Investment Ideas: Great Offshore, Indoco Remedies, JSW Steel

Emkay Global Financial Services has maintained its buy rating on Great Offshore with a target price of Rs 710 in its August 4, 2008 research report. "Great Offshore’s (GOFF) Q1FY2009 pre-exceptional net profit at Rs 356 million is below our expectation primarily because of lower revenue continuation from high margin offshore segment and higher than expected repairs & maintenance cost for the quarter."
"We are not changing our earnings estimates for GOFF. The company has announced that it has called of its intention to acquire majority stake in Seadragon Offshore. Hence is absence of any near term upside from acqusition we are downgrading price target of GOFF to Rs 710. We have valued GOFF at 8X its FY2010 earnings of Rs 66 and added FY2010 estimated cash per share of Rs 180 on its book. Stock currently trades attractive valuations of 6.3X its FY2010 earnings and 3.74 X EV/EBIDTA. Maintain BUY," says Emkay Global Financial Services' research report.

Angel Broking has maintained its buy rating on Indoco Remedies with a revised 15-month target price of Rs 400 in its July 31, 2008 research report. "For 1QFY2009, the company posted Net Sales of Rs 109.5 crore (Rs 100.3 crore), a yoy growth of 9.1%. Growth during the period was mainly aided by Exports, which grew 16.1% and contributed 22.1% (20.8%) of overall sales. The company’s Domestic business, on the other hand, posted a yoy growth of 8.6% during the period, with Domestic Formulations registering a growth of 8.7%. Overall, the company ended with Profits of Rs 24.6 crore (Rs 22.1 crore)."
"At the CMP, the stock is trading at 6.1x FY2009E and 5.3x FY2010E Earnings, which we believe is attractive. Going ahead, we expect Topline to clock a CAGR of 15% over FY2007-10E primarily led by Exports. The growth in Exports would be on the back of better contribution from the Regulated markets to 22% of Sales during FY2010E (17% of Sales during FY2008) registering a CAGR of 36% over FY2007-10E. We have pruned our FY2009 and FY2010 estimates by 9.8% and 9.9%, respectively. We maintain a Buy on the stock, with a revised 15-month Target Price of Rs 400 (460)," says Angel's research report.

Emkay Global Financial Services Ltd has recommended buy rating on JSW Steel, with price target of Rs 1380, in its report dated 4th August, 2008.
“JSW Steel reported 1QFY09 results, which are significantly ahead of our estimates. Net sales stood at Rs 44.56 billion (yoy up 85.9%, qoq down 9.3%), EBITDA stood at Rs 8.15 billion. However, this includes forex loss of Rs 3.67 billion of which Rs 2.29 billion is on capital account translational loss. Adjusting for the notional Fx loss (including the impact on deferred tax on the same) EBITDA stood at Rs 10.4 billion (yoy up 46.5%, qoq down 1.5%) and APAT stood at Rs 4 billion (yoy up 35.7%, qoq up 30.1%). JSW reported Adjusted FDEPS of Rs 20. We believe a large part of this performance is attributable to the exports where we believe the realization is significantly higher as compared to the domestic markets. At CMP of Rs 797, the stock is trading at 8.6x FY09 and 5.7x our FY10 FDEPS estimate of Rs 93 and Rs 138 respectively. On EV/EBITDA, the stock currently trades at 5.7x and 4.3x FY09 and FY10 estimates. We maintain BUY on the stock with target price of Rs 1,380 which is 10x our FY10E consolidated FDEPS”.

