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Thursday, August 9, 2012

Sugar Stocks - Buy on declines

Investors,

The sugar stocks have run up quite smartly during the last 1 month and they are now looking overbought.

Buy on declines of around 10% in the upcoming weeks. We give below the buy and sell ranges for the top 5 picks in the sector

Balrampur Chini Buy - Buy around Rs.55 levels target price of Rs.75
Bajaj Hindustan Buy - Buy around Rs.30 levels target price of Rs.50
Triveni Engineering - Buy around Rs.18 levels target price of Rs.35
Shree Renuka Sugars - Buy around Rs.30 levelstarget price of Rs.50
KCP Sugars - Buy around 15 levels target price of Rs.25

Holding Period - 6 months

Related post -

Ambareesh Baliga, COO, Way2Wealth told CNBC-TV18, “Sugar space, I am cautious at these levels because unlike last time when we had the sugar prices moving up, I think the inventory levels this time are much lower and last time I suppose most of the profits was from the inventory which was there and not really from operations.”

He further added, “So this time also I expect that the margins still would be under pressure going ahead with cane prices moving up because of monsoons which we have. So I think the upside is quite limited. Possibly a stock like Shree Renuka could move to levels of about Rs 36-37 but going beyond that would everybody quiet difficult.”

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Saturday, September 17, 2011

Nalco - Portfolio Buy

Investors could consider selling their shares in aluminium producer Nalco given the fact that the company's expansion plans do not provide the company's top-line sufficient firepower for increased volume growth over the near-term. With aluminium metal prices expected to remain in a narrow range, top-line expansion will have to come mainly from volumes. Continual pressure on the input cost front too is crimping profit growth. Therefore, the stock's current market price of Rs.75 which is 18 times its FY11 earnings may prove to very hard to justify. Peers with more ambitious expansion plans or better product mix such as Hindalco and Sterlite trade at 13 and 11 times their FY11 earnings. On a enterprise value to operating profit basis, Nalco is at eight times also at a premium to larger global peers such as Alcoa and Norsk Hydro among others.

The year 2010-11 saw net sales and profits rise by 20 and 28 per cent to Rs 6,370 and Rs 1,070 crore respectively as higher global aluminium prices boosted sales. The company's net profits received a significant boost from locking into longer term raw material contracts whenever possible. However this is not an advantage the company is likely to enjoy this year. External factors such as the lacklustre pace of growth in domestic coal supply and the new profit-sharing clause in the Draft Mining Bill are likely to contribute to significantly higher coal prices over the medium-term. Coal is an input to the company's captive power plants which are a third of the cost of producing aluminium. The company's other inputs such as caustic soda, calcined petroleum coke and coal tar pitch have seen their prices rise at a far quicker pace than the six per cent gain registered by aluminium since the start of the year.

Aluminium prices face another headwind in the form of high global inventory. Global inventory stockpiles are estimated at 4.5 million tonnes or 12-15 per cent of the annual consumption. This stockpiled mass of aluminium is expected to keep aluminium prices in check. Further smelter additions and restarts in West Asia, China and developed countries have more than kept pace with the growing demand for aluminium. The company's own expansion plan includes the addition of 25 per cent to the current alumina production capacity and a commensurate increase in bauxite ore production. Given that alumina prices trade at roughly 14-15 per cent of the value of final aluminium, the upside from increased alumina volumes is unlikely to off-set the input cost pressure from running smelters. The company is a zero-debt entity with Rs 3,800 crore of free reserves which gives great scope for buying assets overseas.

Performance

The Company has share split equity share of Rs 10 into two equity shares of Rs 5 each & company approved 1:1 bonus, that is one bonus share for each share held.

The scrip gave negative returns as per the returns chart for the past 1 year.

Time Span	Price	Change	%Change
Today	65.55	-0.20	-0.30
Week	67.20	-1.45	-2.15
Month	62.00	3.75	6.04
Three Months	87.20	-21.45	-24.59
Six Months	107.50	-41.75	-38.83
One Year	102.35	-36.60	-35.75

Our Recommendation :

The scrip offers tremendous value for money. Wait for steep falls in the coming months to add to your portfolio hold. Its peers - Hindalco and Sterlite too present investors with great buying opportunity.

