Saturday, March 31, 2012

FAIRFIELD ATLAS - REPEAT

I have recommended a BUY on Fairfield Atlas @ Rs.69 on September 24,2011.Thereafter company reported better than expected number in all quarters. It is expected to grow even faster due to an early revival in US economy and a favorable exchange ratio of  Rupee/Dollar .Reiterating a BUY @ Rs.139/-

For Old Posting on this Company Click HERE

Monday, March 26, 2012

SCHNEIDER ELECTRIC INFRASTRUCTURE LTD - WILL IT MOVE TO THE BIG LEAGUE ?






Schneider Electric Infrastructure , an associate company of the French Energy management conglomerate  Schneider Electric is  a newly listed  stock in our stock exchanges.This company originated by the  Areva T&D’s global take over by the Alstom-Schneider consortium and subsequent de -merger of Transmission business to Alstom and  distribution business  to Schneider.The global takeover happened in 2010 at a cost of EUR 2.29 billion.Later the high voltage business allotted to Alstom and Medium and low voltage business allotted to Schneider to align with their global status.The Indian business of erstwhile Areva T&D also shared in the same manner here.In the initial stage its name was  SMARTGRID AUTOMATION DISTRIBUTION AND SWITCHGEAR LIMITED and changed its to Schneider Electric Infrastructure Limited in December 2011. Its ultimate parent company Schneider Electric is one of the world's largest manufacturers of equipment for electrical power distribution, industrial control and automation.Its nearest rival is ABB , but if we take the growth in Asia region business Schneider outpaces  with a 21%sales growth compared to 5% of ABB. Even in other parameters too Schneider showing better prospects as in the case of operational  margins for low voltage business where its is 20.5 % for Schneider and 16% for ABB (Asian business) .At present Schneider’s revenue share from Asian region is about 37% and it is growing very fast mainly due to some aggressive acquisitions made in last few years. In India , parent company made some big ticket acquisitions in recent past which includes Conzerv Systems, Meher Capacitors, Zicom's electronic security systems integration business(Rs.225 Cr),Uniflair India, APW President Systems( Rs.70 Cr approx.),Digilink(Rs.500 Cr) and Luminous ( Rs.1400 Cr)..etc.These figures clearly indicates their commitments to India . Coming back to the business of the listed entity ,it is in MV/LV Distribution business which includes Protection relays , control panels and other accessories.Even if there is some slowness in power generation and distribution policies by government in recent times , we all know there is huge scope remaining and it is inevitable in a country like India.I believe , with superior technology ,aggressive marketing strategies and vast experience Schneider having big opportunity in India for their Distribution business going forward.For the nine month ended December 2011  Schneider Electric Infrastructure posted a turnover of Rs.1054 Cr and a net profit of Rs.33Cr .In the latest December quarter alone it  posted a sales of Rs.409 Cr and a net profit of Rs.18 Cr .Margins are not great  at present but it is expecting to improve after the full control  of Schneider in the management .SEIL listed last week and this FV Rs.2 stock is currently trading around Rs.70/- .I feels the major selling happening in these days are from some Institutional share holders. As a matter of policy ,generally some funds/institutions are not interested to hold de-merged pieces and this may be an offloading because of this reason. I strongly believe whenever this supply ends this stock will move to the next level  and may turn as a dark horse in coming years.Risk takers may enter in it @CMP of Rs.69.60/- and hold for long term.With effect from,  April 3, 2012 this will come out of ' T ' group and shifted to 'B' Group.

* Since it is a newly listed stock ,only limited information is available now
* Disc: I have vested interest in SEIL


