Tuesday, September 29, 2009

Headlines : 11 September 2009

 

Corporate News Headline


BHEL said it has bagged an order worth Rs. 9.90 bn from the Indian Railways for supply of electric locomotives. (BS)


IVRCL Infrastructures & Projects said it has bagged orders totaling to Rs. 5.57 bn from the government of Maharashtra. (BS)


Punj Lloyd said it has raised Rs 6.00 bn by issuing debentures on private placement basis. (BS)

Economic and Political Headline


Inflation rises to minus 0.12% for the week ended August 29 from the week ended August 29 from minus 0.21% in the previous week.(BS)


The US trade deficit widened in July and imports gained by a record 4.70%, signaling a revival of commerce as the global recession eased.(Bloomberg)


The Bank of England plans to keep buying as much as GBP 175 bn (USD 290 bn) of assets to cement the economy’s recovery from the worst recession in a generation. (Bloomberg)

Wednesday, September 16, 2009

How to buy stocks ? Buy stocks with confidence

Current stock market, as we all know, is in an uncertain situation with ups and downs in stocks every week. Every investor may be wondering about how to buy a stock as buying stocks for long term investment has become difficult when there are no clear market trends.

We advise investors to keep the following factors in mind in order to make safe and sensible investments.

Stock trades at cheap brokerage and buying stocks online or online stock trading have made stock trades a very frequent practice for normal investor, they should understnad that stocks mentioned here are for long term investing and will be fruitful if they hold for longer time durations.

1. Low Debt-Equity ratio stocks
This is the ratio shows that how much equity and debt is used by the company to finance its assets. Debt-equity ratio above one shows that the company has resorted to debt for financing its assets rather than equity. If the ratio is lower than one, it means the company has a lesser debt burden. The positives of such companies are that they need only a lesser amount to be kept aside to pay the interests that arise out of loans. The fluctuations in interest rates during high inflationary situations may have little impact on the financials of such companies. So companies that have zero debt should be targeted with a medium to long-term perspective.

2. Stocks trading below their book values
Another factor to be kept in mind while investing in shares is the book value. The book value of a company is the cost of an asset minus accumulated depreciation. In other words it is the total value of the company’s assets that shareholders would theoretically receive if a company is liquidated. So, if a stock is trading below its book value, then it is underpriced, and should therefore be seen as an opportunity to make an investment in that stock.

3. Buying ‘A’ group stocks
An investor with a medium to long-term perspective can, without any hesitation, go for stocks in the ‘A’ group, even if the situation is not very favourable. Once the markets consolidate and pick up, the first stocks to move up will be the ‘A’ group stocks as they form the index. When the index moves up, obviously these stocks will be the movers. One main thing to keep in mind is that, never make your whole investment in a single sector or a stock. Instead, investors should create a diversified portfolio including more than one stock belonging to different sectors.

4. Following the averaging pattern of investment
Investors should follow the averaging pattern of investment when the markets are volatile and not giving any trends. This will put the investors in a better position. The investor has to enter the market at three or four different times which will help the investor to reduce the per share price of his holdings.

E.g. if an investor is desirous of making an investment of Rs 40000, he should invest the money at three or four different times with an investment of Rs 10000 each. When the stock which the investor wants to invest in is trading at Rs 100, he can make his first entry by investing Rs 10000 and purchasing 100 shares of the stock. When the share price comes down to Rs 80, he can make his second entry by investing Rs 10000 and purchasing 125 shares. When the share falls to Rs 70 and then Rs 60, the investor can make his third and fourth entries by investing Rs 10000 each, and purchase 143 and 167 shares, respectively. When the market moves up from lows, the average rate of the stock in the investor’s portfolio will be Rs 74.7 which will be the investor’s BEP.

Stocks To Buy - Hidden Gems - Taneja Aerospace Aviation

Here is another hidden gem from famous equity analyst Ashish Chugh. He discussed this recently on a TV channel. Ashish Chugh is known to identify the companies with hidden intrinsic value of the stock and recommends to buy stocks at early stage. The stock recommendations from him could prove multi-bagger stocks in long run.

If we see the price pattern of this stock, this stock has been primarily range-bound between Rs 30–40 for a long period of time. Promoters picked-up about 5% of the stake in the company they increased the stake by about 5% in the month of November at about Rs 28 and the stock has been primarily range-bound mainly because of the negatives which surround the sector and also the company. Last year there were rumors of a Delhi based infrastructure company wanting to take a stake in their air strip project and the valuations being talked about are very high, and at that time the stock touched a high of about Rs 250–270.

The company has a 250-acre land where they have made an airstrip which is largely unutilized and I see that as an opportunity, the reason that we are getting the stock at a market cap of just about Rs 100 crore is primarily because of the reasons which are mentioned. When things look rosy and everything starts looking good. When they are fresh with orders for aircraft and the value unlocking which people are expecting that airstrip will have that happens and you won’t get the stock for Rs 35-40.

