Wednesday, August 26, 2009

Intraday Trading Calls for 26th August

Indian Stock Market may open positive and remains positive but with very high volatility.

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

SCRIP NAME

TRIGGER

PRICE

TARGET 1

TARGET 2

JP ASSOCIATES

Buy Above

221.55

227.15

232.00

Sell Below

218.35

213.25

208.00

ROLTA INDIA

Buy Above

187.25

192.10

198.00

Sell Below

184.15

180.35

175.00

MOSER BAER

Buy Above

91.75

95.20

98.00

Sell Below

90.30

87.45

84.00

IDFC

Buy Above

131.60

136.20

141.00

Sell Below

128.70

125.10

121.00

BRFL

Buy Above

191.60

197.70

204.00

Sell Below

189.10

185.20

180.00

GMR INFRA

Buy Above

136.25

140.35

145.00

Sell Below

133.50

130.10

126.00

NAGARJUNA CONSTRUCTION

Buy Above

138.60

142.75

148.00

Sell Below

135.40

131.60

127.00

GOOD LUCK

Stock Idea: Nitta Gelatin Ltd.

Earlier known as Kerala Chemicals, NGL is 80.50% subsidiary of Nitta Gelatin Inc., Japan, which is one of the largest producers of Gelatin in the world and, brand name 'Nitta' commands premium in the market. NGIL is engaged in the manufacture of Gelatin, Ossein, DCP and Collagen Peptide. NGL is the largest producer of Gelatin in India.

Gelatin: Gelatin for Pharma Use: Gelatin is a vital ingredient in the most popular drug delivery systems in the world, such as hard capsules, soft capsules, tablets, mini, micro capsules etc.

Gelatin for Food: This type of Gelatin is widely used as an ingredient in desserts, confections, frozen foods, ready-to-eat meals and drinks because of its high purity protein and fat-free property, as well as its gelations and water retention properties.

Gelatin for Digital Cameras: Gelatin is popular as the ideal material upon which to reproduce quality images. It has installed capacity of 3500 TPA for Gelatin.

DCP (dicalcium phospate): DCP is consumed by poulty industries and demand for the same is rising. Company has 11,000 TPA capacity for the same.

Ossein: Installed capacity is 5500 tonnes and entire production is exported to Nitta, Japan.

Company has performed extremely well in 2008-09. Sales increased by 25% due to increased production, better unit sales realization and better sales mix. PBT zoomed by 238%. PAT increased by 126% despite significantly higher tax provision. During the year, company provided 6.49 cr. for depreciation and 6.57 cr. for deferred tax. Thus, total Cash Profit stood at 28 crs. Cash EPS Rs. 33.30 and EPS Rs. 17.88. Gelatin production increased by 14% to 3522 MT. Company changed its drying operation from furnace oil to firewood to more areas resulting in substantial savings. Increase in power tariff increased the power cost by 2.40 crs. Exports of Gelatin stood 2064 MT to 19 countries and 1413 MT sold in domestic market. Ossein turnover increased by 20%. Gelatin turnover increased by 30% to 84.06 cr.. DCP sales increased by 21% to 52.31 crs. Company has been performing extremely well in current year. For Q1, sales have gone up by just 5%. However, PBT has climbed by 142%. Despite higher income tax provision, PAT is up 110% to 6.07 crs. Q1 EPS is 7.23.

A) During the year, Company has already increased its Gelatin capacity by 400 MT and work is under progress to increase the capacity by further 500 MT. Company is also taking steps to increase the yield and reduce production costs.

B) Collagen Peptide: In recent years, collagen has been found to physiologically activate the human body. Proper use of enzyme that splits the peptide bonds will enable control of Amino acid sequence involved in digestion of the collagen. NGIL Collagen Peptide helps in maintaining health and well being as it is a functional food for healthy/younger skin, controlling bone mineral density and for Joint Health. Company has already commissioned a Plant with 300 MT capacity. Company plans to increase its production capacity next year.

C) Work in a Plant to manufacture 660 MT of Meat Meal and 360 MT of Sterilized Bone Meal has also been completed. It will utilize the solids that go into effluent and convert to value added products for pet food and poultry feed. Considering above developments and continued rising demand for its products from User Industry, NGIL should report spectacular performance.

Valuations:

A) Book Value is Rs. 105/-.

B) RoE is 17.02%.

C) Gross Block is Rs. 136 crs.

D) Net Block is Rs. 58 crs.

E) Stock is trading at 4.56 x FY10E EPS and 3.67 x FY11 EPS.