Saturday, March 24, 2012

GRANULES INDIA LTD - BUY







Granules India is  Hyderabad based integrated pharmaceutical outsourcing manufacturer mainly in Active Pharmaceutical Ingredients (API), Pharmaceutical Formulations Intermediates(PFI) and  Finished Dosages (FD ). Company having three API manufacturing facilities located in Bonthapally,and  Jeedimetla  in Andhra Pradesh and Hubei in China.All these three facilities are approved by USFDA and other authorities like WHO ,EDQM..etc. Its API portfolio includes Paracetamol ,Ibuprofen,Metformin HCl,Guaifenesin,Methocarbamo,Oxymetazoline and Phenazopyridine HCl. Granules’ PFI facilities are located at Gagillapur and Jeedimetla both in Andhra Pradesh. Company also have six billion tablect capacity FD plant in Gagillapur. Company having strong outsourcing tie-ups with world pharma majors. Now company is moving gradually to high margin PFI and Fd segment from API .Last year Granules expanded its capacity in both these segments. Company having good R&D and got approvals for two ANDA’s in last year.Outside India, company having marketing presence in US,China,UK and Colombia.After receiving recent FDA approvals and capacity expansion company is expected to perform well going forward.Last FY , Granules posted a turnover of Rs.475 Cr and a net profit of Rs.21 Cr .With the aggressive expansion ,marketing initiatives,and introduction of new products and favorable exchange value ( about 80% of sales coming from exports.) Granules is expected to  post decent growth in coming years.It is one of the good pharma picks from small cap space at CMP of Rs.79/-

Friday, March 23, 2012

AHLCON PARENTERALS (INDIA) LTD - UPDATE

AHLCON PARENTERALS (INDIA) LTD is one of my old recommendation at Rs.64 on June 10,2010 ( For the old posting CLICK HERE ) which is currently trading at Rs.373/- .German  medical and pharmaceutical giant B. Braun Melsungen AG made an open offer to acquire the shares of the company at a price of Rs.460/- share.

Thursday, March 22, 2012

DOLPHIN OFFSHORE ENTERPRISES (INDIA) LTD. - BUY












Dolphin Offshore Enterprises is a niche company in offshore oil exploration services.Company is providing under water services to oil exploration companies .Their work includes  Under water construction services entailing modification and redevelopment of existing offshore facilities,Pre-engineering surveys,Diving support for pipe laying, including pipe line stabilization,Inspection, maintenance and repairs of platforms,Installation and replacement of tie-ins, risers and conductors,Underwater ship repair and maintenance Rig support Diving services including UWILD surveys,Inspection required for various certifying bodies such as ABS, DNV and USCG certifications ROV services ..etc.There are very few companies are operating in India in this field. Company’s performance was very good till few years back.But its  turnover and margin declined along with the decline of oil prices in last few years.When there is a crash in oil prices , exploration companies cut their budgets  and  postponed many  projects.Such a situation reduces the opportunities in this field and many foreign companies submit their bids at very lower rate to capture the available minimum opportunities. Because of this reason Dolphin didn’t get any major contracts for the past  few quarters.Now with the rising trend in oil prices,situation is again improving and it is expected to gain the momentum going forward.Recently company received a contract from ONGC worth Rs.270 Cr  to be completed in 15months.It is expected to add further orders going forward with improving oil prices.Management of this company is an investor friendly one and issued  bonus shares twice in last 5 years.In recent times promoters are aggressively bought shares from open market which is another positive  point to note.At CMP of Rs.84/- one may consider it for long term.

RBI tightens norms for gold loan companies

LISTED GOLD LOAN COMPANIES LIKE MUTHOOT FINANCE AND MANAPPURAM MAY BE AFFECTED

The Reserve Bank of India (RBI) on Wednesday issued a notification directing all non-banking finance companies engaged in gold loan business to maintain a loan to value (LTV) ratio of 60%. This means, a borrower has to pledge gold jewellery worth Rs 100 to get a loan of Rs 60. 

CMP of Muthoot is Rs.162.30 and Manappuram is Rs.45.30/-

To read the full notification ,Click HERE





Wednesday, March 21, 2012

7 Common Investor Mistakes

Courtesy : Jay yoder

1. No PlanAs the old saying goes, if you don't know where you're going, any road will take you there. Solution?

Have a personal investment plan or policy that addresses the following:


  • Goals and objectives - Find out what you're trying to accomplish. Accumulating $100,000 for a child's college education or $2 million for retirement at age 60 are appropriate goals. Beating the market is not a goal.
  • Risks - What risks are relevant to you or your portfolio? If you are a 30-year-old saving for retirement, volatility isn't (or shouldn't be) a meaningful risk. On the other hand, inflation - which erodes any long-term portfolio - is a significant risk. (To see more on risk, read Determining Risk And The Risk Pyramid and Personalizing Risk Tolerance.)
  • Appropriate benchmarks - How will you measure the success of your portfolio, its asset classes and individual funds or managers? (Keep reading about benchmarks in Benchmark Your Returns With Indexes.)
  • Asset allocation - What percentage of your total portfolio will you allocate to U.S. equities, international stocks, U.S. bonds, high-yield bonds, etc. Your asset allocation should accomplish your goals while addressing relevant risks.
  • Diversification - Allocating to different asset classes is the initial layer of diversification. You then need to diversify within each asset class. In U.S. stocks, for example, this means exposure to large-, mid- and small-cap stocks. (Find out more about allocation and diversification in Five Things To Know About Asset Allocation, Choose Your Own Asset Allocation Adventure and A Guide To Portfolio Construction.)
Your written plan's guidelines will help you adhere to a sound long-term policy, even when current market conditions are unsettling. Having a good plan and sticking to it is not nearly as exciting or as much fun as trying to time the markets, but it will likely be more profitable in the long term. (To find out how to make your investment plan, see Having A Plan: The Basis Of Success, Ten Steps to Building A Winning Trading Plan and Tailoring Your Investment Plan.)

2. Too Short of a Time Horizon
If you are saving for retirement 30 years hence, what the stock market does this year or next shouldn't be the biggest concern. Even if you are just entering retirement at age 70, your life expectancy is likely 15 to 20 years. If you expect to leave some assets to your heirs, then your time horizon is even longer. Of course, if you are saving for your daughter's college education and she's a junior in high school, then your time horizon is appropriately short and your asset allocation should reflect that fact. Most investors are too focused on the short term.

3. Too Much Attention Given to Financial MediaThere is almost nothing on financial news shows that can help you achieve your goals. Turn them off. There are few newsletters that can provide you with anything of value. Even if there were, how do you identify them in advance?

Think about it - if anyone really had profitable stock tips, trading advice or a secret formula to make big bucks, would they blab it on TV or sell it to you for $49 per month? No - they'd keep their mouth shut, make their millions and not have to sell a newsletter to make a living. (To learn more, see Mad Money ... Mad Market? and The Madness Of Crowds.)

Solution? Spend less time watching financial shows on TV and reading newsletters. Spend more time creating - and sticking to - your investment plan.

4. Not Rebalancing Rebalancing is the process of returning your portfolio to its target asset allocation as outlined in your investment plan. Rebalancing is difficult because it forces you to sell the asset class that is performing well and buy more of your worst performing asset classes. This contrarian action is very difficult for many investors.

In addition, rebalancing is unprofitable right up to that point where it pays off spectacularly (think U.S. equities in the late 1990s), and the underperforming assets start to take off. (Keep reading about this subject in Equity Premiums: Looking Back And Looking Ahead.)

However, a portfolio allowed to drift with market returns guarantees that asset classes will be overweighted at market peaks and underweighted at market lows - a formula for poor performance. The solution? Rebalance religiously and reap the long-term rewards. (Find out how to put this tip to use in Rebalance Your Portfolio To Stay On Track, When Fear And Greed Take Over and Master Your Trading Mindtraps.)

5. Overconfidence in the Ability of ManagersFrom numerous studies, including Burton Malkiel's 1995 study entitled, "Returns From Investing In Equity Mutual Funds", we know that most managers will underperform their benchmarks. We also know that there's no consistent way to select - in advance - those managers that will outperform. We also know that very, very few individuals can profitably time the market over the long term. So why are so many investors confident of their abilities to time the market and select outperforming managers?

Fidelity guru Peter Lynch once observed, "There are no market timers in the 'Forbes' 400'." Investors' misplaced overconfidence in their ability to market-time and select outperforming managers leads directly to our next common investment mistake. (For more insight, see Pick Stocks Like Peter Lynch.)