The reason you are getting the stocks at current valuations is only because of the negatives which are surrounding and the good thing is that the promoters themselves have increased their stake at about Rs 28 in the month of November. At that time there was pessimism all around and the stock has also been range bound for a very long period of time and that’s a reason you are getting this stock for Rs 35, when there were rumours of someone big buying that airstrip business and fancy valuations being talked about at that time the stock was not available for Rs 35 and it was available for Rs 250–270. So this is the one for the patient investors who can just sit on the stock and wait for company to unlock the value for the shareholders.

5 best Sensex stocks for long term investment

Fundamentally sound stocks generally perform better in these troubled times. 5 good Sensex stocks are picked for those who prefer to invest in index large cap stocks. Long term investors should accumulate these stocks to get 60-80% returns in one year. Keep some cash to accumulate more on any unexpected fall.

5 best Sensex stocks for long term investment horizon:

1. Larsen and Toubro (L&T):
This is the best stock in Sensex for long term investors. L&T surprised analysts with their better than expected results. But stock still underperformed to bad market sentiment. As L&T entered into niche areas, margins will improve in the coming quarters. Upcoming demergers will improve L&T valuations in the coming quarters. Huge order book is another plus point. Announcement of bonus is a near term trigger after current turmoil.

CMP: 2,564. EPS: 74.3 P/E: 34.5
Expected EPS for FY2009: 105-110.

Ideal entry price: 2,350-2,400.
1 Year target: 3,600-3,800.
Best investment duration: 3 years to get wonderful returns from this giant.

2. ICICI Bank:
Real strength of ICICI Bank lies in their subsidiaries. ICICI securities IPO is a near term trigger.

CMP: 733. EPS: 37.3 P/E: 19.6
Expected EPS for FY09: 48-52.

Ideal entry price: 660-680.
1 year target: 1150-1,250.

3. State Bank of India (SBI):
Attractive valuations but unpredictable government interference.

CMP: 1,249. EPS: 106 P/E: 11.7
Expected EPS: 135-140.

Ideal entry price: 1050-1100.
1 year target: 2,000-2,200.
Best investment duration: 18-24 months.

4. Reliance Communications:
Another “Must buy” stock for long term investors if they don’t overly paid for acquisitions. Reliance Infratel IPO is a short term trigger.

CMP: 491.6 EPS: 12.5 P/E: 39.2
Expected EPS for FY09: 25-28.

Ideal entry price: 470-480.
1 year target: 750-800.

5. Reliance Industries:
This stock holds enormous intrinsic value. Reliance will give good returns for patient shareholders who invested for long term. Kakinada gas will change fortunes of shareholders in short term. Invest in Reliance; believe in Ambani; forget about it.

CMP: 2,100 EPS: 138 P/E: 16

Ideal entry price: 1,800-1,900.
1 year target: 3,000-3,200.
Duration: Invest for 2-3 year to get complete benefits.

Infosys, Bharti Airtel and Grasim are good stocks to get safe moderate returns in these difficult times. Fortunes of DLF and M&M will depend on inflation. Recent salary hikes may hit the balance sheets of companies like BHEL. Tata Steel is best underdog stock for FY09. We will get more clarity on these stocks in the next quarter results.
Equity investment should always be done cautiously. Though Financial markets (especially stocks trading) looks lucrative, if one fails to understand the finance, better you leave it to stock market experts (Mutual Funds, portfolio management etc.) Invest Wisely,Trade Cautiously !! Happy investing !!

Promoters investing money in own companies

Many of the promoters have been buying their own stocks, investing money in own companies since most of the stocks are quoting very reasonablly. We believe investing in such stocks could prove best investments in bear market for long term.

The year 2008 may have been a forgettable one for equity investors, but it offered a golden opportunity to many promoters to raise their holdings at dirt cheap prices. Promoters have been on a stake-raising spree for most part of the year, primarily due to attractive valuations, and in some cases, as a desperate measure to stem the slide in share prices.

The recent Sebi move hiking promoter holding limit to 75% from 55% under creeping acquisition guidelines has widened the scope for raising stake to an extent that promoters feel confident of warding off takeover attempts, analysts said.

Data filed with stock exchanges show that promoters of a host of companies, including GMR Infrastructure, Gitanjali Gems, Kesoram Industries, Larsen & Toubro, Mastek, NIIT, Patel Engineering and Praj Industries, have been accumulating shares from the open market in large quantities. Analysts feel that the biggest advantage of buying in the current market is the lower cost of acquisition. The stocks of these companies have fallen between 60-85% from their respective peaks.

GMR Infrastructure is one such example where the key promoter, GMR Holdings, acquired 42.3 lakh shares between December 15-18, subsequent to which the latter’s stake rose to 74%.

Similarly, Mehul Choksi has bought about 33 lakh shares of Gitanjali Gems from the market since the beginning of October. The shares account for about 4% of the company’s equity capital. The promoters of NIIT acquired 17 lakh shares while the Chaudhari family of Praj Industries purchased 21 lakh shares. L&T CMD AM Naik has bought about two lakh shares of the company.

