Warren Buffett and value Investing

"You ought to be able to explain why you’re taking the job you’re taking, why you’re making the investment you’re making, or whatever it may be. And if it can’t stand applying pencil to paper, you’d better think it through some more. And if you can’t write an intelligent answer to those questions, don’t do it." Warren Buffett

There have been a lot of Investment guru’s around the world, but one name that is cynosure of all eyes and is most respected for his investing sense is, undoubtedly, Warren Buffett. Though I do not cover such articles on my blog, I thought it would be a good idea to occasionally post few such posts featuring the great investors and their ideologies. And when it comes to investing , who should we talk of first, other than warren buffett, who is the Second richest person in the world and he did it all through investing. We will cover Benjamin Graham, Charlie, David and of course India’s investing sensation Rakesh Jhunjhunwala among others in a series of posts.

The Oracle of Omaha – Investing since Childhood
About Buffett’s Personal Life
Warren Edward Buffett was born on August 30, 1930. The only boy, he was the second of three children, and displayed an amazing aptitude for both money and business at a very early age. His father was a stock broker turned Congressman.

In 1947, a seventeen year old Warren Buffett graduated from High School. It was never his intention to go to college; he had already made $5,000 delivering newspapers (this is equal to $42,610.81 in 2000). His father had other plans, and urged his son to attend the Wharton Business School at the University of Pennsylvania. Buffett stayed two years, complaining that he knew more than his professors. When Howard was defeated in the 1948 Congressional race, Warren returned home to Omaha and transferred to the University of Nebraska-Lincoln. Working full-time, he managed to graduate in only three years.

Buffett married Susan Thompson in 1952. They had three children, Susie, Howard, and Peter. The couple began living separately in 1977, though they remained married until her death in July 2004. His daughter Susie lives in Omaha and does charitable work through the Susan A. Buffett Foundation and as a national board member of Girls, Inc. On his 76th birthday Buffett married his longtime companion, Astrid Menks, who had lived with him since his wife's departure

An Investor by birth
Warren showed an Investing aptitude since his early childhood. He was a born Investor though he refined his Investing sense under stalwarts like Benjamin Graham.

As a boy, irrespective of his family background, he delivered newspapers to make extra money and this probably sparked his interest in the media where he has made several successful investments including the Washington Post Company, a stock that has made him a lot of money and which he vows never to sell.

At the age of 13, Buffett filed his first income tax return, deducting his bicycle as a work expense. At the age of 15, Buffett and a friend spent $25 to purchase a used pinball machine, which they placed in a barber shop. Within months, they owned three machines in different locations.

Association with Benjamin
Buffett enrolled at Columbia Business School after learning that Benjamin Graham and David Dodd, two well-known securities analysts, taught there. Buffett graduated and wanted to work on Wall Street.

Buffett offered to work for Graham for free but Graham refused. He purchased a Texaco gas station as a side investment, but that venture did not work out as well as he had hoped. Meanwhile, he worked as a stockbroker. He finally got the job with Benjamin Graham’s firm and, as he generously acknowledges, learned a lot about stock investment from The Master.

Graham retired and folded up his partnership. Since leaving college six years earlier, Buffett's personal savings grew from $9,800 to over $140,000. He returned home to Omaha and created Buffett Associates, Ltd., an investment partnership.

Berkshire Hathaway
In 1962, Buffett discovered a textile manufacturing firm, Berkshire Hathaway, that was selling for under $8 per share. Through his partnership, Buffett eventually purchased 49% of the outstanding shares. Buffett maintained BH's core business of textile milling, but by 1967 was expanding into the insurance industry and other investments.

Berkshire first ventured into the insurance business with the purchase of National Indemnity Company. In the late 1970s, Berkshire acquired an equity stake in the Government Employees Insurance Company (GEICO), which forms the core of its insurance operations today (and is a major source of capital for BH's other investments). In 1985, the last textile operations (BH's historic core) were shut down.

Berkshire Hathaway , a massive holding company headquartered in Omaha, Nebraska, USA, that oversees and manages a number of subsidiary companies. Berkshire Hathaway's core business is insurance, including property and casualty insurance, reinsurance and specialty nonstandard insurance. The Company averaged a phenomenal 25%+ annual return to its shareholders for the last 25 years while employing large amounts of capital and minimal debt.

Warren Buffet’s Value Investing principles

The business the company is in should be simple and understandable.

The firm should have a consistent operating history, manifested in operating earnings that are stable and predictable.

The firm should be in a business with favorable long term prospects.

The managers of the company should be candid. As evidenced by the way he treated his own stockholders, Buffett put a premium on managers he trusted. The managers of the company should be leaders and not followers.

The company should have a high return on equity. Buffett emphasizes return on equity (ROE), a key measure of a company's profitability. He prefers to invest in companies where he can confidently forecast future ROEs at least 10 years out. He is particularly fond of firms that don't require a lot of capital, as they tend to produce much higher returns on equity.

Consistently Strong Free Cash Flow. Buffett also seeks companies with significant free cash flow. Always mindful of the risks associated with investing, he ensures that his companies have plenty of money left over to invest in their growth after they have paid the bills.

Limited Debt. In the 1990s, Buffett bought insurers Geico and General Re because he liked how the companies limited and managed their debt.Buffett also likes the "float" that insurance companies offer. Policyholders pay premiums up front, but claims are paid out later -- providing insurance companies with a steady stream of low-cost cash to play with. Until policyholders collect on their policies or claims, the company can invest those billions in stocks/bonds or other areas, and who better to invest that money than Buffett himself?

Margin of Safety. If you understood a business perfectly and the future of the business, you would need very little in the way of a margin of safety. So, the more vulnerable the business is, assuming you still want to invest in it, the larger margin of safety you'd need.

Read More!

Tanla Solution Allotment Status Tomorrow

Dear Friends,

I can make out the intense curiosity among the investors to see their allotment status for Tanla Solutions IPO. Some of our friends are trying to spread rumors about allotment status on various forums. Hence, I decided to call up Karvy and confirm. Based on the information I received , Karvy is going to put the allotment Status on its Website by 10 AM tomorrow, 28th December,2006. You can check the allotment status tomorrow by clicking the link below

Tanla IPO Allotment Status
Read More!


High on Promises, Low on Performance

Stock : Aksh Optifibre

CMP : Rs 41.90

Risk : High

Outlook : Negative

I am sure a lot of Investors are dying to see something on this stock. This stock which was a turnaround attraction in the year 2004 and again in the year 2005 had not been able to deliver returns to its shareholders in terms of both delivering on its promises of high growth and creating shareholder wealth.

Investment Guru blog had also recommended the stock on November 26th, 2005 classifying the stock as a strong turnaround candidate and strong business outlook. This blog carried a short term tag of 90 and long term tag of Rs. 120 for the stock. The stock, though delivered its short term target, failed to keep up its commitment of strong growth and has been a laggard since then. I have been getting lot of queries from the visitors too, to write a review on this stock. I know the news is not good for the investors but let us take a hard bite on this and see what's this stock is up to.

Returns to Investors

Photobucket - Video and Image Hosting
You can make out from the above chart that this stock has been a continuous laggard for the whole year and is currently trading near to its 52 week low of Rs. 39. The stock was trading at Rs . 41.90 as on 26th December,2006. The volumes have also followed suit with spikes at certain intervals, which however didn’t resulted in impacting the price positively. On an overall basis the stock has eroded the investor wealth by 53% within the last one year.

What went wrong with Aksh Optifibre ?
I do not have a copy of the annual report of the company. However from the summary of the results shown in the table below, the company has failed to deliver on the promises of strong growth backed by strong order book and 50% capacity expansion to meet the projected growth. So what went wrong with the company’s plan? I think the answer needs to come from the company’s chairman. I had written an email to the company secretary, asking him to clarify certain questions on the performance of the company, however there was no response from their side.

Photobucket - Video and Image Hosting

Sales down Sharply
The company’s sales for the quarter ended Sep’06 are down by 50% over the previous quarter and down 69% over the quarter ending Sep’05.

From profits to Losses
The company’s operating profits were down 6% versus Sep’05. The net loss was 0.05 % as compared to a net profit margin of 15% in Sep’05.

