Stock Idea: SRF Ltd.

SRF Limited is a market leader in technical textiles, refrigerants, engineering plastics and industrial yarns and a preferred supplier of other fluorochemical products, fluorospecialities and polyester films. But it is now more recognised as the first company which started reporting a healthy income from the sale of carbon credits. Even in April 2009, it reported having got 1.78 million Carbon Credit worth Rs.128 crore from UN body.

The company has done well and now during the fourth quarter ended 31st March 2009, the company reported a profit after tax (PAT) of Rs 21 crore compared with Rs 1 crore PAT recorded during the corresponding period in the previous year. It had a net sales of Rs 408 crore during the fourth quarter. This Q4 performance also includes that of two new businesses, the Engineering Plastics Business and the I

For the whole year 2008-09, the company’s PAT improved by 18% to Rs. 163 crore on a net sales of Rs.1800 crore, up 11%. This rise was despite the Rs.81 crore it lost on account of fluctuations in forex rates.

The positive turning in favour of the company is that demand for its TTB started picking up from March onwards. The company has also completed the buy back, that commenced last year, of shares of the company for Rs. 70 crore from the open market in April this year. The average price of the buy back shares worked at Rs.94.83/- per share as against the approved price of Rs. 160/- per share.

SRF also made two foreign acquisitions during the year - one in Thailand and the second one in South Africa.

Currently quoted at Rs.89, the stock has been steady for over a month now. It is on a bounce back track, stay invested.

Source: www.premiuminvestments.in (By S P Tulsian)

Intraday Trading Calls for 12th May

Stock Market India may open Negative but recovery expected from lower levels at mid-session and it may close positive at the end.

Today's Intraday Stock Tips / Trading Calls (Keep strict Stop Loss for Each Trade):

SCRIP NAME	TRIGGER	PRICE	TARGET 1	TARGET 2
IDFC (532659)	Buy Above	86.20	89.15	92.00
	Sell Below	84.35	81.55	79.00
PETRONET LNG	Buy Above	56.25	58.50	61.00
	Sell Below	54.70	53.10	51.00
RENUKA SUGAR	Buy Above	115.75	119.50	124.00
	Sell Below	113.35	110.05	106.00
NUCLEUS SOFT (531209)	Buy Above	72.50	76.15	80.00
	Sell Below	70.40	67.35	64.00
OPTO CIRCUIT (532391)	Buy Above	125.60	129.25	134.00
	Sell Below	123.40	119.45	115.00
GMR INFRA	Buy Above	112.55	116.25	120.00
	Sell Below	111.15	108.35	104.00
AIA ENGINEER (532683)	Buy Above	172.80	178.65	185.00
	Sell Below	169.50	164.20	158.00

GOOD LUCK

Corporate News

Reliance Power Transmission (RPTL), Essar Power, L&T and JSW Energy are among the eight companies that have been selected to place price bids for three large power transmission projects worth Rs56.5bn. (ET)

The Delhi Development Authority announced a Rs7bn bailout package for cash-drained Emaar MGF, which is developing the Commonwealth Games Village (CGV) project. (BS)

JSW Steel plans to sell its plants in the US at a price lower than its acquisition cost to cut rising losses. (ET)

Tata Teleservices, Vodafone and Idea Cellular are expected to issue multi-year BPO contracts of ~Rs5bn in the next couple of months. (ET)

United Breweries to bottle and distribute Heineken brands in India; will get a one-time fee of Rs3bn. (ET)

ONGC to invest Rs60bn in new and existing fields in current fiscal to raise output. (ET)

ONGC may see its natural gas output almost double to 100mn cubic meter a day by 2015-16. (FE)

Maruti plans to focus on the rural market, to double its outlets in rural India from the present 231 to around 450 in the next two years. (BL)

Maytas Infra is expected to achieve financial closure for the Hyderabad metro rail project in about three months. (BS)

Tatas-Srei JV may share passive infrastructure with two new operators Swan Telecom and S-Tel and targets to build over 30,000 towers by end of current fiscal. (ET)

RCom and Tata Teleservices have opposed a proposal to auction extra airwaves. (ET)

IOC likely to cut stake in Farsi gas and oil field in Iran as it faces financing pressure due to continuing losses on fuel sales. (FE)

GMR Energy, a subsidiary of GMR Infrastructure Ltd, is planning to set up a 2,000MW thermal power plant near a port on the west coast as it has already tied up coal supplies by acquiring a mine for US$100mn in Indonesia last year. (BS)

TCS likely to take a call on promotions at the end of Q1 FY10. (ET)

GMR Infrastructure will be issuing preferential equity shares to India Development Fund, the private equity arm of IDFC Infrastructure Fund. (BL)

Bajaj Auto to ramp up production at Pantnagar. (BS)

Sri Lanka has assured to expedite the implementation of a NTPC's 500mw imported coal-based power project at Trincomalee in Sri Lanka. (FE)

With a 24% increase in its wage bill, Coal India is looking for a price hike to protect its bottomline. (FE)

HMSI, the two-wheeler arm of the Japanese parent, has drafted an aggressive strategy for motorcycles that will also act as a key differentiator with its sibling, Hero Honda. (BL)

The Central Electricity Regulatory Commission has penalised Tamil Nadu Electricity Board, Karnataka Power Transmission Corporation and Rajasthan Rajya Vidyut Prasaran Nigam for grid indiscipline. (FE)

Bajaj Auto has launched new Pulsar model Pulsar 150 DTS-i and 180 DTS-i. (FE)