However, Mr Naik, a professional manager, is not regarded as a promoter of the company. Deccan Chronicle promoters — T Venkattram Reddy, T Vinayak Ravi Reddy and PK Iyer — acquired close to 52 lakh shares from the market.

Analysts feel that this is the right time for promoters to go for creeping acquisitions and reaffirm confidence in their companies. “It makes sense for promoters to buy shares from the market, as this would give comfort to investors that liquidity position of promoters is strong,” said Indiabulls Securities CEO Divyesh Shah.

Interestingly, it is observed that promoters of many real estate companies have bought shares from the market in the past few months. In some cases, the percentage, or number of shares, bought may not be enough to provide any substantial support to the stock price. But such transactions could help build confidence among investors, say brokers.

Ansal Housing, Anant Raj, DLF, Kamanwala Housing, Kolte Patil, Orbit Corporation and Prime Property are a few real estate and construction companies witnessing creeping acquisitions by their respective promoters.

Best stocks to buy now are banking stocks

Amid easing of liquidity, low bond yields and expectations of long term economic revival, banking stocks are seen as the best bet for investment - both in medium term and long term.

Banking sector is expected to outperform the market giving an on an average return of 20 per cent, according to analysts.

"With softer monetary policies and consequent reduction in bank lending rates and benchmark G-Sec rates, action would shift from core income to treasury and asset quality," said Amitabh Chakraborty, president (equities), Religare Securities.

Added Chakraborty, "Slower credit growth coupled with reduced benchmark prime lending rate (BPLR) will keep NII subdued. However, fall in benchmark rate will result in reversal of mark-to-market provision and trading gain opportunities."

BPLR is a short-term interest rate quoted by a commercial bank as an indication of the rate being charged on loans to its best commercial customers.

With capital adequacy ratio of 9 per cent and tier-I capital of 6 per cent, India banks (both PSUs and private sector) stand firm in the face of worsening global banking scenario.

Said Manish Sonthalia, vice president-equity strategy, Motilal Oswal, "Indian banks are 5 times more risk averse than US banks wherein capital adequacy ratio is merely around 2% as against standard 9% in India. The debt to equity ratio of Indian banks is 10 times more than US banks."

With a healthy 7 per cent GDP growth, India still stands strong in terms of economic development, for which banks are the major drivers for funds. Among Indian banks, PSU banks are the most preferred to park money. "Because of the higher investment of 27- 28% in SLR securities, the PSU banks are a better investment bet as against private banks (25% in SLR)," states a Religare research report.

Furthermore, because of more retail loan disbursement, chances of defaults are relatively higher for private banks.

However, net non-performing asset (NPA) levels for both PSU and private banks ranges between 0.7% and 1%. "Whatever may be the current NPA level; those are manageable and banks are making enough provisions for that. NPA is no threat for Indian banks," added Motilal's Sonthalia.

Top picks from PSU banks are SBI, Oriental bank, Indian Bank, Andhra Bank, Bank of Baroda, Federal Bank etc while ICICI, HDFC, Axis are the banks which rule the roost in private segment.

According to the analysts, any fresh 'buy' on these bank stocks can attract returns of upto 15-20% in a year. Meanwhile, market slowdown does not seem to have played any spoilsport for banks' financial performance. Experts are of the opinion that PSU banks are expected to post a hike in their bottom line on YoY basis.
Source: Economic Times

Public Sector Oil Marketing Companies - Sector Analysis

INVESTORS would have by now lost faith in Indias three public sector, Fortune 500 companies Indian Oil, BPCL and HPCL due to their topsy turvy performance last year. Last year proved very tough for these public sector Navaratnas due to huge underrecoveries.

However, the industry seems to have shown signs of revival with the companies reporting first signs of profitability in the June 09 quarter, which is likely to continue.

Steady but slow:
Despite a total lack of control over their own profitability, the stocks of these companies did not fall with the overall market in the last August 08 to February 09 period. The share prices of these three biggies found strong support around their book value. In the last quarter, however, the performance of these companies has been somewhat subdued despite the market revival. Since the start of April 2009, the shares of Indian Oil, BPCL and HPCL have gone up by around 37%, compared to over 60% gains in the benchmark Sensex to 15,160 on August 7, 09.

Wiping the slate clean:
The June 2009 quarter was a turnaround for the oil marketing companies (OMCs), as they posted healthy profits and cash flows compared to losses earlier. Their refining operations were under pressure due to the global economic turmoil, however, the sharp reduction in marketing losses helped them. The crude oil prices ruled at $60 per barrel during the quarter nearly half of the year ago period which helped these players to cut down their underrecoveries on marketing operations to negligible levels. As a result, there was no need for any oil bonds and very low upstream support.

Two other changes provided great support to the financials of these companies. Strengthening of rupee meant that the companies recorded forex gains during the quarter, as against heavy forex losses in the corresponding quarter of previous year. At the same time, their interest burden receded considerably thanks to lower interest rates and also reduced debt burden. The interest cost of these OMCs had jumped nearly threefold in FY 09 to Rs 8200 crore twice that of their annual aggregate profit.

