Stock Idea: Country Club India

Country Club India
Annual Report Analysis
Large increase in membership revenue: CCIL’s aggressive expansion plans in terms of acquiring properties and offering comprehensive range of products to its clients has helped the company to grow at CAGR of 210.8% over last three years to Rs3.18bn in FY08. In FY08, CCIL added 37838 members to its existing ones and increased its total membership to 155483. CCIL spent about Rs3.83bn in FY08 for acquiring properties and refurbishing the old ones. The spent-per-head (SPH) grew by 33.5% to Rs3318. But SPH is still a small amount (on absolute basis) on the base of average membership revenue of Rs 70600.

Cost impacted due to high sales figure: Despite an increase in the cost from Rs0.95bn to Rs1.93bn, the actual cost increased only by 70bps from 62.6% in FY07 to 63.3% in FY08 (as % of sales). Increase on absolute basis has occurred due to an increase in the personnel and advertisement cost to generate more membership revenues.
Drop in RoCE as well as RoE: RoCE decreased in FY08 to 14.3% from 20.0% in FY07 due to an increase in the total capital base (because of QIP issue, GDR issue and conversion of some amount of FCCB).As a result, RoE also decreased from 29.3% in FY07 to 16.4% in FY08. It is expected to deteriorate due to conversion of the remaining FCCB’s in FY09. RoE would improve from FY10 due to strong revenues and profit growth and no further increase in the capital base.

Valuation: At the CMP of Rs 270, the stock trades at 4.5x FY09E and 2.7x FY10E earnings. We believe that CCIL should trade at a premium to the current valuations, given its strong revenue and profit growth. We maintain BUY rating on the stock with a target price of Rs 797 (8x FY10E).

The major revenue contribution has been from the membership revenues (seen from the table above). It grew by 114.4% (YoY) from Rs1.24bn to Rs2.67 bn in FY08. Also average membership revenue has increased by 47.9% to Rs70600. This has been primarily due to aggressive expansion plans in terms of acquiring properties at existing as well as newer locations (domestic and international) and offering comprehensive range of products to its clients, depending upon their income class and requirements. The company acquired 16 properties during the year, taking the total to 40 till FY08. Majority of these properties have been acquired in major cities like Chennai, Pune, Delhi, Kolkatta, Ahmedabad, Baroda, Surat etc. This resulted in an addition of 37838 members to the existing ones and increased the total membership base to 155483. Subscription from members and club revenues grew significantly by 76.4% to Rs516m.But the SPH (Spent per head) grew only by 33.5% to Rs3318 per member which is still a small amount (on absolute basis) on the base of average membership revenue of Rs70600. SPH, which is recurring in nature, is in our opinion indicative of the patron loyalty (since only regularly visiting members will spend at the club). We believe it is imperative for CCIL to focus on this aspect of its revenue profile even more than simply on new members. A high proportion of SPH will indicate superior earnings quality which would be valued at significantly higher multiples than membership revenue (which is non-recurring in nature)

Source: Prabhudas Lilladher

Technicals: Power Sector

CESC has been witnessing a falling wedge pattern and if the stock rallies above 310 levels where it will fill the gap formed during the downtrend, we expect the stock to witness a smart rally. RSI also for CESC is oversold and once the stock rallies above 310 levels, the RSI will start to move orthward indicating a bullish pattern. We recommend to buy CESC at current levels, with a stop loss of 250 and an initial target of 350 and the second target being 400.

NTPC has taken support of the major trend line and shown a spurt from there. A breakout above 188 levels will indicate a bullish pattern in the stock. RSI is also showing an upward movement from the bottom levels also indicating positive movement for the stock. We recommend to buy NTPC at current levels, where the stock will cross the support line, with a stop loss of 160 and an initial target of 205 following a target of 220.

After making double top formation at around 1100 levels, the stock has corrected up to 700 levels. The downward price gap is seen on weekly chart and the gap has to be filled for resuming its uptrend. After crossing 950 level, the price gap on weekly chart will get filled and the 'Hammer' structure seen on chart is expected to support downtrend, if seen. RSI for REL INFRA is in the oversold territory and an upward movement of the same indicates a positive move northwards for the stock. We recommend to buy REL INFRA at current levels, which is the level where the gap will be filled, with a stop loss of 780, which is the level near the previous low made by the stock and a targets of 1150 and 1350.

Source: MOST.

Stock Idea: SREI Infrastructure

Kolkatta based NBFC, SREI Infrastructure Finance touched a new low yesterday at Rs.70 and then gradually recovered to end the day at Rs.74 levels. The reason for this fall? The company has come under the ministry of corporate affairs scanner for 36 alleged violations of norms laid down by the Act that governs Indian firms, the Companies Act of 1956. The charges range from investments in the stock market without proper guidelines to loans granted without permission from its board of directors, and misappropriation of funds by an employee. The company has refuted these charges and said this is just an enquiry and company would furnish information, they are not formal charges.

Financially, the company’s has done well for the fist quarter ended 30th June 2008. Its income rose, on a YoY by 82%. PBT was up by a whopping 135% and PAT was up 85% atRs.43.20 crore. Its provison for bad and doubtful debts was significantly low at Rs.4.01 crore.

The company is fancied quite a bit on the bourses. It is a part of the consortium of advisors that includes agencies like RITES for the Rs 30,000-crore worth 1,047-km long eight-lane highway project along the river, Ganges. SREI Sahaj e-Village, a subsidiary of SREI is planning to setup 25,000 common service centres to initiate e-governance in rural areas in six states namely West Bengal, Bihar, Orissa, Assam, Uttar Pradesh and Tamil Nadu. The group plans to capitalize on this rural reach. Its telecom subsidiary Quippo builds towers for telecom companies and announced its plan to inject Rs.6750 crore over the next two to three years to set up nearly 25,000 telecom towers, mainly in rural India as the Govt provides a 50% subsidy to companies that are willing to set up mobile towers in rural areas.

It’s a favourite stock of the FIIs as they hold 44.20% stake as against promoters holding of just 25.05%

Source: sptulsian.com

Intraday Trading Calls for 26th September

Indian Stock Market may open nagetive but a smart recovery expected in mid session and good positive closing expected today.

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

GSS AMERICA INFO (239)
Buy Above 242.65 Target 248.15, 255.00
Sell Below 236.20 Target 230.15, 222.00
BALAJI TELE (142)
Buy Above 143.65 Target 147.45, 152.00

Sell Below 140.20 Target 137.15, 134.00
PUNJ LLOYD (304)
Buy Above 306.55 Target 312.35, 320.00

Sell Below 301.40 Target 296.50, 290.00
CORE PROJECTS (285)
Buy Above 288.55 Target 294.60, 300.00

Sell Below 282.10 Target 277.45, 272.00
VOLTAS (108)
Buy Above 110.20 Target 114.25, 120.00

Sell Below 106.15 Target 102.50, 98.00
GMDC (142)
Buy Above 143.75 Target 148.20, 154.00

Sell Below 140.05 Target 136.15, 132.00

GOOD LUCK