Nakoda Textile ( BSE: 521030 ) has informed BSE regarding a Press Release titled "Nakoda Textile Industries Ltd, sponsored Surat Super Yarn Park Ltd. enhances production capacity to 1,51,000 MTPA of Texturised yarn".
The stock trades at 68.2 at a P/E of 5.8. It has witnessed lows of 10, this year.
You can read the official announcement to the BSE here
Maruti Suzuki plans world premiere for first compact MPV Concept at Auto Expo 2010
Maruti Suzuki plans world premiere for first compact MPV Concept at Auto Expo 2010.
Click Here for more detail (link to BSE Announcement)
Click Here for more detail (link to BSE Announcement)
Rolta repurchases US $ 15.00 Mn FCCBs
Rolta India Ltd has informed BSE that the Company has further repurchased US $ 15.0 Million of the outstanding Foreign Currency Convertible Bonds's (FCCB's), of the original issue of Zero Coupon FCCBs of US $ 150 Million due in 2012. The Boands of the accreted value of US $ 17.8 Million have been repurchased at a discount of 15.25% resulting in a gain of US $ 2.80 Million (approx. Rs 13.00 crores). (from BSEindia.com)
BSE Announcement URL: http://www.bseindia.com/xml-data/corpfiling/announcement/Rolta_India_Ltd_241209.pdf
BSE Announcement URL: http://www.bseindia.com/xml-data/corpfiling/announcement/Rolta_India_Ltd_241209.pdf
Glenmark receives Tentative Approval from USFDA for Generics
Glenmark has received tentative approval from USFDA for Pramipexole Dihydrochloride tablets and Atomoxetine Hydrochloride capsules, it informed the stock exchanges in a release statement.
The estimated market size for Pramipexole Dihydrochloride tablets is $487 mn.
The estimated market size for Atomoxetine Hydrochloride capsules is approx $500 mn.
Read the entire press release here: http://www.bseindia.com/xml-data/corpfiling/announcement/Glenmark_Pharmaceuticals_Ltd_241209.pdf
The estimated market size for Pramipexole Dihydrochloride tablets is $487 mn.
The estimated market size for Atomoxetine Hydrochloride capsules is approx $500 mn.
Read the entire press release here: http://www.bseindia.com/xml-data/corpfiling/announcement/Glenmark_Pharmaceuticals_Ltd_241209.pdf
Seamec Ltd | Fundamentals Analysis
Company Introduction
Seamec Ltd is a company that provides support vessels for offshore installations (for oil exploration and drilling). Its major shareholder and promoter is a French offshore company. The company was the first to manage an ONGC owned vessel. Its fleet currently comprises of 4 vessels - Seamec I - IV and Seamec Princess.
Industry Overview
The global market for offshore operations was a growing market till oil prices crashed. Now a revival is seen, albeit a slow one. The Indian offshore industry has players like Aban Offshore, Great Offshore, GE Shipping- just to name a few. This business is directly related to the Exploration and Production (E&P) activities of oil companies, and E&P activities -it is generally acknowledged- are related to crude oil prices. Most of the offshore supply vessels are old, and would be scrapped in the coming years. This does mean procurement of new ships for these companies- and an increase in expenditure. Companies such as Seamec, which provide ships for offshore activities, would have to pay- but that's part of the business. The good thing about this is, ships once deployed are like cash cows- they generate a lot of money. Deployment rates can be like $23,400 per day (Seamec 1) to $105,500 per day (Seamec Princess).
Financials
In the September Quarter, Seamec posted revenues of Rs. 97 cr vs Rs. 68 cr the quarter last year, and vs Rs. 100 cr in the June Q. The company pays negligible interest, and thus would have very less debt. Margins are good as well. According to last year's filings, the company has reserves of Rs. 278 cr. The company was having all the four vessels deployed in Q2 this year, doing a good show in difficult times. If we compare to other listed offshore companies like Great Offshore or Aban Offshore, the company has better margins on the books and less debt and leverage. The company has posted good profits this year, in sync with its peers- however, with no debt thus good net profit margins, the company looks better than its peers, financially. The company doesn't pay dividends, however.
Valuations
At Rs. 220, the stock trades at a P/E multiple of 3.11. As we had discussed before, P/E never gives a direct buy or sell call. The stock had gone down to levels of 30 in the great bear era. People who had bought shares at lower levels, between last October and March may come out selling after their "1 year" of holding the stock has ended (they would pay no taxes that way). That would be selling pressure, and the stock would dip and then one may buy. Current valuations are high, and price of 170-200 would be reasonable. The operationalization of Seamec Princess has led to increased revenue and profits. As the company would upgrade its fleet, the capacities would increase, and that would also increase the revenues. Seamec's P/E is 3.11 whereas the industry P/E is 6.51. So, expectations are low. If the company posts good results in both the coming quarters, we should see the stock price move up considerably- to the levels of 400-450 and then to 700-750. Otherwise, the stock would follow the general market sentiment, and in case of a bearish environment, it may go down to levels of 150-175.
Stockscenter Verdict
The company looks strong fundamentally. With no debt on its books, it has great net profit margins. Again, with the operationalization of Seamec princess, the company has increased its revenues. Upgradation of current fleet and addition of newer vessels would further the company's revenues. Also, the addition of Seamec princess in the fleet hasn't resulted in debt- and that is noteworthy. The company is doing all the right things the right way. The stock price is good, however, the market expects the future to be bleak for the segment in general and Seamec in particular. If Seamec continues its growth for this year, it would be a definite multibagger, in a bullish market.
Seamec Ltd is a company that provides support vessels for offshore installations (for oil exploration and drilling). Its major shareholder and promoter is a French offshore company. The company was the first to manage an ONGC owned vessel. Its fleet currently comprises of 4 vessels - Seamec I - IV and Seamec Princess.
Industry Overview
The global market for offshore operations was a growing market till oil prices crashed. Now a revival is seen, albeit a slow one. The Indian offshore industry has players like Aban Offshore, Great Offshore, GE Shipping- just to name a few. This business is directly related to the Exploration and Production (E&P) activities of oil companies, and E&P activities -it is generally acknowledged- are related to crude oil prices. Most of the offshore supply vessels are old, and would be scrapped in the coming years. This does mean procurement of new ships for these companies- and an increase in expenditure. Companies such as Seamec, which provide ships for offshore activities, would have to pay- but that's part of the business. The good thing about this is, ships once deployed are like cash cows- they generate a lot of money. Deployment rates can be like $23,400 per day (Seamec 1) to $105,500 per day (Seamec Princess).
Financials
In the September Quarter, Seamec posted revenues of Rs. 97 cr vs Rs. 68 cr the quarter last year, and vs Rs. 100 cr in the June Q. The company pays negligible interest, and thus would have very less debt. Margins are good as well. According to last year's filings, the company has reserves of Rs. 278 cr. The company was having all the four vessels deployed in Q2 this year, doing a good show in difficult times. If we compare to other listed offshore companies like Great Offshore or Aban Offshore, the company has better margins on the books and less debt and leverage. The company has posted good profits this year, in sync with its peers- however, with no debt thus good net profit margins, the company looks better than its peers, financially. The company doesn't pay dividends, however.
Valuations
At Rs. 220, the stock trades at a P/E multiple of 3.11. As we had discussed before, P/E never gives a direct buy or sell call. The stock had gone down to levels of 30 in the great bear era. People who had bought shares at lower levels, between last October and March may come out selling after their "1 year" of holding the stock has ended (they would pay no taxes that way). That would be selling pressure, and the stock would dip and then one may buy. Current valuations are high, and price of 170-200 would be reasonable. The operationalization of Seamec Princess has led to increased revenue and profits. As the company would upgrade its fleet, the capacities would increase, and that would also increase the revenues. Seamec's P/E is 3.11 whereas the industry P/E is 6.51. So, expectations are low. If the company posts good results in both the coming quarters, we should see the stock price move up considerably- to the levels of 400-450 and then to 700-750. Otherwise, the stock would follow the general market sentiment, and in case of a bearish environment, it may go down to levels of 150-175.
| Year | Open Price | High Price | Low Price | Close Price | No. of Shares | No. of Trades | Total Turnover(Rs.) | * Spread (Rs.) | ||
| H - L | C - O | |||||||||
| 2007 | 194.00 | 304.70 | 164.00 | 286.85 | 12895566 | 173997 | 2,821,721,508.00 | 140.70 | 92.85 | |
| 2008 | 290.00 | 304.00 | 30.20 | 37.75 | 4091909 | 60041 | 635,951,363.00 | 273.80 | -252.25 | |
| 2009 | 38.75 | 254.70 | 35.00 | 220.20 | 11892532 | 128430 | 1,584,551,176.00 | 219.70 | 181.45 | |
| * Spread H - L -> High - Low C - 0 -> Close - Open | ||||||||||
Stockscenter Verdict
The company looks strong fundamentally. With no debt on its books, it has great net profit margins. Again, with the operationalization of Seamec princess, the company has increased its revenues. Upgradation of current fleet and addition of newer vessels would further the company's revenues. Also, the addition of Seamec princess in the fleet hasn't resulted in debt- and that is noteworthy. The company is doing all the right things the right way. The stock price is good, however, the market expects the future to be bleak for the segment in general and Seamec in particular. If Seamec continues its growth for this year, it would be a definite multibagger, in a bullish market.
Opinion: Food for thought | World Markets & Economy
It's time we overhauled our own perspective, and opened our eyes to what is going on around us apart from the monotonous bull run. We will be reviewing the economic condition at the moment, by considering what we've really been through in the past two years.
Economic scientists that come on news channels are of the opinion that the Great Recession has ended, and the next inflationary cycle has begun. While this statement may be good news for the stock market bull, it might just not be- for the consumer community and for the stock market bull too! While stock markets are always ahead of the other economic indicators - volatile as they are, in depicting the state of the economy, considering them to be the only indicators would be wrong.
Considering what has transpired out of the two year drama on the stock markets, as a direct consequence of what happened due to, (what i like to alliterate as) the stock markets, as a direct consequence of what happened due to the invention of the incomprehensible and now impossible financial instruments; the real prices of commodities and real estate in many emerging markets hasn't gone down while the purchasing power went down significantly during the downturn. Credit (no pun intended) has to be given to the governments for this fiasco. They made credit super cheap to the irresponsible borrowers, increased the MSPs of food grains - when they could have done a lot else, and made plans to bail out the hubristic realtors. Then there was the double whammy of the bad monsoons, and whoa, the economy is still looking good.
