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The key benchmark indices soared last week shrugging off weak industrial production data, high inflation and soaring global crude oil prices. Depreciating domestic currency against the dollar boosted export driven IT stocks.
The BSE Sensex rose 697.87 points or 4.17% to 17,434.94 in the week ended Friday, 16 May 2008. The S&P CNX Nifty rose 175.10 points or 3.51% to 5157.70 in the week. The BSE Mid-Cap index rose 137.04 points or 1.96% at 7,129.70 in the week. The BSE Small-Cap index rose 114.62 points or 1.35% at 8,620.26.
The wholesale price index rose 7.83% in 12 months to 3 May 2008, higher than previous week's annual rise of 7.61%, government data released on 16 May 2008, showed. It was the highest since an annual reading of 7.93% n 6 November 2004. The annual inflation rate was 5.74% during the corresponding week of the previous year.
India's industrial production growth dropped sharply to 3% in March 2008, slowing from the previous month's unrevised 8.6%, government data showed on Monday, 12 May 2008. It was the slowest annual growth since a 2.4% rise in February 2002.
Manufacturing production rose 2.9% in March 2008 from a year earlier, compared with 8.6% growth in February 2008. Industrial output rose 8.1% in 2007/08 compared with 11.6% in 2006/07.
US light crude for June delivery surged to a record high of $126.98 on Tuesday, 13 May 2008. However, that price eased to $123.74 on 15 May 2008 as rising US distillates stocks and Iran's reassurances that it would not cut crude exports added to a strengthening US dollar to limit the upside.
India's rupee fell to the lowest level since April 2007 to 42.445 per dollar on Wednesday, 14 May 2008 on speculation record crude oil prices will widen the nation's trade and current-account deficits, increasing demand for foreign currencies. The currency also weakened after overseas investors further sold local equities.
Foreign institutional investors (FII) have, so far, sold shares worth Rs 529.10 crore this month, till 14 May 2008. They sold shares worth Rs 10,887.20 crore in calendar year 2008, till 14 May 2008. Domestic funds sold shares worth Rs 639.80 this month, till 14 May 2008.
India's biggest mobile operator by market share Bharti Airtel rose 1.09% to Rs 851.35. The firm is reportedly evaluating a bid for South Africa-based communication services provider MTN Group.
India's largest pharma company in terms of sales Ranbaxy Laboratories gained 8.79% to Rs 510.70. Ranbaxy Laboratories signed a deal to develop new anti-infective drugs for US-based Merck & Co Inc. As per the deal, Ranbaxy will carry out drug discovery and clinical development through Phase II clinical trials, while Merck will be responsible for the development and commercialisation.
India's largest private sector company in terms of market capitalisation and oil refiner Reliance Industries (RIL) rose 4.25% to Rs 2635.20. Recently, RIL had shut all of its 1,432 petrol pumps in the country after sales dropped to almost nil as it could not match the subsidised price offered by public sector competition.
Depreciation in Indian currency against the dollar generated interest in software counters as the Indian software firms earn more than half of their revenue in dollar terms. India's largest software services exporter TCS surged 6.40% to Rs 976.15, Infosys Technologies, the nation's second biggest software exporter by sales, spurted 6.89% to Rs 1871.19 and Wipro, the third largest exporter by sales, flared up 0.99% to Rs 506.15.
India's top tractor maker Mahindra & Mahindra (M&M) fell 1.52% to Rs 662. The company said on Friday, 9 May 2008, it is hiking vehicle prices in the range of 1.5% to 2.5% due to rise in input costs. The price hikes will come into effect from 19 May 2008.
India's largest private sector aluminium company in terms of sales Hindalco Industries jumped 17.37% to Rs 203.70.
India's biggest private sector lender by assets ICICI Bank galloped 7.68% to Rs 941.15
India’s largest cellular services provider in terms of market capitalisation Reliance Communications gained 11.65% to Rs 601.85. Reliance Infratel, a 95% telecom infrastructure subsidiary of the company is reported to have secured the Securities and Exchange Board of India (Sebi)’s nod for a public issue. The Anil Ambani group company may offload a 10.05% stake in Reliance Infratel to raise Rs 5,000-6,000 crore through the IPO.
