Stock Ideas: Steel Strips Wheels Ltd.

A part of the Steel Strips group, the company manufactures the steel rims which come around the wheels of automobiles. It supplies to Maruti, Mahindra & Mahindra and Bajaj Tempo.

The company has posted its results for the year ended 31st March 2008. In real terms, the company has shown an improvement but a look at the margins indicates that there has been some pressure. YoY, the net sales rose 31% at Rs.259.64 crore. The company’s operating expense rose 32% and though the EBIDTA rose 24% at Rs.49.42 crore, its OPM was down from 20.12% to 19.03%. PBT was up 17% at Rs.23.36 crore and PAT rose 22% at Rs.12.56 crore. NPM was also down marginally at 6.57% from 7.07% last fiscal.

The company’s future growth path looks good. It is setting up a new plant for manufacturing wheels rims for passenger cars and multi utility vehicles near Chennai in Tamil Nadu, with an initial capacity of 3 millions wheel rims p.a. This is likely to start trial production in 1st quarter of year 2008-09.

The company’s focus is expected to be exports and it has already started going ahead in that direction. In April 2008, Renault of France, one of the largest manufacturer of cars in Europe and the leading manufacturer of light commercial vehicles, has given an export order to the company for supply of approx 1 million steel wheel rims over 5 years, valued at approx Rs.110 crore. This export order is for one of their new vehicles to be produced in Europe.

Prior to this, PSA Peugeot Citroen, Europe's number two automotive manufacturer had given another export order for the supply of over 70,000 steel wheel rims for their existing passenger car model, valued over Rs 4.50 crore p.a This is the second order from them, they had already placed another order for 13,75,000 steel wheel rims, valued at over Rs 75 crore.

The company expects its exports to grow over 200% in FY 08-09 and hopes to cross export of 4,25,000 wheels rims in the current fiscal. The rising cost of steel is sure to hike up its operating costs this fiscal too but surely, it will be able to pass it on to the consumers.
Quoted at Rs.170, stay invested.