The economy had never really turned sour in our case. The Indian economic stimulus was in the form of lower taxes and cheaper credit. Lower taxes meant better margins for the producer and cheaper stuff for the consumer. Cheaper credit never really got taken- as it was not really cheap, and it was not really required. Buying debt, and then paying off bills and then repaying that debt is a risky affair. Whole economies are built on debt nowadays, and when the real production from the available sources of raw materials doesn't make up for the debt, problems happen. And that is what exactly the capitalist world is risking at the moment. Coverups and hypocrisy cement capitalistic economic growth, and this time, a lot has been covered up; and as we used to say, the cycle has just grown bigger.
The stock markets have recovered to the levels they should really be, the premium being the wealth created as a result of the exploitation of natural resources, and the discount being the debt incurred in doing so. The drying up of available capital in the international markets was offset by TARP funds and such schemes in an experiment which can go either way. At the same time, if the focus shifts on the real drivers of global growth- ie, the emerging markets and the US economy is allowed to stagnate, and then pick up as a result of the growth in the former, then i would be clapping. China needs a stronger yuan to reflect its real strength, and has to rightly do so instead of flexing the right muscle the wrong way. The punters expect the western region and China to restart overconsumption and overproduction respectively; where the former is not really possible very quickly and the latter has never ceased! At such times, the focus shifts, as it has, to economies with domestic consumption and production stories such as India. Countries should start protecting their own economies from those who want all the good things for themselves- such as China who want to keep exporting, and still want their currencies to be undervalued. You can definitely not have everything for yourself, and also at a time when you've invested so much into the US Treasury.
There is a lot of money lying around for now, which will soon be sucked up by the governments as they realize it's not needed. We can, as investors, only hope it will disappear before it goes to the stock markets. As that would again invoke greed, when it should be invoking fear. Or may be, it has already happened. "Anytime, now." is the chant, as we stand at an inflexion point on the economic chart; (and the problem is, every situation seems to be an inflexion point, and everytime, it seems, "it's different", while it's always the same!).
Economic scientists that come on news channels are of the opinion that the Great Recession has ended, and the next inflationary cycle has begun. While this statement may be good news for the stock market bull, it might just not be- for the consumer community and for the stock market bull too! While stock markets are always ahead of the other economic indicators - volatile as they are, in depicting the state of the economy, considering them to be the only indicators would be wrong.
Considering what has transpired out of the two year drama on the stock markets, as a direct consequence of what happened due to, (what i like to alliterate as) the stock markets, as a direct consequence of what happened due to the invention of the incomprehensible and now impossible financial instruments; the real prices of commodities and real estate in many emerging markets hasn't gone down while the purchasing power went down significantly during the downturn. Credit (no pun intended) has to be given to the governments for this fiasco. They made credit super cheap to the irresponsible borrowers, increased the MSPs of food grains - when they could have done a lot else, and made plans to bail out the hubristic realtors. Then there was the double whammy of the bad monsoons, and whoa, the economy is still looking good.
The economy had never really turned sour in our case. The Indian economic stimulus was in the form of lower taxes and cheaper credit. Lower taxes meant better margins for the producer and cheaper stuff for the consumer. Cheaper credit never really got taken- as it was not really cheap, and it was not really required. Buying debt, and then paying off bills and then repaying that debt is a risky affair. Whole economies are built on debt nowadays, and when the real production from the available sources of raw materials doesn't make up for the debt, problems happen. And that is what exactly the capitalist world is risking at the moment. Coverups and hypocrisy cement capitalistic economic growth, and this time, a lot has been covered up; and as we used to say, the cycle has just grown bigger.
The stock markets have recovered to the levels they should really be, the premium being the wealth created as a result of the exploitation of natural resources, and the discount being the debt incurred in doing so. The drying up of available capital in the international markets was offset by TARP funds and such schemes in an experiment which can go either way. At the same time, if the focus shifts on the real drivers of global growth- ie, the emerging markets and the US economy is allowed to stagnate, and then pick up as a result of the growth in the former, then i would be clapping. China needs a stronger yuan to reflect its real strength, and has to rightly do so instead of flexing the right muscle the wrong way. The punters expect the western region and China to restart overconsumption and overproduction respectively; where the former is not really possible very quickly and the latter has never ceased! At such times, the focus shifts, as it has, to economies with domestic consumption and production stories such as India. Countries should start protecting their own economies from those who want all the good things for themselves- such as China who want to keep exporting, and still want their currencies to be undervalued. You can definitely not have everything for yourself, and also at a time when you've invested so much into the US Treasury.
There is a lot of money lying around for now, which will soon be sucked up by the governments as they realize it's not needed. We can, as investors, only hope it will disappear before it goes to the stock markets. As that would again invoke greed, when it should be invoking fear. Or may be, it has already happened. "Anytime, now." is the chant, as we stand at an inflexion point on the economic chart; (and the problem is, every situation seems to be an inflexion point, and everytime, it seems, "it's different", while it's always the same!).
IPO Alert: D B Corp Ltd
Issue Detail:
- Issue Open: Dec 11, 2009 - Dec 15, 2009
- Issue Size: Rs. 336.24 - 385.31 Crore
- Issue Price: Rs. 185 - Rs. 212 Per Equity Share
- Market Lot and Minimum Order Quantity: 30 Shares
IPO Grade: 4/5 (CARE - above average fundamentals)
EPS:
- fyo7: 3.66
- fy08: 6.01
- fy09: 4.06
- Weighted: 4.64
P/E of Peer: 18 (Deccan Chronicle)
About the Company
Incorporated in 1995, D B Corp Ltd is one of the leading print media companies in India, publishing 7 newspapers, 48 newspaper editions and 128 sub-editions in three languages (Hindi, Gujarati and English) in 11 states in India. Company's flagship newspapers are Dainik Bhaskar, Divya Bhaskar and Saurashtra Samachar have a combined average daily readership of 15.5 million readers making them one of the most widely read newspaper groups in India.
Dainik Bhaskar, with a total average daily readership of 11.7 million readers is a widely read newspaper in Madhya Pradesh, Chattisgarh, Rajasthan, Haryana, Punjab and Chandigarh. Divya Bhaskar is the number one Gujarati daily newspaper in terms of circulation in Gujarat. Comapny's other newspapers are Business Bhaskar, DB Gold, DB Star and on a franchisee basis DNA (in Gujarat and Rajasthan).
In addition to newspapers D B Corp publish 5 periodicals namely Aha Zindagi, a monthly magazine published in Hindi and Gujarati, Bal Bhaskar, a Hindi magazine for children, Young Bhaskar, a children’s magazine in English and Lakshya, a career magazine in Hindi. D B Corp also have a significant presence in the radio business under the brand name MY FM. They operate 17 FM radio stations.
Objects of the Issue
- Setting up new publishing units
- Upgrading the existing units
- Covering Marketing expenditure
- Covering existing loans
Company fundamentals are strong; however, the IPO is priced expensively. Also, there were news reports that the company was under a lot of debt. It may be available in the secondary market at a cheaper price. Avoid.
Nirma's 'controversial' cement project gets government nod
Gujarat government has given its green signal to Nirma Ltd's controversial cement plant in Mahuva. The company has been aiming to foray into cement production by setting up a 2.4 million tonnes cement plant in Bhavnagar district for an estimated investment of Rs 1000 crore, according to industry sources privy to the development.
Read the entire news article on Business Standard
Read the entire news article on Business Standard
Update on Asian Electronics
Asian Electronics is under restructuring at the moment. The much awaited Rights issue in Asian Electronics was announced earlier this week.
1. Rights Issue:
Issue of 1,53,59,139 Equity Shares of Rs. 5/- each in the Equity Share Capital of the Company to be issued to the existing Shareholders in the proportion of 1 Equity Share of Rs. 5/- each for every existing 2 Equity Shares of Rs. 5/- each at the issue price of Rs. 20/- per Equity Share on the terms and conditions as contained in the Draft Letter of Offer which has been approved by the Board. The said Draft Letter of Offer is subject to approval of SEBI and Stock Exchanges.
2. Allotment of 8,33,333 warrants convertible to Equity shares to Investors at Rs. 40/- a share.
In separate filings to the BSE, Shah Investments, Financials, Developments & Consultants Pvt. Ltd. (SIFDC) informed that they have sold 0.84% of the shares in the open markets. SIFDC is the major share holder in Asian Electronics.
1. Rights Issue:
Issue of 1,53,59,139 Equity Shares of Rs. 5/- each in the Equity Share Capital of the Company to be issued to the existing Shareholders in the proportion of 1 Equity Share of Rs. 5/- each for every existing 2 Equity Shares of Rs. 5/- each at the issue price of Rs. 20/- per Equity Share on the terms and conditions as contained in the Draft Letter of Offer which has been approved by the Board. The said Draft Letter of Offer is subject to approval of SEBI and Stock Exchanges.
2. Allotment of 8,33,333 warrants convertible to Equity shares to Investors at Rs. 40/- a share.
In separate filings to the BSE, Shah Investments, Financials, Developments & Consultants Pvt. Ltd. (SIFDC) informed that they have sold 0.84% of the shares in the open markets. SIFDC is the major share holder in Asian Electronics.
A Social Investing Community
Hello readers,
At StocksCenter, we believe knowledge and information should be available freely to everyone. After all, there should be equity in equity. We hear about cases almost everyday- about people getting duped by speculators, scammed by fraudsters and the like. So, we provide free fundamental analysis of stocks and also opinions on the state of the economy to everyone, without any discrimination.
Another community that shares this belief is Stockezy. Stockezy is a website where people come together to discuss stocks, commodities, trends and also share insights.
StocksCenter's main author and editor Chinmay Shah also participates at Stockezy. You can view his stock recommendations on Stockezy by clicking here.
We recommend you to check out and join Stockezy. The benefits of such a community are many. Stockezy advocates the idea of independent investment, bringing you out in the open- to many more experts and helpers. You can also help out others, and this is the best thing about it. And, as Stockezy says, Collaborate, invest-smart and make more money!
Important URLs:
Register for a Stockezy account (free): http://stockezy.com/accounts/register/
StocksCenter's recommendations: http://www.stockezy.com/picks/iahb/
At StocksCenter, we believe knowledge and information should be available freely to everyone. After all, there should be equity in equity. We hear about cases almost everyday- about people getting duped by speculators, scammed by fraudsters and the like. So, we provide free fundamental analysis of stocks and also opinions on the state of the economy to everyone, without any discrimination.