Infrastructure sector output rose 9.6% in March 2008 from a year earlier, faster than a downwardly revised 7.1% growth in February 2008, data released by the government showed. Output had risen an annual 10.5% in March 2007. It rose 5.6% in the fiscal year 2007/08.
Tourist arrivals in India rose 10.7% to 3,69,677 in April 2008 over April 2007, the government data showed on Monday, 12 May 2008. Foreign exchange earnings from the sector rose 6.8% to $817 million in April 2008 over April 2007.
In the coming week the market is likely to be rangebound in the absence of any major domestic trigger, with Q4 March 2008 results nearing end. The market has reached a stage where liquidity will pull the prices up and valuations will keep them under control. The market will have its bit of volatility due to these two opposing forces. It will test the patience of investors and the nerves of the traders.
Inflation data will be closely watched as it remains as a major worry and hindrance for the domestic growth. High inflation may compel the government to take more fiscal measures to rein in prices in addition to slew of measures taken recently.
Saturday, May 17, 2008
Friday, May 16, 2008
ANALYST VIEWS
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Mercator Lines has target of Rs 140-149
Technical Analyst, Rajat K Bose is of the view that one will see Mercator Lines going up much further from here. Over the medium-term, my target would be something like Rs 140 to about Rs 149 and if it crosses that then even further higher levels of say Rs 163 to Rs 165 could be possible. In fact above Rs 110 there has been a breakout and chances are that one will see Mercator Lines going up much further from here. Over the medium-term, my target would be something like Rs 140 to about Rs 149 and if it crosses that then even further higher levels of say Rs 163 to Rs 165 could be possible. The chart pattern suggests a strong bullishness over the medium-term.
[source: moneycontrol]
Buy Firstsource Solutions, target of Rs 66
PINC Research has maintained its buy rating on Firstsource Solutions with a 12-month price target of Rs 66 in its May 14, 2008 research report. "Firstsource Solutions Ltd. (FSL) reported sales of Rs 3.8 billion in Q4FY08, a flat QoQ growth. However, operating profits posted a 7.4% QoQ rise to Rs 622 million, as the previous quarter had one-off items. Net profit growth, though was subdued due to a provisioning for FCCB’s (Rs 195.6 million) which resulted in only a 1.9% QoQ growth to Rs 210 million."
"At the CMP of Rs 40, FSL is trading at a P/E of 14.3x and EV/EBIDTA of 7.6x. Though FSL could face short term uncertainties in key segments we continue to believe that its offerings are expected to witness greater traction due to the under penetration of outsourced BPO services. Hence, as FSL possesses proven capabilities to capture these opportunities, it has the potential to report robust earnings growth and stable free cash flows which should enable its valuations to align with that of its global peers. Thus, we maintain our ‘BUY’ recommendation with a 12-month price target of Rs 66," says PINC's research report.
[source: moneycontrol]
Mercator Lines has target of Rs 140-149
Technical Analyst, Rajat K Bose is of the view that one will see Mercator Lines going up much further from here. Over the medium-term, my target would be something like Rs 140 to about Rs 149 and if it crosses that then even further higher levels of say Rs 163 to Rs 165 could be possible. In fact above Rs 110 there has been a breakout and chances are that one will see Mercator Lines going up much further from here. Over the medium-term, my target would be something like Rs 140 to about Rs 149 and if it crosses that then even further higher levels of say Rs 163 to Rs 165 could be possible. The chart pattern suggests a strong bullishness over the medium-term.
[source: moneycontrol]
Buy Firstsource Solutions, target of Rs 66
PINC Research has maintained its buy rating on Firstsource Solutions with a 12-month price target of Rs 66 in its May 14, 2008 research report. "Firstsource Solutions Ltd. (FSL) reported sales of Rs 3.8 billion in Q4FY08, a flat QoQ growth. However, operating profits posted a 7.4% QoQ rise to Rs 622 million, as the previous quarter had one-off items. Net profit growth, though was subdued due to a provisioning for FCCB’s (Rs 195.6 million) which resulted in only a 1.9% QoQ growth to Rs 210 million."