6. Not Enough Indexing
There is not enough time to recite many of the studies that prove that most managers and mutual funds underperform their benchmarks. Over the long-term, low-cost index funds are typically upper second-quartile performers, or better than 65-75% of actively managed funds.
Despite all the evidence in favor of indexing, the desire to invest with active managers remains strong. John Bogle, the founder of Vanguard, says it's because, "Hope springs eternal. Indexing is sort of dull. It flies in the face of the American way [that] 'I can do better.'"

Index all or a large portion (70-80%) of all your traditional asset classes. If you can't resist the excitement of pursuing the next great performer, set aside a portion (20-30%) of each asset class to allocate to active managers. This may satisfy your desire to pursue outperformance without devastating your portfolio.

7. Chasing PerformanceMany investors select asset classes, strategies, managers and funds based on recent strong performance. The feeling that "I'm missing out on great returns" has probably led to more bad investment decisions than any other single factor. If a particular asset class, strategy or fund has done extremely well for three or four years, we know one thing with certainty: We should have invested three or four years ago. Now, however, the particular cycle that led to this great performance may be nearing its end. The smart money is moving out, and the dumb money is pouring in. Stick with your investment plan and rebalance, which is the polar opposite of chasing performance.

Conclusion
Investors who recognize and avoid these seven common mistakes give themselves a great advantage in meeting their investment goals. Most of the solutions above are not exciting, and they don't make great cocktail party conversation. However, they are likely to be profitable. And isn't that why we really invest?



Sunday, March 18, 2012

HIKAL - BUY
















HIKAL– jointly promoted by Hiremath and  Kalyani groups is in the manufacturing of chemicals and intermediates for  sectors like Pharmaceuticals,Biotechnology and Crop protection. About 70% of company’s earnings is coming  from exports and having strong marketing tie-ups with multinationals includes Bayer,Syngenta,Degussa and Pfizer.Company is also very active in contract research(CRAMS) through its 100% subsidiary ‘Acoris’. Company’s manufacturing facilities are located in Taloja,Mahad,Bangalore,Panoli and Pune.Hikal is proving support for Discovery Research, Process Development, Analytical Method Development and Custom Manufacturing  and gained good reputation among multinational companies.Company’s expertise and lower wage structure prevailing in India compared with foreign countries providing enough scope for growth in these fields. Hikal is following stringent quality standards and its sites are approved by USFDA. In last financial year company’s  performance was dismal due to adverse currency fluctuation and lower demand scenario.Now things are improving and it came to growth path.For the nine month ended December quarter , HIKAL reported a sales of Rs.473 Cr and a net profit of Rs.39 Cr which is far better than last year.Considering the quality of management ,potential of the industry and scalability of business – HIKAL is a good BUY @Rs.269/- for medium to long term.

Thursday, March 15, 2012

TOKYO PLAST INTERNATIONAL - HOLD

I have recommended a BUY on TOKYO PLAST INTERNATIONAL @ Rs.14/- on April 19,2011 which is currently trading at its life time high @ Rs.23.50 ,an appreciation of 60% in one year .One may HOLD it at CMP .

For old posting click HERE

Saturday, March 10, 2012

AGROTECH FOODS - REPEAT






                                                     








                                                                                






AgroTech Foods once   recommended @ Rs.327/- on November 6,2010.This is NOT  a BUY purely on conventional valuation parameters like P/E.In my old posting I clearly mentioned that the attitude of foreign management after the exit of ITC from this company will be the crucial point to watch.Based on some of the recent developments, I strongly feels that the parent company ConAgra Foods is now fully committed and trying their level best to take Agrotech Foods to the next stage of growth.In November 2011,foreign promoter hiked their stake to 52 % by purchasing ITC's remaining stake at a huge premium ( @ Rs.580) to the then prevailing market price.Last week AgroTech  announced its plans to start four new manufacturing facilities - 3 in India and 1 in Bangladesh in next three years at a cost of Rs.100 Cr.This step is a clear indication for company's plans to concentrate in growing Indian and other Asian markets going forward.Company's efforts to transform from a commodity player to a food company is also started to bring results  and it is evident from the margins posted in latest December quarter.It is expected to introduce many of the parent's brands in India in next few years. This MNC associate may not  be cheap at CMP of Rs.450/- as I mentioned above , but this premium will continue even in future considering its growth prospects,debt free balance sheet,parent company's status and its  brand value..etc. It is a stock to include in your core portfolio with  a long term view .