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Nitin Fire - Buy on dips

We recommend a buy in the stock of Nitin Fire Protection Industries from a short-term perspective. It is evident from the charts of the stock that since its March 2009 low of Rs 23, the stock has been on a structural bull-run forming higher peaks and higher troughs.

In February, the stock took support from its long-term base level of Rs 60 and started to trend upwards. The stock has been on a medium-term uptrend since then. It is hovering well above its 50- and 200-day moving averages. Reinforcing bullish momentum, the stock advanced almost four per cent accompanied by above average volumes on Thursday. This up move has breached its near-term resistance at around Rs 139.

Both daily as well as weekly relative strength indices are featuring in the bullish zone. Likewise, moving average convergence divergence indicators are also hovering in the positive territory indicating upward momentum. Considering that the stock's medium-term uptrend line is intact we are positive on the stock. We anticipate its up move to prolong further until it hits our price target of Rs 144 or Rs 149 in the ensuing trading sessions. Traders with short-term.

Performance

The scrip has been out performing last 1 month time frame and is a must buy on all declines. The historical prices for last 1 year gives a decent return on capital

Time Span	Price	Change	%Change
Today	139.10	-1.40	-0.99
Week	141.25	-0.75	-0.53
Month	110.90	29.60	26.69
Three Months	99.75	40.75	40.85
Six Months	78.55	61.95	78.86

Recommendation

Short term traders should wait for declines to 120 levels to sell around 145-150 range and re-enter post declines.

SRF - Hold

Investors with a short-term perspective can buy the stock of SRF. It is evident from the charts of the stock that it peaked out after registering an all time high at Rs 444 in early November last year. Since then it has been on an intermediate-term downtrend. However, the stock's decline got arrested and it took support at its long-term base band between Rs 270 and Rs 280 twice this year (in early February and late June) and bounced up.

It has been steadily trending higher since late June. While moving higher it breached its 21- and 50-day moving averages and is trading well above them. Further, the stock penetrated its intermediate-term downtrend line emphatically by jumping almost five per cent with heavy volumes on July 19. The daily relative strength index has entered into the bullish zone and weekly RSI is inching higher in the neutral region. Daily moving average convergence divergence indicator has signalled a buy and is featuring in the positive territory implying upward momentum.

Considering the stock's recent downtrend line penetration and strength in the indicators, we are bullish on it from a short-term perspective. We expect the stock's move to prolong until it hits our price target of Rs 331 or Rs 341 in the next 3-4 weeks. Short-term traders can buy the stock with stop-loss of 290.

Performance

It has a 6 monthly high low of 273 and 363, while it hit a high of 310 and low of Rs.290 for the last 1 month. The scrip gave a measly return in the last 1 year

Time Span	Price	Change	%Change
Today	308.60	-0.05	-0.01
Week	307.15	1.50	0.48
Month	303.00	5.65	1.86
Three Months	294.65	14.00	4.75
Six Months	309.70	-1.05	-0.33
One Year	281.80	26.85	9.5

Our Recommendation

Buy the scrip around 275 levels on a week day and on sharp falls in the market and hold for a target of Rs.350/- for a holding period 2-3 months.

Buy JK Cement on declines.

We recommend a buy in the stock of J.K. Cement from a short-term perspective. It is apparent from the charts of the stock that it has been on an intermediate-term downtrend from its 52-week high of Rs 199 marked in October 2010. Further, its medium-term trend is also down since it encountered resistance at Rs 140 this April. However, the stock's decline found support at its long-term base level at around Rs 100 recently.

On Wednesday, the stock jumped eight per cent, forming a bullish engulfing candlestick pattern which signals a bullish reversal. Moreover, this up-move was triggered by a prolonged positive divergence in daily moving average convergence divergence and weekly relative strength index. We observe that there has been an increase in volumes over the past four trading sessions.