"At the CMP of Rs 40, FSL is trading at a P/E of 14.3x and EV/EBIDTA of 7.6x. Though FSL could face short term uncertainties in key segments we continue to believe that its offerings are expected to witness greater traction due to the under penetration of outsourced BPO services. Hence, as FSL possesses proven capabilities to capture these opportunities, it has the potential to report robust earnings growth and stable free cash flows which should enable its valuations to align with that of its global peers. Thus, we maintain our ‘BUY’ recommendation with a 12-month price target of Rs 66," says PINC's research report.
[source: moneycontrol]
Saturday, May 10, 2008
BROKERAGE RECOMMENDATIONS
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BROKERAGE REPORTS DATED 10th MAY 2008
[source:moneycontrol.com]
PINC Research has maintained its buy rating on Pratibha Industries with a 12-month price target of Rs 480 in its May 8, 2008 research report. "Pratibha Industries Ltd’s (PIL’s) sales doubled to Rs 2.2 billion in Q4FY08. This was on back of a strong order book and increasing contribution from its HSAW pipes division. However, surge in raw material cost/sales by 478 bps led to a slide in OPM to 10.3%. This along with higher depreciation contained net profit growth to 61% at Rs 103 million. PIL’s current order book (core construction business) stands at Rs 20 billoion, with major chunk (60%) being accounted for by Water Management Projects (WMPs). While urban infrastructure projects constitute 32% of the order book, road projects account for the balance."
"At the CMP of Rs 327, PIL trades at a P/E of 8.2x and EV/EBIDTA of 5.9x FY10E earnings. A healthy order book, strong presence in WMPs and revenues from the pipe manufacturing should enable PIL to capitalise on opportunities in the infrastructure sector. We maintain a ‘BUY’ recommendation with a 12-month price target of Rs 480," says PINC research report.
[source:ndtvprofit.com]
GATEWAY DISTRIPARKS : I would recommend the investors to hold or even buy at the current levels. In the short-term, the counter has resistance at Rs 130 levels and it is likely to reach Rs 175 levels in a year’s time.: Ashu Kakkar: Tech Analyst: skypowerfinancialservices.com:
IDEA CELLULAR LTD : I would advice the investors to hold the stock. The counter is moving between Rs 95 and Rs 115 levels. But if it breaks Rs 115 levels, then it has potential to reach Rs 130 levels.: Bharat Dalal: Technical Analyst: Dawnay Day AV Financial Services.
TATA STEEL LTD : I recommend the investors to hold the stock. The counter looks strong on the charts and once it crosses Rs 920 levels, then it will move upward sharply.: Bharat Dalal: Technical Analyst: Dawnay Day AV Financial Services.
ITC LTD : I advice the investors to hold the stock. The counter has support at Rs 205levels and resistance at Rs 222 levels. It is a defensive stock and so the investors should remain invested.: Bharat Dalal: Technical Analyst: Dawnay Day AV Financial Services.
AXIS BANK LTD : I would advice the investors to hold the stock for long-term. The Q4 results of the bank were good and it is in uptrend. So, the investors should remain invested.: DD Sharma: VP-Research: Anand Rathi Sec.
WELSPUN INDIA LTD : I recommend the investors to hold the stock. Though the appreciating rupee had an impact on the margins of the company in the past, things look better now. So, I would suggest the investors to stay invested.: DD Sharma: VP-Research: Anand Rathi Sec.
GMR Infrastructure : I advice the investors to hold the stock. The company has good projects in pipeline and the prospect is impressive. So, the investors should remain invested.: VVLN Sastry: Country Head: Firstcall India Equity Advisors.
EDUCOMP SOLUTIONS LTD : I would recommend the investors to hold the stock. The counter is extremely overvalued and so the investors should look to book profits at every rally.: VVLN Sastry: Country Head: Firstcall India Equity Advisors.
ITC LTD : I would recommend the investors to hold the stock. I am bullish on the counter and it is poised to do well in the coming days. It is in uptrend at the current levels.: Hormuz Maloo: Technical Analyst: Geojit Financial Services.