Shareholding Pattern

As of September ’06, the shareholding pattern looks as follows :

Promoters : 30%

Mutual Funds : 8%


Corporate : 12%

Individuals : 41%

Others : 9%

From above we can make out that a large chunk of the stock is in hands of the public. FII’s hold only 9000 shares in the company (One Investor). This shows that the stock’s price movement will depend on large extent to the its ability to draw FII attention . However the possibility of same looks bleak.

Slew of announcements

Foray into IPTV
The company in association with MTNL on October 17, 2006 has announced the launch of India's first IPTV Service in Delhi. The Service will offer traditional television broadcast, video and Music on demand and video calling TV facilities. However, the ability of the company to deliver in this new initiative is questionable.

Amalgamation of Aksh BroadBand Ltd.
The company is considering amalgamation of Aksh Braod band Ltd. With itself.

Issue of Fresh Equity

The Board of Directors of the Company on December 05, 2006 has passed a resolution by circulation recommending for the issue of fresh equity / ADRs / GDRs / FCCBs / Convertible Bonds, in the domestic market and / or International Offerings through Public Issue, Rights issue, Preferential issue and / or Pvt Placement with or without green shoe option to the extent of USD 30 mn with a green shoe option of USD 4.5 mn, subject to approval of shareholders to be obtained by means of Extra-Ordinary General Meeting of the shareholders of the Company to be held on January 06, 2007.

Outlook on the stock
After reviewing the company’s performance and its stock price movement , Investment Guru is of the view that Investors should not expect much to happen on this counter. Though the stock is quoting near its 52 week low, the chances of a speedy recovery doesn’t exists. The company has to deliver better results and revive confidence of the investors in order to move its stock price upwards. Read More!

Sensex Today: Sensex inches up by 45 pts.

Tech Mahindra, I-flex, Glenmark & Moser Baer in thick of action

Sensex behaved again in the manner we predicted yesterday. Marred with lot of volatility, it finally managed to add 45 points with an intra day volatility of 260 points. Action was seen in the Auto stocks primarily on renewed buying interest. However, Tech Mahindra was the star attraction of todya's trade. The stock closed 20% higher with no sellers at Rs. 1490. The company has announced the signing of a five-year deal to provide BT with strategic sourcing services. This contract is expected to create new revenue for Tech Mahindra in excess of $1 Billion over this period.

However the day was not good for I-flex investors as the stock tumbled by 11% on fears of dumping of the stocks by large players in open market. The stock, intrestinglly, was quoting at a huge discount in futures yesterday as compared to its closing price in cash segment.

Another attraction was listing of the Great Offshore. The stock settled at Rs 725 on NSE which is in line with market expectations. Read More!

Sensex Today : Sensex down 42 amid Volatility

Sensex gets slimmer , sheds 42 points

Yes, the sensex behaved the way we have discussed yesterday. The day was marked with immense volatility. This trend will continue tomorrow and we will see swings between the bears and the bulls. Traders should be cautious and small investors should stay away from trading at such junctures. Stock picking at lower levels may continue.

Attractions of the day

The two IPO's listed in line with Investment Guru's expectation. Sobha Developers started with the fireworks to list above 1000 levels and finally settled at 925. The stock is trying to move in tandem with Parsvanath Developers and may find support at 850-875 levels.

Ruchira disappointed on listing. The stock though quoted a high of Rs.24 slipped away to discount and could not recover from the lows.

Tech Mahindra touched its all time high amid talks of company bidding for UK operations of Tiscali.

Gitanjali Gems was also in the first half with news that it has acquired a majority ownership interest in Samuels Jewelers Inc. which operates 97 retail jewelry stores in 18 states throughout the United States. However, the euphoria died down with stock finally settling at Rs.220 Read More!

Shobha will Rock, Ruchira may Disappoint

Two IPO's are listing today on NSE and BSE. Lets see the possible listing and strategy.

Shobha developers is expected to follow suit of its brother Prasvanath and the stock may list in the range of 1000-1050. Investors are advised to book profits if the listing happens above these levels.

Ruchira papers is also listing today. However this IPO may not delight the investors and is expected to list near its issue price of Rs. 23. A listing above Rs. 25 should be considered as a window for booking gains. Read More!

Sensex Today : Sensex sheds 350 points

Correction a welcome move for New year

The sensed tanked 350 points today. Market sources are attributing the fall to the weaker asian markets. The asian markets were weak following Thailand's central bank statement that international investors must pay a 10 percent penalty to take funds out of the country within a year. The Thai central bank's currency controls heightened concern about emerging markets. However I see more into today's correction than mere the asian play.

Well, I believe that the markets are gearing itself up for the next year and hence it becomes imperative for the markets to correct a bit in order to start the new year at a modest note. The newsflow are just aiding the biggies to drive the markets in this direction.

Markets to remain volatile

On one hand some big FII's are on the selling spree, there are others who are waiting on the sidelines to invest in Indian story. This will lead to volatility in the markets with selling pressure to continue and at the same time investment at lower levels to gather momentum.

The right approach at this stage is to enter the fundamentally strong stocks at such dips. For example Reliance Industries , L&T, ONGC are few such stocks where entry can be made at lower levels. These and similar stocks will be the leaders in the pull back rally.

The tale of Two IPO's

We are through with the Cairn and Tanla IPO's and both had a contrasting finish. The Tanla solutions IPO met with good success with issue being oversubcribed 38 times and the issue price was fixed at the upper band of Rs.265.

Cairn energy, which created lot of exictement with pre IPo biz, failed to eventually impress the investors with most research agencies coming with a long term outlook on the stock. This shows that the primary motive of the investors remains to make big bucks in short time frame from the IPo listings. The issue price has been fixed at the lower band at Rs. 160. With lower subscription numbers , the chances of listing gains are bleak and investors investing for listing gains may be disappointed. ZEE News has reported quoting a research firm that the issue may trade between Rs.89-174. However this is a very broad range. Investment Guru blog will publish its outlook once the allotment status is out.

Stocks to watch
Investors should consider buying on dips in Reliance Industries, Larsen & Tourbo, Punj Lloyd, Yes Bank and Infosys with a short to medium term outlook (2-4 months). Read More!

IPO Update :Cairn Energy - A Long Term Story

Will Sand-dunes deliver Oil ?

Here is a different IPO and of course the Investment Guru blog would be covering this a bit differently than other IPO updates. One reason why this IPO is close to me is that it is betting on the land of warriors, Rajasthan, and the success of this venture would turn the fortunes for the state in terms of both employment opportunities and economic growth. Let’s come out of the emotions and talk about this energy giant’s IPO and what it offers to the investors.

Investment Guru’s Outlook on Cairn energy IPO
Friends, the story is going to be interesting with the nature of operations of the company and the state of the operations. Cairn Energy is a newly incorporated company and is in the business of oil exploration. We will talk more about the company later in this post.

However, a basic question in investor’s mind is what should be the outlook for investing in this IPO. There are three scenarios as far as performance of the stock on the bourses is concerned. The listing should be a good considering the appetite for the stock. Second, this company is going to deliver results in long term. So Investors should consider this IPO as an investment opportunity from a long term perspective.

Now next question is “What would happen in medium term”? In medium term the stock price would be more a factor of the news on oil exploration success or failures and a little on the crude oil prices. So if cairn energy comes with the news that it is revising the estimated oil reserves in a particular block or say it has found oil somewhere else, the stock price would move accordingly. In absence of any news the stock is expected to remain lackluster.

My suggestion is to take either a listing gain approach or a long term investment approach.

About the IPO
Cairn energy is entering the capital markets with a public issue of 32,87,99,675 equity shares of Rs 10 through a 100% book-building process at a price band of Rs. 160 – Rs. 190 per share. The object of the issue is to fund the acquisition of shares of Cairn India Holdings Limited , fund development of the Rajasthan Block, as well as further development of other producing fields and fund other exploration and appraisal activities.

Pre-IPO placement has happened at Rs. 176.48 per share
A lot of excitement for the IPO has generated because of the pre-IPO placement of company’s shares at a price of Rs. 176.48. The placement has been made to Malaysian oil giant Petronas (17.65 crore shares), Merril Lynch (1.27 crore shares), ABN Amro (1.27 crore shares) and Videocon Industries (63.7 lac shares).