Another community that shares this belief is Stockezy. Stockezy is a website where people come together to discuss stocks, commodities, trends and also share insights.
StocksCenter's main author and editor Chinmay Shah also participates at Stockezy. You can view his stock recommendations on Stockezy by clicking here.
We recommend you to check out and join Stockezy. The benefits of such a community are many. Stockezy advocates the idea of independent investment, bringing you out in the open- to many more experts and helpers. You can also help out others, and this is the best thing about it. And, as Stockezy says, Collaborate, invest-smart and make more money!
Important URLs:
Register for a Stockezy account (free): http://stockezy.com/accounts/register/
StocksCenter's recommendations: http://www.stockezy.com/picks/iahb/
Analysis: BPL Ltd
One of the companies that failed in the Consumer Electronics market due to lack of innovation on the part of the promoters is BPL Ltd. It is a classic example of how management energy fizzles out and the company starts charting dangerous routes for itself and its shareholders. We've picked some good companies in the past- to invest, as far as equity is concerned. So, this time, we thought, how about a not so good company. How about a company that has failed, for now- left for the vulture investors of the bourses. There would also be people who would've bought shares of this company when everything was fine globally, money was coming in, and people were betting on all kinds of things. BPL Ltd was one of those things then. It went up to 170 plus levels, and then when things got worse globally, and stock markets plummeted, the stock went down hard, to sub 20 levels, never recovering much and now trading in the thirties.
So, how would one approach such a company? Is this really an opportunity? Let's see.
Financial Performance - Weak
The company has been regularly posting losses. However, the sales are there and that's the plus and indicative of the company doing business. We won't consider the magnitude of the losses in our analysis, just because there's no point. The company doesn't have much interest expenditure, losses are due to increased general expenditure. Many of the loans that the company took were classified as Non performing assets, and were bought by ARCIL (Asset Reconstruction Company India Ltd).
Opportunities
The company is engaged in the industries of Telecom equipment, Healthcare equipment, Electric and Electronic equipment. The markets are huge, and a bull would be betting on the company taking advantage of these huge markets. The company has also entered into an MoU with the govt of Chhattisgarh for commissioning a 300 MW coal based power project in Chhattisgarh. The power project may take at least five years for operationalization. The company is yet to obtain necessary approvals, provisions for coal allotment, land, licenses, etc for the project. The company has been planning to enter the energy segment for quite some time, but it doesn't seem to have made any headway.
BPL was also recently in the news for a tie-up with an American diagnostics products company called Welch Allyn. BPL's healthcare division may manufacture and sell Welch Allyn's products in India. The company is also looking at PPP projects to boost sales, according to the news report.
Verdict
The bull has reasons to bet. A turn around here would mean stock prices going to levels of 150 plus. The company is generating the right news. If the balance sheet follows suit, this would augur very well for the investors. Our suggestion would be to put this on the watchlist. Wait for the next results if you're a cautious investor. Otherwise, there's no harm buying this stock at these prices if you're ready to hold for a really long time. For those who already hold shares of this company, there's no point selling if you do not need that money. If you require the money, go ahead an sell- the stock price won't be seen rising very quickly. Spurts in the stock price are not sustainable when the underlying financial performance doesn't keep up. Having said that, the coming years are crucial for the company. This may prove to be a multibagger.
So, how would one approach such a company? Is this really an opportunity? Let's see.
Financial Performance - Weak
The company has been regularly posting losses. However, the sales are there and that's the plus and indicative of the company doing business. We won't consider the magnitude of the losses in our analysis, just because there's no point. The company doesn't have much interest expenditure, losses are due to increased general expenditure. Many of the loans that the company took were classified as Non performing assets, and were bought by ARCIL (Asset Reconstruction Company India Ltd).
Opportunities
The company is engaged in the industries of Telecom equipment, Healthcare equipment, Electric and Electronic equipment. The markets are huge, and a bull would be betting on the company taking advantage of these huge markets. The company has also entered into an MoU with the govt of Chhattisgarh for commissioning a 300 MW coal based power project in Chhattisgarh. The power project may take at least five years for operationalization. The company is yet to obtain necessary approvals, provisions for coal allotment, land, licenses, etc for the project. The company has been planning to enter the energy segment for quite some time, but it doesn't seem to have made any headway.
BPL was also recently in the news for a tie-up with an American diagnostics products company called Welch Allyn. BPL's healthcare division may manufacture and sell Welch Allyn's products in India. The company is also looking at PPP projects to boost sales, according to the news report.
Verdict
The bull has reasons to bet. A turn around here would mean stock prices going to levels of 150 plus. The company is generating the right news. If the balance sheet follows suit, this would augur very well for the investors. Our suggestion would be to put this on the watchlist. Wait for the next results if you're a cautious investor. Otherwise, there's no harm buying this stock at these prices if you're ready to hold for a really long time. For those who already hold shares of this company, there's no point selling if you do not need that money. If you require the money, go ahead an sell- the stock price won't be seen rising very quickly. Spurts in the stock price are not sustainable when the underlying financial performance doesn't keep up. Having said that, the coming years are crucial for the company. This may prove to be a multibagger.
JSW Energy Ltd IPO opens tomorrow, Dec 07 | Snapshot
IPO Details:
About the Company
The company has been in the business of power generation since 2000 and its consolidated revenue increased from Rs1,326 crore in FY2008 to Rs1,852 crore in FY2009. The
company is also involved in power transmission and plans to foray into power distribution space.
Objective of the Issue
To part-finance the construction and development of the Identified Projects aggregating to 2,790 MW in capacity; 400 KV transmission project and a mining venture.
IPO Grade
CARE: 4/5 (Above Average Fundamentals)
Current/Existing Operations
The company has 995 MW of operational power generation.
Quantitative Factors
EPS: (Standalone 2009) 4.22
EPS: (Consolidated 2009) 2.04
Valuation View
The IPO is not cheap. It is expensive. The difference here, in this Energy IPO is that the company is operational. But at an EPS of 4.22, the P/E of Price Band is more than 25, and this more than doubles if you consider the consolidated EPS. The Jindals have presumptuously priced in a premium for and operational Energy company (going for an IPO) with large expansion plans. So, the higher pricing is for this aspect of difference in terms of operationality and transparency.
Download: Red Herring Prospectus
- Issue Price: Rs. 100 - Rs. 115 Per Equity Share
- Discount to Retail Investors: Rs. 5 /share to issue price
- Issue Open: Dec 07, 2009 - Dec 09, 2009
- Issue Size: Rs. 2,700.00 Crore
- Face Value: Rs. 10 Per Equity Share
- Lot and Minimum Order Quantity: 60 Shares
About the Company
The company has been in the business of power generation since 2000 and its consolidated revenue increased from Rs1,326 crore in FY2008 to Rs1,852 crore in FY2009. The
company is also involved in power transmission and plans to foray into power distribution space.
Objective of the Issue
To part-finance the construction and development of the Identified Projects aggregating to 2,790 MW in capacity; 400 KV transmission project and a mining venture.
IPO Grade
CARE: 4/5 (Above Average Fundamentals)
Current/Existing Operations
The company has 995 MW of operational power generation.
Quantitative Factors
EPS: (Standalone 2009) 4.22
EPS: (Consolidated 2009) 2.04
Valuation View
The IPO is not cheap. It is expensive. The difference here, in this Energy IPO is that the company is operational. But at an EPS of 4.22, the P/E of Price Band is more than 25, and this more than doubles if you consider the consolidated EPS. The Jindals have presumptuously priced in a premium for and operational Energy company (going for an IPO) with large expansion plans. So, the higher pricing is for this aspect of difference in terms of operationality and transparency.
Download: Red Herring Prospectus
P/E: The Price to Earnings Ratio | What is it really?
P/E is the ratio of the market price to the earnings per share. It can also be calculated as the ratio of the market capitalization and the net profit. The P/E ratio shows the relation between the market price of a share of a company and the financial performance of the company in terms of net profit.
Why is it significant?
The P/E is an important parameter to fundamentally analyze any stock. Since the P/E shows the relationship between the pricing of a share and the net profit, it indicates how expensive a stock is in the market, as against how well it is performing financially. A low P/E (say, less than 15) means that the stock is not expensive at the moment and a high P/E (greater than 15) means that the stock is expensive, vis-Ã -vis its earnings per share.
The earning per share is an important measure which indicates the part of the (net) profit each share is notionally entitled to. The P/E therefore is indicative of the extent to which you will have to pay to get the share of the earnings you will notionally entitled once you have bought the share. Buying a high P/E stock means that you will be paying more to get, in return, a stock which gives you very less earnings per share in comparison to the amount you paid per share.
Many people do know this, and therefore they pay attention to the P/E of a stock. They feel tempted to buy a low P/E stock and avoid high P/E stocks. This reasoning is true only to mathematics minus probabilities. Real fund managers and investors look for growth in the EPS. A good EPS is fine. But a growing EPS is better.
Why is it significant?
The P/E is an important parameter to fundamentally analyze any stock. Since the P/E shows the relationship between the pricing of a share and the net profit, it indicates how expensive a stock is in the market, as against how well it is performing financially. A low P/E (say, less than 15) means that the stock is not expensive at the moment and a high P/E (greater than 15) means that the stock is expensive, vis-Ã -vis its earnings per share.
The earning per share is an important measure which indicates the part of the (net) profit each share is notionally entitled to. The P/E therefore is indicative of the extent to which you will have to pay to get the share of the earnings you will notionally entitled once you have bought the share. Buying a high P/E stock means that you will be paying more to get, in return, a stock which gives you very less earnings per share in comparison to the amount you paid per share.
Many people do know this, and therefore they pay attention to the P/E of a stock. They feel tempted to buy a low P/E stock and avoid high P/E stocks. This reasoning is true only to mathematics minus probabilities. Real fund managers and investors look for growth in the EPS. A good EPS is fine. But a growing EPS is better.