UNITED SPIRITS LTD : I advice the investors to hold the stock for the long-term. I expect it to outperform the markets in the days ahead. But the investors should remain invested for longer period. : Hormuz Maloo: Technical Analyst: Geojit Financial Services.
RELIANCE PETROLEUM LTD : I recommend the investors to hold the stock. The counter will perform well in the days ahead and it will reach decent target if it crosses Rs 205 levels.: PK Agarwal: President Research: Bonanza Portfolio Ltd.
GMR Infrastructure : I advice the investors to buy the stock. The counter looks good fundamentally and has good projects in pipeline. So, the investors can bet on this counter for the long-term.: Anita Gandhi: Head Institutional Business: Arihant Capital.
RELIANCE INDUS INFRASTRUCT : I would recommend the investors to hold the stock. The counter seems to be in uptrend and Rs 1740 level will be the next target. So, the investors should remain invested.: Hemen Kapadia: CEO: chartpunditcom.
ARVIND MILLS LTD : I would recommend the investors to hold the stock. The performance of the entire textile segment wasn’t good last year. But the counter looks impressive at the current levels and I expect it to do well in the days ahead.: Anita Gandhi: Head Institutional Business: Arihant Capital.
MINDTREE CONSULTING LTD : I would advice the investors to hold the stock. The company is doing well and it has upside potential. The outlook for the IT sector is also good.: Anita Gandhi: Head Institutional Business: Arihant Capital.
Gitanjali Gems Ltd : I recommend the investors to hold the stock. The counter is in medium term uptrend and I expect it to reach Rs 300 levels in the near future.: Hemen Kapadia: CEO: chartpunditcom.
BROKERAGE REPORTS DATED 10th MAY 2008
[source:moneycontrol.com]
PINC Research has maintained its buy rating on Pratibha Industries with a 12-month price target of Rs 480 in its May 8, 2008 research report. "Pratibha Industries Ltd’s (PIL’s) sales doubled to Rs 2.2 billion in Q4FY08. This was on back of a strong order book and increasing contribution from its HSAW pipes division. However, surge in raw material cost/sales by 478 bps led to a slide in OPM to 10.3%. This along with higher depreciation contained net profit growth to 61% at Rs 103 million. PIL’s current order book (core construction business) stands at Rs 20 billoion, with major chunk (60%) being accounted for by Water Management Projects (WMPs). While urban infrastructure projects constitute 32% of the order book, road projects account for the balance."
"At the CMP of Rs 327, PIL trades at a P/E of 8.2x and EV/EBIDTA of 5.9x FY10E earnings. A healthy order book, strong presence in WMPs and revenues from the pipe manufacturing should enable PIL to capitalise on opportunities in the infrastructure sector. We maintain a ‘BUY’ recommendation with a 12-month price target of Rs 480," says PINC research report.
[source:ndtvprofit.com]
GATEWAY DISTRIPARKS : I would recommend the investors to hold or even buy at the current levels. In the short-term, the counter has resistance at Rs 130 levels and it is likely to reach Rs 175 levels in a year’s time.: Ashu Kakkar: Tech Analyst: skypowerfinancialservices.com:
IDEA CELLULAR LTD : I would advice the investors to hold the stock. The counter is moving between Rs 95 and Rs 115 levels. But if it breaks Rs 115 levels, then it has potential to reach Rs 130 levels.: Bharat Dalal: Technical Analyst: Dawnay Day AV Financial Services.
TATA STEEL LTD : I recommend the investors to hold the stock. The counter looks strong on the charts and once it crosses Rs 920 levels, then it will move upward sharply.: Bharat Dalal: Technical Analyst: Dawnay Day AV Financial Services.
ITC LTD : I advice the investors to hold the stock. The counter has support at Rs 205levels and resistance at Rs 222 levels. It is a defensive stock and so the investors should remain invested.: Bharat Dalal: Technical Analyst: Dawnay Day AV Financial Services.
