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.
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