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

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!"

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.

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.

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.

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.

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.

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)

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.

IPO Flash: MBL Infrastructure Ltd

IPO Snapshot:

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

#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*:

• 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.

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)

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.

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.

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!

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.

(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:

Investments made by LIC in Indian Equity

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.

We have compiled details of the current shareholding of LIC in various BSE and NSE listed companies.

Holdings more than 10% have been marked.

Company Name LIC Holding %* Reliance Ind 6.04% Tata Steel 11.91% Grasim Ind 13.38% Larsen and Toubro 17.54% ACC 16.86% Bharti Airtel 4.59% BHEL 2.97% HDFC Bank 7.47% Hindalco 11.09% HDFC 2.64% ITC 13.62% Infosys 3.89% JP Asso 3.51% M&M 17.58% ONGC 2.94% Reliance Comm 7.25% Reliance Infra 10.33% Vijaya Bank 4.59% ABB 5.5% PNB 4.30% Unity 2.25% Union Bank 2.04% SAIL 1.86% GAIL 1.8%

Company Name LIC Holding %* SBI 10.19% Sterlite 2.14% Tata Power 9.46% Tata Motors 12.23% ICICI Bank 10.3% TCS 2.41% Wipro 1.26% Siemens 13.71% Cummins Ind 3.87% Sun Pharma 1.08% Orient Bank 4.47% IDFC 3.08% Canara Bank 2.83% PTC 3.19% Tata Sponge Iron 2.61% Container Corp 1.61% Glaxo 1.31% Orchid Chem 2.72% BEL 2.88% Idea Cellular 2.80% Bharati Shipyard 10.65% Andhra Bank 5.85% BASF 3.71% Dabur 1.59% GNFC 1.53% IndraprasthaGas 1.26% GMR Infra 1.09% TVS Motors 3.73%

Company Name LIC Holding%* Tech Mahindra 1.8% IDBI 6.07% Maruti 2.82% GSPL 1.82% Uniphos 1.07% Voltas 1.41% Wockhardt Pharm 1.21% Octav 7.3% Bank of Maharashtra 5.94% Piramal Life 3.44% Kothari Sugars 2.72% Kothari Petro 2.55% SBBJ 1.46% WelspunInd 2.08% IOB 2.03% Hotel Leela 1.84% Raymond 1.67 Aventis 1.26% Century Tex 1.17% PowerGrid 1.16% BPCL 1.14% Pantaloon 1.12% HUL 1.01%

*More than 1% holdings considered, Data as on Sep '09.
The list is not complete, but it gives a fair idea of the investment appetite and approach of LIC in various sectors of the industry.

Analysis: Ultratech - Grasim subsidiary merger ratio at 4:7

Ultratech Cements will merge Grasim's subsidiary Samruddhi Cements into itself. The merger ratio has been announced. It is 4:7. Grasim hived off its cement business to Samruddhi Cements, its subsidiary. For each share held of Grasim, the shareholders will get an extra share having face value of Rs. 5- of Samruddhi, and for 7 such shares, the share holders will receive 4 shares of Ultratech. Ultratech's share capital will increase by Rs. 15 cr approx.

Let's do some number crunching, shall we? Currently, if you hold 105 shares of Grasim (105 because it would be easier to calculate), your effective Gross Cement EPS (Revenue per share for cement) will be calculated at Rs. 65,089 considering Grasim's cement revenues at Rs. 4220 and Ultratech's at Rs. 3598 and Grasim's 55% share in it. (44310 + 20779=65089)

After the merger, your Gross Cement EPS would be at Rs. 66373.1. We have considered Grasim's holding to increase in Ultratech to around 60.5% post merger. In both cases, Grasim's cement revenues have been used as Rs. 4220 cr and Ultratech's as Rs. 3598 cr.

Now operational costs may not go down significantly, but they will certainly go down- we are not considering the uncontrollable factors such as fuel costs. This would lead to an increase in margins. The combined entity would become the largest cement maker in India with current capacities of 42 mtpa, which would be upgraded to 49 mtpa according to the company's plans.

Next comes the impact on the share price of Grasim. The initial news of the restructuring was not acceptable to the market. The stock declined from year highs of 2900 to sub 2200 levels. Grasim's cement share per se would go down to Rs. 4690.8 cr (using the same data) from Rs. 6199 cr. Much cannot be said about the arbitrage moves in the market till the next announcement of the record date comes- since besides being in a bear grip due to the holding company discount, Grasim's shareholders would benefit greatly by this move once they've been allotted shares of Ultratech. So, it would not be surprising to see Grasim's stock price move up the next week. In general, the cement outlook has not been predicted to be very very good, with cement stocks taking a beating in the past few months.

So, what would be left with Grasim? Its VSF and Chemicals business. Grasim is the largest producer of VSF in the world, however, the contribution of the VSF segment (about 30%) to its business has been overshadowed outright by its cement business. Grasim has chalked out some Rs. 1000 cr for setting up a new VSF plant in Gujarat, to increase the capacity by 25%. According to the company, the current restructuring would unleash share value and also would not disallow Grasim from nurturing the cement business. Grasim, per se, would see an increase in margins after the restructuring given its good margins in VSF.

StocksCenter verdict:

In the long run, this is tremendous value creation for the current Grasim shareholders. If prices dip, consider buying this stock before the record date!

We will be back soon.. Till then, the stocks watchlist!

Hi,
Just got time and content enough to say hello. We'll be back in a few weeks now. Till then, keep watching these stocks-
1) Bharati Shipyard
(Triggers: Defence Orders, Great Offshore takeover approval)

2)Spanco
Great Results!

3)Ultratech/Grasim
Merger announcements and ratio

4)Balrampur Chini/Bajaj Hindusthan
Merger talks

5)RIL v/s RNRL

6)Telecom stocks in general. They will fall, but expect consolidation.

7)IT stocks such as TCS/Infy. IT will outperform all other sectors not just in this year, but in the whole decade, and till eternity until biotechnology reaches its true potential.

8)Mahindra Satyam! Watch out for this one. It's been creating news lately.

9)Punj Lloyd- watch out for that rally

OVERALL OUTLOOK: Bearish till mid Nov. Will revise later when we get back online. Remain cautious. There is no price for waiting!