AXIS BANK LTD : I would advice the investors to hold the stock for long-term. The Q4 results of the bank were good and it is in uptrend. So, the investors should remain invested.: DD Sharma: VP-Research: Anand Rathi Sec.
WELSPUN INDIA LTD : I recommend the investors to hold the stock. Though the appreciating rupee had an impact on the margins of the company in the past, things look better now. So, I would suggest the investors to stay invested.: DD Sharma: VP-Research: Anand Rathi Sec.
GMR Infrastructure : I advice the investors to hold the stock. The company has good projects in pipeline and the prospect is impressive. So, the investors should remain invested.: VVLN Sastry: Country Head: Firstcall India Equity Advisors.
EDUCOMP SOLUTIONS LTD : I would recommend the investors to hold the stock. The counter is extremely overvalued and so the investors should look to book profits at every rally.: VVLN Sastry: Country Head: Firstcall India Equity Advisors.
ITC LTD : I would recommend the investors to hold the stock. I am bullish on the counter and it is poised to do well in the coming days. It is in uptrend at the current levels.: Hormuz Maloo: Technical Analyst: Geojit Financial Services.
UNITED SPIRITS LTD : I advice the investors to hold the stock for the long-term. I expect it to outperform the markets in the days ahead. But the investors should remain invested for longer period. : Hormuz Maloo: Technical Analyst: Geojit Financial Services.
RELIANCE PETROLEUM LTD : I recommend the investors to hold the stock. The counter will perform well in the days ahead and it will reach decent target if it crosses Rs 205 levels.: PK Agarwal: President Research: Bonanza Portfolio Ltd.
GMR Infrastructure : I advice the investors to buy the stock. The counter looks good fundamentally and has good projects in pipeline. So, the investors can bet on this counter for the long-term.: Anita Gandhi: Head Institutional Business: Arihant Capital.
RELIANCE INDUS INFRASTRUCT : I would recommend the investors to hold the stock. The counter seems to be in uptrend and Rs 1740 level will be the next target. So, the investors should remain invested.: Hemen Kapadia: CEO: chartpunditcom.
ARVIND MILLS LTD : I would recommend the investors to hold the stock. The performance of the entire textile segment wasn’t good last year. But the counter looks impressive at the current levels and I expect it to do well in the days ahead.: Anita Gandhi: Head Institutional Business: Arihant Capital.
MINDTREE CONSULTING LTD : I would advice the investors to hold the stock. The company is doing well and it has upside potential. The outlook for the IT sector is also good.: Anita Gandhi: Head Institutional Business: Arihant Capital.
Gitanjali Gems Ltd : I recommend the investors to hold the stock. The counter is in medium term uptrend and I expect it to reach Rs 300 levels in the near future.: Hemen Kapadia: CEO: chartpunditcom.
Thursday, May 8, 2008
LATEST NEWS
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DATED: 8th MAY 2008
STEEL MAKERS OFFER TO CUT PRICES
Acknowledging concerns that steel prices were exerting inflationary pressure on the economy, leading steel makers on Wednesday decided to reduce prices of flat products by Rs 4,000 per tonne and those of rebars and structural steel by Rs 2,000 per tonne. This price reduction would, however, not be applicable on exports or negotiated prices.
GOVERNMENT MAY DIVEST STAKE IN VSNL
The government is considering divesting its 26 per cent residual stake in Tata Communications Ltd (formerly VSNL), a deal that could fetch the exchequer about Rs 3,650 crore at current market prices. The government holds 26.12 per cent stake in Tata Communications Ltd and going by the market price the value of the residual stake is a little over Rs 3,650 crore as the company shares are changing hands at Rs 491 a share.
GOKALDAS EXPORT MAY DELIST
Blackstone Group (foreign promoter) holding a majority 67.88% stake in the company is mulling to take the Bangalore based apparel player private this year. Indian promoters hold 20% stake in the company (as at end March 2008). The delisting process is expected to be start during second half of the current year. In addition to delisting plan, Blackstone has also reportedly expressed its willingness to buy out a few more factories which are currently owned by promoters of Gokaldas Exports.
