Stock Idea: Gujarat NRE Coke

With coal prices going through the roof, it was a foregone conclusion that Gujarat NRE Coke would post a superlative performance for first quarter ended 30th June 2008, it was only a question of “how superlative”.
YoY, exuberant would be more like it. On a whopping 154% rise in net sales, the company’s EBIDTA rose over two times, the PBT of the company rose 2.26 times and PAT was up by a whopping 2.20 times at Rs.94.40 crore. But the margins indicate that there is some pressure. OPM was down from 42.10% to 34.68% and NPM was down from 28.76% to 25%.
QoQ, the performance was mixed. Though net sales was down marginally by 0.8%, it managed to reduce its operating costs by 14.38% and this helped the EBITDA which was up 23%. It reduced its interest outgo by 13% and depreciation rose 31%. PBT rose 28%. Its taxation for the quarter was down 22% and this further helped boost the net profit, which was up 47%. Unlike YoY, the QoQ margins showed an improvement. OPM was up from 27.85% and NPM from 16.87%, which is quite substantial.
The company currently manufactures one million tonne of coke from its three existing facilities in Gujarat and Karnataka. An additional 0.25 mt capacity is being commissioned at Dharwad, which is expected to go on stream by March 2009. It plans to set up a one million tonne coke manufacturing facility at Nellore in Andhra Pradesh, at a capex of Rs.450 crore, to be financed mostly from internal accruals and is expected to be commissioned by 2010. It has dropped its rights issue plan.
It has also lined up Rs.600 crore worth of power projects. It has installed 30 MW wind power capacity and installation of another 30 MW at Rs.170 crore is to be completed by September 2008. The company is also installing 60 MW waste heat recovery power plants at its coke plants, costing Rs.300 crore. Once all these go on stream, the total power generation capacity is expected to be 147.5 MW.
The company has also lined up investments tuning over $500 million (of which it has already invested $300 million) in developing its two coal mines in Australia, which is expected to take its total coal production capacity to 7 million tonnes by 2012-13. This investment is also being funded through internal accruals. Goes on to show, how much money the company managed to make due to soaring coal prices. And it’s gratifying to know that instead of sitting on these gains, it is ploughing back the gains and distributing to shareholders also. It has recommended a bonus issue in the ratio of 2 shares for every five held. This is the sixth bonus since 1995-96.
The average net realisation of the company has gone up from Rs 8,600 a tonne to Rs 19,100 a tonne during Q1. From $450 a tonne in April, spot coke prices reached $600 a tonne in June and is now ruling at $700. The company sells 60% of its production on spot basis.
Clearly, the prospect for coal remains highly bullish in the current fiscal too. One can consider buying this stock at every decline for good long term gains.

Source: Sptulsian.com

Stock Idea: Bank of Rajasthan

Total income of the bank, YoY, rose 25% at Rs.341.40 crore. Treasury operations were at Rs.116.46 crore as against Rs.97.91 crore in Q1FY08; Corporate or wholesale banking income was at Rs.126.92 crore while retail banking income was at Rs.92.26 crore. PBT was down 11% at Rs.37.76 crore. The bank managed to reduce its taxation by 44% and that helped the net profits, which was more or less flat at Rs.30.92 crore as against Rs.30.17 crore in Q1FY08.

Its capital adequacy was at 12.26% compared to 11.90% last Q1. Gross NPA was at 1.65%, down from 2.70% while net NPA was at 0.42% as against 0.62% in previous Q1.

The Bank is now well on its path to make a bigger presence in the Indian banking sector. It has converted all its branches online on a pan India basis and has emerged as one of the most technology driven private sector banks. The bank currently has a network of 469 branches and has applied to RBI for an additional 40 branches.

The bevy of activity in the bank, specially with so many FIIs picking up a stake in the bank indicates that many are stocking up their stake, in a run-up to the opening up of the banking sector to foreign investors in April 2009. Currently, this is one of the most profitable banks in the Indian banking sector, and it is little wonder then that most of the FIIs want to be prepared to hike their stake beyond 5% once they are presented with the opportunity.