Indian Oils quarterly numbers were also boosted by the merger of Bongaigaon Refinery with effect from 25th March 2008. Hence its financials were included in June 09 numbers, but not in the June 08 figures. Indian Oil also benefited from the improving performance of its petrochemical operations , the profits of which segment tripled during the quarter.

Future expectations:
Better future seems to await these three oil majors, particularly in the light of the recent Budget announcement about setting up of an expert group to decide a viable and sustainable petroleum pricing system.

The recent increase in prices of auto fuels starting July 2009 has reduced the under-recoveries of these OMCs on petrol and diesel to a level below Rs 2 per litre. These transport fuels represent over half of Indias total consumption of petroleum products, while the other two subsidized products kerosene and LPG represent just 15% portion. As a result, the increase in auto fuel prices will help these companies report profits in the coming quarters.

At the same time, these companies are investing in improving and expanding their refinery operations. The 6 million tonne Bina refinery of BPCL is expected to start operations by the end of 2009, while HPCLs 9 million tonne Bhatinda refinery will be ready by February 2011. Indian Oil is also in the process of expanding its Panipat refinery and start polymer production.

Public Sector Oil Marketing Companies - Sector Analysis

Valuations:
Thanks to the profits in the June 2009 quarter as against losses in the corresponding quarter of last year, the valuation of oil marketing companies has become attractive. Indian Oil is currently trading at a price-to-earnings multiple of 10.9, BPCL at 7.8 and HPCL at 5.9 We expect these companies to remain profitable in the next two quarters, wiping out over Rs 9500 crore of losses incurred in the same period of the last year. This will boost the per share earnings of these companies giving a booster to their performance on the bourses.

Risk Factors:
The main risk lies in crude oil prices zooming up in a short span, without corresponding increase in the retail prices of the petroleum products. However, considering the weakness in demand and heavy potential supply that could enter the market at a short notice, we rate this risk as low in the coming quarters.

Best FMCG Companies - Stocks to Invest in 2009

FMCG Stocks are now catching eye of investors for investing as best option in stock market. Analysts and market experts are now putting a ‘buy stock’ recommendation on select FMCG stocks.


AHMEDABAD: FMCG stocks seem to be the dark horse on the bourses. These stocks are now catching the eye of investors. Analysts and market experts are now putting a‘buy’ recommendations on select FMCG stocks, a move which is not just being considered as a safe ploy but also as a defensive strategy to counter a volatile and uncertain market.

The trend is visible on the bourses where leading FMCG counters have outperformed the overall market during the last few sessions. Take the case of MNC giant Hindustan Unilever (HUL). The company’s stock has made its 52-week high at Rs 267 on December 19, at a time when BSE’s benchmark index, Sensex, was trading under the 10,000-mark (down by over 50 % from its life-time high of 21,000 made in January, 2008).

Similarly, the scrip of another FMCG giant, Godrej Consumer, is currently hovering near its 52-week high of Rs 145. On Wednesday, the stock price closed at Rs 138. Other companies like P&G , Dabur(I) and Colgate Palmolive have also recorded better performance on the bourses. Market analysts who earlier stayed away from FMCG stocks are now taking a fresh look at these rising scrips. Though some reservations about the FMCG sector still persists, the analysts have accepted the “safe” nature of these stocks.

Read: Dabur India - Good Stock From FMCG Sector

“Fall in commodity prices (from crude, vegetable fat and food articles) is the main reason behind the outperforming FMCG sector. Earlier trends indicate that fall in commodity prices will lead to an improvement in profitability of the FMCG companies in the next fiscal. Such a phenomenon will not remain limited to just soaps and detergent companies; even paints, confectionery, food processing and others will get benefit of the fall in commodity prices,” said Ajay Parmar, head, equity, Emkay Global Financial Services. “Those who want to play defensive can invest in such stocks,” he added.

Anand Shah, a research analyst at Angel Broking, is also optimistic about the FMCG sector. Though the markets (at current level) have already discounted the positive impact of the fall in the raw material costs, Shah believes that those who wish to play safe should invest when the prices of the FMCG scrips fall.

“FMCG companies will be able gain cost advantage on raw materials, freight, transport and packaging. The balance sheet of the FMCG companies will definitely gain strength in the coming quarters,” Shah said while cautioning the investors to adopt a stock-specific approach instead of a sector-specific one.

However, not all are convinced. “Now-a-days , smaller players are eating into the business of big MNC players in the FMCG sector. Biggies are therefore losing their market share,” says VVLN Sastry, country head at Firstcall India Equity Advisors. “There is some momentary activity in FMCG stocks, which is a part of the defensive strategy adopted by the traders to restrict the downslide. But this trend will not prevail for a long time,” he added.

Interesting Sensex analysis

Please have a look at the table below with details of the sensex performance right from the year 1991. Last evening's closing has been taken for 2008 data temporarily. We have already knocked down 41% from 2007's close.


