Opening Bell : Good opening, Volatility to continue

Derivatives Expiry, Liquidity to drive the markets

Sensex ended up down nearly 100 points yesterday. The sensex closed at 14411 and is still 300 odd points away from its all time high. On Thursday the markets are expected to open strong. However, the volatility may be high resulting in major ups and downs due to the future and options expiry. Asian markets are showing a mixed trends. Chinese markets are still struggling with yesterday's downturn that refreshed memories of the May 17th episode of the Indian markets.

Stocks to Watch
McDowell Holding This stock listed yesterday at 20% premium to its list price and there was very minimal trading. There was a beeline for buyers on this counter. Investment Guru expects this trend to continue for few more sessions since the stock is currently qouting at attractive valuations

MIC Electronics This stock saw phenomenal listing listing yestrday. The stock ended at 340 yesterday against the offer price of Rs. 150. Investment Guru is of view that the stock is quite expensive at the current levels and fresh entry should not be taken in the stock. The tsock should cool down a bit in coming days once the listing euphoria is over

Madras Cements came up with good set of numbers. The net profit zoomed 217 % . Net Sales also rose 45% . Markets would welcome the strong numbers posted by the company.

Escorts may see a further downside after its star performer Dr. trehan moves to Apollo Hospital. Around 20 other doctors are expected to move with Dr. trehan. Apollo hospital stock should continue to cheer up on this move.
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Stocks in News : DLF, Bharat Hotels, MIC

Here are some recent developments that have been reported in newspapers and would influence the price movement of the concerned stocks

Dubai Ventures buys stake in Suri-owned Bharat Hotels
ET reports that Dubai Ventures has signed an agreement for an equity investment of $40 million, approximately five percent, stake in Bharat Hotels Ltd., one of India's largest hotel companies. Bharat Hotels currently operates InterContinental The Grand hotels in New Delhi, Mumbai, Goa and Srinagar as well as The Grand Ashok Bangalore, The Grand Laxmi Vilas Palace Udaipur and The Grand Temple View Khajuraho.

MIC Electronics to list on 30th May on NSE & BSE
The company had priced its IPO at Rs 150 per share. The IPO had received overwhelming response and was subscribed over 50 times. Investment Guru expects the stock to list in the range of 190-210.

DLF IPO opens on June 11, Sets price band at Rs. 500-550
The much awaited and discussed IPO is all set to open on June 11. Investment Guru Blog would bring a update on DLF IPO soon.

ITC Q4 net profit up 15% at Rs 651 cr
The company registered Q4 net profit up 14.7% at Rs 651 crore versus Rs 567.5 crore on YoY basis. During corresponding quarters, the company registered net sales of Rs 3466 crore versus Rs 2784.5 crore on YoY basis. During the full year FY07, the company's net profit was at Rs 2,699.97 crore and its net sales was at Rs 12,369.30 crore versus Rs 9,790.5 crore on YoY basis.
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IPO Update : Decolight Ceramics

Costruction sector to dictate trend for Ceramic Industry

Decolight Ceramics is enterung the capital markets with a public issue of 80.45 lac shares of Rs. 10 each at a price band of Rs. 45-54 per share. Investment Guru is of the view that this is an addition to a list of issues which are aggresively priced on the basis of their financial performance and overall standing in the industry segment in which these companies operate and also on the benchmark of the current market price of the listed competitors. The recently concluded IPO's have shown good response despite being aggresively priced and no wonder if Decolight also gets into this league. However Investment Guru is of the view that investors should ideally not expect too much out of these IPO's. Listing gains may come as a result of huge demand for IPO's and consequent high subscriptions, however, these factors may change with market sentiments and one needs to take a cautious approach.

Here are few highlights of the company and its IPO

The company manufactures Vitrified Ceramic tiles marketed under the brand name ‘Granolite'.

Ceramic tiles as a product segment has grown to 3.8 million tons production per annum. The industry is riding its fortines on the boom in the housing sector, retail sector and IT & BPO sectors. The ceramic tiles sector has been clocking a robust growth of 12-15% consistently over the last few years. India is the 7th largest manufacturer of ceramic tiles.

The ceramic tiles sector faces the threat of a slow-down due to the massive dumping of cheap vitrified tiles by Chinese manufacturers. During 2003-04, Chinese tiles worth Rs 1,0000 lakh were dumped in the Indian market. This year, it is expected that dumping may well cross the Rs 30000 lakh mark. This will undoubtedly put a lot of strain on the local market, and in a long run, may even throw some of the players out of business. The existing and emergence of so many players will result in intense competition and downward pressure on Prices.

The company is promoted by Pethapara family and the promoters have over 10 years of industry experience.