This placement shows the belief of these giants in the success of cairn energy venture and the business model. On the huge success of the preplacement, the chief executive of cairns, Sir Bill Gammell, commented ““We are delighted to have gained such substantial backing for our pre-flotation placing. The positive response confirms our belief that this is the best strategy for Cairn to develop and grow our world class business in India.”

Understanding the Industry
In 1997, the NELP was implemented. The NELP was designed as a means of allowing participants in the Indian oil and gas industry to compete on equal terms for exploration acreage. Successful bidders are required to enter into production sharing contracts with the Government.

The oil and gas industry in India is still dominated by two Government-controlled entities, ONGC and Oil India Limited. However, significant private-sector participants in the industry (other than Cairn India) include Reliance Industries, BG Group and Videocon Industries Limited.

Indian Domestic Energy Demand
India is a net importer of crude oil and natural gas. In 2005, India consumed 115.7 million tonnes of crude oil, yet it produced only 36.2 million tonnes. The International Energy Agency has predicted that between 2003 and 2030 India will experience an average annual oil demand growth rate of 2.7%, which may be compared with China’s predicted average annual oil demand growth rate of 3.3%. In contrast, the predicted world growth rate is expected to be 1.4%

Understanding the company
Cairn is an independent oil and gas exploration and production company. The company is listed on the London Stock Exchange since 1988, with head office in Edinburgh. It holds material exploration and production rights in India, Bangladesh and Nepal.

Cairn India (CIL) was incorporated on 21 August 2006 to consolidate Cairn’s business and interests in India. CIL is acquiring its assets and business through acquisition of Cairn’s subsidiaries: Cairn Energy Australia Pvt Ltd (CEA), Cairn Energy hydrocarbons (CEH) and Cairn Energy India Holdings B.V.(CEIH).

In the first six months to June 2006, Cairn’s gross production from existing oil assets (Ravva, Lakshmi and Gauri) was 87,500 barrels of oil equivalent per day (bpd). Of this, CIL had a working interest in 24,000 bpd.

What is company’s strategy ?

Sustain production from and maintain low operating costs in existing producing fields.

Execute Rajasthan Block Northern Fields development to reach first commercial production at Mangala during 2009.

To harness the significant resource base in Rajasthan.

Identify new opportunities for growth in reserves and production

What works in favour of the company?
The company has interests ranging from 40% in the Lakshmi and Gauri oil and gas fields to 22.5% in the Raava oil and gas field. It has 70% interest in the two development areas in the Rajasthan Block. As at 30 June, 2006, it has estimated proved and probable reserves, of 472 mmboe.

Seven year tax holiday from corporate tax in respect of each eligible unit in the Rajasthan Block.

Significant portfolio of exploration and appraisal acreage in eastern, western and
northern India.

What are the Risk Factors ?
The start of production from the ‘‘RajasthanBlock’’ may be delayed and such delays may result in significant cost overruns.

Plateau production rates from the Rajasthan fields may be less than forecast.

There may be issues with availability of proper infrastructure facilities like transportation, fueland water which may further delay the production plans.

Crude oil and natural gas initially in place, reserves and resources data are only estimates and are inherently uncertain, and the actual size of deposits may differ materially from these estimates.

The company is expected to have negative cash flows even after commencement of production for some time.

For the year ending 31st December 2006, the company has potsed a net profit of Rs. 92.5 crores. The EPS works out to be 0.52 per share. However, one cannot take a decision of investing in this IPO based on the current financials. This a pure play on the future and that’s why it is a long term bet.

Ciarn needs to be valued on the basis of its oil reserves and discoveries. However, company’s prospectus does not shares much information on valuation from this perspective.

The industry PE average comes to 25.14 and competitors are generating returns on net worth in the range of 18-30%.

Issue Opens : 11-Dec-2006
Issue closes : 15-Dec-2006
Registrar : Intime Spectrum

When the Allotment Status is out you can check it from the link below


Additional References

World Energy Outlook 2006

News on OIL

India's Energy Future

Cairn Energy Website

Write up on Cairn Energy Read More!

Shobha Developers : Check Allotment Status

Shobha developers IPO allotment status is out ! You can check if you got shares alloted by clicking the link below.

Shobha Developers Allotment Status

Successful applicants have been alloted 10 Shares.

Additional References

About Shobha developers

Current Projects Read More!

IPO Update - Tanla Solutions

Betting on Big Boys, Outlook Stable

Tanla Solutions has eneterd the capital markets with an offer of 1.59 crore shares at a price band of Rs. 230-265. Investment guru recommends investors to subscribe to the IPO with a short term outlook. The stock may give listing gains in the range of 25-30%.

Lets take a look at the company in detail :

Tanla is a provider of integrated telecom solutions and products for the wireless market.

The company specialize in providing SS7 messaging infrastructure software products including Short Messaging Service Centre (SMSC), High Density Media Servers (HDMS), optimal routing solutions, welcome roamers, voice mail servers and Aggregator Services and offshore services including software development, infrastructure management services and technical support services.

The major part of the company’s revenue is driven by its subsidiary in UK. The company boasts of high profile clients including Vodafone, O2 and Hutchison. Forex fluctuations can have a significant impact on company revenues since 98% of the revenues are derived in foreign currency.

Top 5 clients constitutes around 49% of its revenues. Hences, the revenue sources are skewed in favour of these companies. Howevr, this should not a worrying factor give the niche the company enjoys in its segment.

The company states established and proven products and services, Leading telecom companies as clients, Scalability of solutions, cost efficiency due to India operations, flexible pricing model and focus on R&D as its competitive strengths.

On a consolidated basis, the company’s revenues have grown rapidly during FY06 and the first half of FY07 has also shown significant increase. The company revenues have grown by 282% to reach 63 crores in FY06 . In first half of FY07 the company has already done business of 87 crores, 138% above its full year revenues of FY06.

Net profits grew 444% in FY06 to reach 30 Crores mark. For the first six months of FY07 the company has already achieved 35 crores in profits, more than what it did in full year in FY06.

The company’s operating margins stood attractive at 55.7% in FY06 and 51.3% in first half of FY07.

The proceeds pf the IPO would be used for Setting up infrastructure facility for a development centre at Hyderabad, disaster recovery centre at Bangalore, establishing overseas offices and R&D.

Valuations : The weighted average EPS for last three years stood at 5.39. However since the company is on a high growth path, we should also consider the current EPS. The EPS for the six months ending sept.,2006 stood at 10.47.

On a consolidated basis the weighted average Return on Net worth stood at 58.24%. For the first half ending Sep.,2006, the return was 46.87%. The pre-issue net asset value per share as of Sep. 30 stood at Rs. 22.33.

If we annualize the first half EPS of the unconsolidated entity the EPS comes to 13.5 giving a PE of 19.6 at the higher price band. There are no listed comparables belonging to same industry.

Issue Opens : 11-12-2006

Issue Closes: 14-12-2006

Registrar : Karvy

Additional references :

About Tanla Solutions

Product Profile of Tanla Solutions Read More!

Stocks in News -Reliance, Tata, DLF IPO

Reliance Retail set to buy Adani Retail
RIL has decided to acquire Adani Retail, the Gujarat based retail chain controlled by the Rs 13,500 crore Adani Group. The Adanis have about 54 stores across all formats such as neighbourhood stores, supermarkets and hypermarkets, spread across 15 cities in Gujarat. The company had planned to have about 65 stores by the end of this year.

Tata Steel enters shipping business
Tata Steel has entered into a joint venture with Japan's largest shipping line Nippon Yusen KK to transport dry-bulk and other cargo. The venture will lower Tata's transportation cost and make Nippon Yusen's shipping line accessible.

DLF IPO likely to hit market in February
The DLF group’s much-touted IPO will finally see the light of day. The group, which has already resolved the issue with its minority shareholders, is now in the process of filing the draft red herring prospectus (DRHP) with Sebi. Sources in the company told ET, “The DRHP will be filed by December 15 and the issue should hit the market in February.” Read More!

Sensex dreams 14000, Momentum strong

Investors should play safe at current levels, stocks to watch

I was away from the markets for most part of this week and hence couldn’t post on the listing strategy of parsvanath developers and other stocks in action. Will try to cover the back log through this post.