P/E never gives a direct buy or sell call
P/E never gives you a direct buy or sell call. The following cases are typical:
Case 1: The “E” in the P/E isn’t the real “E”. Due to extraordinary income, the net profit is up tremendously- which of course, we didn’t know since we did not check the results properly. For example, the company sold some land, or sold its entire business! It had income alright, but that income was one time income in the first case, and in the second case, the company had killed the goose laying the golden eggs. The stock has been driven up by speculators- just to the level of that 10 P/“E”. The same price would’ve been lower in case of the earlier E (minus the exceptional income) at the same P/E. You are not aware of this, and end up buying an expensive, or a junk stock. Then there are situations when profits have been eroded by extraordinary losses. So the current EPS doesn't show the real picture. When (next year/quarter) good results emerge, the P/E returns to normalcy.
Case 2: The “E” is okay, but the future is bleak. Suppose the company has a large pending order book. The company is doing well at the moment, executing its orders. But it is not receiving any new orders due to a general slump in the economy, or some other reasons related to the company or the industry. So the next years’ or quarters’ good sales, and therefore, earnings are not guaranteed. These are extremely risky stocks for medium term investors. Say you bought a share at 4 P/E @ Rs. 100, EPS (annualized) of Rs. 25. Next quarter results disappoint the market. The order book is empty; the company manages an EPS of Rs. 2. The stock crashes, and you lose money. Moral of the story? Check the P/E of the peers of the company. If they’re low at the same time, may be some government policy decisions or some industry related slump or some other bad news are affecting the stock. Avoid for the medium term. Classic examples are the shipbuilding stocks at the moment.
Case 3: There would be new companies; there would be companies in the expansion mode, doing M&A, and breaking new ground. When good news surrounds a company, its stock price moves up, and consequently the P/E goes up. Growth expectations are high, and so price is high. Classic case of Power stocks (high P/E) vs Bank stocks (low P/E). It isn’t an expensive stock if the consecutive earnings are going to catch up with the high P/E. But one has to exercise caution, and filter the correct news from the speculation.
Case 4: Refineries. Movements in crude oil prices affect refining margins. This affects the net profit, and therefore, the “E” in the P/E. Say oil prices zoom, refineries post great results. EPS rises for consecutive quarters. The price also rises in tandem, and slowly outruns the EPS rise. You buy, since it’s still low P/E courtesy the killing the refineries made in the last quarters. Then crude oil price crashes. Suddenly, for the quarter, the stock price stagnates. You buy more, unaware of the crude oil price movements. The results come out, and the refinery has posted a loss. The “E” has vanished, and so has your money. Know what business your company is into, thoroughly.
Case 5: Different sectors & diversified businesses. One should never compare P/Es of different companies in different sectors, or of companies in diversified companies. Again, you should know what business the company is into. Always compare across peers.
Case 6: Exceptions and unnoticed shares. There are some golden chests lying around, which no one has opened, simply because no one knows they’re there. If you’re lucky enough to find such stocks, and you’re ready to hold them till everyone notices, you’ve probably made The Killing. Such stocks are rare, and generally have low P/E. You’ve got to comprehend the P/E, perform a thorough analysis of available data and then take a decision. And of course, you’ve got to give it time.
Case 1: The “E” in the P/E isn’t the real “E”. Due to extraordinary income, the net profit is up tremendously- which of course, we didn’t know since we did not check the results properly. For example, the company sold some land, or sold its entire business! It had income alright, but that income was one time income in the first case, and in the second case, the company had killed the goose laying the golden eggs. The stock has been driven up by speculators- just to the level of that 10 P/“E”. The same price would’ve been lower in case of the earlier E (minus the exceptional income) at the same P/E. You are not aware of this, and end up buying an expensive, or a junk stock. Then there are situations when profits have been eroded by extraordinary losses. So the current EPS doesn't show the real picture. When (next year/quarter) good results emerge, the P/E returns to normalcy.
Case 2: The “E” is okay, but the future is bleak. Suppose the company has a large pending order book. The company is doing well at the moment, executing its orders. But it is not receiving any new orders due to a general slump in the economy, or some other reasons related to the company or the industry. So the next years’ or quarters’ good sales, and therefore, earnings are not guaranteed. These are extremely risky stocks for medium term investors. Say you bought a share at 4 P/E @ Rs. 100, EPS (annualized) of Rs. 25. Next quarter results disappoint the market. The order book is empty; the company manages an EPS of Rs. 2. The stock crashes, and you lose money. Moral of the story? Check the P/E of the peers of the company. If they’re low at the same time, may be some government policy decisions or some industry related slump or some other bad news are affecting the stock. Avoid for the medium term. Classic examples are the shipbuilding stocks at the moment.
Case 3: There would be new companies; there would be companies in the expansion mode, doing M&A, and breaking new ground. When good news surrounds a company, its stock price moves up, and consequently the P/E goes up. Growth expectations are high, and so price is high. Classic case of Power stocks (high P/E) vs Bank stocks (low P/E). It isn’t an expensive stock if the consecutive earnings are going to catch up with the high P/E. But one has to exercise caution, and filter the correct news from the speculation.
Case 4: Refineries. Movements in crude oil prices affect refining margins. This affects the net profit, and therefore, the “E” in the P/E. Say oil prices zoom, refineries post great results. EPS rises for consecutive quarters. The price also rises in tandem, and slowly outruns the EPS rise. You buy, since it’s still low P/E courtesy the killing the refineries made in the last quarters. Then crude oil price crashes. Suddenly, for the quarter, the stock price stagnates. You buy more, unaware of the crude oil price movements. The results come out, and the refinery has posted a loss. The “E” has vanished, and so has your money. Know what business your company is into, thoroughly.
Case 5: Different sectors & diversified businesses. One should never compare P/Es of different companies in different sectors, or of companies in diversified companies. Again, you should know what business the company is into. Always compare across peers.
Case 6: Exceptions and unnoticed shares. There are some golden chests lying around, which no one has opened, simply because no one knows they’re there. If you’re lucky enough to find such stocks, and you’re ready to hold them till everyone notices, you’ve probably made The Killing. Such stocks are rare, and generally have low P/E. You’ve got to comprehend the P/E, perform a thorough analysis of available data and then take a decision. And of course, you’ve got to give it time.
Bharati Shipyard wins Great battle
ABG Shipyard and its subsidiaries reduced their shareholding in Great Offshore to a negligible amount. ABG Shipyard and its subsidiary Eleventh Land Developers sold their combined shares, equivalent to 8.27% of the total shares of Great Offshore today, in the open market.
ABG and Bharati Shipyard were locked in a takeover battle. Bharati Shipyard increased its open offer price to Rs. 590 per share from Rs. 560 per share. ABG had already started selling its stake in Great Offshore since morning today- when initially, the stock of Great Offshore were up by almost 4%. Finally, when the dust settled after the news came, Great Offshore ended up getting hammered, and closed down 6%. Bharati has bid for 20% stake @ Rs. 590 per share now. The acceptance ratio of the offer would also go down. Great Offshore would be seen to underperform consequently in the coming weeks, until Bharati completes the open offer process.
The stocks of ABG Shipyard and Bharati Shipyard were up by almost 10% at closing, however, delivery ratios were low. This is the trigger we had been talking about for over two months now, and it's finally happened. The next trigger for the stock would be defense orders, speculation is rife in the markets.
Bharati Shipyard has won the battle for Great Offshore for now. The good news for Bharati Shipyard shareholders is that this strategic investment in Great Offshore would allow Bharati Shipyard to maintain its order book, which comprises of a lot of orders from Great Offshore. The bad news for Bharati Shipyard shareholders is the large debt the company has accumulated in order to acquire Great Offshore. Of course, Great Offshore is a much larger company than Bharati Shipyard in terms of Market Capitalization (Great Offshore is 4 times as big as Bharati Shipyard). While Bharati trades at a low P/E of less than 4, there is a chance for an upward correction.
So, what could be the next things to look out for? May be, may be, Bharati Shipyard and Great Offshore get merged- that's a very distant possibility for the moment, but it cannot be ruled out. Before that, Bharati would have to gain management control of Great Offshore- which it cannot have at the moment, according to a SEBI advice on the Open Offer.
We would also have to see who bought ABG's stake in the market today. There is a high chance that Bharati would have bought it. If that has happened, its current stake would go up to 32%. And finally, after the offer, it would climb to 52%- which would make Great Offshore Bharati's subsidiary.
There are a lot of possibilities, but for now, Bharati Shipyard would have to start debt management, and do that without diluting its equity. There were news that it would do a rights issue- that's fine. But a QIP on increased share capital or something of that sort would dilute its equity, and consequently reduce the EPS. If the reduction in EPS due to dilution gets offset by the increased earnings out of this investment, it would again be fine. These are just our views, of course, the Bharati Shipyard management would have thought of it all already.
Also, Bharati Shipyard was our first investment suggestion. Check out what we had to say about it some months ago: (click here for our previous analysis). We maintain our price target of Rs. 900 in 4 years time frame.
ABG and Bharati Shipyard were locked in a takeover battle. Bharati Shipyard increased its open offer price to Rs. 590 per share from Rs. 560 per share. ABG had already started selling its stake in Great Offshore since morning today- when initially, the stock of Great Offshore were up by almost 4%. Finally, when the dust settled after the news came, Great Offshore ended up getting hammered, and closed down 6%. Bharati has bid for 20% stake @ Rs. 590 per share now. The acceptance ratio of the offer would also go down. Great Offshore would be seen to underperform consequently in the coming weeks, until Bharati completes the open offer process.
The stocks of ABG Shipyard and Bharati Shipyard were up by almost 10% at closing, however, delivery ratios were low. This is the trigger we had been talking about for over two months now, and it's finally happened. The next trigger for the stock would be defense orders, speculation is rife in the markets.
Bharati Shipyard has won the battle for Great Offshore for now. The good news for Bharati Shipyard shareholders is that this strategic investment in Great Offshore would allow Bharati Shipyard to maintain its order book, which comprises of a lot of orders from Great Offshore. The bad news for Bharati Shipyard shareholders is the large debt the company has accumulated in order to acquire Great Offshore. Of course, Great Offshore is a much larger company than Bharati Shipyard in terms of Market Capitalization (Great Offshore is 4 times as big as Bharati Shipyard). While Bharati trades at a low P/E of less than 4, there is a chance for an upward correction.
So, what could be the next things to look out for? May be, may be, Bharati Shipyard and Great Offshore get merged- that's a very distant possibility for the moment, but it cannot be ruled out. Before that, Bharati would have to gain management control of Great Offshore- which it cannot have at the moment, according to a SEBI advice on the Open Offer.
We would also have to see who bought ABG's stake in the market today. There is a high chance that Bharati would have bought it. If that has happened, its current stake would go up to 32%. And finally, after the offer, it would climb to 52%- which would make Great Offshore Bharati's subsidiary.
