to Rs.54 Cr and net profit rose 136 %
to Rs.5.24 Cr from Rs.2.22 Cr . Six months EPS is Rs.17.25 v/s Rs.8. Today Indag closed at its all time high @ Rs.143.25 ( up 20%). Long term investors can still HOLD the same .Company also declared an interim dividend of 15%

For old posting , Click HERE

Saturday, October 8, 2011

HONDA SIEL POWER PRODUCTS - BUY














Honda Siel Power Ltd ( HSPPL) is a 67% subsidiary of Honda Motor Company Japan  and it is the largest manufacturer of portable generators, water pump-sets  in India .Company also producing general-purpose engines.HSPPL enjoying very good market share it all of its categories .Company is enjoying very good support from its parent Honda Motors which is the second largest engine maker in the world.Very strong R&D of the parent company is helping it to introduce new products time to time and also increasing the fuel efficiency of its best selling portable genset range.Mechanization of farming activities is unavoidable due to scarcity of labourers and the entry of corporates into the farming sector.Company's newly introduced products like Brush Cutters and Small Tillers are very helpful even for small farmers.Due to increasing food inflation, government is expected to give special attention in farming sector going forward.Government's decision to give subsidy to farmers to buy agriculture equipments like pump sets, brush cutter..etc will help the company in a big way. In a power deficient country like India , Honda Siel is the undisputed leader in the portable genset manufacturing.Company having a strong network of 800 dealers all over India.HSPPL posted a turnover of Rs.412 Cr and a net profit of Rs.30 Cr in last year .This debt free company having a reserve of Rs.213 Cr as on 31 March 2011.Modernization and Mechanization in agriculture space is offering excellent opportunities for this MNC subsidiary .One can consider buying it at CMp of Rs.337 or in  further dip.
                                                                               

Wednesday, October 5, 2011

IN A FALLING MARKET ......


 COURTESY : THE BUSINESS LINE.



Pranay, who started investing in equities in mid-2010, is worried. With almost 25 per cent shaved off from the BSE Sensex's November 2010 peak of 21,005, the markets now seem to be on a downward spiral. Pranay's portfolio of blue-chip stocks, acquired after a good deal of research, has also taken a sharp knock. Adding to his unease is the opinion in some quarters that the markets have entered a bear phase. Unnerved, Pranay is thinking of liquidating his equity investments to cut losses, and also permanently staying away from the stock market. Is this the correct decision?

What's a bear market?

First, let's consider what constitutes a bear market. A sharp, prolonged decline in the price of assets (stocks, in the case of equity markets) is a defining feature of a bear market. Though not cast in stone, it is generally believed that when equity markets fall over 20 per cent from their peaks, they are in bear territory. By this yardstick, the Indian markets, having lost more than a fifth of their value since last November, could be said to be in bear zone. However, this fall has neither been continuous nor prolonged (as yet), and has been interspersed with some strong comebacks - the latest in July when the Sensex closed above the 19,000 mark. So, strictly speaking, our markets still have some way to go (down) before being categorised as being in the ‘bear category'. That said, a growing sense of despair - another leitmotif of bear markets - is beginning to make its presence felt in the Indian markets, with many participants having a negative outlook on the future direction of the bourses. Such pessimism is often self-feeding and results in spiralling market declines.
Bear markets are different from ‘corrections'. The latter are relatively minor declines in prices, do not last long, and mostly serve to remove froth (unjustifiable price increases) out of overheated markets. Bear markets, on the other hand, result when fear sets in among a large section of the investor community about the future prospects of the economy and companies.

The trigger

A deterioration in economic fundamentals which impacts the prospects of companies is often the trigger for bear markets. For instance, the recent sharp market dip in India has been precipitated by a steep rise in raw material costs, rising interest rates, global economic uncertainties, and fears of a domestic slowdown. The uninspiring results posted by India Inc. in the recent quarters have also contributed to the pain. With panic setting in, even stocks of companies which are otherwise sound are beaten down hard. During the last major bear market witnessed by the Indian bourses in 2008 and early 2009, the Sensex tanked from around 21,000 to below 8000, dragging down in its wake the bluest-of-the blue chips.