If we compute the CAGR for the sensex from 1991 to 2007 spanning 17 years we get a return of 14.91% explained as {(20286.99/1908.85)^(1/17)-1}. We have seen extraordinary/ astronomical returns in certain years namely 1999, 2003 and 2005-07 in in the band of 40-70%. This year having slipped into a bear market we need to adjust for the excesses on the downside and fall in line with the CAGR of 14.91% p.a. To maintain this CAGR going ahead into 2009 we need to make a bottom of 8069 or fall 60% from the highs.

Though the above is purely a quantitative analysis based on historical data, Elliot wave theory has already shown us an indicative target close to 9000 for the 4th corrective wave on the sensex and 8096 doesnt seem to be far off. We are at 11800 already and another 25% fall in the bellwether stocks like RIL and LnT will easily take us there. There seems to be excesses still left in capital goods stocks which have not yet witnessed the capitulation seen in metals and real estate counters. Once the poison gets out of the system we can form a nice base for the reemergence of the bull market or the fifth supercycle wave as the elliot wave theorists call it.

But for that to start we need a time wise correction. The value wise correction seems to be happening but time wise we need to travel a bit more. We are nine months into this correction and we have broken important support levels along the downside taking cues from global markets and concentrated FII selling across the cap curve.

Therefore reaching out to these bottoms of 8000-9000 may not happen so soon. We might have violent retracements, sharp rallies that give u a 20-25% pullback in a short span of time. But these pull backs will be short lived lasting for a week or two before we head back to lower lows once again. The confidence in the system, despite belief in long term story of India, has been severely dented at the moment. The patience of the retail investor is slowly fizzling out like a dim candlelight with each passing day, as he wipes his forehead with his already wet handkerchief seeing the sensex drop in hundreds and thousands, watching stock prices collapse under the force of gravity. Every recovery aimed by the indices is being met with selling as highly leveraged investors try to make an exit from their bleeding positions. Three to four pull back attempts from the lows of 3800 were attempted by the nifty, but each time we have seen the index making a lower top which indicates structural weakness and provides evidence of the deeper lows staring at the bottom, which is what has happened today with the index breaking down to a new low of 3581 and the sensex decisively collapsing to levels below Rakesh Jhunjhunwala's psychological "12000". He would, going by his own words, still be drinking like a fish, eating like a pig and smoking out his costly cigars without major worries as he has invested in the market right from levels of 3000 on the sensex. So even at the worst bottom of 8-9K he would still be making 3 times his cost.
Therefore friends, we are headed towards making decisive lows that might happen over a period of time but until then trades will keep happening in a range bound manner. Dont get fooled by smart V shaped recoveries and bet all your money . Typical bear markets end in a saucer bottom formation which means timely consolidation around the support levels before a strong rally emerges.Regular investors should be wise enough to catch the bottom of this range to buy and exit at the top of this range for short term gains. It requires regular tracking of the markets and considerable effort/knowledge. For those who believe in the India story, this is the time to invest and cherrypick with a 3-5 year view, as in the short term you might still see your portfolio heading down 10-15% even from these attractive levels. A new bull market will start only when there is extreme pessismism around, low volumes,analysts on TV predicting total gloom and doom issuing ridiculous targets for the sensex on the downside etc etc From now on, watch out for ur your neighbours, relatives and people u meet in your day to day life, the ones who were gung ho about new highs for the sensex at 21K.Even my autorickshaw guy was giving me a target of 5000 for reliance 10 months ago. People felt that the bull market was permanent and eternal, an easy gambling paradise to double one's networth in days n weeks, without realising that investing is a tough business. Now is the time to start engaging them in a conversation about the markets. If they disappear from your sight, then thats the time to start investing heavily. Guess we are heading closer to those exciting moments, the so called "once in a lifetime" investing opportunity which intelligent investors capitalise upon to make a lifetime bargain.

The only risk to my estimate of 8-9K on the sensex is the "patience risk" as i would term it whereby long term investors and the domestic institutions in India say "Hey look, we are not selling the India story so easily for an economy growing at 7-8%. We are holding on come what may". This resilience will throw all market theories out of the window and a few months down the line we may be left ruing the fact that we kept our purse strings zipped and tight at these levels.

Markets are indeed supreme!!

Where Are Indian Stock Markets Heading?

Where would Indian stock markets are heading from here? BSE SENSEX has been trading rangebound for past three months now. 14500 to 15500 and around has been the range of trading.
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If you look at the peaks in the chart, they indicate the lacking streangth in breaching the range mentioned above on the upper side of it.

2 days back I heard Shankar Sharma, famous bear in Indian stock market, speaking on TV about correction in stock markets. He is confident that Indian stock markets are bound to see 10-15% correction in near term.

He mentioned that SENSEX could go to 13000 levels before reaching 17000.

Shankar Sharma's statement is based on performance of world stock markets. World stock markets are riding with demand from chinese markets. The problem is, demand in Chinese markets is depleting eroding the growth.

The current rally in Indian stock markets is more a technical rally and not the fundamental one.

So what does this mean for long term invetors? Should you stay away from stock markets?

It has always been said "every time the markets go down, that is a buying opportunity".

So if markets correct by 10-15% as Shankar Sharma says, be ready to buy stocks at lower prices for long term investment.