There are a lot of possibilities, but for now, Bharati Shipyard would have to start debt management, and do that without diluting its equity. There were news that it would do a rights issue- that's fine. But a QIP on increased share capital or something of that sort would dilute its equity, and consequently reduce the EPS. If the reduction in EPS due to dilution gets offset by the increased earnings out of this investment, it would again be fine. These are just our views, of course, the Bharati Shipyard management would have thought of it all already.
Also, Bharati Shipyard was our first investment suggestion. Check out what we had to say about it some months ago: (click here for our previous analysis). We maintain our price target of Rs. 900 in 4 years time frame.
HSBC Global Investment Fund exits from M&M Financial Services
According to a disclosure, HSBC has exited from M&M Financial Services, as on 12 Nov 09.
It sold 5,722,097 shares, or 5.905% of total number of shares on 12-Nov-09. Interestingly, HSBC had increased its stake in M&M Financial Services just a few months ago (by 1.06 per cent).
HSBC Global Investment Fund sold the stake at an average price of Rs. 266.58 per share.
The Last Traded Price of Mahindra & Mahindra Financial Services on the Bombay Stock Exchange was Rs. 301.05 as on 1-Dec-09.
It sold 5,722,097 shares, or 5.905% of total number of shares on 12-Nov-09. Interestingly, HSBC had increased its stake in M&M Financial Services just a few months ago (by 1.06 per cent).
HSBC Global Investment Fund sold the stake at an average price of Rs. 266.58 per share.
The Last Traded Price of Mahindra & Mahindra Financial Services on the Bombay Stock Exchange was Rs. 301.05 as on 1-Dec-09.
LIC hikes stake in Indian Hotels Company by 2%
According to a PIT (Prohibition of Insider Trading) Disclosure, LIC has bought 14,640,990 shares (or close to 2% of the total shares) of Indian Hotels between 14-Aug-09 to 25-Nov-09 at an average price of Rs. 65 per share.
The LIC has been actively purchasing shares of Indian companies. LIC also made another disclosure some days ago, informing that it had hiked its shareholding in Bank of Maharashtra from 5.94% to 7.27%.
(Click here to view the shares held by LIC (as on the quarter ended Sep '09) of major companies listed on BSE/NSE.)
State-run Life Insurance Corp. of India, or LIC, is targeting investment of as much as Rs. 50,000 crore in equities this fiscal year.
The LIC has been actively purchasing shares of Indian companies. LIC also made another disclosure some days ago, informing that it had hiked its shareholding in Bank of Maharashtra from 5.94% to 7.27%.
(Click here to view the shares held by LIC (as on the quarter ended Sep '09) of major companies listed on BSE/NSE.)
State-run Life Insurance Corp. of India, or LIC, is targeting investment of as much as Rs. 50,000 crore in equities this fiscal year.
Fundamental Analysis: Clariant Chemicals Ltd
Clariant Chemicals is one of India's leading speciality chemicals companies. It has a large market share in pigments, textile chemicals and leather chemicals (and some agro intermediates whose business it is getting rid of)! It is an Indian subsidiary of Swiss firm Clariant. Clariant was formed formally in 1995 by a demerger of Sandoz Chemicals Division. It has its roots in Sandoz and Hoechst. The Indian division is one of the most significant ones in Clariant's global operations.
Current Market Price and P/E
Clariant Chemicals Ltd currently trades at Rs. 400-420 levels. It has shown some increases in the past few weeks. The stock went up from around Rs 350 to Rs 400, without much resistance. At Rs. 409, the P/E ratio of Clariant Chemicals Ltd stands at 11.64. This is largely because of good performance in the previous quarters. In the last two quarters, it has posted some very good margins. As is visible from the graph below, Clariant has been having quite a rally in the stock markets since January 09.
Financial Results
Clariant posted strong bottom line numbers in Q1 and Q2 of this year. However, the top line growth was not impressive. In Q1, YoY, the sales were down 5% and in Q2, they were down around 3%. However, margins grew as PBDT in both quarters were higher by 27% and 23% respectively. EPS has risen steadily, in sync with increased bottom line figures. The company has practically no debt on its books, and this is a significant plus.
Historic Price
Sector Outlook
The Speciality Chemicals segment is an emerging sector in the growing Indian chemicals industry. This industry is dependent upon other industries such as paper, textiles, leather, detergents, plastics, etc. This segment did take a beating in the downturn, but the effect was lesser than the other sectors. The good thing about this industry, is that the industry is one which we cannot do without. Dyes, pigments and such chemicals are required - downturn or not. Margins may take a beating in a crisis, but then they recover very well later on because prices of raw materials go down as well.
Shareholding Pattern
Promoters hold 63.4% shares. Key public shareholders are mutual funds (UTI) holding around 3.18% and a brokerage house that holds 1.68% as on Sep '09. The stock has seen some good buying since the start of this year. Delivery ratios have been on the higher side.
Dividends
The stock pays good dividends. It paid Rs. 19 per share last year, and has already paid Rs. 10 this year as interim dividend.
Buy or Sell?
Fundamentally, this is one of the strongest companies listed on the Stock Exchanges. It has a wide product portfolio, and is having margins, for the moment at least. For a stock that's moving up so quickly, it would be advisable to wait and buy on dips. If you'll be buying, and it won't be for the short term, it would be rather be a really longer term- such as about two years. We recommend to buy in general at this point- if you don't need that money for some yearse, cautiously though, having the global events in the back of the mind, and fingers crossed at the Dubai's or for that matter, Abu Dhabi's next move.
Current Market Price and P/E
Clariant Chemicals Ltd currently trades at Rs. 400-420 levels. It has shown some increases in the past few weeks. The stock went up from around Rs 350 to Rs 400, without much resistance. At Rs. 409, the P/E ratio of Clariant Chemicals Ltd stands at 11.64. This is largely because of good performance in the previous quarters. In the last two quarters, it has posted some very good margins. As is visible from the graph below, Clariant has been having quite a rally in the stock markets since January 09.
Financial Results
Clariant posted strong bottom line numbers in Q1 and Q2 of this year. However, the top line growth was not impressive. In Q1, YoY, the sales were down 5% and in Q2, they were down around 3%. However, margins grew as PBDT in both quarters were higher by 27% and 23% respectively. EPS has risen steadily, in sync with increased bottom line figures. The company has practically no debt on its books, and this is a significant plus.
Historic Price
| Year | Open Price | High Price | Low Price | Close Price | No. of Shares | No. of Trades | Total Turnover(Rs.) | * Spread (Rs.) | |
| H - L | C - O | ||||||||
| 2003 | 240.50 | 293.35 | 185.55 | 261.50 | 1424464 | 31058 | 325,440,451.00 | 107.80 | 21.00 |
| 2004 | 261.30 | 322.35 | 221.00 | 279.95 | 844383 | 17171 | 221,661,331.00 | 101.35 | 18.65 |
| 2005 | 280.00 | 346.00 | 237.50 | 331.40 | 1422995 | 14439 | 412,893,546.00 | 108.50 | 51.40 |
| 2006 | 333.75 | 395.00 | 226.60 | 337.15 | 4307452 | 17454 | 1,341,161,357.00 | 168.40 | 3.40 |
| 2007 | 340.00 | 364.00 | 255.00 | 328.95 | 2298639 | 41235 | 703,738,692.00 | 109.00 | -11.05 |
| 2008 | 336.00 | 348.90 | 145.25 | 154.05 | 1666927 | 19480 | 383,065,218.00 | 203.65 | -181.95 |
| 2009 | 156.65 | 422.95 | 144.30 | 409.60 | 3715252 | 52827 | 854,079,227.00 | 278.65 | 252.95 |
Sector Outlook
The Speciality Chemicals segment is an emerging sector in the growing Indian chemicals industry. This industry is dependent upon other industries such as paper, textiles, leather, detergents, plastics, etc. This segment did take a beating in the downturn, but the effect was lesser than the other sectors. The good thing about this industry, is that the industry is one which we cannot do without. Dyes, pigments and such chemicals are required - downturn or not. Margins may take a beating in a crisis, but then they recover very well later on because prices of raw materials go down as well.
Shareholding Pattern
Promoters hold 63.4% shares. Key public shareholders are mutual funds (UTI) holding around 3.18% and a brokerage house that holds 1.68% as on Sep '09. The stock has seen some good buying since the start of this year. Delivery ratios have been on the higher side.
Dividends
The stock pays good dividends. It paid Rs. 19 per share last year, and has already paid Rs. 10 this year as interim dividend.
Buy or Sell?
Fundamentally, this is one of the strongest companies listed on the Stock Exchanges. It has a wide product portfolio, and is having margins, for the moment at least. For a stock that's moving up so quickly, it would be advisable to wait and buy on dips. If you'll be buying, and it won't be for the short term, it would be rather be a really longer term- such as about two years. We recommend to buy in general at this point- if you don't need that money for some yearse, cautiously though, having the global events in the back of the mind, and fingers crossed at the Dubai's or for that matter, Abu Dhabi's next move.
European stock markets defy global selloff
May be it happened on Thursday, so it didn't have to happen on Friday. Whatever the reason may be, European shares posted solid gains on Friday. All major indices were up 1-1.25% at closing bell. Asian markets took a double beating- both on Thursday and on Friday, and only the Indian stocks recovered fairly- still to close in the red, on Friday. While Europe posted gains, the American Dow and NASDAQ were down 1.48% and 1.72% respectively, after a holiday on Thursday. It had to happen!
Meanwhile, the dollar and the yen rose against rival currencies as expected because of this global selloff.
The Dubai World news brought back memories of the credit crunch- and no one was willing to take any risks.
Leaders of India Inc said there was nothing much to worry as they had not much exposure. However, there were concerns that further investment into India, and remittances from the Emirates to India would decline.
The RBI governor had asked major banks to provide details of their exposure to loans in Dubai. According to the banks, the Dubai loan portfolio is not very significant. However, realtors could get affected if the crisis persists- which would increase the NPAs of these banks. Amongst the banks, Bank of Baroda, SBI, ICICI have the highest exposure- which they claim is not significant.
Just when things were looking alright, we have to cross our fingers once again. Will this be a premature end to the bull run? As the Zen master said, "We'll see!"
Meanwhile, the dollar and the yen rose against rival currencies as expected because of this global selloff.