Taking stock of the markets

The markets didn’t disappoint me as far as the weekly statistics are concerned. The BSE Sensex added around 142 points to its tail to touch 13845 mark. So we are roughly 165 points away from the 14000 mark and it would not be a surprise if this level is attained in the coming week. The F& O expiry went smoothly with good rollover seen for December. Let’s see what is driving the markets and the possible scenario. We will also look at few stocks which may give good returns in short term.

What is driving the markets ?

Economic trends continue to delight

India’s economy grew by 9.2 per cent in the last quarter (July-Sep), driven by rising activity in both manufacturing and services. The improvement in the July to September period puts the country on course to match growth levels being achieved by China. Growth in the previous quarter, April to June, was 8.9 per cent. Manufacturing output rose by 11.9 per cent in July to September. The services sector, which accounts for more than half of India’s GDP, continued to be buoyant, with trade, hotels and transport services growing by 13.9 per cent. (Times Online)

The positive economic indicators has provided the boost to the already ongoing strong momentum backed by strong Q2 Results. The strong performance has lead to re-rating on outlook on India as an Investment Story.

F&O Expiry was smooth
Futures Open Interest was up by Rs 748 crore. Options Open Interest was up by Rs 260 crore (Rs 2.60 billion). Markets witnessed an rollover at 62 % . Nifty December Futures closed at a 17 points premium to the cash markets on the derivates expiry day.

Technicals are positive
The Markets are trading well above the 50 DMA and 100 DMA which indicates that the bullish momentum is expected to continue in the short term. There can be bouts of profit booking as sensex tries to breach the 14000 mark.
Photobucket - Video and Image Hosting
FII & Mutual Fund

Photobucket - Video and Image Hosting
FII’s bought Rs. 9380 crores of equity which was their highest net investment in last 5 months. Mutual funds are still maintaining a cautious approach and were net sellers to the tune of 24 crores in Nov-06. Investing circles are abuzz with news that FII’s may further step up buying this month as allocations will be made for new year 2007. However I feel that FII’s may throw up some surprise by deviating from this routine. They have already invested a good amount in the past few months and hence may defer further buying till a correction happens.

What is the probability of Correction ?
Corrections should not be considered a devil and it is quite healthy for markets to correct at regular intervals. This takes away the risk of a market crash. We have not seen any major correction and it would not be a surprise to see correction happening in coming sessions. However, I believe that certain Mid cap stocks would continue to shine due to the news flow and strong growth prospectus.

Conclusion on Market Trends
Well, the markets are expected to rise a bit more due to string momentum and may breach the 140000 mark, however profit booking may take center stage at those levels. So keep fundamentally strong stocks, may it be large or mid caps, in your portfolio.

Stocks in Focus
Gitanjali Gems
The stock is in news following talks of buying a US-based jewellery retail chain, comprising 100 stores in line with its plans to increase retail operation. The company has also received an approval for a special economic zone (SEZ) for the gems and jewellery sector at Panvel. To be spread over 25.23 acres, this will be Gitanjali’s second SEZ, after the 200-acre Rajiv Gems Park at Shamshabad, Hyderabad

ERA Constructions
This is another construction stock which has caught investor fancy in past few sessions. The stock was locked at upper circuit on Friday. The stock has scope of further appreciation by another 50 Rs.

Other Stocks that may gain ground are Karnataka Bank, Yes Bank, Shipping Corporation of India and Skumars. Read More!



Finally it's out! You can check if you got the shares alloted from the link below


An Inspirational Poem

This is a inspirational poem by great Indian Poet Shri Harivansh Rai Bachhan. I thought of sharing it with all of you. So if you are feeling left out or demotivated, just read this poem and boost your innerself with confidence. The motto is that Try and try and you will get success. Same applies even to stock markets, where we learn from our mistakes in order to become a smart Investor !

Photobucket - Video and Image Hosting
Read More!

Stock in News : Dabur, L&T, Videocon

Reliance ties up with Dabur for retail venture
Reliance has entered into a one-year pact with Dabur, under which it would sell Ayurvedic products such as chawanprash, and personal care items like hair oil through its retail outlets. Under this agreement, Dabur would generate about Rs 90 crore in revenues annually.

Larsen & Toubro plans new shipyard in India
Larsen & Toubro Ltd plans to set up large shipyard at a cost of about 20 billion rupees to capitalise on expected demand for vessels as international trade grows. The company already
builds ships at Hazira in Gujarat, but Naik this facility could only handle smaller vessels.

RIL set to bag 7 prized oil blocks
In what could result in Reliance Industries Ltd’s virtual dominance of the deep-water Krishna Godavari and Mahanadi basins off the east coast of India, the Directorate General of Hydrocarbons (DGH) has recommended that the company be granted seven highly prized assets in the region to prospect for oil and gas.

Videocon buys shares in Cairn Energy
New York-based investment firm Blackrock-Merrill Lynch and Indian electronics major Videocon Industries (VIL) are believed to have bought shares worth close to $100m in the pre-IPO placement of Cairn India, a subsidiary of the Edinburgh-based Cairn Energy. Both investors are tipped to have bagged shares worth $50m each.

Gateway to buy 50.1% stake in Snowman
Gateway will subscribe to 34.39 million new equity shares of Snowman at Rs 10.50 a share. Snowman provides GDL with a well-established platform to explore the tremendous growth opportunities in the booming cold chain logistics business.

Siemens gets Rs 40 bn order
Siemens Ltd said on Wednesday it has bagged a contract worth 40 billion rupees in the power transmission and distribution segment.

PNB ties up with IDBI Capital
Punjab National Bank (PNB) on Wednesday tied up with IDBI Capital to provide advanced e-trading services to its customers.

Bulk Deal Updates
Fidelity Buys 11 Lac Shares of Info Edge at 587 per share
Citi Group Buys 15 Lac Shares of Spice Jet. Read More!

Bursa at a life time high!

Confused with the heading of this post ? Wondering , what crib I am talking about. Is this a new stock or what ? Never heard!

Well Guys, I am not talking about any stock , but I am talking about the Malaysian Stock Market. I was in Malaysia (KL to be precise) for last 4 days on a fun-filled visit. Though the fun was so hectic that I could not look at Indian markets, but couldn't resist my temptation to know something about the Malaysian stock markets. and guess what! Malaysian stocks are also at their life-time highs. The going is pretty good for the malaysian stocks . Genting, UMW, Lingui and BAT are few of the stocks that are rocking the malaysian markets.

The visit to Petronas Towers (the tallest building in the world) was unforgettable. Petronas is the Oil and Petroleum giant of Malaysia and is owned by the government. Also did some shopping at the Suria Mall and the China town. The dance party at KL towers was an amazing experience when you come out and realise that you were partying at such heights.

So overall a fun filled journey, thanks to my organisation. Will get back to the Indian stock markets in the coming post. Read More!

Stocks in News: Inox, TCS, Dabur

TCS wins $35 mn Eli Lilly contract
Indian software major Tata Consultancy Services (TCS) has landed a large pharma BPO contract from Eli Lilly to provide drug development services, including clinical trial data management, statistical analysis and medical writing, to the global pharma major. Industry sources estimate that the multi-year contract is in the range of $30-35m. Read More

RIL cuts retail fuel prices
Reliance Industries, whose fuel retail business took a hit after it hiked rates early this year, has reduced the sale price of petrol and diesel by Rs 2.50 per litre to bring it on par with prices of petro products sold by public sector undertakings. Read More

ONGC drops JV plan with Hindujas
State-owned Oil and Natural Gas Corporation (ONGC) has walked out of a proposed JV with the Hindujas at the last minute even though the oil major’s board had approved the deal on October 19. Read More

Dabur eyes stake in Australian winery
Amit Burman of Dabur is headed Down Under to give shape to his fledgling wine interests. Mr Burman, who has floated Nature’s Bounty Wines & Allied Products outside the Dabur Group, is expected to acquire a strategic stake in the privately-held Toorak Wineries, located in the New South Wales region of Australia. Read More

Reliance, BSNL in strategic tie-up
Over 80m subscribers of BSNL and Reliance will now be able to access 1-800 numbers provided by either operator, thus, paving the way for network-independent access to 1-800 services in India for the first time. An agreement to this effect has been reached between Reliance Communications (RCL) and BSNL. Read More Read More!