Stock Market Tips - Buy Ispat Industries For Short Term Gains

Nirmal Bang equity research & broking house has recommended to investors to buy stocks of 'ISPAT Industries' from short-term investment perspective.

Stock Trading Idea is:
CMP: Rs. 22
Strict stop loss: Rs 21.45
Short term target: Rs. 26
Medium term target: Rs. 30 (Above 30)

The report further stated that, if the counter is successful to breach 27, then it will hit a medium term target of Rs 30.

Today (Sept 01), the shares of the company opened at Rs 23.60 on BSE. The share price has seen a 52-week high of Rs 28.60 and a low of Rs 9 on BSE.

For the three month period ended June 2009, Ispat Industries, an integrated steel maker posted loss owing to decline in sales and increase in input costs.

During the period, the company recorded loss of Rs 2,149.20 million as against a profit of Rs 287.30 million during the same quarter previous year.

Net sales fell 49.79% to Rs 13,997 million, whereas total income during the period declined 51.25% to Rs 14,018.50 million.

It posted a loss of Rs 1.91 per share in the quarter as against with earnings of Rs 0.08 per share in the corresponding period of the last year.

During the quarter, the company's operating margin fell by 1,228.23 basis points to 7.42% compared with the previous year period. Interest cost during the three month period dropped 37.88% to Rs 2,675.80 million whereas depreciation cost surged 1.81% to Rs 1,635.70 million.

Top 10 fastest growing small companies in India

Growth is the only way listed companies generate wealth and value for their shareholders and other stakeholders, including employees. The younger and smaller the company, easier it is to grow. And the earlier you are able to pick future leaders, the better it is for you. In fact, during the last bear run, which ended in early 2003, many small companies gave double-digit annual returns on a consistent basis, even as frontline companies remained grounded.

ETIG has come out with its 2008 edition of fastest-growing small companies. Last year's list was dominated by companies from the then hot sectors such as real estate, capital goods and construction, with a sprinkling of IT companies. However, the toppers this time are now from less cyclical and asset-light sectors, especially infotech.

Take a look at the top 10 fastest-growing small companies:


ICSA India
This is the new face of the Indian IT industry — companies offering niche product and services with a clear differentiating factor. ICSA offers supervisory control and data acquisition (SCADA)-based IT solutions to power companies.

ICSA India had a market cap of Rs 1,305.2 crore (the average for September '08), besides having an average return on capital employed (RoCE) of 67.8% and interest coverage ratio (ICR) of 132.7, for the preceding three years.

Also, its compound average growth rate (CAGR) in sales and net profit for the preceding three years stood at 214.8% and 210%, respectively.



Allied Digital provides remote infrastructure management and systems integration in the domestic market. It is a leading IT Infrastructure management and technical support services outsourcing company.

It enables global, large and medium enterprises and service providers to reduce their total cost of ownership using a combination of onsite and remote services.

With an average market cap of Rs 1,239.2 crore in September '08, the company's three-year average RoCE stood at 62.8% and ICR at 103.5. Moreover, its sales recorded a three-year CAGR of 79.2%, while the CAGR of profit after tax stood at 211.6%.


As the name suggests, Prime Property Development Corporation is a real estate developer in India, based in Mumbai.

Its properties include information technology parks; commercial units comprising show rooms, shops, and offices; mall projects with anchor shop, shopping complex, multiplex, food court, entertainment area, and a hotel; and commercial-cum-residential projects.

The company had a market cap of Rs 120.2 crore (the average for September '08). Its three-year average RoCE stood at 48.1% and ICR at 394.7. Its sales recorded a three-year compound average growth rate of 86.4%, while the CAGR of profit after tax stood at 185.3%.

Resurgere Mines and Minerals India Ltd
Resurgere Mines and Minerals India Ltd is engaged in the business of extraction and processing of iron ore products, ie lump ore and size ore, and is predominantly a manufacturer of calibrated lump ore (CLO) and iron ore fines.

It is also engaged into merchant export of iron ore fines to China. The company is a member of CAPEXIL, FIEO and FIMI and is a recognized star trading house. At present,the company has run-of-mines contracts for two mines situated at Nuagaon and Maharajpur in Orissa.

Resurgere Mines' market cap (average for September '08) stood at Rs 733.5 cr, while the three-year average RoCE was recorded at 100.2% and ICR at 32.8. Its sales recorded a three-year compound average growth rate of 81%, while the CAGR of profit after tax stood at 561.4%.


The success of Sharon Bio-Medicine lies in its ability to expedite pace of product development by streamlining the processes and inculcating a culture of operational excellence. It offers contract research and manufacturing services for global pharmaceutical companies.

Since its inception, the company has carved its niche by offering a distinct value proposition to its customers.

Sharon had a market cap of Rs 101.7 crore (the average for September '08). Its three-year average RoCE stood at 30.8 % and ICR at 747.8. Its sales recorded a three-year compound average growth rate of 93.3%, while the CAGR of profit after tax stood at 254.2%.