For the old posting Click HERE






Tuesday, March 6, 2012

SUGAR SECTOR STOCKS

Today , after the UP Poll outcome all stocks from sugar sector reacted sharply down.I feels this is only an over reaction.Long term investors should take it  as an opportunity to buy if there is any further correction.Even without de-control ,the risk reward ratio on a two year time frame justifying an investment in sugar stocks at current level. Moreover I don't think anything negative has happened to this sector due to the victory of SP in UP and really it may be positive on many grounds.  Since the market volatility is high due to the upcoming important events like RBI policy ,Budget ..etc , one may adopt a strategy to buy it in different lots.

Sunday, March 4, 2012

BAJAJ HINDUSTHAN - BUY



 
We have discussed stocks from sugar sector few months back when most of them at their all time lows.( For old posting Click HERE) Even if many of them appreciated more than 30 % in an average from that level,there is still chances in this sector for long term investors.Even now there is full of skepticism about this sector and these skeptics are looking only to the negative factors around and not considering the sharp correction in the prices of stocks from sugar  sector. I have mentioned three stocks in my earlier note .Today ,let us take Bajaj Hindusthan which is one of the largest sugar producers in our country.Company having 14 sugar plants in India with a  crushing capacity of 136,000 TCD (tonnes crushed per day) and has Industrial Alcohol/Ethanol producing capacity of 800 KL per day.It also having a co generation facility for producing 428 MW of power.Under three SPV’s ( Bajaj Energy Private Limited, Lalitpur Power Generation Company Limited, Bajaj Power Generation Private Limited )company is in the process of setting up thermal power capacity of 4410 MW in Uttar Pradesh.Its another subsidiary Bajaj Eco-Tec Products Limited (BEPL) is Manufacturing Medium Density Fibre (MDF) boards and Particle boards from sugarcane baggese. BEPL is expected to break even in next few years. This integrated nature of the company is reducing the risk of sugar price volatility to a certain extent. As all of you are aware, sugar companies are currently going through a difficult situation due to price erosion of sugar because of over supply situation.Now in whole sale market ,sugar is traded even below its production cost.But this situation is expected to change in coming years due to crop loss in major producing countries on account of weather conditions,shift of farmers to other crops..etc.In countries like Brazil more cane is expected to divert for ethanol production due to rise in crude prices. All these factors are pointing  to a recovery in sugar prices in next few years.Being a company with huge capacity ,such a situation will immensely benefit Bajaj Hindusthan.In December quarter company posted a loss of Rs.45 Cr .Last year company collected 1,479.75 crore through a rights issue to part finance its various expansion programs and retire a part of its debt. At current market price of Rs.35/- ,Bajaj Hindusthan is a good bet for long term investors with enough patience.

Saturday, March 3, 2012

KENNAMETAL INDIA - BOOK PARTIAL PROFIT

Kennametal India is my old recommendation 
@ Rs.350/- on 18th April 2010 ( Old posting HERE) .Today it moved up sharply and closed at Rs.1065/- , a whopping gain of more than 200 % in less than two not so good years for the overall stock market.Requesting to sell at least 50% of the total holdings at current rate and keep the balance cost free.

Thursday, March 1, 2012

WPIL - RE ENTER

I have recommended a BUY on WPIL on 20th July 2011 at Rs.187 ( Old Posting HERE) and profit booking at Rs.300+ on 15 February 2012 ( HERE) . From a level of Rs.300+ it crashed in few trading sessions due the offloading of an Investor who holds about 1.5 lac shares in this low liquid counter.Currently It is trading around Rs.195/- .Earlier , promoters hiked their stake upto 75% through market purchases even at a level of Rs.220/-. One may again buy it if it falls below Rs.190/-, for medium to long term.

Discl :I have vested interest in WPIL

Followers

Tweet TopOfBlogs