Market Mood : All time high, What’s next ?

The carnival to continue on bumpy roads

The mood are bullish and the traders must be partying this weekend with the sensex rising to its all time highs amid bouts of volatility in the last week. The sensex closed at 13295 adding the valuable 165 points to its tally during the week. When I say valuable, it has a meaning, its not just an adjective to decorate my post. This addition to sensex has a lot to do to demonstrate that the energy levels in the markets are still high and we have a way to go before reaching the crossroads. This rally has also underlined the strength of the India Inc. which was visible the Q2 earnings show.

Let’s look at some of the factors that may provide insight into the way markets are likely to drive in the coming days.

Q2 results were sizzling !
Yes, it was a pretty impressive show put up by the India Inc. Indian companies saw robust growth both in terms of the topline (Sales) and bottomline (Profit) with positive guidance on the coming quarters. The bright thing in the whoile story was that a good chunk of Mid companies have also reported a terrific growth and have helped to lift the overall sentiments for the markets . This is in contrast to the rally seen in the month of July and august which was primarily driven by large caps.

Read out few success stories of India inc.. in Q2 in the print Media. DNA reports that the GDP and industrial production growth figures had broadly confirmed that the economy continues to grow at a healthy pace

Financial express reports that India Inc demonstrated superior performance, that too in the toughest quarter of the year. Most industries usually saw a cyclical slackness due to the monsoons and a general slowdown in the second quarter. An aggregate of 435 companies, whose results were analysed by FE, showed that these companies posted a 32.4% rise in net profit over the same period last year. Sales grew to Rs 1,66,295 crore during the quarter ended September 2006. This represented a 31.4% over the same quarter in the previous year.

Economic times in its story “India Inc. bottomline hits the roof” reports that its analysis shows that India Inc is improving its margin through cost rationalisation and better pricing. This is unlike last year, when lower interest costs and tax rates had to compensate for the fall in operating margins for maintaining the PAT margin.

The Q2 results have been able to revive the investor confidence in the recent rally and has led big players to revise their targets for the Indian companies, which eventually lead the way for sensex to put up a bold face.

FII’s continue to buy India story
FII’s continued to be net buyers in the month of November. They have bought around 2338 crores till now in November. See the Chart below for Net Investment pattern of FII since after the May debacle and the story would speak for itself.
Photobucket - Video and Image Hosting
The buying continues for a continuous period of 6 months shows that FII’s too have reposed their their confidence in the Indian markets. Mutual funds have also been net buyers though they are conservatively cautious on the markets. One question that arises is that since FII’s have been buying for a series of Six months now, is it a time for them to sell off and are they going to again dump the stocks. My views are that given the strong performance of Indian companies this rally is standing on a stronger edifice than the earlier one. There may be bouts of profits booking in the markets but these are good signs and are important for markets to consolidate before moving ahead.

Mid Cap stocks get re-rating
The Q2 results also brought a respite to the mid cap stocks that were laggards in the earlier phase of the pullback. Select Midcap stocks which had delivered strong results were stocked by the investors. The trend is expected to continue as these stories unveil and as these companies roll their future plans.

The Road Ahead

Photobucket - Video and Image Hosting
Look at the graph above and you can experience the pleasant ride from the lows of May to the highs of November. The technicals are placed in positive zones and are not sending any negative signals.

Investors may expect the markets to continue its ride toward the new horizons. However, we may see more volatility in the coming days as some investor groups may tend to book profits on every rise rather than leaving everything on the table. The broader market sentiments are positive and 13500 on sensex would be the next level to watch and we are just 205 points way from there!

Happy Investing ! Read More!

IPO Update: Parsvnath Developers Ltd.

Riding on Construction Boom

Parsvnath developers has entered the capital markets with a public offer of 3.32 crore equity shares at a price band of Rs. 250-300. Investment Guru recommends investors to subscribe to the issue. The issue is expected to garner moderate listing gains and could also be considered for a medium term hold.

Highlights of the issue
Parsvnath is one of the leading real estate development companies in India with operations in 41 cities and 14 states of India. The company directly owns or helds development rights for an estimated 108.64 million square feet of saleable area.

The company intends to develop 20 integrated townships, 27 commercial complexes including shopping malls, multiplexes, office space and a complete metro station and 25 residential projects. It also intend to construct 14 hotels and four information technology parks on commercial land acquired by us or in respect of which it has development rights.

Financials : Company's Revenue from operations stood at 643 crores for the FY06, an increase of 212% over previous year. Net profits have shown a increase of 163%. For the quarter ended June '06, the company has acheived a topline growth of 167 % over same quarter last year. Net profits increased by 226 % during the above period.

Positives :The company mentions its ability to identify emerging markets and assess the potential of a location, marketing network, diversified business model, timely and cost efficient completion of projects and transparent and efficient system of procuring materials as its qualitative strenghts.

Valuations :The weighted average EPS for last three years comes to Rs. 5.29. The EPS for the first quarter of this year comes to 2.46. If we take the etimated FY07 EPS of Rs. 9 for the company, the issue comes at a PE of 28 at the lower price band and at 33 times on the upper price band.

If we compare the offer price with the valuation of exitng listed players the valuations appear to be in the middle path and looks reasonable since the company is diversifying itself from a residential play to a commercial space player.

Return on Net worth is 53% which looks good as other competitors except DS Kulkarni are generating lower returns.

Risk Factors : The construction space as a whole commands a high PE in the stock markets given the huge potential and focus on housing and infrastructural development in the country. However, any negative developments or barriers on this front may lead to rerating of this sector. Apart from this Parsvnath is also battling the ownership of its brand name. The verdict if against the company may impact it adversely. Another concern is the negative cash flows in the last two financial year as well as the last quarter.

Issue Opens : November 06, 2006
Issue Closes :November 10, 2006
Registrar : Intime Spectrum

Additional references
Parsvnath developers Website

Company's Vision

Key Personnel

Prospectus Read More!

Stocks in News : Reliance, SAIL, TATA, ONGC

Reliance looks for rapid retail expansion
By 2010/11 we will be in 784 cities and towns in urban India, and in 6,000-plus rural locations," Raghu Pillai, president of Reliance Retail Ltd, said in an interview at the opening of a store in the southern city of Hyderabad, the capital of Andhra Pradesh. Cash-rich Reliance Industries, India's top petrochemical maker, is investing around $5.6 billion in setting up a nationwide retail chain of hypermarkets, supermarkets, discount stores, department stores, convenience and specialty stores. Read More

Also read Reliance eyes pan-India retail footprint in 5 years

SAIL's corporate plan could shoot up by Rs 8,000 cr
SAIL's Corporate Plan envisages expenditure worth Rs 37,000 crore, which is likely to shoot up to Rs 45,000 crore. The Plan envisages upgradation of all steel plants of the steel giant to meet India's growing demand for steel. Read More

Tata Tea plans green revolution for Tetley, Gold
Tata Tea has firmed up a slew of packet tea launches under its Tetley and Tata Tea brands to maintain 10% growth in its branded tea business in ’06-07. For starters, it will launch green tea under the Tetley banner and premium Darjeeling under the Tata Gold brand. Read More

UB Grp arm, Russian vodka maker ink deal
Through this alliance, the United Spirits will introduce Russian vodka brands manufactured and supplied by Russian Standard in India. While the Russian company, which has a broad distribution network in Russia and other CIS markets, will market the premium whiskey brands of United Spirits in Russia Read More

Hindustan Dorr-Oliver gains on new order win
Hindustan Dorr-Oliver (HDO) rose 3.62% to Rs 123, after reports that it along with China Aluminium International Engineering Corporation has jointly bagged an order from Vedanta Alumina for Rs 200 crore. Read More

ONGC may rope in Hindujas for oil hunt
After tying up with steel tycoon Lakshmi N Mittal, Oil and Natural Gas Corporation (ONGC) is roping in the diversified, multi-billion dollar Hinduja group for acquiring oilfields abroad and sourcing liquefied natural gas. Read More

Info Edge IPO sold 50 times
The initial public offer (IPO) of Info Edge India Ltd, the first Indian dotcom to go public on domestic bourses, received an overwhelming response from investors with the IPO getting oversubscribed by more than 50 times. Read More

Reliance Capital to acquire Travelmate Services
The acquisition would mark its foray into the fast growing forex changing and money transfer business. Travelmate is a unit of the Kuoni Group with 36 offices, 2,900 agents and 91 employees across the country. Read More Read More!