Source: Sptulsian.com

Markets Today

Rally in index heavyweight Reliance Industries led rally on the bourses today. Improved Index of Industrial Production (IIP) data aided the surge. Firm Asian and European markets also boosted the sentiment. However, Infosys slipped ahead its Q4 March 2008 results due on 15 April 2008.
Power and capital goods stocks rose. IT stocks were mixed. Banking stocks rose. Bharat Heavy Electricals and Larsen & Toubro were major gainers from Sensex pack. Ambuja Cements and Infosys were major losers from Sensex pack. The market breadth was strong.
Asian stocks rose today, 11 April 2008, after Banc of America Securities upgraded the US semiconductor sector and Wal-Mart Stores Inc, the world's largest retailer, raised its profit forecast. Key benchmark indices in Hong Kong, Japan, China, South Korea, Singapore, and Taiwan were up by between 0.61% to 2.92%. European markets which opened after Indian markets were firm. Frances CAC 40, Germanys DAX and UKs FTSE 100 rose in between 0.69% to 1.15%.
India's industrial output (IIP) rose 8.6% in February 2008 from a year earlier, rising from the previous month's upwardly revised 5.8% growth, data showed today.
The wholesale price index rose 7.41% in 12 months to 29 March 2008, accelerating from the previous week's annual rise of 7%, government data showed today, 11 April 2008. The data was announced at about 10:45 IST. The rate is the highest reading since 13 November 2004 when it was 7.68%. The annual inflation rate was 5.94% during the corresponding week of the previous year.
The 30-share BSE Sensex provisionally ended up 121.88 points or 0.78% at 15,816.98. The Sensex gained 262.14 points at days high of 15,957.24, hit in early afternoon trade. At the days low of 15673.67 Sensex lost 21.43 points in mid-morning trade.
The BSE clocked a turnover of Rs 5556 crore today, 11 April 2008 as compared to turnover of Rs 5,519.49 crore on 10 April 2008.
The S&P CNX Nifty was up 52.25 points or 1.1% at 4785.25 as per provisional figures.
The BSE Mid-Cap index was up 0.62% at 6,519.09 and the BSE Small-Cap index was up 0.59% at 8,078.78.
The market breadth was strong: on BSE, 1634 stocks gained, 1055 stocks declined and 59 stocks were unchanged.
Indias largest private sector firm by market capitalization and oil refiner Reliance Industries rose 3.34% at Rs 2,550.05. Reportedly, Reliance is in talks with several oil majors to sell up to 10% in its deep-water D6 block off India's east coast.
IT stocks were mixed on the penultimate trading session ahead of Infosys annual guidance on Tuesday 15 April 2008. Infosys, Indias second largest IT exporter by sales, declined 1.96% to Rs 1,424.95. Tata Consultancy Services (up 0.69% to Rs 907) and Satyam Computer Services (up 2.96% to Rs 436 ), rose.
Banking stocks were mixed after higher inflation data. Indias largest private sector bank by operating income ICICI Bank declined 1.71% to Rs 787.25. It came off from its high of Rs 822. However, State Bank of India (up 0.2% to Rs 1,665.10) and HDFC Bank (up 0.34% to Rs 1,330) edged higher.
Capital goods stocks rose. Larsen & Toubro (up 3.65% to Rs 2,776), Bharat Heavy Electricals (up 3.67% to Rs 1,830) and Suzlon Energy (up 0.22% to Rs 290.35) edged higher.
Power stocks rose. Tata Power Company (up 3.95% to Rs 1,247.05) and Reliance Power (up 0.82% to Rs 361.35), NTPC (up 0.27% to Rs 186.50) edged higher. India's second largest power utility by revenue Reliance Energy rose 2.22% to Rs 1,281.15 after the company said on 10 April 2008 it has spent about a third of the Rs 800 crore ($200 million) allocated for buying back shares from the stock market.
Oil & Gas stocks rose. Cairn India (up 4.38% to Rs 252.75), Gail India (up 4.24% to Rs 445), Reliance Petroleum (up 3.68% to Rs 181.95) edged higher.
Hindalco Industries (up 1.67% to Rs 176.35), Reliance Communications (up 1.83% to Rs 493.25), Bharti Airtel (up 0.69% to Rs 804.20), Mahindra & Mahindra (up 1.31% to Rs 620.25) , Tata Steel (up 0.92% to Rs 692.20) edged higher from the Sensex pack.
Ranbaxy Laboratories (down 1.58% to Rs 443.55), Grasim Industries (down 0.78% to Rs 2,550), Hindustan Unilever (down 2.02% to Rs 235.15) , ITC (down 1.83% to Rs 204.15) and Ambuja Cements (down 3.61% to Rs 117.60), ACC (down 0.05% to Rs 813.20) edged lower from Sensex pack.
The near term trigger for the market is Q4 March 2008 results of India Inc. Analysts will be closely watching what the company managements have to say about the outlook for the year ending March 2009 (FY 2009). Analysts will also scrutinize disclosures that companies may make regarding foreign exchange derivatives products that they have bought on the advice of their bankers. A steep decline in the value of the US dollar against the Japanese Yen and the Swiss Franc hit Indian corporates which have used these two currencies (Yen and Franc) extensively to swap their rupee denominated debt. As per estimates by a domestic brokerage, the mark-to-market losses of corporate India under forex derivatives could be around $4 billion.
What added to the gloom regarding corporate earnings was lower-than-expected provisional results announced by Bharat Heavy Electrical (Bhel), Indias biggest power equipment firm by revenue, recently. Slower than expected execution rate and project specific delays could be the reasons for the lower-than-expected growth in the top line of Bhel.
Recent government action to rein in inflation has also added to uncertainty about outlook on corporate profits. The government has scrapped import duty on crude edible oil and banned the export of rice and pulses. It also surged steelmakers to cut prices of the alloy.
Prospects of further outflow by foreign funds to offset losses incurred by them in the US sub-prime mortgage market continue to weight on the market sentiment. In the calendar year so far, FIIs sold shares worth a net Rs 11455.60 crore (till 9 April 2008), to offset their huge losses in the US sub-prime mortgage market.
As far as domestic liquidity is concerned, inflows to equity mutual funds and unit linked insurance plans (with high weightage for equity) have slowed after the sharp setback on the bourses in the past two months. As per provisional data, domestic funds bought shares worth a net Rs 594.48 crore on Thursday, 10 April 2008.
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Intraday Calls for 11th April

Today Indian Stock Markets will depends on two major announcements. First is Inflation Numbers which is going to be announced at 10.30 am and second is Industrial Growth Numbers which will be announced at 12.00 noon today. But as all global markets trading in green so A positive opening expected and if Inflation rate declines then market may see a huge and strong rally today.

Today's Intraday Picks:

Inox Leisure

Nagarjuna Construction

RPL

IOC

HDIL

Satyam Computer

For Levels and Targets download the file by CLICK HERE.

Good Luck