The Dubai World news brought back memories of the credit crunch- and no one was willing to take any risks.
Leaders of India Inc said there was nothing much to worry as they had not much exposure. However, there were concerns that further investment into India, and remittances from the Emirates to India would decline.
The RBI governor had asked major banks to provide details of their exposure to loans in Dubai. According to the banks, the Dubai loan portfolio is not very significant. However, realtors could get affected if the crisis persists- which would increase the NPAs of these banks. Amongst the banks, Bank of Baroda, SBI, ICICI have the highest exposure- which they claim is not significant.
Just when things were looking alright, we have to cross our fingers once again. Will this be a premature end to the bull run? As the Zen master said, "We'll see!"
ABG Shipyard finalizes schedule for Great Offshore open offer
ABG Shipyard, who is in a takeover battle with Bharati Shipyard, for Great Offshore has announced its open offer schedule. It's offer stands at Rs. 520 a share, which is expected to be revised soon.
Date of opening of the offer: December 03, 2009
Date of closing of the offer: December 22, 2009
The offer is to acquire 1,25,71,072 shares of Great Offshore. ABG Shipyard already holds around 8.74% in Great Offshore.
Its rival Bharati Shipyard holds around 24% in Great Offshore. Bharati Shipyard is offering a higher price of Rs. 560 per share at the moment.
ABG Shipyard's stock was down 2.78% in a negative market.
Date of opening of the offer: December 03, 2009
Date of closing of the offer: December 22, 2009
The offer is to acquire 1,25,71,072 shares of Great Offshore. ABG Shipyard already holds around 8.74% in Great Offshore.
Its rival Bharati Shipyard holds around 24% in Great Offshore. Bharati Shipyard is offering a higher price of Rs. 560 per share at the moment.
ABG Shipyard's stock was down 2.78% in a negative market.
Gujarat NRE Coke allots convertible warrants
2.5 cr were allotted to the promoters at a convertible price of Rs. 65.78 per share.
The stock trades at a weighted average price of Rs. 66.3, while it closed at Rs. 67.45.
Gujarat NRE Coke's Q2 results were less than impressive, with net profit going down close to 80%, and total income going down 24%.
The total share capital of Gujarat NRE Coke is of Rs. 47.6 cr, So equity dilution of 5% will occur.
Promoters currently hold 45% in Gujarat NRE Coke. 72% of their holding, equivalent to 32% of the total shares at current equity base, is pledged.
The stock trades at a weighted average price of Rs. 66.3, while it closed at Rs. 67.45.
Gujarat NRE Coke's Q2 results were less than impressive, with net profit going down close to 80%, and total income going down 24%.
The total share capital of Gujarat NRE Coke is of Rs. 47.6 cr, So equity dilution of 5% will occur.
Promoters currently hold 45% in Gujarat NRE Coke. 72% of their holding, equivalent to 32% of the total shares at current equity base, is pledged.
FIIs net sell shares worth 1057 cr in equity markets today
FIIs net sold equity worth 1057 cr while DIIs bought shares worth (net) 700 cr in a volatile market.
| FII & DII Turnover (BSE + NSE)(Rs. crore) | ||||||
| FII | DII | |||||
| Trade Date | Buy | Sales | Net | Buy | Sales | Net |
| 27/11/09 | 1,449.17 | 2,506.35 | -1,057.18 | 2,394.92 | 1,696.25 | 698.67 |
| 26/11/09 | 2,857.74 | 2,927.94 | -70.20 | 1,929.59 | 1,779.04 | 150.55 |
| 25/11/09 | 2,041.10 | 2,372.75 | -331.65 | 1,296.35 | 1,154.66 | 141.69 |
| Nov, 09 | 45,960.14 | 44,708.18 | 1,251.96 | 26,960.65 | 25,039.30 | 1,921.35 |
| Since 1/1/09 * | 534,894.32 | 515,459.19 | 19,435.13 | 281,500.86 | 255,795.91 | 25,704.95 |
Tata Motors: Back to Profits!
Tata Motors announced its consolidated Q2 numbers today.
Net Profit: Rs. 21 cr vs a loss of Rs. 941 cr
Total Income: Rs. 21506 cr vs Rs. 23417 cr
The financial results for the half year ended September 30, 2008 include the results of the operation of Jaguar Land Rover businesses for the period June 02, 2008 to September 30, 2008.
Although the profits are close to nothing, the fact that they're there augurs well for the company's performance in the coming quarters. Satisfying results.
Net Profit: Rs. 21 cr vs a loss of Rs. 941 cr
Total Income: Rs. 21506 cr vs Rs. 23417 cr
The financial results for the half year ended September 30, 2008 include the results of the operation of Jaguar Land Rover businesses for the period June 02, 2008 to September 30, 2008.
Although the profits are close to nothing, the fact that they're there augurs well for the company's performance in the coming quarters. Satisfying results.
What a trading day it has been today!
The Sensex moved close to 850 points intraday in a session that will be regarded as one of the most volatile ones. Volumes in some counters were mind boggling. Tata Steel, which has been seeing some high volumes of late clocked volumes of Rs. 688 cr on the NSE, and Rs. 244 cr on the BSE. Other counters such as ICICI Bank and RIL had good volumes as well.
The Indian markets recovered after the European markets did not open very much in the red. A stable opening in Europe saw the Sensex and Nifty recover in top speed. At one time, the Sensex was down some 644 pts. It closed down 222 pts. in one of the most welcome relief rallies during the later part of the day.
Have a look at the intraday chart of the Sensex.
Tata Steel bounced back with tremendous volumes- was it short covering or delivery based buying, we will know later when the delivery ratios would be out at night. Nonetheless, today's trade brought back the memories of year 2008.
There were news that Dubai wanted creditors of Dubai World and property group Nakheel to agree a debt standstill as it restructures Dubai World. Dubai World's debt burden stands at $59 billion of the total $80 billion debt of the state. This rattled most equity markets over the world. Realty stocks, construction majors and banks faced most of the heat.
Gainers in todays trade include Tata Steel, who bounced back spectacularly, Suzlon Energy, Tata Comm, BEL and Ranbaxy amongst others.
The Indian markets recovered after the European markets did not open very much in the red. A stable opening in Europe saw the Sensex and Nifty recover in top speed. At one time, the Sensex was down some 644 pts. It closed down 222 pts. in one of the most welcome relief rallies during the later part of the day.
Have a look at the intraday chart of the Sensex.
Tata Steel bounced back with tremendous volumes- was it short covering or delivery based buying, we will know later when the delivery ratios would be out at night. Nonetheless, today's trade brought back the memories of year 2008.
There were news that Dubai wanted creditors of Dubai World and property group Nakheel to agree a debt standstill as it restructures Dubai World. Dubai World's debt burden stands at $59 billion of the total $80 billion debt of the state. This rattled most equity markets over the world. Realty stocks, construction majors and banks faced most of the heat.
Gainers in todays trade include Tata Steel, who bounced back spectacularly, Suzlon Energy, Tata Comm, BEL and Ranbaxy amongst others.
Siemens announces yearly results
Siemens Ltd has announced the following Audited results for the year ended September 30, 2009:
The Company has posted a net profit after tax of Rs 10448.508 million for the year ended September 30, 2009 as compared to Rs 5933.266 million for the year ended September 30, 2008. Total Income has increased from Rs 83644.458 million for the year ended September 30, 2008 to Rs 86926.152 million for the year ended September 30, 2009.
The Audited Consolidated Results are as follows
The Company has posted a net profit after tax of Rs 7046.038 million for the year ended September 30, 2009 as compared to Rs 5995.489 million for the year ended September 30, 2008. Total Income has decreased from Rs 97395.044 million for the year ended September 30, 2008 to Rs 93606.079 million for the year ended September 30, 2009.
Siemens' board is scheduled to meet on Nov 30 to consider the proposal of amalgamation of Siemens Healthcare Diagnostics Ltd with the Company.
The stock was down 7% in early morning trade on the BSE in a falling market.
The Company has posted a net profit after tax of Rs 10448.508 million for the year ended September 30, 2009 as compared to Rs 5933.266 million for the year ended September 30, 2008. Total Income has increased from Rs 83644.458 million for the year ended September 30, 2008 to Rs 86926.152 million for the year ended September 30, 2009.
The Audited Consolidated Results are as follows
The Company has posted a net profit after tax of Rs 7046.038 million for the year ended September 30, 2009 as compared to Rs 5995.489 million for the year ended September 30, 2008. Total Income has decreased from Rs 97395.044 million for the year ended September 30, 2008 to Rs 93606.079 million for the year ended September 30, 2009.
Siemens' board is scheduled to meet on Nov 30 to consider the proposal of amalgamation of Siemens Healthcare Diagnostics Ltd with the Company.
The stock was down 7% in early morning trade on the BSE in a falling market.
Suzlon subsidiary wins large order
Suzlon's 91% german subsidiary REPower AG has won one of the largest wind orders in the North American region. The order is for windfarm projects in Quebec, Canada. According to Suzlon's press release, the guaranteed minimum purchase is of 748 MW, with an additional option of 206 MW.
Suzlon's stock was up 0.5% at 11 am in a falling market.
Our Analysis Of Suzlon (Pick URL: http://stockscenter.blogspot.com/2009/04/suzlon-energy-ltd.html)
Suzlon's stock was up 0.5% at 11 am in a falling market.
Our Analysis Of Suzlon (Pick URL: http://stockscenter.blogspot.com/2009/04/suzlon-energy-ltd.html)
Morning 27 Nov: Markets fall on profit booking by FIIs
Markets are seeing heavy FII selling all around. The Indian Sensex and Nifty are down 2.5% each. Asian markets opened deep in the red as well. Index heavyweights Reliance, L&T, Bharti Airtel and DLF are down 3%, 4%, 1.5%, and 5% respectively.
Counters ares seeing high volatility amidst heavy selling. The sole gainer in the SENSEX is Sun Pharma, up about 0.83% in morning trade.
A pull back is possible on the back of opening of European markets. If European markets also see another deep correction like yesterdays, the Indian markets would not recover today, at least.
The NSE F&O segment saw highest ever volumes yesterday.
Counters ares seeing high volatility amidst heavy selling. The sole gainer in the SENSEX is Sun Pharma, up about 0.83% in morning trade.
A pull back is possible on the back of opening of European markets. If European markets also see another deep correction like yesterdays, the Indian markets would not recover today, at least.