Tanla Solutions develops value-added solutions for mobile phones. It offers end-to-end mobile commerce, mobile entertainment, mobile internet and mobile advertising solutions.

Tanla is a global provider of mobile commerce, mobile entertainment, mobile marketing and advertising solutions to the telecommunications, media and digital content industries. It has the distinction of being one of the first Indian companies to focus on integrated solutions and products for the wireless world.

With an average market cap of Rs 1,906.9 crore in September '08, the company's three-year average RoCE stood at 51.1% and ICR at 15.8. Moreover, its sales recorded a three-year CAGR of 173.8%, while the CAGR of profit after tax stood at 189.8%.


Northgate Technologies Limited
The corner stone capabilities of Northgate Technologies' business are infrastructure (high capacity, highly scalable server farm), services (internet advertising tracking tool, instant messaging, short messaging, net telephony, global content delivery, video streaming, social networking, file sharing and downloading, gaming and many more), and monetization (mass monetization through fast growing global internet advertising industry).

Its core strengths of world-class server farm infrastructure, a rapidly-expanding global content distribution platform, popular internet properties, partnership with large web communities and own advertising network differentiates it from other peers who operate in only sector, the company claims.

Northgate Tech's market cap (average for September '08) stood at Rs 904.9 crore, while the three-year average RoCE was recorded at 31% and ICR at 1141.4.

Its sales recorded a three-year compound average growth rate of 102.1%, while the CAGR of profit after tax stood at 110.9%.



Venus Remedies India is a research and development driven, pharmaceutical manufacturing company. The company is constantly working to broaden the pipeline of products and to make a impact in the international markets.

It has two manufacturing locations in India and one in Germany. Venus is a manufacturer of oncological and cefelosporine injectable products following EU-GMP norms for all is activities.

The company had a market cap of Rs 316.9 crore (the average for September '08), besides having an average return on capital employed of 43.2% and interest coverage ratio of 59.5, for the preceding three years.

Also, its compound average growth rate in sales and net profit for the preceding three years stood at 84.4% and 117.5%, respectively.


Geodesic Limited
Geodesic operates in a niche area of developing various innovative products in the information, communication and entertainment space. Its product-list is versatile and all-encompassing when it comes to offering choice of communication and collaboration solutions to its users, whether it is the inherently simple hand-held Simputer to web-based mobile & wireless applications to the intricately complex Engage Spyder applications.

Geodesic's mix of innovative products and high performance solutions has driven the company to profit right from its first year, according to the company.

With an average market cap of Rs 1,511.5 crore in September '08, the company's three-year average RoCE stood at 31.1% and ICR at 1027.3.

Moreover, its sales recorded a three-year CAGR of 98.9%, while the CAGR of profit after tax stood at 98.2%.


Info Edge (India) Ltd
The company is a leading provider of online recruitment, matrimonial & real estate classifieds and related services in India.

Its business is managed primarily through four divisions, which comprise online recruitment classified division, online matrimonial classified division, online real estate classified division and offline executive search division.

Info Edge's market cap (average for September '08) stood at Rs 2,056.7 crore, while the three-year average RoCE was recorded at 60.4% and ICR at 11.4.

Its sales recorded a three-year compound average growth rate of 70.6%, while the CAGR of profit after tax stood at 451.8%.

Rakesh Jhunjhunwala's latest portfolio

Rakesh Jhunjhunwala have been buying stocks and making big money. His portfolio holdings are as on Sept'08 based on BSE / NSE data. Remember that his holding period is 5-10 years on an average and he has invested his money to buy stocks of Small and Mid caps only, so anyone who is buying stocks (good small cap & Mid caps) and holds it for 5-10 years, has better probability to create such huge amount of wealth.

Trading stocks / stock trades are best to be avoided for retail investor. Online stock trading and buying stocks online have made it very easy for retail investors to trade stocks at fingertips very frequently. Learn how to buy stocks Rakesh Jhunjhunwala way. Buy stocks wisely!!! Investing in stock should be a long term affair & do not indulge in frequent stock trades.


Income Tax Planning and Savings- Equities way

If you are looking at equity as an asset class and want tax reliefs as well, you can opt for ELSS, provided your goals are 5-7 years away. Equity is considered by many experts to be the asset class that can yield returns higher than many other instruments in the section 80C basket. ELSS provides you a chance to buy stocks thru mutual funds and at the time save income tax with higher returns on your long term investment.

Investing In Equities - Better Returns while Saving Income Tax
one of the best asset classes to provide that benefit is equity. Though its risky and volatile in the short-run , all kinds of long-term gains from equity, including capital returns and dividend income, are tax-free . In fact, as the investing period gets longer, dividend becomes a significant part of gains from the equity investment and it provides investors with a consistent flow of tax-free income.

ELSS - Income Tax Saving Instrument - Give It A Thought
If you haven't made the necessary investments already, it is time to go through your salary statement to find out the amount you need to set aside for claiming deductions up to Rs 1 lakh under the section 80C of the Income Tax Act.Since the valuations are quite low at the moment, it makes sense to invest in ELSS.