India's apex consumer disputes panel rejects Satyam shareholder's compensation plea of about Rs50bn. (ET)

Reliance Life Insurance reduced the number of agents by almost a third in H2 FY09. (BS)

Production at tyre giant MRF's factories at Arakkonam and Puducherry, has been hit following a sit-in strike by around 3,000 workers. (BS)

Damodar Valley Corporation plans to raise Rs20bn from the debt market in order to fund the first phase of the proposed 500mw Bokaro project. (ET)

Loop Telecom, a subsidiary of Ruias-managed Loop Mobile (earlier BPL Mobile) announced the soft launch of cellular services in Tamil Nadu and Orissa circles. (ET)

LG Electronics India and Samsung India are in the process of creating new category of LCD TVs, called the light emitting diode (LED) TVs. (FE)

Rasna., holding ~93% market share in the soft drink concentrate market in India, plans to enter the ready-to-drink segment. (FE)

Source: Indiainfoline.com

Focus on Auto Sector

Car and bike sales for the month of April 2009 have gone up. And based on this, Mr.Gupta has been buying up shares of auto component makers and most of the front line auto stocks. And it is not just Mr.Gupta who has been buying. There are many like him who have become bullish on the auto sector. There are also quite a few who believe that this rise in April sales marks an end to the slowdown. They feel its time to invite the bulls over on Dalal Street permanently. But is that so? Is this optimism right?

Absolutely not! This is like celebrating the arrival of the baby the moment the news of pregnancy is declared. Yes, the news is good but it’s too early to celebrate. Mere surge in car and bike sales is not enough. The real mover of the economy is the truck sales. So unless and until the truck manufacturers declare a surge in their sales, there is really no recovery.

Why so much significance to truck sales? Well, it is the trucks which move goods from place to the other. And goods will start moving once industrial activity picks up and demand shows a rise. That in the right sense would mark the kick start of economic revival. But right now, that is not happening. Falling truck sales means that demand is low and there is no need for additional trucks to move goods from one place to the other. So the revival is yet to really happen.

As per figures released by the Society of Indian Automobile Manufacturers (SIAM), motorcycle sales in the country during the month was up 12.11%. Total two-wheeler sales in April rose by 13.71% and domestic passenger-car sales increased by 4.20%. Last year around this time around this time, the gloom in the auto sector was just about beginning to spread. The pile up of inventory, rising raw material costs and falling demand started taking its toll. But this time around, the first month of fiscal 2009-2010 has been good, especially for the car makers. Except for Mahindra Renault, which showed a 68% drop in its sales growth for April, all others have reported a positive growth. Maruti sales was up 9%, Hyundai was up 3.5%, Honda 7.5%, M&M by a sharp 35%, Hero Honda by 29.5%, TVS by 3% and Yamaha by 48.3%.

Commercial vehicle sales were down 11.25%. Ashok Leyland reported a 69.33% decline in commercial vehicles sales in April. Its domestic sales for the month stood at 1,615 units against 5,549 units in corresponding month last year, down by 70.90%. Tata Motors, for the first time since Sept 2008, has registered a YoY increase in April in LCV sales though M/HCV sales were down 28%. So recovery is yet to really happen, that’s the writing on the wall.

What does the rise in car and bike sales mean? Does it not indicate a revival in demand? Yes, it does mean that people have started buying cars and bikes but that buying alone is not enough for the companies and the economy to bounce back. It is good news but not good enough.

And in case of auto component makers, it would take a while for the perk up in demand to percolate down to them. It would be too early to stock up on these auto component stocks. Well, if you have the holding power, you can stock up. And in that context, you can stock up on almost any good stock as whatever goes down does come up, some time or the other. That’s the cycle of life.

Source: www.premiuminvestments.in (By Ruma Dubey)

Stock Idea: Titan Industries

When one looks at the FY09 performance of Titan Industries, it surely seems to have managed to beat the bad times. Its net sales rose 28% at Rs.3832.64 crore. And despite a 23% rise in employee cost, 20% rise in advertising expenses and 38% spurt in interest outgo, the company has managed to show a 11% rise in net profit at Rs.163.92 crore.

Watch segment sales grew by 3.6%, jewellery sales went up by 36.3%. Sales of other products, including eyewear, accessories and precision engineering components, rose by 48.8%. During the year, it added 135 new stores for watches, jewellery and eyewear businesses. As on 31 March 2009, the company has a total of 487 stores (6,03,686sq ft). It declared a dividend of 80% and a special silver jubilee additional dividend of 20% making a total dividend of 100% for FY09.

The overall year has been good but its fourth quarter has not been that good. In Q4Fy09, net sales dropped 6% (QoQ) but net profit dropped by a whopping 86% on a QoQ. OPM was down at 5.89% (11.69%) and NPM was down at a meager 1.15% (8%). What took a toll, apart from the lower sales was the impact of Rs.12.78 crore due to reduction in the discount rate for actuarial valuation of gratuity and leave salary. It also provided Rs.17.58 crore towards income tax and interest thereon of earlier years, which were in respect of issues where similar demands have been raised earlier and are being contested.

The company feels that the coming quarter, Q1FY10 will be a good one as it is peak marriage season and demand is expected to be high. In FY10, overall, it expects a growth of 15% but given the difficult times we all currently live in, it is better we take a quarter-to-quarter approach.

In Q3FY09, Rakesh Jhunjhunwala held 8.37% stake in the company, which as on 31/03/09 stands at 8.1%

Source: www.premiuminvestments.in (S P Tulsian)