Stock Idea: Power Finance Corporation (PFC)

A Navaratna PSU, Power Finance Corporation (PFC) reported a steady growth in its standalone net profit for first quarter ended 30th June 2009. Total income rose 31% on a YoY at Rs.1893 crore. Net Interest Income increased by 36% to Rs. 700 crore. Net profit increased by a very healthy 87% to Rs. 555 crore.

What was gratifying to note was that Net NPA was at a low level of 0.01% of net loan assets; meaning loan quality has remained good with a miniscule portion of bad loans.

Its sanctions also increased by 24% to Rs. 18,782 crore. Disbursements were lower by 8% at Rs.4345 crore. Sanctions continue to be dominated by state sector, which was up 47%, central sector was up 20%, joint sector was at 8% and that to the private sector was at its highest, up 26%. What this means is that one would see higher disbursements coming in Q2. PFC’s targets for the current fiscal is Rs.60,000 crore in sanctions and Rs.23,000 crore in disbursements.

Its debt equity at the end of current Q1 stands at 4.85 and capital adequacy is at 17.51% as against 16.75% in Q1FY09. Book value is very healthy at Rs.98.57.

PFC had tapped the primary market in 2007 with a Rs.997.19 crore issue. It was priced at Rs85 per share and got listed at Rs.113. Today it is quoted at around Rs.215 levels, which continues to remain a very good deal for the original shareholders even now, even in this market.

PFC is the dominant investor in the country's power sector, funding about 20% of the projects. PFC has been designated as a nodal agency by the union government for facilitating the development of UMPPs and with six more UMPPs to go, PFC seems to have its work all chalked out! Power is one of the sectors, which is expected to get the maximum impetus, and irrespective of any slowdown or inflation, the growth of this sector will continue relentlessly. PFC remains a good stock in the portfolio.

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

Intraday Trading Calls for 28th August

Indian Stock Market may open negative and remains flat to negative 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
PSL LTD.	Buy Above	158.50	164.20	170.00
	Sell Below	155.35	151.10	146.00
GMDC	Buy Above	113.60	118.20	124.00
	Sell Below	111.10	107.15	102.00
IRB INFRA	Buy Above	218.60	224.35	230.00
	Sell Below	214.70	208.65	202.00
STC INDIA	Buy Above	367.20	374.15	382.00
	Sell Below	361.35	354.35	346.00
BRFL	Buy Above	207.25	212.35	218.00
	Sell Below	203.40	196.75	191.00
GMR INFRA	Buy Above	143.25	147.25	152.00
	Sell Below	140.35	136.45	132.00
ASTRA MICROWAVE	Buy Above	80.10	84.25	89.00
	Sell Below	78.15	75.20	71.00

Buy Astra Microvave Products Ltd. (532493) CMP Rs. 79/- Short to Med Term Target Rs. 125/-.

GOOD LUCK

Stock Idea: Colgate Palmolive Ltd.

This MNC whose brand name is almost the generic name for toothpaste in India, has done pretty well for itself for the first quarter ended 30th June 2009. YoY, net sales were up 19% at Rs.485.40 crore. Its business continues to be driven by toothpaste and it achieved a volume growth of 12% in this category. It now has a market share of 52.3%, which makes it the market leader in this segment. In the toothbrush category, volume market share has increased to 38.2% and in the toothpowder category to 48.8% in Q1FY10.

Net profit for the quarter was at Rs.102.8 crore, an increase of 43% on a YoY. The company has been working on reducing costs and this to a large extent has helped shore up the margins. Operating cost for current Q1 was at Rs.362.83 crore which was 75% of the net sales. As against this, in Q1FY09, operating cost was at Rs.341.50 crore, which was 84% of the net sales, clearly YoY there has been a reduction vis-à-vis the sales. Even sequentially, costs have been reduced, which in Q4FY09 was 80% of the net sales. This reduction is cost has been reflected in the margins – OPM was at 27.02% v/s 23.86% in Q1FY09 and NPM improved from 17.64% to 21.17%.

And the major cost reduction has come by way of reduction in advertising and sales promotion costs, which YOY was down 16% and has remained more or les flat on a QoQ at Rs.69.31 crore.

This is one of the best MNC stocks on the BSE. Apart from having a negligible interest outgo, reserves of over Rs.200 crore (as on 31st March 2009), this is one MNC, which is not dependent on the monsoon for rural India’s demand. Irrespective of the rains, the demand for toothpaste and tooth powder does not go down. Stay invested and one can accumulate for long term on declines.

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