Banking stocks might not be too good right now, but stay invested, as once April 09 comes, the entire dynamics of the banking industry will change.

Source: sptulsian.com

STOCK IDEA: GMR INFRA

All those familiar with this website, would know that this has been one of the stocks which we have been recommending steadfastedly. The stock price has come down, keeping in tandem with the stock indices, which have also slipped down considerably. Yet despite the fall in the stock price and the current Q1 results, which have not exactly been trailblazing, we stand by our recommendation. This is a stock, which should not be viewed on a QoQ basis, GMR Infra is more of a long term stock and its real value would get recognized only on a long term basis.
For the first quarter ended 30th June 2008, the consolidated performance of the company has been good when one looks at the improvement in the sales but the forex losses, higher fuel charges, depreciation and interest outgo, plus the not-so-good performance of some of its subsidiaries have dented the profit margins. YoY, net sales was up 86% at Rs.885.47 crore. Operating expenses rose by a whopping 91% and of this, over 59% constituted of the fuel cost. EBITDA was up 55% at Rs.244.92 crore. The interest outgo rose from Rs.37.53 crore to Rs.68.91 crore. Depreciation was up from Rs.40.64 crore to Rs.80.16 crore. This higher interest and depreciation outgo is on account of the starting of its Hyderabad airport.Profit before tax and exceptional item was at Rs.96.57 crore as against Rs.79.58 crore in Q1FY08, a rise of 21%. Its subsidiaries, Vemagiri Power Generation Ltd (VPGL) and GMR Hyderabad International Airport Ltd (GHAIL) together have accounted for a notional foreign exchange translation loss of Rs.45.59 crore as against an exchange gain of Rs.9.33 crore in previous quarter. This loss/gain is with reference to their project loans. However, both these subsidiaries have adequate foreign currency revenues to provide hedge against any currency fluctuation risks that may arise as and when the interest payments and principal repayments of these loans are made. Also, GHIAL has not been able to levy the User Development Fee (UDF) on overseas passengers for three weeks in April 2008 and on domestic passengers for the entire current quarter, pending approval from the Government of India.
After maintaining its tax at almost the same levels, the PAT was down 9.72% at Rs.41.90 crore. These consolidated results include the accounts of GMR Infrastructure Ltd, its subsidiaries, joint ventures and associates. The overseas joint venture entity, being ´Istanbul Sabiha Gocken Uluslarasi Havalimani Yatirim Yapum Ve Isletme Sirketi (SGIA)´ has been accounted as per Accounting Standard 27 on Financial Reporting of Interests in Joint Venture based on 40% shareholding.VPGL has now suspended its power generation activities due to non-availability of natural gas and it has also incurred an operating loss of Rs.27.52 crore in current Q1. This too has dented GMR’s margins. Following the expiry of the seven year Power Purchase Agreement, GMR Energy Ltd´s 220 MW plant at Tanir Bavi near Mangalore in Karnataka ceased to operate. Work has been undertaken to relocate the plant to KG Basin, near Kakinada in Andhra Pradesh to operate it as merchant plant after changes to run the plant with natural gas as fuel. This will take some time to generate income and by next fiscal, this unit too should be able to contribute to the margins. Also through its step-down subsidiary, GMR Energy Global, has entered into necessary arrangements to acquire 50% equity stake in a Dutch company - InterGen NV by means of compulsory convertible debentures. It has also given a corporate guarantee up to a maximum of US$1.3 billion to the mandated lead arrangers on behalf of a fellow subsidiary to enable it to raise debt for financing the aforesaid acquisition.
This blip in the performance is just that, just a blip. GMR Infra is a great infrastructure story - its presence in the airport, in the road project, in the power generation, SEZ, property development all still makes it a great stock. Things will only get better once its realty development begins at Delhi and Hyderabad. The stock price is just a reflection of all the infrastructure and realty stocks listed on the bourses.One must take a long term call in GMR Infra because all these infrastructure projects would start giving profits in one year’s time. There is no point in taking a day to day call. Keep some patience and the returns would come, stay invested.

Source: sptulsian.com