Opening Bell - Markets to Consolidate

The markets are expected to consolidate the gains build up in its journey in last few sessions. The sentiments looks positive. FII's are busy buying stocks with net buying of 368 Crore on Wednesday. Mutuals funds have also woken up and have fuelled up their buying. They were net buyers of Rs. 311 crores. On the Global indices, Asian markets have thrown a mixed response while the US markets were down. However, at present the Indian markets are driven more by local factors than the global trends.

Talking of stocks, Reliance Indutries felt just 1 rupee short of the 1300 mark. The company has opened a slew of Reliance fresh stores today in Hyderabad. The stock is expected to cross the 1300 mark and close above that level in today's session.

Other stocks to watch are GVK Power, Era Construction, ICSA and Gitanjali Gems.

Read More!

Investment Idea : Mahindra & Mahindra

Core business to drive Growth, Subsidiaries to boost valuation

Company : Mahindra & Mahindra
Sector : Automobiles
CMP : Rs. 730
12 Months Target price : Rs. 1050

Risk : Moderate

About the Company
Mahindra & Mahindra Limited (M&M) is the flagship company of US $ 2.59 billion Mahindra Group, which has a significant presence in key sectors of the Indian economy

M&M has two main operating divisions:
The Automotive Division manufactures utility vehicles, light commercial vehicles and three wheelers.The Company has recently entered into a JV with Renault of France for the manufacture of a mid-sized sedan, the Logan, and with International Truck & Engine Corporation, USA, for manufacture of trucks and buses in India.

The Tractor (Farm Equipment) Division makes agricultural tractors and implements that are used in conjunction with tractors, and has also ventured into manufacturing of industrial engines. The Tractor Division has won the coveted Deming Application Prize 2003, making it the only tractor manufacturing company in the world to secure this prize.

Rural push to drive farm equipment growth
Mahindra is a market leader in the farm equipment segment. M&M has two main tractor manufacturing plants located at Mumbai and Nagpur in Maharashtra. has a strong and extensive dealer network of over 450 dealers for sales and service of tractors and spare parts.

In FY06 the company commanded 29.7% of the market share. The domestic tractor industry registered a healthy growth of 39.9% in the second quarter of F2007 over Q2 last year. The company sold 21,801 tractors in the current quarter as against 17,096 tractors in Q2 F2006. The company’s exports registered a growth of 64.1% while the Engine business clocked a growth of 78% in Q2 FY07.

The Farm sector as a whole is bound to reap huge benefits with the UPA government’s thrust on rural development and prime minister pledge of reforms with human face. Favurable monsoons would also be a boon to the company. With the background set for rural thrust , M&M is all set to make sure that its tractors and farm equipments rule the Indian soils.

Automative Sector: Scorpio runs the show
In FY 2006, the company continued to dominate the utility vehicles segment with the market share of 47.6%. The Scorpio continued its strong performance in the market with a 20% improvement in volumes over Q2 last year. The Bolero variants also witnessed good growth. The Company remained the market leader in the UV segment with a share of 45.7% in the second quarter. The market shares has registered a decline as compared to Fy06 due to competition from Toyota Innova.

In the 4MT LCV segment, the sales of Mahindra vehicles increased by 5.7% to 1,991 against a 4.4% decline in industry sales. The Company had a market share of 19.3 % in the quarter as against 17.44 % in Q2 last year.

In the large 3-wheeler segment, while the industry volumes declined during the quarter by 19.6%, however the company’s volumes declined by only 13.8%.

The Company’s vehicle export saw a strong growth of 51.5% with the Company exporting 2,761 vehicles in Q2 F2007 as compared to 1,822 vehicles exported in Q2 last year. This is the highest ever quarterly vehicle export volume for the Company.

Investment guru is of view that Scorpio would continue to run the show for M&M, while the 3-Wheller segment would make a further dint. However, the silver lining would be company’s major thrust on exports and this would keep the flag high.

Photobucket - Video and Image Hosting

Subsidiaries to boost Valuations
Tech Mahindra –Feather in the Cap
M&M has around 46 % stake in Tech Mahindra. Tech Mahindra has grown rapidly to become the 8th largest software exporter in India. The company stock had a dream run in the last few sessions and analyst are counting heavily on the company reach and expertise in the Telecom arena. The growth of telecom industry will further boost the fortunes of Tech Mahindra and in turn will increase the valuation of its Parent, Mahindra & Mahindra.

M&M Financial Services –Strong Networking
M&M hold around 68% stake in M&M financial services which is the financing arm of M&M. It provides loans to fund purchases of UVs, tractors and cars, with a focus on India’s rural and semi-urban territories. The company boasts of a storng branch network and has a pan India presence. For the half year ended Sep,2006 the company has posted a 40% growth in Net Income while net profits grew by 19%.

Infrastructure – Reaping Dividends
M&M has a presence in Infrastructure sector though its subsidiaries Mahindra Gesco and a host of other subsidiaries. M&M holds 55% in Mahindra gesco. Besides three SEZs in Chennai, Jaipur and Pune, it is developing residential and commercial projects in cities like Mumbai, Pune, Chennai, Faridabad, Bangalore and Delhi.

Investment Guru is of the view that M&M has a sizeable stake in its subsidiary companies and these companies have posted strong results. The outlook for the subsidiaries is also bright and this would further boost the valuation of M&M. The benefits in turns accrues to Mahindra and Mahindra shareholders.

The stock is currently trading at Rs. 730 . At current price, the stock is valued at 19 times its FY06 EPS. However, if we take the current half year performance into account the stock trades at a forward PE of 17. FII's holding in the company share is 36.8%. Investment guru recommends investors to enter the stock with a long term horizon and enjoy the fruits of the success of M&M and its subsidiaries.

Additional Readings & References
Shareholding Pattern

Financial Releases

Stock performance

Tech Mahindra

M&M Financial Services

Mahindra Gesco Read More!

Hindalco shines, Major Results tomorrow

Major Heavyweight Results to drive markets tomorrow

Stock markets were in relaxing mood today after a tiring run in last few sessions. Sensex lost 25 points to close at 12858. The market breadth turned negative in the later half of the session with loosers outnumbering gainers. FII's were net buyers of Rs 389 crore on Tuesday while Mutual funds were net sellers of Rs 121.14 crore . The market is expected to open firm tomorrow. There are quite a few Heavy weight results to be announced tomorrow and hence the trading is expected to be quite hectic in these counters. Few attractive Mid-cap stories are also lined to announce results on Thursday.

Good news on Economy Indicators
The Direct tax kitty has swelled by 40% and is nearing Rs 90 k cr. The 40% rise in direct tax collections along with the 20% surge in indirect tax collections suggest two positive trends — an increase in both the tax-GDP ratio and share of direct taxes in the overall tax kitty to well above 50%. Read More

Govt aiming at 10% GDP growth
ET reports qouting Prime minister that the government was aiming to achieve 10 percent annual GDP growth by the year 2011/12, but the country needed over $300 billion to upgrade its infrastructure over the next five years. Read More

BS reports that the Planning Commission might make a pitch to Prime Minister Manmohan Singh tomorrow for a 10 per cent GDP growth target during the Eleventh Five-Year Plan period. Read More

FIEM Industries to list on Oct 19
FIEM IPO is listing tomorrow. Teh IPO was priced at Rs. 137 per share. The issue was subscribed 2.8 times. The listing is expected to be in the range of Rs.150-155.