The daily RSI is inching higher in the neutral region towards the bullish zone and weekly RSI is on the brink of entering into the neutral region from the bearish zone. Taking a contrarian stance on the stock we are bullish on the stock from a short-term perspective. We anticipate the stock to move higher until it touches our price target of Rs 123.5 or Rs 127 in the approaching trading sessions.

Performance :

The scrip gave the following returns during the last 1 year

Time Span	Price	Change	%Change
Today	117.35	1.20	1.03
Week	115.05	1.10	0.95
Month	103.35	12.80	12.38
Three Months	106.30	9.85	9.26
Six Months	133.55	-17.40	-13.02
One Year	165.55	-49.40	-29.83

Recommendation :

Traders with a short-term perspective can buy the stock around 105 levels with stop-loss at Rs 95 and hold for a target price of 140 for a holding period 3-4 months.

Saturday, September 3, 2011

BSE / NSE Weekly Review 2 Sept 2011

A deluge of buying interest throughout the holiday-truncated week resurrected the markets from the malaise of the previous month. Snapping the tumultuous five successive weeks of losses, the Sensex bounced back in style to surge by 972 points or 6.1% to 16,821 and ditto with the Nifty, which jumped 292 points or 6.1% to 5,040. The mid-cap index rose 4.8% at 6324 and small-cap index rose 3.2% at 7133. The metal index soared by 11.5% at 12,549, while the realty index jumped by 10% at 1,769 and banking index gained by 6.8% at 10,949.

The market got off to a flying start on Monday on receding fears of recession in the US following an optimistic assessment of the US economy by Fed chairman Ben Bernanke on August 26. The end of a standoff between the government and anti-corruption crusader Anna Hazare over the previous weekend also aided the positive sentiment. The BSE Sensex jumped nearly 600 points and there was no looking back from thereon.
The strong Q1 June 2011 GDP growth data maintained the tempo on Tuesday; the Sensex jumped by another 260 points as the latest data showed that the economy expanded 7.7% in Q1 June 2011 from a year earlier, helped by strong growth in the services sector. The manufacturing sector grew an annual 7.2% in Q1 June 2011 and farm output rose an annual 3.9%, the data showed.

Neither the holidays bang in the middle of the week nor the double-digit food inflation numbers were enough to break the momentum. The markets were shut on August 31 on account of Ramzan and September 1 due to Ganesh Chaturthi. And food inflation touched the double-digit mark after a gap of over five months. It was at 10.05% for the week ended August 20, as onion, fruits, vegetables and protein-based items turned expensive. The prices of onion soared by 57.01% year-on-year, while that of potato rose by 13.31% during the week under review.

Taking from where they had left, the key benchmark indices logged gains for the third consecutive session on Friday as domestic bourses played a catch-up with their global peers to sign off what was the best week in the past two years.

India's largest real estate developer by market capitalisation DLF jumped 18.28% to Rs 208 to top the gainers list on the BSE on plans to sell its holding in the joint venture company which is undertaking the DLF IT Park, Noida project. Tata Steel gained by 15.6% at Rs 488 post its steep recent fall triggered by concerns the ongoing euro-zone debt crisis will impact its European operations. And index heavyweight RIL recovered from a 52-week low of Rs 713.55 touched on August 26 to advance 11.9% to Rs 805 after announcing the completion of BP's acquisition of a 30% stake in 21 oil and gas production sharing contracts that RIL operates in the country, including the KG D6 block.

In the midcap index, Manappuram Finance soared by 29% at Rs 56, Glodyne Technology raced ahead by 17.7% at Rs 321 and State Bank of Mysore added 17.4% at Rs 670. And the smallcap space saw the likes of Fineotex Chemicals jumping by 29.4% at Rs 328, ICSA India gaining 21.8% at Rs 77 and Man Industries adding 20% at Rs 149.