UNION BANK TO RAISE CAPITAL
Union Bank of India is reportedly planning to raise capital by issuing fresh equity shares on rights basis to existing shareholders including government. Government holds over 55% stake in the bank. The bank management has discussed plans for rights issue with the government and is looking for further development.
MINDTREE TO BUY AZTECSOFT
MindTree is buying a majority stake in software services firm Aztecsoft for Rs 190 crore. MindTree will initially buy 32.57% of Aztecsoft at Rs 80 per share and follow it up with an open offer for an additional 20%. It will be paying Rs 190 crore in the all-cash deal. The acquisition will be funded by internal accruals.
SESA GOA TO OFFER BONUS AND STOCK SPLIT
It was announced that Sesa Goa would split shares of Rs.10 each to shares of Re.1 each and further would offer bonus shares in the ratio of 1:1. Sesa Goa reported 216.37% surge in net profit to Rs 798.30 crore on 116.21% increase in sales to Rs 1669.97 crore in Q4 March 2008 over Q4 March 2007.
FINOLEX INDUSTRIES TO SELL OFF SEZ PLOT
Finolex Industries has reportedly decided to sell off its special economic zone (SEZ) plot at Chinchwad near Pune. It is close to signing a deal with a US-based developer to sell the land for between Rs 350 crore and Rs 400 crore.
INDIA INFOLINE TO OFFER STOCK SPLIT
The board of India Infoline approved splitting each share of Rs 10 each into five shares of Rs 2 each. Further, the board also recommended a dividend of Rs 6 per share of Rs 10 each. India Infoline reported 8.47% rise in net profit to Rs 17.42 crore on 14.34% decline in sales to Rs 203.94 crore in Q4 March 2008 over Q4 March 2007.
DATED: 8th MAY 2008
STEEL MAKERS OFFER TO CUT PRICES
Acknowledging concerns that steel prices were exerting inflationary pressure on the economy, leading steel makers on Wednesday decided to reduce prices of flat products by Rs 4,000 per tonne and those of rebars and structural steel by Rs 2,000 per tonne. This price reduction would, however, not be applicable on exports or negotiated prices.
GOVERNMENT MAY DIVEST STAKE IN VSNL
The government is considering divesting its 26 per cent residual stake in Tata Communications Ltd (formerly VSNL), a deal that could fetch the exchequer about Rs 3,650 crore at current market prices. The government holds 26.12 per cent stake in Tata Communications Ltd and going by the market price the value of the residual stake is a little over Rs 3,650 crore as the company shares are changing hands at Rs 491 a share.
GOKALDAS EXPORT MAY DELIST
Blackstone Group (foreign promoter) holding a majority 67.88% stake in the company is mulling to take the Bangalore based apparel player private this year. Indian promoters hold 20% stake in the company (as at end March 2008). The delisting process is expected to be start during second half of the current year. In addition to delisting plan, Blackstone has also reportedly expressed its willingness to buy out a few more factories which are currently owned by promoters of Gokaldas Exports.
UNION BANK TO RAISE CAPITAL
Union Bank of India is reportedly planning to raise capital by issuing fresh equity shares on rights basis to existing shareholders including government. Government holds over 55% stake in the bank. The bank management has discussed plans for rights issue with the government and is looking for further development.
MINDTREE TO BUY AZTECSOFT
MindTree is buying a majority stake in software services firm Aztecsoft for Rs 190 crore. MindTree will initially buy 32.57% of Aztecsoft at Rs 80 per share and follow it up with an open offer for an additional 20%. It will be paying Rs 190 crore in the all-cash deal. The acquisition will be funded by internal accruals.
SESA GOA TO OFFER BONUS AND STOCK SPLIT
It was announced that Sesa Goa would split shares of Rs.10 each to shares of Re.1 each and further would offer bonus shares in the ratio of 1:1. Sesa Goa reported 216.37% surge in net profit to Rs 798.30 crore on 116.21% increase in sales to Rs 1669.97 crore in Q4 March 2008 over Q4 March 2007.