The NSE F&O segment saw highest ever volumes yesterday.
IPO Flash: MBL Infrastructure Ltd
IPO Snapshot:
#ICRA assigns ratings from a scale of 1-5. A rating of 5 implies strong fundamentals, whereas a rating of 1 implies weak fundamentals. In this case, the company has below average fundamentals, according to ICRA.
Company Information*:
Financials:
*from what we could gather
| Issue Opens on: | November 27, 2009 |
| Issue Closes on: | December 1, 2009 |
| Bid Lot: | 35 Equity Shares |
| Price Band: | Rs.165 to Rs.180 |
| No. of Shares: | 5,700,000 Shares |
| Issue size: | Rs.94 - 103 cr |
| Rating# (ICRA ): | 2 |
Company Information*:
- MBL Infrastructures Ltd is engaged in the construction and maintenance of roads and highways, and other civil engineering projects.
- MBL is also engaged in steel trading and waste management (ferrous scrap and slag recycling) at major steel plants.
- MBL has completed the execution of Build-Operate-Transfer(BOT) project of 114 kms. of Seoni- Balaghat- Rajegaon State Highway under the Public Private Partnership (PPP) arrangements.
- MBL owns a fleet of equipments, including hot mix plants, sensor pavers, tandom rollers, soil compactors, stone crushers, tippers, loaders, excavators, motorgraders, concrete batching plants, transit mixers, concrete pumps, reversible drum mixers, dozers and cranes.
- MBL proposes to utilize IPO money for investment in capital equipments, JVs and BOT projects.
Financials:
| Particulars | For the year/period ended (Rs. in Lacs) | |||||
| 30-June-09 | 31-Mar-09 | 31-Mar-08 | 31-Mar-07 | 31-Mar-06 | 31-Mar-05 | |
| Total Income | 15091.10 | 51364.34 | 29397.12 | 17064.13 | 15815.82 | 14286.88 |
| Profit After Tax (PAT) | 860.23 | 2740.32 | 1692.30 | 1031.65 | 846.35 | 657.98 |
*from what we could gather
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Gold hits record high. Expectations of the $1200 mark rise
The precious metal hit 1,182.95 dollars an ounce in afternoon trade on the London Bullion Market, after striking a series of historic peaks in recent days and weeks.
India had expressed interest in buying gold from IMF earlier.
We see gold prices to consolidate. This trend will continue till excesses of liquidity aren't controlled. As the world economy would recover, interest rates would have to move higher, and inflation would have to be controlled. But till then, the unpredictability would remain. As an economic indicator, it would be advisable to keep tracking the US Fed Reserve's rates, which currently at near zero levels.
India had expressed interest in buying gold from IMF earlier.
We see gold prices to consolidate. This trend will continue till excesses of liquidity aren't controlled. As the world economy would recover, interest rates would have to move higher, and inflation would have to be controlled. But till then, the unpredictability would remain. As an economic indicator, it would be advisable to keep tracking the US Fed Reserve's rates, which currently at near zero levels.
Balrampur Chini posts good numbers on increased sugar prices
Balrampur Chini Mills Ltd has announced the following results for the quarter & year ended September 30, 2009:
The Unaudited results for the quarter ended September 30, 2009
The Company has posted a profit after tax of Rs 427.30 million for the quarter ended September 30, 2009 as compared to Rs 145.80 million for the quarter ended September 30, 2008. Total Income has decreased from Rs 4170.60 million for the quarter ended September 30, 2008 to Rs 3807.20 million for the quarter ended September 30, 2009.
The Audited results for the year ended September 30, 2009
The Company has posted a net profit after tax of Rs 2265.10 million for the year ended September 30, 2009 as compared to Rs 970.30 million for the year ended September 30, 2008. Total Income has increased from Rs 14776.70 million for the year ended September 30, 2008 to Rs 17062.70 million for the year ended September 30, 2009.
The Consolidated Results are as follows
The Audited results for the year ended September 30, 2009
The Company has posted a net profit after adjustment of Minority Interest & Share of Associates of Rs 2090.50 million for the year ended September 30, 2009 as compared to Rs 783.40 million for the year ended September 30, 2008. Total Income has increased from Rs 15061.30 million for the year ended September 30, 2008 to Rs 17552.90 million for the year ended September 30, 2009.
(from BSEindia.com)
The Unaudited results for the quarter ended September 30, 2009
The Company has posted a profit after tax of Rs 427.30 million for the quarter ended September 30, 2009 as compared to Rs 145.80 million for the quarter ended September 30, 2008. Total Income has decreased from Rs 4170.60 million for the quarter ended September 30, 2008 to Rs 3807.20 million for the quarter ended September 30, 2009.
The Audited results for the year ended September 30, 2009
The Company has posted a net profit after tax of Rs 2265.10 million for the year ended September 30, 2009 as compared to Rs 970.30 million for the year ended September 30, 2008. Total Income has increased from Rs 14776.70 million for the year ended September 30, 2008 to Rs 17062.70 million for the year ended September 30, 2009.
The Consolidated Results are as follows
The Audited results for the year ended September 30, 2009
The Company has posted a net profit after adjustment of Minority Interest & Share of Associates of Rs 2090.50 million for the year ended September 30, 2009 as compared to Rs 783.40 million for the year ended September 30, 2008. Total Income has increased from Rs 15061.30 million for the year ended September 30, 2008 to Rs 17552.90 million for the year ended September 30, 2009.
(from BSEindia.com)
REC Board meets on FPO
In the EGM yesterday, the board announced the government approval for the Follow on Public Offer. Government will be selling 20% shares in the FPO. It would issue 15% fresh shares, while the rest would be sold from its existing holding.
REC came with an IPO in 2008 at a price of Rs. 105 per share. It currently trades at Rs. 234 per share as on 25-11-09 on BSE at a P/E of Rs. 12.
REC is engaged in the financing and promotion of transmission, distribution and generation projects throughout India.
REC came with an IPO in 2008 at a price of Rs. 105 per share. It currently trades at Rs. 234 per share as on 25-11-09 on BSE at a P/E of Rs. 12.
REC is engaged in the financing and promotion of transmission, distribution and generation projects throughout India.
Satyam scam magnitude of Rs. 14,000 cr: CBI
The stock price of Satyam got hammered today, falling close to 12% intraday, before closing 10% down at Rs. 90.55. Large volumes on the counter were seen on tremendous short selling, as the stock tumbled below the Rs. 90 level it had found as support. This happened as CBI filed the second chargesheet yesterday against R. Raju. As against the initial estimate of Rs. 7,800 cr, the new estimates come at an almost double figure of Rs. 14,000 cr- according to Economic Times.
With the stock falling, the management of Satyam came out announcing that audited figures for Satyam would be made available in the next 6 months.
With the stock falling, the management of Satyam came out announcing that audited figures for Satyam would be made available in the next 6 months.
Opinion: The Holding Upheaval
In order to put things into perspective, we need to know what we've been through, and not what we're being through. We may all be happy about what is happening now, but has one really thought as to what has happened till now, now? When the markets were falling, the newspapers educated us about the subprime crisis and the economic fallout. But did anyone notice anything behind the scenes? Did anyone notice what was actually happening?
0: The first signs of the sub prime crisis and fears of the recession
1: The small correction due to the P-Note issue
2: The fall
3: Death of Lehman
4: The period of our analysis
When everyone was worried and scared and freaked, whole shareholding patterns had changed in various companies. Promoters had vacated their seats in some cases, while in others, LIC was upping its stake. When the FIIs were selling, the transactions were happening. Not everyone was selling- it just doesn't happen. The sellers were selling madly, while the buyers were getting all the discounts they wanted and consequently, the prices that they wanted. I'm not talking about the penny shares- they never have reasons to trade. As a general rule to every counter that sees trading, the number of shares traded go down when prices move up. The delivery ratios become perfunctory in our analysis as even when prices were high, and when prices were low, the delivery ratios are comparatively similar.
Between Oct 08 and Mar 09, from the graph, we see that volumes were less, but not so less as we were led to believe. Participation of the FIIs was low, volumes were upheld courtesy the participation of the domesitic players such as insurance companies and some NBFCs, while mutual fund managers waited. After that period, from Apr 09, as is evident from the graph, everyone found themselves out of sync with the market rally- so everyone dived into the flowing water. The volumes never have been higher- and even while prices are low. This is a direct consequence of large volumes, in number of shares traded, being part of transactions. Delivery ratios have been impressive, and this corroborates the fact that many public shareholding patterns changed during the period. Everyone wanted to participate, and now everyone is chasing the markets. This may be due to the availability of share prices at lower levels, or due to the sheer frenzy of the investors. When the two converge, no one can tell- not even history.
But one must also consider the fact that since such large quantities of shares have traded at lower prices at significant delivery ratios, after the year may run its course, the an amount of shares thus bought may form part of the supply which may outweigh the demand, pushing down the indices once again. The stock markets are the most volatile economic indicators- and at the moment, as always, they have overreacted to the positive news- just what happened to the negative news in the opposite direction. Although, there is a difference now. The bubble has burst, and air is going in at the moment. The people who fed on the spoils of the destruction, are the prime gainers. The organisations and the banks that had to fail, have failed. The downside has been seen. The only movement left now in this new economic cycle of the capitalist's diocese is upward; but till when, is the question.
The world economic is in a perennial bull market till the resources are profitably exploited, products are produced and consumed. What can ruin it is derivatives, and the financial sector being the only one which can lead to doom. The financial regulators should learn from their mistakes- and the economic stimulus should be withdrawn as soon as it seems fit. Governments should start taxing the profits as soon as it can, as the next bust will be bigger as the speculators grow bigger. The only thing that can take down the markets is bad news from the financial sector. Inflation being controlled, the other sectors will slowly find their way out of the dark tunnel, and the economy will revive to good highs once again given the fund managers and the financial planners do not resort to ugly gambling.
If you're a long term investor, you would be looking at the point of inflection in the economic curve, and should go ahead with your investment decisions as far as equity is concerned. If you're a short termer, a healthy market such as this should facilitate your activities. The stage is set. Let's see how the act plays!