In the metals space, JSW Steel topped the gainers charts by adding a whopping 18.5% at Rs 720. Tata Steel gained 15.6% at Rs 488 and Jindal Steel added 13.6% at Rs 525. Sesa Goa, Hindustan Zinc and Hindalco added between 10% and 12% each. DLF soared by 18.2% at Rs 208 to take the realty space by storm. Among the other prominent gainers in this space, Parsvnath Developers gained by 17.4% at Rs 54 and Phoenix Mills added 10.4% at Rs 219. The banking space saw ICICI Bank jumping by 8.1% at Rs 887, Yes Bank gaining 7.5% at Rs 278 and HDFC Bank adding 7.4% at Rs 471.

In an indication of the buying fury that gripped the markets during the week gone by, ONGC was the only Sensex stock to end the week in the red, shedding 5% at Rs 263.

The next week would reveal whether the corrective rally still has some steam left on the upside. However, the developments on Wall Street on Friday do not augur well for Monday's market opening back home. US stocks tumbled 2% after data showing zero jobs growth in August brought investors face-to-face with the prospect of another recession. The Dow Jones sunk 253 points and Nasdaq Composite was down 65 points on the last day of the week. Moreover, the markets will also start factoring in the outcome of the next scheduled on September 16. In the last policy meet, the central bank had hiked the repo and reverse repo rates by 50 bps each, more than market expectations.

Source : Business-Standard

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Thursday, September 1, 2011

Titan Industries - Buy on declines

Titan: Golden opportunity

Focus on high-end market likely to help the company boost margins.

If there were an appropriate tagline for Titan on Wednesday, it would probably say: ‘We also make watches’. Even as the growth in its same-store watch sales continues to be in double digits, the company is fast evolving into a lifestyle company, with a sharp focus on premium accessories. While on the one hand it is planning to enter new categories in accessories like silver watches, on the other it plans to expand its existing footprint in the jewellery business with Tanishq

However, a segment of analysts has reservations about the company’s ability to grow Tanishq sales, thanks to the sharp rise in gold prices. But Edelweiss Capital maintains that Titan has historically had a positive correlation with gold prices, primarily on account of a gradual increase in margins. Also, a gradual upside in gold has little impact on demand, it says. Having said this, it cannot be denied that jewellery volumes across retailers have slowed over the past two months. But analysts expect volume growth to inch up in the second half of 2011-12, thanks to the onset of the festive season and the recent correction in gold prices.

What will help the company beat the demand scenario is its focus on the wedding market. So far, it has targeted the Rs 30,000-50,000 bracket; but now, with its large-format stores, Tanishq plans to increase its same-store sales through selling higher grammage per square foot that can increase to offset decline in gold prices, if any.

Analysts maintain the company is targeting sales of Rs 3,500 crore from watches by 2014-15, which will be driven by network expansion, introduction of new designs, as well as a shift towards the branded segment. Titan aspires to expand the category in eyewear and accessories (currently 177 stores) by getting into new sub-categories. A report by Prabhudas Lilladher says: “The company is targeting FY13 breakeven and believes potential margins can be higher than in watches. It intends to enter new lifestyle categories in the medium to long term.” What analysts like is the company’s shift in focus to high-end studded and gold jewellery and prescription-driven eyewear, not merely sunglasses.

So far, the big concern has been expensive valuation. However, in this uncertain market, defensives continue to rule. Titan continues to remain the top pick of most brokerages. The stock is trading at 32.1x FY12 and 24.9x FY13 earnings per share.

Performance :

The scrip has given a great returns during last 2 years and is likely to out perform going forward. Short term investors can avoid the scrip.

Time Span	Price	Change	%Change
Today	205.70	0.05	0.02
Week	208.90	-3.25	-1.55
Month	228.40	-22.75	-9.96
Three Months	215.43	-9.78	-4.53
Six Months	172.45	33.20	19.25
One Year	149.93	55.72	37.16
Two Years	62.12	143.53	231.05

Our Recommendation :

Long term investors should look to buy the scrip around Rs.180 levels and hold for a period 2-3 years for a return of more than 200% going forward. Though the scrip will move sideways owing to the higher liquidity (due to stock split and bonus given recently) After a period of consolidation the scrip will become ripe for next bull run after 6 months from now.