FINOLEX INDUSTRIES TO SELL OFF SEZ PLOT
Finolex Industries has reportedly decided to sell off its special economic zone (SEZ) plot at Chinchwad near Pune. It is close to signing a deal with a US-based developer to sell the land for between Rs 350 crore and Rs 400 crore.
INDIA INFOLINE TO OFFER STOCK SPLIT
The board of India Infoline approved splitting each share of Rs 10 each into five shares of Rs 2 each. Further, the board also recommended a dividend of Rs 6 per share of Rs 10 each. India Infoline reported 8.47% rise in net profit to Rs 17.42 crore on 14.34% decline in sales to Rs 203.94 crore in Q4 March 2008 over Q4 March 2007.
Friday, May 2, 2008
JINDAL SAW - A LONG TERM BET
CMP: Rs.653.45 (30/04/2008)
Jindal Saw (JINDAL), promoted by the O. P. Jindal group in 1984, is into manufacturing and coating of submerged arc welded pipes (SAW pipes). The company is the largest producer of saw pipes used widely in the energy sector for the transportation of oil and gas. It is India`s first and only manufacturer of such pipes using U-O-E technology. It is a market leader and a global major in providing Total Pipe Solutions to the industry.
The business operations of the company are structured into four SBUs, i.e., saw pipes, seamless tubes, ductile iron spun pipes and the US operations. The company has obtained technical assistance from US engineers and consultants, a subsidiary of US Steel Corporation, for its products. Further, the company has nine manufacturing facilities in Kosikalan (UP), Mundra (Gujarat), Nashik (Maharashtra) and Swastik Foils (New Delhi). Through affiliates, it also manages the largest pipe mill in the US.
The demand for Saw Pipes is expected to rise immensely in next few years as energy majors plans to lay national gas grid, the regional gas grids, city gas distribution networks and international pipelines. About 10,000 new oil retail outlets which would be set up by companies like Reliance, Essar, Shell and ONGC would also require cost efficient transportation viz. pipelines. The oil & gas existing pipeline infrastructure in India is minimal at about 15,000 km. Through existing infrastructure only 25% of oil products can be moved by pipelines in India, compared to 59% in the US. Realising the cost advantage, reliability and low penetration of pipelines; ONGC, Gail (India), Reliance, GSPL, Gujarat Gas and IOC have planned huge investment for laying pipelines. CLSA estimates that total demand from the oil and gas sector in India would be about 17,000 km of pipelines over the next 3-4 years. In FY2005 alone Rs. 30 billion have been planned on pipelines, 50% of which would be on pipes. The 2600-km long and $4.16 billion Iran Pakistan-India pipeline, when sanctioned would be icing on the cake. Thus, we would see JSL's revenue rising in tandem with rise in demand for Saw Pipes.
The Company has experienced a steady growth in all the business segments and expects to have improved performance in all the segments including large diameter saw pipes, ductile iron pipes and seamless tubes. The company projects better and sustainable productivity and profitability supported by its sustained healthy order book.
Considering the present CMP of Rs.650 odds it is trading at a PE Ratio of roughly 6-8times of its present earnings which seems to be quite cheap compared to its peers which are trading roughly at 20 times of its earnings and also considering the robust growth prospects the company have. It has touched a high of Rs.1221 in the last 52 Week and a low of Rs.375 in the last 52 Week. The stock has almost corrected by 50% in the recent phase of market correction and is available at a very attractive price currently and a safe bet if one wants to add it to his portfolio as a medium-long term investment.
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DISCLAIMER: The views expressed herein should not be construed as an offer to buy or sell securities, nor advice to do so and are for information purposes only and under no circumstances should be used for actual trading. You agree to assume complete and full responsibility for the outcomes of all trading decisions that you make on the basis of above expressed views, including but not limited to loss of capital. You are requested to consult a qualified financial advisor before making any investment/trading decisions.
Jindal Saw (JINDAL), promoted by the O. P. Jindal group in 1984, is into manufacturing and coating of submerged arc welded pipes (SAW pipes). The company is the largest producer of saw pipes used widely in the energy sector for the transportation of oil and gas. It is India`s first and only manufacturer of such pipes using U-O-E technology. It is a market leader and a global major in providing Total Pipe Solutions to the industry.