0: The first signs of the sub prime crisis and fears of the recession
1: The small correction due to the P-Note issue
2: The fall
3: Death of Lehman
4: The period of our analysis
When everyone was worried and scared and freaked, whole shareholding patterns had changed in various companies. Promoters had vacated their seats in some cases, while in others, LIC was upping its stake. When the FIIs were selling, the transactions were happening. Not everyone was selling- it just doesn't happen. The sellers were selling madly, while the buyers were getting all the discounts they wanted and consequently, the prices that they wanted. I'm not talking about the penny shares- they never have reasons to trade. As a general rule to every counter that sees trading, the number of shares traded go down when prices move up. The delivery ratios become perfunctory in our analysis as even when prices were high, and when prices were low, the delivery ratios are comparatively similar.
Between Oct 08 and Mar 09, from the graph, we see that volumes were less, but not so less as we were led to believe. Participation of the FIIs was low, volumes were upheld courtesy the participation of the domesitic players such as insurance companies and some NBFCs, while mutual fund managers waited. After that period, from Apr 09, as is evident from the graph, everyone found themselves out of sync with the market rally- so everyone dived into the flowing water. The volumes never have been higher- and even while prices are low. This is a direct consequence of large volumes, in number of shares traded, being part of transactions. Delivery ratios have been impressive, and this corroborates the fact that many public shareholding patterns changed during the period. Everyone wanted to participate, and now everyone is chasing the markets. This may be due to the availability of share prices at lower levels, or due to the sheer frenzy of the investors. When the two converge, no one can tell- not even history.
But one must also consider the fact that since such large quantities of shares have traded at lower prices at significant delivery ratios, after the year may run its course, the an amount of shares thus bought may form part of the supply which may outweigh the demand, pushing down the indices once again. The stock markets are the most volatile economic indicators- and at the moment, as always, they have overreacted to the positive news- just what happened to the negative news in the opposite direction. Although, there is a difference now. The bubble has burst, and air is going in at the moment. The people who fed on the spoils of the destruction, are the prime gainers. The organisations and the banks that had to fail, have failed. The downside has been seen. The only movement left now in this new economic cycle of the capitalist's diocese is upward; but till when, is the question.
The world economic is in a perennial bull market till the resources are profitably exploited, products are produced and consumed. What can ruin it is derivatives, and the financial sector being the only one which can lead to doom. The financial regulators should learn from their mistakes- and the economic stimulus should be withdrawn as soon as it seems fit. Governments should start taxing the profits as soon as it can, as the next bust will be bigger as the speculators grow bigger. The only thing that can take down the markets is bad news from the financial sector. Inflation being controlled, the other sectors will slowly find their way out of the dark tunnel, and the economy will revive to good highs once again given the fund managers and the financial planners do not resort to ugly gambling.
If you're a long term investor, you would be looking at the point of inflection in the economic curve, and should go ahead with your investment decisions as far as equity is concerned. If you're a short termer, a healthy market such as this should facilitate your activities. The stage is set. Let's see how the act plays!
Fundamental Analysis: Great Eastern Shipping Company
About the Company:
GE Shipping was founded in 1948. The company is engaged in shipping and offshore services. The shipping business is involved in transportation of crude oil, petroleum products, gas and dry bulk commodities. The offshore business services to the oil companies in carrying out offshore exploration and production. The company is well reputed and well set in the shipping industry. It is one of the most respected companies in the sector in India. The company has 12 crude carriers, 18 product carriers and one gas carrier along with 31 tankers and six dry bulk carriers.
Sector Focus
The shipping industry has seen as much, or probably more downfall as any other industry in the past year. The Baltic Dry Index, one of the economic indicators fell from around 12000 to close to 690. The Baltic Dry Index tracks worldwide international shipping prices of various dry bulk cargoes. Now the Baltic Dry Index is seeing an upward movement, which shows that economic activity on the ships- cargo, etc is increasing and improving. This upward movement in the BDI has been followed by a rally in the shipping stocks. However, the outlook remains cautious given the possibility of China reducing imports on realization of built up stockpiles which would result in the abeyance of a lot of shipping activity. Large US oil inventories coupled with new building deliveries will keep tanker rates down. On the product tankers side, low refining margins and depressed demand will add to the existing pressure on rates.
However, on a YoY basis, the current spot freight rates in the tanker segment are still sharply lower, as global demand for vessels in this segment is still to fully recover to those that prevailed a year earlier.
Revenues and Profits - Q3
3QFY10 results of GE Shipping were disappointing, nevertheless, expected. The company had sold a lot of ships last year, and this accounted for a decrease in the total revenues of the company. A drop in demand for steel, iron ore and coking coal with recession in major global economies saw freight rates, particularly in the dry bulk segment, dropping as much as 90 percent while in tankers rates fell over 75 percent, giving a double whammy to the topline with the bottomline following the same trend. The Group has posted a net profit after tax of Rs 1084.70 million for the quarter ended September 30, 2009 as compared to Rs 5699.00 million for the quarter ended September 30, 2008. Total Income has decreased from Rs 12314.20 million for the quarter ended September 30, 2008 to Rs 8019.40 million for the quarter ended September 30, 2009.
The EPS has reduced significantly in the past two quarters of this year. However, with the rise in the BDI and the expansion plans of the company into the offshore business should show us better results and more revenue. However, one has to understand that this will not happen now and quickly.
Capex/ Expansion Plans and Prospects of the company:
It has expansion plans of Rs. 2075 crores to expand its carrier and dry bulk capacity. There were also reports that the company would increase its offshore business organically. With increase in economic activity as the world economy crawls (or may be zooms!) out of recession, the BDI will be in sync with it, and so would be the revenues of shipping companies. Also, with increase in focus on the offshore business as crude oil prices seen stabilizing, this would further make the revenue stream more fluent.
Investment advice:
The stock trades currently at a P/E of 6.25, with reduced net expectations. Expected P/E at current market price would stand at around 10 if revenues do not improve significantly. With a market cap if 4400 cr, the stock has a satisfactory dividend yield of 2.77%.
If you are considering investing in a shipping stock, different from a shipyard stock, GE Shipping is arguably the best company with great fundamentals and is relatively cheaper amongst its peers in terms of market price.
Historic price of GE Shipping:
GE Shipping Live Quote:
GE Shipping was founded in 1948. The company is engaged in shipping and offshore services. The shipping business is involved in transportation of crude oil, petroleum products, gas and dry bulk commodities. The offshore business services to the oil companies in carrying out offshore exploration and production. The company is well reputed and well set in the shipping industry. It is one of the most respected companies in the sector in India. The company has 12 crude carriers, 18 product carriers and one gas carrier along with 31 tankers and six dry bulk carriers.
Sector Focus
The shipping industry has seen as much, or probably more downfall as any other industry in the past year. The Baltic Dry Index, one of the economic indicators fell from around 12000 to close to 690. The Baltic Dry Index tracks worldwide international shipping prices of various dry bulk cargoes. Now the Baltic Dry Index is seeing an upward movement, which shows that economic activity on the ships- cargo, etc is increasing and improving. This upward movement in the BDI has been followed by a rally in the shipping stocks. However, the outlook remains cautious given the possibility of China reducing imports on realization of built up stockpiles which would result in the abeyance of a lot of shipping activity. Large US oil inventories coupled with new building deliveries will keep tanker rates down. On the product tankers side, low refining margins and depressed demand will add to the existing pressure on rates.
However, on a YoY basis, the current spot freight rates in the tanker segment are still sharply lower, as global demand for vessels in this segment is still to fully recover to those that prevailed a year earlier.
Revenues and Profits - Q3
3QFY10 results of GE Shipping were disappointing, nevertheless, expected. The company had sold a lot of ships last year, and this accounted for a decrease in the total revenues of the company. A drop in demand for steel, iron ore and coking coal with recession in major global economies saw freight rates, particularly in the dry bulk segment, dropping as much as 90 percent while in tankers rates fell over 75 percent, giving a double whammy to the topline with the bottomline following the same trend. The Group has posted a net profit after tax of Rs 1084.70 million for the quarter ended September 30, 2009 as compared to Rs 5699.00 million for the quarter ended September 30, 2008. Total Income has decreased from Rs 12314.20 million for the quarter ended September 30, 2008 to Rs 8019.40 million for the quarter ended September 30, 2009.
The EPS has reduced significantly in the past two quarters of this year. However, with the rise in the BDI and the expansion plans of the company into the offshore business should show us better results and more revenue. However, one has to understand that this will not happen now and quickly.
| (in Cr.) | Sep-09 | Jun-09 | FY08-09 |
| Revenue | 487.66 | 587.65 | 3,083.47 |
| Net Profit | 96.77 | 126.28 | 1,384.82 |
| EPS | 6.35 | 8.29 | 90.94 |
| Cash EPS | 12.39 | 13.75 | 113.82 |
Capex/ Expansion Plans and Prospects of the company:
It has expansion plans of Rs. 2075 crores to expand its carrier and dry bulk capacity. There were also reports that the company would increase its offshore business organically. With increase in economic activity as the world economy crawls (or may be zooms!) out of recession, the BDI will be in sync with it, and so would be the revenues of shipping companies. Also, with increase in focus on the offshore business as crude oil prices seen stabilizing, this would further make the revenue stream more fluent.
Investment advice:
The stock trades currently at a P/E of 6.25, with reduced net expectations. Expected P/E at current market price would stand at around 10 if revenues do not improve significantly. With a market cap if 4400 cr, the stock has a satisfactory dividend yield of 2.77%.
If you are considering investing in a shipping stock, different from a shipyard stock, GE Shipping is arguably the best company with great fundamentals and is relatively cheaper amongst its peers in terms of market price.
Historic price of GE Shipping:
| Year | Open Price | High Price | Low Price | Close Price | No. of Shares | No. of Trades | Total Turnover(Rs.) | * Spread (Rs.) | |
| H - L | C - O | ||||||||
| 2005 | 168.50 | 239.25 | 130.80 | 230.80 | 85742612 | 493659 | 15,673,609,910.00 | 108.45 | 62.30 |
| 2006 | 233.00 | 353.00 | 171.00 | 200.20 | 113647961 | 801889 | 29,901,723,556.00 | 182.00 | -32.80 |
| 2007 | 202.00 | 572.00 | 185.00 | 557.65 | 49841290 | 417854 | 15,863,447,752.00 | 387.00 | 355.65 |
| 2008 | 564.00 | 564.00 | 138.60 | 202.90 | 27042117 | 539798 | 9,303,650,266.00 | 425.40 | -361.10 |
| 2009 | 205.45 | 315.90 | 142.00 | 289.15 | 51244507 | 741714 | 12,577,828,143.00 | 173.90 | 83.70 |
GE Shipping Live Quote:
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