Source Article for this post is from BusinessStandard.com

Monday, August 29, 2011

TCS - Fundamental Pick - Buy

The shares of the country's largest IT services firm have witnessed a sell-off recently due to fears of a possible double-dip recession in the US and Europe. However, these concerns seem to be overblown as the company has seen a healthy flow of deals from these regions.

In the previous quarter, the software giant clocked 10 new deals across geographies (led by US & Europe, followed by emerging markets) and registered a robust growth across verticals (hi-tech, telecom, retail, BFSI). The company management expects the demand environment and pricing to remain stable in the coming quarters. Given the volume growth, improvement in productivity and high utilisation levels, TCS is likely to outperform its peers in the industry for the rest of the year.

The management's positive growth outlook is also reflected in its hiring trend. After recruiting around 12,000 people in the first quarter of 2011-12, the company (largest private sector employer) is likely to meet its target of 60,000 people for the entire fiscal year. The company has also planned a capital expenditure of Rs 2,300 crore for 2011-12 to help increase its market share in Latin America, the Middle East and Asia.

Performance :

the stock has corrected sharply since the last 1 month and any recovery will depend on the signs of higher IT spend and US economy showing signs of buoyancy.

Time Span	Price	Change	%Change
Today	1,006.50	57.35	6.04
Week	929.80	19.35	2.08
Month	1,146.05	-196.90	-17.18
Three Months	1,141.45	-192.30	-16.84
Six Months	1,111.20	-162.05	-14.58
One Year	874.10	75.05	8.58

Keep away from this stock. Any sharp declines to the levels of Rs.800 should be taken as an opportunity to add to ones portfolio and hold for 2-3 years time frame for a target price of Rs.1500/-

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BHEL - Buy

This public-sector power equipment behemoth is currently facing some challenges. Apart from the high interest rates, the power sector has been hit by bottlenecks in the form of slow-paced reforms, difficulty in getting environmental clearances and establishing coal linkages. Increased competition from Chinese players also seems to be playing spoilsport for many power sector companies in India.

However, Bhel is well-placed to tide over these challenges and appears most attractive from the valuation perspective. With the sheer scale of its operations and high research and development (R&D) capabilities, Bhel is in a position to thwart any competitive pressures. It will also benefit from the recent government clause that prevents companies with no domestic manufacturing facilities from placing bids for super-critical equipment.

The comfortable debt on its books also ensures that it is not adversely impacted by high interest rates. Its impressive order book (around Rs1,640 billion at the end of 2010-11) provides a strong visibility on future earnings. Order inflows are expected to pick up further when the interest rates soften. Bhel is also planning to ramp up its capacity, with plans to increase its equipment manufacturing capacity from the current 15,000MW to 20,000 MW by the end of 2011-12.

Performance :

The scrip has under performed in line with the Capital Goods Index and is likely to move side ways in the near term.

Time Span	Price	Change	%Change
Today	1,746.20	9.70	0.55
Week	1,683.25	53.25	3.16
Month	1,824.90	-88.40	-4.84
Three Months	1,936.00	-199.50	-10.30
Six Months	1,975.00	-238.50	-12.07
One Year	2,478.50	-742.00	-29.93

Our Recommendation :
Buy on steep declines to around 1600 and hold for a period of 2-3 years for a decent returns, long term investors should hold the stock with a strict stop loss of 1600/-

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Divis Lab - Buy on declines

The company was earlier engaged primarily in the manufacturing of active pharmaceutical ingredients (APIs) and intermediates, but now it provides complete turnkey solutions to domestic pharma companies and is also the leading player in the custom synthesis space. With a near debt-free balance sheet and strong, predictable cash flow, Divis continues to exhibit robust performance aided by its strong business model.

What gives it an edge over its competitors is its unique focus on the contract manufacturing space, coupled with the ability to keep costs at a low level. With the global downturn, CRAMS players like Divis are benefitting from the bigger outsourcing opportunities offered by global pharma players, thereby providing more revenue visibility in the long term. Divis' cost advantage also allows it to maintain EBITDA margins as high as 38%. Apart from this, its strong skillset and commitment to R&D is expected to reap rich rewards in the future.