Above valuations are quite cheap considering Japanese giant holds 80% stake and Company has world class technology to produce globally famous products. Even if NGIL gets a very modest P.E. Ratio of 9, based upon FY10E EPS, its share price should be Rs. 270/-. In stable market conditions, NGIL scrip should appreciate minimum 30% in next 3-6 months and 70% in 12-15 months. A solid scrip available at compelling valuations.

Stock Idea: Wockhardt

Wockhardt is a stock which analysts have written off, in April 09, as the company is saddled with the debt of Rs.3,400 crores. However, we had a different view, which was expressed by us in our cover feature on 2-04-09, wherein story said, "Wockhardt- not yet on the death bed". Share at that time, was recommended at Rs.75, saying that it has tremendous value and potential to rise.

The faith in the stock was re-affirmed by us in our second cover, on 25-06-09, in the story "Wockhardt – CDR Pill will give it color of health".
Now we are seeing the effect on stock price, which has moved to Rs.180, due to the various developments having taken place in the company, in last 4 months. To tide over its liquidity crunch, the company has divested its animal health care and nutritional business for over Rs.750 crores and the promoters of the company, today, divested its ownership of 10 hospitals of Wockhardt Hospitals for Rs.909 crores, to Fortis Healthcare. These 10 hospitals are located in Mumbai 2, Kolkata 3 and Bangalore 5, including 2 under construction, having 1902 beds, including 534 beds in 2 Greenfield projects. This includes two JCI accredited hospitals situated at Mulund in Mumbai and Banerghatta Road, Bengaluru.
Wockhardt Hospitals had a total debt of Rs.436 crores, as at 31-12-07, which has learnt to have risen to Rs.500 crores, as on date. So of this sale proceeds, almost entire debt is likely to get paid and discharged, while remaining amount is likely to get used by the promoters to deleverage the balance sheet of Wockhardt.
Paid up equity of Wockhardt Hospital is at Rs. 104.28 crores, with face value of Rs. 10 each. 81.79 % of this is held by Dartmour Holdings Pvt. Ltd., in which Mr. H. F. Khorikawala, holds 97.56 %, while 2.44 % is held by his wife Mrs. Nafisa Khorakiwala. Carol Info Services Ltd., another listed company of the group, holds 9.09 %, while Mr. H. F. Khorakiwala holds another 9.09 % in his personal Capacity.
Earlier, in April 09, many leading print media reported that part of the stake in Wockhardt Hospital is held by Wockhardt, which had leveraged balance sheet of Wockhardt and derailed it. This was clearly stated by us in our 2nd April 09 article that it is not so.
Since CDR of Wockhardt has been approved along with that of Wockhardt Hospitals, and in view of group likely to mobilize close to over Rs.1,600 crores, in both the companies, debt burden would get eased to the extent of 50 % and debt equity ratio of both the companies would come within the accepted norms.
The pressing liability before Wockhardt has been FCCB of $ 110 million, which is falling due for redemption on 25-09-09, with liability of $ 142.54 million. Since these FCCB are ruling at a hefty discount, the same can now be bought back by the promoters, on which saving of close to Rs. 350 crores is likely to be made, with equal amount requiring to buy them back.
See how the company gets transformed in no time? Where existence of a company itself having come in question, now it may have surplus funds with the promoters and the company. Wockhardt Hospitals is seen to be completing the deal by December 09, for which business transfer agreement has been signed with Fortis Healthcare. On receipt of Rs.909 crores and after fully paying off its debt of close to Rs.500 crores, the company will be left with about Rs.400 crores, which will be considered as the promoters' money.
However, in view of the promoters, having a stake of 74.08 % in Wockhardt, it will be difficult for them to raise it beyond 75 %, inspite of they willing to do so, on fear of open offer getting triggered. But, this surplus money is likely to get utilized to bring Wockhardt on its own feet and let him bring back its own glory.
As such, core business of Wockhardt has been intact and it continues to remain 7th largest pharma company in the country. Share having moved to Rs. 177, still has potential to move to Rs. 250 by the year end, with this drastic transformation.
Source: www.premiuminvestments.in (By S P Tulsian)

Disclaimer

The information in this publication is provided by http://www.moneybazzar.blogspot.com/ is intended for use for Readers & Traders . Every effort is made to provide accurate information, but http://www.moneybazzar.blogspot.com/ cannot guarantee the accuracy of the information or of the market analysis. This is a newsletter and is for informational purposes only. It is not a solicitation or offer to buy or sell futures. There is a high risk of loss in trading futures. You should not trade with money that you cannot afford to lose. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this newsletter. The past performance of any trading system or methodology is not necessarily indicative of future results.



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