High Dividend Stocks

Dividend is a tax-free income in the hand of shareholders. Dividends are far more profitable today than it would have been in the last four years. ET Intelligence dug deep to find out companies, which are consistent in paying dividends and in some cases have also increased the payout ratio.

This is because the stock prices have crashed in last one year, as result the dividend yield (dividend per share divided by price per share) has gone up. Therefore, the dividend per rupee of investment is much more today than it was earlier. However, investors should not aim at accumulating stocks with high dividend yield because such high yields may not be sustainable in case profit falls due to economic slowdown.

ET Intelligence dug deep to find out companies, which are consistent in paying dividends and in some cases have also increased the payout ratio. A high payout ratio means a higher percentage of profits are distributed among shareholders as dividends.

The payout ratio has come down for most of the companies in the table. For instance, Great Eastern Shipping paid 38.6% of its profits as dividend in FY 2003, which came down to 17.3% in FY 2008.

The drop in payout ratio has to be seen in the light of high growth in profits. When profits rise at astronomical rates, the dividend growth tends to be a bit lesser because the company prefers to retain some amount with it for further investment.

Investors interested in earning dividends should steer clear of companies with high fluctuations in profits. For instance, Tata Motors had incurred losses in FY 2001 and FY 2002.
Though the company is incurring losses, it can still pay dividend from its past cash flows. But sustaining dividend payment will become extremely difficult in near future. Similarly, other auto manufacturers, like Ashok Leyland, were also excluded from the sample because they operate in highly cyclical industry.
As we all know that investing in stocks is a risky affair, so, an investor should always try to balance his investments between stocks and fixed interest instruments, which are less risky. We did a simulation (taking the stocks mentioned in the table) to calculate the return purely from the dividend the stocks have been paying.

We assume that an investor had put in Rs 1,000 in each of the 10 stocks on April 01, 2003, taking his total investment to Rs 10,000. The amount invested in all stocks was same to make a portfolio with equal proportions invested in different stocks. At the end of first financial year on April 01, 2004, the investor would have received dividends from the companies amounting to Rs 1,264.

To minimise risk, we assume that the investor had invested the dividend in a fixed deposit for one year at the interest rate of 5.25% and then kept on rolling the fixed deposit every year for another one year. This is called ‘hybrid strategy’ , wherein the income from risky investments (in this case equity) is routed to relatively less risky investments (in this case fixed deposit).

Similarly, every year on the first day of April, the investor would have got dividends, which he would have routed to fixed deposit of one year. Following this strategy, the investor would have made Rs 8,970 from dividend and interest on those dividends in five years.

It is noteworthy that adopting this hybrid strategy the investor would have almost recovered 90% of his entire investment in five years time. This translates to annual return of 13.7% per annum from dividends only.

The most interesting part of the result is that the investor would have made a much higher return on his investments than offered by any fixed rate instrument. On the top of it, that return would have had been entirely free from taxes. The interest on fixed deposit is taxed.

As the interest earned formed a lesser part of the return; the tax incidence would also had been much lesser. Moreover, we have not considered the capital gains. The value of the total portfolio stands at Rs 46,302 today— close to five times of the principal amount of Rs 10,000—though the market has crashed by more than 50% since its peak.

Top Stocks to buy now : 2009

As uncertainties prevail and a revival expected only post second quarter of 2009, looking at current stock market situation it will pay to buy stocks of large cap companies with a proven track record, high earnings visibility, low leverage, good book value and low debt. Buying stocks with strong promoter holdings looking at recent Satyam fiasco could be one one of the considerations for stock buying.

Stock trades at cheap brokerage fees and buying stocks online or online stock trading have made trading stocks very frequent practice for normal investor, they should understnad that stocks mentioned here are for long term investing and will be fruitful if they hold for longer time durations.

In the aftermath of economic slowdown and fall in markets, and also uncertainty over the next few quarters, it is advisable to play safe and practice stock buying of large companies with a consistent track-record. Stock trades are best to be avoided for retail investor. Online stock trading have made it very easy for retail investors to trade stocks very frequently. It is complete no-no in current stock market situation.

Sandeep Shenoy, strategist, Pinc Research says, “Companies with integrated operations, strong balance sheets, low leverage or ability to complete financial closure for capex, and low working capital requirements are preferred.”

Beyond that, interest rate sensitive sectors are finding favour. Says Srivastava, “We are favourably inclined towards rate-sensitive sectors like banking, auto or even in real-estate on a selective basis. But, as the market is expected to be range bound, a trading strategy could prove helpful.”

Defensive plays like FMCG and utilities, too, figure among the preferred lot even as there is already some amount of premium built in their valuations, due to the stability they provide. Additionally, users of commodities are expected to outperform. Says Manish Sonthalia, senior VP Research & Strategy, Motilal Oswal Securities, “Now, the consumption side, like auto (two wheelers) will get more importance. Among other preferred sectors are FMCG and telecom.” Commodity user industries like construction, which may get a fillip on account of increased infrastructure spending, also figure in the list, although there are some issues pertaining to funding of projects.