Reliance Retail chain to go International
Reliance Retail has decided to simultaneously foray into international markets. Identified countries include Sri Lanka, Nepal, China, Vietnam, Cambodia, Indonesia, Philippines, Maldives, Kenya, Myanmar, Nigeria, Ghana and Tanzania. Read More

Wal-Mart bets big on India
Wal-Mart Stores Inc, one of world's largest organised retail chains has said that its sourcing of goods from India would be worth over 600 million dollars by the year-end, around 50 per cent more than in 2005. Read More

Hindalco puts Impressive show, other results
Hindalco Industries posted 90.40% jump in net profit to Rs 597.60 crore for the quarter ended 30 September 2006, compared to Rs 313.8 crore for the quarter ended 30 September 2005. Total Income increased to Rs 4,745 crore (Rs 2,752.10 crore)

Exide Industries has posted a net profit of 50.41% to Rs 43.74 crore for Q2 September 2006, compared to Rs 29.08 crore for Q2 September 2005. Total income has increased from Rs 338.96 crore to Rs 453.58 crore

Bank of Rajasthan’s Q2 September 2006 net profit jumped more than 10-fold to Rs 55 crore, from Rs 5.25 crore for Q2 September 2005. Its NII rose 35% to Rs 71.8 crore (Rs 52.9 crore).

Bajaj Auto’s net profit rose 10% in Q2 September 2006, to Rs 317.59 crore from Rs 289.36 crore in Q2 September 2005. Net sales rose 30.4% to Rs 2,435.97 crore from Rs 1,866.95 crore. The core operating profit margin (OPM) declined to 15% from 16.9% in Q2 September 2006.

Major results on Thursday
Heavy weights
Reliance Industries
State Bank of India
Larsen & tourbo
Ranbaxy Labs

Other Major Results
Reliance Energy
JSW steels
Canara Bank
HT Media
Kotak Mahindra
Adlab Films
3i Infotech Read More!

Sensex tests 13000, Gayatri listing today

The Indian stock markets would attempt to brek the 13000 levels today for the first time in its history. Given the positive newsflow on the Q2 results front, there do not seem to be any major resistant to this. Asian markets are also ruling firm. Let's look at the stocks which may hog limelight in today's session.

Gayatri to list today
The stock is listing today on NSE & BSE. The IPO price was Rs. 295 and the stock is expected to list in a range of 325-350. Investor would do well by booking listing gains.

Tatas, Corus reach pact for $9bn deal
The deal will further consolidate the global steel industry and will put Tata Steel among the top 10 steel companies in the world. The new entity will become the sixth largest steel manufacturer with annual production of at least 23m tonnes per annum. Read More

Indiabulls plans to demerge financial services business
Indiabulls Financial Services on Monday said the company has plans to demerge its financial services business — consumer finance and securities business — as part of its attempts to increase individual focus on both businesses. The demerger proposal is seen as a move to unlock value, mainly for its rapidly growing consumer finance arm.Read More

RIL to sell ATF at 25 airports
Public sector monopoly in the aviation turbine fuel (ATF) business is finally coming to an end. Reliance Industries is entering the business in a big way to infuse competition, fulfilling a long-standing demand of airlines..Read More

Stocks in T2T from October 20
BPL, Shringar Cinemas, Silverline Tech and SPIC

Results Today
Jet Airways
Bharat Forge
Gabriel India
Mahindra Gesco
India Infoline
Petronet LNG Read More!

Stocks in News : Richa Knits, Shringar Cinema

Richa Knits listing today, Ambani brothers eyes Shringar Stake

Richa Knits Ltd. is listing today on BSE and NSE. The allotment was made at Rs. 30 per share. The issue was subscribed 1.7 times. Investment Guru expects the stock to open today between Rs. 32-34 range. Investors are advised to book profits on listing.

RIL, ADAG eye Shringar cinemas
The Reliance Anil Dhirubhai Ambani group (ADAG) and the Reliance Industries group are in separate discussions with the promoters of Shringar Cinemas to buy a substantial stake in the company, people close to the talks said. The Shroff family, which is in the film exhibition business under the ‘Fame’ umbrella, is in talks with the representatives of both the groups for selling a large stake. The promoters now own about 47.5%. Read More

Reliance may spin off assets in K-G basin
Reliance Industries plans to spin off its assets in the Krishna-Godavari (K-G) basin into a separate company. The move is seen as a precursor to the induction of a strategic investor in the proposed entity. Reliance’s natural gas reserves in the K-G basin are estimated to be more than 50 trillion cubic feet (tcf), against previous estimates of 35 tcf. In case Reliance Industries decided to invite a strategic partner, Chevron would be the preferred choice. Read More

Welspun group lines up Rs 6,400 cr for Orissa
Welspun Power and Steel Ltd and Welspun Anjar SEZ Ltd, two companies of the $1 billion Welspun Group, today signed separate memoranda of understanding with the Orissa government for setting up a 3 million tonne steel and pipe plant and an integrated textile park in the state. The combined investment in the projects is pegged at Rs 6,403.80 crore.Read More

Results Today
Apollo Tyres
Dalmia Cement
Prime Securities
Tamil Nadu Newsprint Read More!

Infosys celebrates diwali with fireworks

Dazzling Q2 performance, Ups FY07 Guidance

The suspense is over. Infosys has declared the Q2 results and it has been on the pleasant side.
The company has reported a net profit of Rs 930 crore for Q2 September 2006 as per Indian GAAP, compared to Rs 606 crore for Q2 September 2005, a growth of 53.3%. Consolidated revenue rose 50.4% to Rs 3,451 crore from Rs 2,294 crore. The core operating profit margin (OPM) has inched ahead to 32.1% from 31.9%. On a sequential basis, OPM has risen from 29.5% of Q1 June 2006.

The company's Q2 net profit is up 17.13% at Rs 930 crore (Rs 9.30 billion) from Rs 794 crore (Rs 7.94 billion), quarter-on-quarter, QoQ.

The company's FY07 revenue growth guidance has been revised upwards at 45.5% . Its revenue guidance is of over USD 3 billion.Its revenue guidance is up from Rs 13,400 crore (Rs 134 billion) to Rs 13,899 crore (Rs 138.99 billion) . The EPS guidance is up from Rs 62.25-62.87 to Rs 66.

The stock markets have cheered the infosys results and the stock has hit a 52 week high of Rs. 2044 today before settling at Rs. 2000 levels.

For more details on Infosys Q2 Results Click Here
Read More!

Opening Bell: Markets to remain Firm today

Indian stock markets are expected to remain firm today backed by recovery in Asean and US Markets. Nasdaq was up 12 points, whileDow Jones was up 7 points. Japan's Nikkei was up 126 points. Mutual funds are reported to have resumed buying off late. The Q2 results wil be kicked off tomorrow by Infosys. Firm trend is also expected in Cement stocks, especially the mid size cement companies.

Stocks in News

The company is going to kickoff the Q2 Earnings calendar tomorrow. The stock may see action paked volatility today with pre result declaration trading in the stock.

DCB IPO Oversubscribed
Development Credit Bank Ltd witnessed a buoyant response from investors for its public issue of 7.15 crore shares, which closed on Friday with an oversubscription of more than 30 times.

Moser Baer
Govt has imposed anti-dumping duty of Rs 2.24-4.20 on rewritable CDs imported from China, Taiwan, Singapore & HK. The move is expected to be a positive for Moser bayer.

Others Stocks expected to move up today
Based on trading patterns Kotak Mahindra Bank, Mphasis BFL, Satyam Computers and Karnataka Bank are expected to remain firm.
Read More!

Are markets gearing up for New Highs ?

All eyes on Infosys Results, Economic Indicators positive

The Indian stock markets showed mixed trends during the closing week and sensex finally settled to close at 12373. The sensex shed 100 points during the week. Nifty closed the week at 3570.

All eyes are set for the coming week when the Q2 results will start flowing. The trendsetter will however be the results of Tech bell weather “INFOSYS”. But this time around, it is not going to impact only the tech sector. Infosys results have the abilities to shake the broader markets which are looking out for triggers for directional move.

Let’s have a wrap of what’s up for the coming days !

Techincals look positive

Photobucket - Video and Image Hosting
The technicals shows no signs of a bear phase . The sensex is placed well above the 50 and 100 DMA. The current consolidation in the markets would increase the probability of the sensex making a new high.

FII’s slow down , Mutual funds sitting on Cash

The FII’s investment saw a bit of slowdown during the tale end of the week. The FII’s have been net buyers to the tune of Rs. 580 Crore in the month of October. FII’s were net buyers of Rs.5424 crore in the month of September.
Photobucket - Video and Image Hosting
Mutual funds were net sellers to the tune of Rs.112 crore in October till date. They were net buyers of Rs. 1340 crores in September-06. Mutuals funds are still sitting on a pile of cash and may lend support to the markets during correction phase.