The company has current production capacity of 12000 sq. meters of vitrified tiles per day.

Decolight plans to engage in the production of Aluminum Composite Panels (ACP), used primarily for outer covering of commercial buildings. ACP offers better resistance to heat and water and is also used in the inner surface and walls of any types of Buildings. However, the company lacks expertise in this segment and hence it would be a high risk venture.

It also plan to setup 4.6 MW Wind Turbine Generators to reduce costs incurred on electricity.

Net Income for the year ended 31st March 2007 stood at Rs. 54.3 crores against 41.2 crores in previous year, a growth of 31.7 percent. Net Profit for period ended 31st March,2007 stood at 5.55 Crores against 3.27 crores in previous year, a growth of 69.7%.

The company does not have any registered Trademark. It has applied for registeration of Trade mark under name "Granolite".

The company does not have long term contracts with its customers. The percentage of contribution of customers of last financial year 2005-06 is 49.15 % of the total sales for the year 2006-07

The weighted average EPS for last three years comes to 4.35. For the year ended 31st March 2007 the EPS stood at Rs. 5.55. At weighted average EPS the IPO is priced at a PE of 12.4. At the EPS of 2006-07 the issue comes at a PE of 9.8

Net Asset value stood at Rs. 21.37 as of 31st March 2007

The listed competitors like Kajaria which has good brand name is qouting at PE of 11.3 while Nitco Tiles is listed at a PE of 14. Lesser known players like Murudesh is qouting at PE of 5 while Orient ceramics is quoting at 7.7

Issue Opens :24-05-2007
Issue Closes :29-05-2007
Registrar :
Bigshare Services Read More!

IPO Update : Time Technoplast

Diversified Business, Aggressive Expansion Plans

Time Technoplast has entered the capital markets with an IPO of 39.21 lac shares at a price band of Rs. 290 -315 per share. Investment Guru is of the view that the company offers a business with adequate diversification and is a good play on the packaging sector. However the pricing of the IPO has also been aggressive as compared to the listed peers and hence investors should not expect hefty listing gains on this IPO. The overall rating for this IPO is AVERAGE.

Let’s take a look at the company

Time Technoplast Ltd. (TTL) (formerly Time Packaging Ltd.) offers a range of technology based polymer products catering to the growing sectors of the Indian economy with Industrial and Consumer Packaging Solutions, Lifestyle Products, Auto Components, Healthcare Products and Construction / Infrastructure related products. Company’s manufacturing facilities are spread over 6 strategic locations and equipped with 11 regional / area marketing offices. Its services over 500 institutional clients and the distribution network spread to reach 345 cities and towns.

TTL’s product portfolio consists of packaging products including Drums / Containers, Pails, PET sheets, Entrance Matting, Turfs, Garden Furniture, Automotive Components, Auto Disabling Medical Disposables and Warning Nets. While remaining focused on polymer products, TTL has built up a consolidated technology platform enabling development of wide range of innovative products.

The main Objects of the Issue are as follows

To finance setting up of a new project at Himachal Pradesh for manufacture of disposable medical devices

To set up integrated injection moulding facility at Silvassa for augmenting production capacity for plastic pails and auto components and consolidation of injection moulding operations for optimum utilization of capacity

To part finance setting up of a new project in our wholly owned subsidiary “Elan Incorporated, FZE”, in
Sharjah, UAE for packaging (plastic drums & containers and coni pails) and life style products (Garden

To set up production facility in our wholly owned subsidiary “ Novo Tech SP Z o.o.” Poland , Europe for auto
components (anti spray devices) and life style products (entrance matting and turf).

To repay Loan availed from IL&FS.

To acquire entire 49% holding of Time Securities Services Pvt. Ltd. in the Singapore based Joint Venture Mauser Holding Asia Pte. Ltd. with Mauser Holding Netherlands B.V. holding remaining 51%

Hence we see that around 60% of the IPO proceeds would go in to finance the expansion plans of the company while 25% would go in repaying the loan. Balance would be used to acquiring stake and other expenses.

The company boasts of brands like Time Mauser for packaging products, Ecopet for PET sheets, Meadowz for Turf, DuroTurf & Durosoft for mattings, Regal for garden furniture, 3S for Anti Spray Devices (Automotive component) and Genex for healthcare products.

The topline of the company has improved significantly from 2005 to 2006. The Total revenues for FY06 stood at 263 Crores against 146 crores in FY 05 , an increase of 80%. However for nine months ended 31st December , the Topline stood at 255 crore and if we take the extrapolate the nine months topline for Full year, it would show an increase of around 35%.

Net profit also witnessed a quantum jump from Rs. 8 crores in FY05 to Rs. 25 Crores in FY06. For nine months ended the company posted a net profit of 27 crores.