It also has a robust product pipeline in the offing, comprising opportunities in the generics space. Its new multipurpose plant at Visakhapatnam has recently commenced operation, which will yield benefits in the coming period. For the current year (2011-12), the company has planned to incur a capital expenditure of around Rs 1.75 billion, primarily to ramp up the existing capacity.

Performance :
The data given below gives the returns divis has given in the past 1 year. In the short term it will trade side ways.

Time Span	Price	Change	%Change
Today	704.00	6.15	0.88
Week	715.20	-17.35	-2.42
Month	833.55	-135.70	-16.27
Three Months	750.00	-52.15	-6.95
Six Months	597.40	100.45	16.81
One Year	754.65	-56.80	-7.52

The fall has been more severe in the last 1 month where it has fallen from 840 levels to 700 where it is seeking good support. Any breakdown below 700 will take the scrip to 660 levels.
Our Recommendation :

Divis lab has been falling after touching a 52 week high of 840 and is likely to slide to Rs.650 giving investors a great opportunity to buy and add to their portfolio. Expect a 100-125% return over a period of 2-3 years time frame.

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Oil India Buy

The upstream PSU oil company, Oil India, has benefited from an uptick in oil and gas production and lower subsidy burden. The last quarter saw its profitability improve 70% over the corresponding period last year due to the 20% jump in net realisation and 18% growth in production. Compare this with its peers in the upstream space, ONGC and Gail, which reported a profit growth of only 12% as they struggle to improve productivity.

While gas production remained muted throughout 2010-11 due to environmental issues, the company clocked a 16% rise in gas production to 642 million cubic meters in the previous quarter, along with a 20% jump in crude oil production to 0.96 million tonnes. The net realisation improved to $59.6/bbl on account of lower subsidy and higher crude oil prices. Its lower leverage and healthy balance sheet also put Oil India in a good position vis-a-vis most of its peers.

However, clarity is awaited from the government on the subsidy burden that is to be shared by upstream oil companies in the future. Oil India is likely to suffer if the government decides to fix the subsidy sharing burden on the basis of volumes rather than profits.

The scrips is relatively safe bet with limited down risk. The track of the scrip is given below.

Time Span	Price	Change	%Change
Today	1,315.10	8.05	0.61
Week	1,302.50	4.55	0.34
Month	1,257.40	49.65	3.94
Three Months	1,268.05	39.00	3.07
Six Months	1,217.35	89.70	7.36
One Year	1,442.50	-135.45	-9.38

Our Recommendation :

Buy on declines to around Rs. 1250 levels on a weak day and hold for long term.

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Sunday, August 28, 2011

United Phosphorous - Buy

At a price-to-earnings multiple (P/E) of 10.2, UPL's valuation has fallen to its lowest in at least five years. Nevertheless, it continues to grow through acquisitions and is already the fifth largest agrochemical company in the world. Although the world is facing threats of economic recession, UPL's customer industry, agriculture, is fairly immune to it, which makes the stock a safe long-term bet.

The scrip has disappointed investors in last 3 years and is also likely to move in line with the market sentiments.

Time Span	Price	Change	%Change
Today	135.80	1.45	1.07
Week	140.75	-6.40	-4.54
Month	163.40	-29.05	-17.77
Three Months	162.10	-27.75	-17.11
Six Months	130.10	4.25	3.26
One Year	186.95	-52.60	-28.13
Two Years	162.50	-28.15	-28.15
Three Years	160.28	-25.93	-16.17

The worst seems to be over look to buy around Rs.115 levels and hold

Thermax - Buy

It has shown a marked improvement in FY11 performance compared with the past two years. Revenue growth has outpaced peers in Q1 FY12. The current order book gives it a revenue visibility for more than a year but fresh order inflows are needed for revenue to grow at the same pace. It has corrected by 18% in the past one month and trades at P/E of 14, less than half its average P/E of past 5 years.

The scrip gave negative returns in 1 year and is likely to move side ways in next 2 quarters. Long term portfolio investors should utilize deep cuts and buy around Rs.425 and hold for 1-2 years for decent spike in prices.