The daring Duo is Bullish, talks of 10% growth rate

The daring duo of Indian economy , Prime minister Manmohan singh and Finance Minister P.Chidambaram set a bullish tone the Indian economy’s growth prospects addressing a conference on Infrastructure Sector.Mr. singh said that India's economy, Asia's fourth largest, can grow at an annual pace of 10 percent ,tackling poverty,if nearly $320 billion is spent fixing creaky infrastructure. The government wants sustained 8-10 percent growth to significantly cut poverty in a country with 1.1 billion people.
Finance Minister P. Chidambaram said the economy recorded growth in the July-September quarter of over 8 percent from a year earlier, mainly due to strong consumer demand that boosted the services and manufacturing sectors.

To Conclude
Well, the week ahead would be a mix of volatility. The quarterly results would act as a immediate triggers for the markets. The markets have built up a expectation of positive news flow from the Q2 results and India Inc. and any disappointment (chances less likely) may trigger a downside. If everything goes well, the probability of sensex touching new highs in coming days is more.
Read More!

IPO Update : Accel Frontline

Take a Backseat on this !

Accel Frontline (hereafter called”Accel”) has entered the capital market with a public issue of 56.36 Lac equity shares at a price band of Rs. 75-90. Investment Guru rates this IPO as “Below Average” as it is priced aggressively and recommends investors to stay away from the IPO.

Highlights of the Issue :

Accel is a Information Technology (“IT”) Services provider specialising in consulting, infrastructure, applications, outsourcing and support services.

The company has structured its business by carving out four strategic business units (“SBUs”) namely IT Infrastructure Solutions; IT Infrastructure Management Services; Enterprise Software Solutions; and Business Process Outsourcing Services.

The company mentions end-to-end IT solutions, strong focus on customer service, strong pan India customer service network and stable management setup as its competitive strength.

The IPO proceeds would be used to fund global business expansion plans including development of our overseas marketing and sales infrastructure and to acquire or invest in strategic businesses(Rs. 30 Crore), to increase ESS and BPO capacities (9 Crore) and for working capital requirements(Rs. 20 Crore).

IT Infrastructure segment generates 55% of the Revenue for the company while service segment generates the balance 45%. The company expects to increase share of service revenue.

Financials: Total Income has grown by 25% in FY06 compared to FY05. Net profit has grown by 130% in the same period. However, one should note that the company’s sales has grown by just 10% over last 5 Years. Company has incurred losses in FY04. Hence, consistency is not seen in the financial performance.

Cash flow from operating activities has been negative in three out of the last five years

The weighted average EPS comes to 2.74. The offer comes at a PE multiple of 27-33. Competitors are quoting at a PE of 17-24. So tell me friends, would you like to buy shares of CMC, HCL, 3i Infotech which are established players and are quoting at lower PE or would you like to apply for accel IPO at a higher PE than these companies. The choice is yours !

The weighted average return of Net worth is 7.94 %. Competitors are generating returns in the range of 13-57%.

The pre-issue NAV per share comes to Rs. 15.86.

Issue Opens : 28-Sep-2006
Issue Closes : 05-Oct-2006
Registrar : Karvy

Read More!

IPO Update : Hanung Toys and Textiles Limited

It’s not a child’s game

Hanung Toys and Textiles (hereafter called as ”HTTL ”) has entered the capital markets with a public issue of 95 Lac equity shares offered through book-building at a price band of Rs. 85-95. Investment Guru rates this issue as “Average” and recommends investors to apply with expectation of moderate listing gains.

Let’s dig into the issue highlights :

HTTL offers a combination of two business –Stuff toys and home furnishings.

HTTL has capacity of producing 1.1 Crore pcs. per year of stuff toys and furnishing unit with the capacity of manufacturing 12.5 Lac sets p.a. The textile processing unit has the capacity of processing 60 Lac meters p.a. and have the '16 color 108 inches wide' printing machine.

The company mainly exports to USA and Eurpoe (96% of total export). Company has also launched domestic Brands viz. "Play-n-Pets" and "Muskan" in stuff toys and "Splash" in home furnishing.

The issue proceeds will be used to set up an integrated home textile unit with a total cost of Rs 153.44 crore, which includes 72 air-jet looms with superior quality wider width weaving capacity of 21,000 meters per day and processing capacity of 1,05,000 meters per day The company also plans to part substitute its existing working capital requirement of Rs.15 crore.

The company has mentioned Duty Free Imports and Single Window Clearance, innovative Design and Development, Interest Cost Benefits, Established Domestic Network and Brands as its competitive strength.

Bennet, Coleman and Co has acquired 5 lakh equity shares at a price of Rs 150 per share constituting 1.99 per cent of the post issue equity share capital of the company.

Financials : Net Income from opretions has grown by 82% in Fy06 as compared to FY05. Net profit has seen a 215% growth in the same period.

The weighted average EPS for last three years comes to 11.47 which makes the offer price ata P/E of 7.4 – 8.3.

Weighted average Return on Networth comes to 17%. Net asset value per share is Rs. 45.72

The company prospectus mentions that there are no peers in Toy segment. Peers in Home furnishing are quoting in the P/E range of 7-17. Competitors generate return on networth in the range of 14-24%.

Issue Opens : 28-Sep-2006
Issue Closes : 05-Oct-2006
Registrar : Karvy
Read More!

Opening Bell : Markets to consolidate

Asian markets throw mixed trends

Sensex closed at 12381 yesterday, a gain of just 14 points over previous day. F& O expiry went smoothly with around 70% rollover indicating that the markets are more bullish than bearish on the neart term outlook. Asian markets have shown a mixed trend today with Japan, Taiwan and Hongkong moving ahead while Singapore and Korea were lagging behind their previous close.

Indian stock markets are expected to consolidate their earlier gains. Action may be seen in recently listed IPO like action construction and Atlanta limited.

Stocks in News
Wipro buys Sweden’s Hydrauto for $31m
Wipro Infrastructure Engineering (WIN) -part of Wipro, announced that the company is acquiring Sweden-based Hydrauto Group AB for $31m (Rs 142.6 crore) in an all-cash deal. The acquisition is expected to be completed by Q3 of FY ’06-07, subject to customary closing conditions and regulatory approvals. The FY06 revenue of Wipro Infra Engineering has been USD 57 million while Hydrauto had revenues of USD 112 million in 2005. The deal is expected to bring some action back to the Wipro counter.

M&M bags German forging firm Jeco
M&M, through its component arm Mahindra Systems and Automotive Technologies, now renamed Systech, acquired a 67.9% stake in German forging company Jeco Holdings, one of Germany’s top five forgings companies, for an undisclosed amount. The enterprise value of the firm has been estimated at about e140m (Rs 830 crore), making it the largest outbound deal.
Jeco manufactures forgings for gear boxes, engine and axle parts, hubs, gears and piston heads and its activities are concentrated on the truck, bus and trailer market. Its main customers include DaimlerChrysler Group, ZF Group, MAN Nutzfahrzeuge, Volvo, Linde, Renault, Agco, Kessler and Kolbenschmidt. The news would add spice to the M& M counter.

Rajesh Exports to start retail stores in Oct
Jewellery exporter Rajesh Exports Ltd said on Wednesday it would start its retail stores, Laabh Jewellers. LAABH will be starting its roll out of stores in the first week of October and will be present in most major cities of the country, shortly there after. For the first time in the country, an exclusive range of 3000 pieces of the most practical and designer range of jewellery has been created. This exclusive and practical range of 3000 jewellery pieces would be launched at the LAABH stores across the country. This range of international class with local flavor designs has been created by the R&D wing of Rajesh Exports.

With the launch of LAABH, Rajesh Exports will emerge as the only company in the world which would be a onestop mines to consumer destination for gold jewellery.

Earlier, the company has bagged a prestigious export order for Rs.195 Crores from Lazorde Jewellery, Kuwait for the supply of a new range of festival collection of plain gold jewellery.

Godrej Appliances may ink deal with Japanese major
ET has reported that the company is believed to have recently held talks with Japanese majors Hitachi and Matsushita for technology tie-ups or possible joint-ventures. The company has also appointed management consultant BCG to chalk out its future business strategies.

Read More!