Dealing with it

Bear markets can have a profound detrimental effect, both financial and psychological, on investors. Some such as Pranay in the example above lose all appetite for investing. However, this may not be an optimal decision, for often in adversity lies opportunity. Market cycles turn, sometimes slowly but surely and bear markets, once they run their course, inevitably give way to revivals. Given that equity as an asset class has proved itself to be among the best wealth-generators over the long-term, investors would do well to continue allocating a portion of their assets to equity. For the discerning investor, bear markets may provide attractive opportunities to pick up good stocks cheap. Being greedy when others are fearful can be quite profitable in the long-run.That said, it may be impossible to predict when the market has hit rock-bottom. A bear market can be like a falling knife, and attempting to catch it could leave your hands bloodied. So, instead of attempting to ‘time the market' and investing a lump-sum at a perceived bottom, investors may be better off adopting a policy of staggering their purchases and buying on dips. Unit cost averaging (reducing overall average cost by investing same amounts periodically to buy more at lower rates and less at high rates) can be put to good effect in bear markets. However, caution needs to be exercised. Not everything available cheap has value. Some questionable stocks, which may have also run up sharply in buoyant market conditions, will invariably be beaten out of shape in bear markets. Such stocks may be permanently de-rated and would likely languish even after the market revives. There are umpteen examples of stocks which never revived from their 2008 and 2009 lows. So it is essential to choose your picks carefully in a bear market; the operative phrase being ‘invest only in fundamentally sound companies available at a discount.' Also, Pranay's idea of selling off his blue-chip stocks to cut his losses may not be a good one. Akin to tough people, good companies will invariably tide over tough times. Difficult as it may be in a falling market, as long as Pranay holds on to his blue-chips, his losses would be unrealised and there is a good possibility of it being recouped in the future. Once sold, notional losses become real and cannot be recouped. That said, if Pranay had initially invested in questionable stocks without adequate research, he may be better off making a switch, by selling the duds and buying into good stocks. The latter are likely to revive faster and stronger when the market's fortunes change for the better.

Saturday, October 1, 2011

ENKEI WHEELS - STARTING TO MOVE









Enkei Wheels is de-merged from the erstwhile Enkey Castalloy Ltd. This company is a 35% subsidiary of the Japanese wheel maker Enkei Corporation .Its parent company having operations in more than 15 countries around the world and it is one of the prominent maker of wheels with specialization in Racing wheel.
This is only the second year of operations of the standalone entity and its operations are just stabilizing.At present ,popularity of motor sports is very limited in India compared with developed countries.But the chances are very high for rapid changes in motor sports sector in our country going forward. Company also producing alloy wheels for other automobile sectors like Car's and two wheelers .Since the sports vehicle sector is not enough developed in our country , at present Enkei is concentrating in 4 wheeler and 2 wheeler alloy wheels here.Major customers here includes Honda,Maruti,Hero Honda,Nissan,Toyota ..etc.Company is also supplying part of its production to its sister concerns outside India.Because of the higher interest rate in India and sluggish economies worldwide,growth of automobile sector is negatively affected now. But even in this not so good conditions ,with the strong support of parent company Enkei Wheels is improving its performance.Since the parent company is keen to develop business in India , possibility of a buy out and delisting  can't be ruled out in future.Currently promoters jointly holding about 72% of the total equity.For the full year ended March 2011, company posted a turnover of Rs.262 Cr v/s Rs.180 Cr and a net profit of Rs.27 Lac v/s a loss of Rs.9 Cr .This is not a stock to buy today and sell in near future but only for real investors who are willing to hold for long term.This FV Rs.5 stock is currently trading around Rs.64/-

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