Weighted average EPS for last three years comes to 10.8 while the FY06 EPS comes to 15.6. On the weighted average EPS the Issue is priced at P/E range of 27-29. While on the FY06 EPS, the PE comes to the range of 19-20.

The company can track its peers in both plastic products as well as packaging industry . The industry composite P/E for plastic products is 20 while that of packaging sector is 30

Competitors like Supreme Industries is quoting at a P/E of 17 while Essel propack at a PE of 27. Sintex Industries is quoting at a P/E of 23. Based on the competitors P/E multiples, it looks like that the company has chosen a mid way in pricing its issue. However the competitors have no doubt a better brand visibility than that of Time Technoplast. The issue is prices fairly aggressive on this front.

Issue Opens : 18-May-2007

Issue Closes : 23-May-2007

Registrar : Intime Spectrum Read More!

IPO Update : Glory Polyfilms

Glory Demystified, Expensive Issue

Glory Polyfilms is entering the capital markets with a public issue of 82.2 lac shares at a fixed price of Rs. 48 ( face value of Rs. 10 each). Investment Guru is of the view that the IPO offers very limited bandwidth to the investors as it is priced aggresively given the size and brand of the company and the valuation of its peers. High risk profile investor only should consider this issue.

Highlights of the Company's IPO

Glory Polyfilms Limited (GPL) is a medium sized manufacturing company established in 1998 by promoters Mr. Yogesh P Kela and Mr.Umesh P Kela. It is a profit making company. The manufacturing facility of the Company is situated at Daman - Union Territory of India.

The Company is engaged in the manufacture of Co extruded multi layer barrier film and printed/ unprinted flexible laminates. Its products have diverse applications as a packaging material for food,liquids like milk, edible oil and nonfood items.

The Company supplies its products to large scale industries, co-operative unions, federations, boards and various small scale industries, multinational and domestic customers in dairy, personal products industry, detergent and fabric wash industry, biscuits, tea, candies and chocolates, agro industries etc.

The Company’s clients include Mother Dairy, Ruchi Soya Industries Ltd. and Hatsun Agro Product Ltd.

The Company’s top ten customers have purchased 79.69% of the total gross sales of the Company as on 31.12.2006. This over dependence on few customers may affect the Company’s operations in the long term. Further, the Company’s gross sales include Rs. 1128.25 lacs to a venture promoted by the promoters, which constitutes 36.14% of the gross sales.

The objects of the issue are to part finance the expansion of Multilayer film producing capacity by 11652 MTPA, printing capacity by 4956 MTPA and lamination capacity by 3500 MTPA, to meet the working capital margin requirements of the Company on account of the proposed expansion and to meet the expenses of the public Issue.

The company has reported an Income of Rs.29.68 crores for nine months ended 31st December,2006 against 39 crores in the Financial year ending 31st March,2006. Net profit stood at Rs. 2.66 crores for nine months ended 31st Dec compared to 2.66 crores generated in Year 2006

There is negative Cash Flow of Rs. 30.02 lacs in the Year 2002-03 & Rs. 4.66 lacs in the
year 2005-06. The Company has reported a net cash flow from operating activities of Rs. 176.97 lacs in the Year 2002-03 & Rs. 143.99 lacs in the year 2005-06. The negative cash flow during the year 2002-03 is on account of repayment of term loan.

Out of the total debtors of the Company of Rs.1,314.05 lacs as on 31.12.2006, an amount of Rs. 604.34 lacs representing 46% of the total debtors is due from Immense Packaging, a venture promoted by the Promoters.

The Company has raised a bridge loan of Rs. 2.00 crores from Indian Overseas Bank at an interest rate of 13.5% against the proceeds of this issue. The Company has taken a disbursement of Rs. 110 lacs against this bridge loan

The promoters have three proprietorship ventures, which are in the similar lines of business as of the Company !

The Company will not be eligible for any Income tax exemption under section 80IB of theIT Act, 1961, which it enjoyed till the last financial year i.e., 2006-07. This may increasethe income tax liabilities and reduce profit margins of the Company in the future.

The Company’s products are not branded. The Company’s logo is not registered. The Company has already applied for registration of its logo and is taking steps to brand its various grades.

The weighted average EPS for last three years stood at 3.1 At pre-issue levels, the IPO comes at a Price multiple of 15.48. Weighted average return on networth comes to 15.48%. Noted Industry peers like Radha madhav are qouting at a P/E of 14.3

Net asset value post issue comes to Rs. 29.71

Issue opens : 09-May-2007
Issue Closes: 15-May-2007
Registrar: Bigshare Services Pvt. Ltd. Read More!