Stock Idea: Kanoria Chemicals

Kanoria Chemicals is a leading maker of chemical intermediates of India. But its performance for the first quarter ended 30th June 2008 has not been too encouraging. Rising costs and exchange loss have dented the profit margins.
YoY, the company’s sales revenue was up 19% at Rs.126 crore. Operating expenses rose 17% and consequently, EBIDTA was down marginally by 1.75% at Rs.26.36 crore. PBT fell down further by 37% at Rs.7.68 crore. OPM was down from 25.39% to 20.92%.
The company suffered an exceptional MTM loss of Rs.6.24 crore on the various FCCB related transactions and this pulled down the PAT, which was down 45% at Rs.5.68 crore. NPM thus declined sharply from 9.72% to 4.51%. In Q1FY08, the company had an exceptional gain of Rs.6.74 crore on its forex transactions.
The company recently commissioned Chlorinated Paraffin project with an installed capacity of 11,500 TPA. It recently completed the acquisition of land, around 30 acres, for its greenfield project in Vizag to manufacture pentaerythritol. The new unit will have an annual capacity of 10,000 tonnes, with an estimated capex of Rs 175-200 crore, to be spread over two years. This unit is expected to go on stream by March 2010. It already has one more pentaerythritol unit in Ankleshwar, Gujarat.
Kanoria Chemicals also has a caustic soda manufacturing facility at Renukoot and it recently commissioned the expanded capacity from 90,00 to 130,000 tonnes per year. IFC, the private arm of the World Bank Group, has invested up to $20 million in the company, to fund the expansion.
The company expects to end the current fiscal on a high note as it expects higher growth due to the expanded capacity also going online. The price of caustic soda has been on the rise and if the company manages to bring down the costs, then it may be able to reap better gains. Stay invested.

Source: sptulsian.com

Stock Idea: Mysore Cement

Mysore Cements, earlier an SK Birla company, it is now a subsidiary of Cementrum I. B.V, Netherlands, which is 100% controlled by HeidelbergCement AG.
The financial performance of Mysore Cements can be rated as being just about ok. The company ends its year on 31st December, hence these are the second quarter results for the period ended 30th June 2008. Rise in the costs and inability to increase the prices seems to have impacted the margins.
YoY, net sales was up 20% at Rs.165.78 crore. Operating expense rose 6% and EBITDA was down 10% at Rs.28.45 crore. PBT was down 13% at Rs.24 crore and PAT was down 14% at Rs.23.91 crore. OPM was down from 19.53% to 17.46% and NPM was down from 16.93% to 14.42%. The inability of the company to pass on the soaring costs to the consumers has affected the overall profitability of the company. Companies had voluntary agreed to hold prices as part of the Government measure to cool down the raging inflation.
The net realisations have been down and though the company was able to match the demand with supply, due to inability to increase price, it had to absorb the losses and cut costs. Its overall input costs have been going up by 15-20%. The company cut down on its raw material consumption due to more efficient fuel and power consumption.
The company had initiated a VRS last year and hence its increase in employee cost has been just 2% and now the company is taking all possible cost cutting measures on internal factors, as it has no control on the external factors.
The company has now sought approvals to expand its Clinkerisation capacity front 1.2 MTPA to 3.1 MTPA at Madhya Pradesh, expand its cement grinding capacity Uttar Pradesh and Madhya Pradesh. It also seeks to expand its cement manufacturing capacity from 0.4 MTPA to 1.2 MTPA at Karnataka. It has placed some orders of machinery and expects the expanded plant in Karnataka to go on stream by 2010 and that in Madhya Pradesh and Uttar Pradesh by 2011. Its capacity by 2011 will thus stand increased from the present 2.1 million tonnes, to 6 million tonnes.
Cement stocks have been on the buyers since the past few days and that is because the markets expect the cement companies to hike their prices once the monsoon season is over and by then, demand is also expected to pick up. Currently quoted near its low of Rs.25 at Rs.34, stay invested.

Source: sptulsian.com

Intraday Trading Calls for 8th August

Indian Stock Market may open flat to nagetive. A nagetive closing expected today.

Today's Intraday Trading Calls / Stock Tips (Keep Appropriate Stop Loss for each trade):

TRIVENI ENGINEERING (111.50)
Buy Above 112.75 Target 115.60, 119.00
Sell Below 110.00 Target 107.1, 102.50
RENUKA SUGAR (133)
Buy Above 134.40 Target 137.45, 141.05
Sell Below 131.70 Target 128.05, 124.00
GUJARAT ALKALI (164)
Buy Above 165.55 Target 168.45, 172.00
Sell Below 162.50 Target 159.05, 155.00
JAIPRAKASH ASSOCIATES (187)
Buy Above 188.75 Target 192.20, 196.55
Sell Below 185.40 Target 182.05, 178.00
VOLTAS (144)
Buy Above 145.20 Target 148.55, 152.00
Sell Below 142.50 Target 139.05, 136.00
MIC ELECTRONICS (135)
Buy Above 136.70 Target 140.20, 144.00
Sell Below 133.20 Target 129.05, 125.00

Others for Intraday: PRITHVI INFO, VAKRANGEE SOFTWARE, PRISM CEMENT, Crew BOS Products Ltd, SAKTHI SUGAR.
Good Luck