The business operations of the company are structured into four SBUs, i.e., saw pipes, seamless tubes, ductile iron spun pipes and the US operations. The company has obtained technical assistance from US engineers and consultants, a subsidiary of US Steel Corporation, for its products. Further, the company has nine manufacturing facilities in Kosikalan (UP), Mundra (Gujarat), Nashik (Maharashtra) and Swastik Foils (New Delhi). Through affiliates, it also manages the largest pipe mill in the US.
The demand for Saw Pipes is expected to rise immensely in next few years as energy majors plans to lay national gas grid, the regional gas grids, city gas distribution networks and international pipelines. About 10,000 new oil retail outlets which would be set up by companies like Reliance, Essar, Shell and ONGC would also require cost efficient transportation viz. pipelines. The oil & gas existing pipeline infrastructure in India is minimal at about 15,000 km. Through existing infrastructure only 25% of oil products can be moved by pipelines in India, compared to 59% in the US. Realising the cost advantage, reliability and low penetration of pipelines; ONGC, Gail (India), Reliance, GSPL, Gujarat Gas and IOC have planned huge investment for laying pipelines. CLSA estimates that total demand from the oil and gas sector in India would be about 17,000 km of pipelines over the next 3-4 years. In FY2005 alone Rs. 30 billion have been planned on pipelines, 50% of which would be on pipes. The 2600-km long and $4.16 billion Iran Pakistan-India pipeline, when sanctioned would be icing on the cake. Thus, we would see JSL's revenue rising in tandem with rise in demand for Saw Pipes.
The Company has experienced a steady growth in all the business segments and expects to have improved performance in all the segments including large diameter saw pipes, ductile iron pipes and seamless tubes. The company projects better and sustainable productivity and profitability supported by its sustained healthy order book.
Considering the present CMP of Rs.650 odds it is trading at a PE Ratio of roughly 6-8times of its present earnings which seems to be quite cheap compared to its peers which are trading roughly at 20 times of its earnings and also considering the robust growth prospects the company have. It has touched a high of Rs.1221 in the last 52 Week and a low of Rs.375 in the last 52 Week. The stock has almost corrected by 50% in the recent phase of market correction and is available at a very attractive price currently and a safe bet if one wants to add it to his portfolio as a medium-long term investment.
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Thursday, May 1, 2008
Buy Sesa Goa, target of Rs 6300 (By ICICI Securities)
ICICI Securities has maintained its buy rating on Sesa Goa with a price target of Rs 6300 in its April 29, 2008 research report. "Sesa Goa’s Q4FY08 results beat expectations, with stellar 207% YoY net profit growth on the back of record quarterly iron-ore sales of 5mnte. Revenues were up 108% YoY and 140% QoQ to Rs 17.1 billion. EBITDA increased 208% YoY and 61% QoQ to Rs 12.2 billion with EBITDA margin at 71%."
"We are revising our FY08E, FY09E and FY10E earnings estimates upwards 18.7%, 52.5% and 62.8% respectively, given high earnings trajectory on the back of: i) positive volume surprise in the quarter as well as FY08 (12.44mnte) combined with volume guidance of 25-30% increase per annum, ii) robust pricing scenario via increased spot sales mix and 65% price increase in contract sales. Post achieving our earlier price target of Rs 3,989 per share, we are upgrading our price target to Rs 6300 per share based on FY10E P/E and EV/EBITDA of 8x and 3.9x respectively. Maintain BUY," says I-Sec's research report.
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"We are revising our FY08E, FY09E and FY10E earnings estimates upwards 18.7%, 52.5% and 62.8% respectively, given high earnings trajectory on the back of: i) positive volume surprise in the quarter as well as FY08 (12.44mnte) combined with volume guidance of 25-30% increase per annum, ii) robust pricing scenario via increased spot sales mix and 65% price increase in contract sales. Post achieving our earlier price target of Rs 3,989 per share, we are upgrading our price target to Rs 6300 per share based on FY10E P/E and EV/EBITDA of 8x and 3.9x respectively. Maintain BUY," says I-Sec's research report.
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