Stock Idea: GSFC Ltd.

GSFC Ltd— BUY—147—INR
Sector — Fertilisers
Regd. Off.— P. O. Fertilizer Nagar, Vadodara Gujarat-391 750
Listed — NSE, BSE.
Company overview—
Company was incorporated on 15th February 1962, in Gujarat. The Company manufacture chemical fertilisers, petrochemicals and other allied products such as urea, ammonium sulphate, diammonium phosphate, ammonia, sulphuric acid, caprolactam, argon gas, etc., and nylon-chips and melamine. First phase of plants consisting of ammonia, sulphuric acid, phosphoric acid, urea, ammonium sulphate and diammonium phosphate units were commissioned in 1967. The Company also has its own development and research department. The Caprolactam facility plant was commissioned on 25th March 1974. Later, Company completed and put into operation a debottlenecking program with a view to increase the production of phosphoric acid. In 1987, Company’s multipurpose fertiliser pilot plant to be set up in collaboration with International Fertilizer Development Center (IFCD), USA, received Government approval in the year. The pilot plant for xylitol from bagasse was commissioned. Company in collaboration with ATIRA, Ahmedabad developed an acrylic based synthetic thickener.
Products & services—
Gujarat State Fertiliser Corporation Ltd. (GSFC), a large player in fertilisers and chemicals, has a major presence in di-ammonium phosphate (DAP) and caprolactum, urea and ammonium sulphate, a co-product of caprolactum. It is the largest producer of caprolactum and also has one of the largest capacities in DAP. The Company manufacture chemical fertiliser, petrochemicals and other allied products such as urea, ammonium sulphate, diammonium phosphate, ammonia, sulphuric acid, caprolactam, argon gas, etc., and nylon-chips and melamine. The Company manufacture chemical fertilisers, petrochemicals and other allied products such as urea, ammonium sulphate, diammonium phosphate, ammonia, sulphuric acid, caprolactam, argon gas, etc., and nylon-chips and melamine. GSFC holds significant stakes in Gujarat Narmada Valley Fertilisers and Gujarat Industrial Power Corporation (GIPC) and is entitled to 37.5% of its power generation. Company has decided to enhance production facility of MEK Oxime by 6500 MTPY at an estimated cost of Rs 75 million to be invested in phase wise manner. Finance for the same will be made available through internal sources of the company.
Financials—
Quarterly results for Apr-Jun 2009 Amount(Rs. in lakhs)
Net Sales/Income from Operations 114309.00
Increase/Decrease in Stock in trade and work in progress 9138.00
Consumption of Raw Materials 82068.00
Purchase of traded goods 902.00
Employees Cost 6374.00
Depreciation 3458.00
Other Expenditure 10584.00
Total Expenditure 112524.00
Profit from Operations before Other Income, Interest & Exceptional Items 1785.00
Other Income 2971.00
Profit before Interest & Exceptional Items 4756.00
Interest 942.00
Profit after Interest but before Exceptional Items 3814.00
Profit(+)/Loss(-) from Ordinary Activities before tax 3814.00
Tax Expense 1157.00
Net Profit (+) / Loss (-) for the period 2657.00
Face Value (in Rs.) 10.00
Paid-up Equity Share Capital 7970.00
Basic EPS after Extraordinary items (in Rs.) 3.33
Diluted EPS after Extraordinary items (in Rs.) 3.33
Public Shareholding (%) 62.16
Valuation—
At current market price, stock is trading at attractive valuation of 4.45 P/E multiple for its FY2010 estimated earnings. We recommend investors to “BUY” “GSFC” with medium to long-term investment prospective.

Source: Internet (By Abhishek Jain)

Stock Idea: IDFC

A company, which has been on a roll before and after the Budget, IDFC has maintained its performance for the first quarter ended 30th June 2009. It’s Net Interest Income (NII) increased by 33% to Rs.922 crore of which NIIM from infrastructure loans increased by 24% to Rs. 219 crore and NII from treasury operations decreased by 38% from Rs. 40 crore to Rs. 25 crore. The increase in non-interest income has been quite substantial, it rose 32% at Rs.217 crore, which is as much as the NII and this is what has boosted the overall performance.

The decision to diversify into asset management also helped. IDFC’s asset management business increased 4 times to Rs. 72 crore in Q1FY10. This jump was due to new funds raised private equity, in project equity and on account of the AUM acquired through the acquisition of the mutual fund.

Profit before tax (PBT) increased by 30% to Rs. 372 crore. After accounting for Rs. 97 crore for tax and share of profit in associate company, PAT was up 26% to Rs.272 crore.

Goss approvals and disbursements continue to remain down. Approvals decreased by 3% to Rs. 4,361 crore and gross disbursements decreased by 44% to Rs. 1,542 crore. Overall exposure decreased by 10% from Rs. 36,307 crore to Rs. 32,816 crore. Energy remained the top sector, YoY, its exposure increased from 36% to 39% and transport remains the second though its exposure has come down marginally from 22.2% to 21.5%. Its exposure to tourism and cement sectors has gone up. The biggest concern was IDFCs’ exposure to realty. Total disbursal outstanding to commercial and industrial infrastructure, YoY has come down from 15% to 12.2% of its total outstanding disbursements.
FY09 was a tough year for IDFC and it adopted a cautious approach, adopted a better to be safe than sorry attitude. Now that things have settled, the company is back to concentrating on growth. Given the emphasis to infra, IDFC is poised to do well.

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

Intraday Trading Calls for 01st September

Indian Stock Market may open Positive and remains positive with some volatility today.

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

SCRIP NAME	TRIGGER	PRICE	TARGET 1	TARGET 2
ROLTA INDIA	Buy Above	179.45	184.15	190.00
	Sell Below	176.70	172.40	167.00
ICSA	Buy Above	211.65	217.70	224.00
	Sell Below	208.35	202.65	195.00
UNITED PHOSPHOR	Buy Above	170.20	175.45	181.00
	Sell Below	167.45	162.55	158.00
APTECH LTD.	Buy Above	252.10	258.75	265.00
	Sell Below	248.15	242.50	236.00
REL POWER	Buy Above	162.25	166.50	171.00
	Sell Below	159.70	155.75	151.00
GMR INFRA	Buy Above	144.20	148.30	153.00
	Sell Below	141.50	137.65	134.00
PETRONET LNG	Buy Above	73.55	76.20	79.00
	Sell Below	72.40	70.10	67.00

Buy UNITED PHOSPHORUS Ltd. (512070) CMP Rs. 169/- Short to Med TermTarget Rs. 225/-.

GOOD LUCK

NHPC Listing

BY S. P. Tulsian
NHPC Ltd. stock will be listing tomorrow and looking to the grey market premium of Rs. 5.50 to Rs. 6 and issue having made at Rs. 36 per share, it is likely to list, at around Rs. 42 per share. This listing will definitely be a disappointment for the NHPC allottees and for the primary market.
NHPC went public on 7th August 2009 with an issue of 164 crore equity shares of Rs. 10 each, of which, fresh issue was 112 crore shares, while, offer for sale was of 52 crore shares. The allotment has been made by the company in record 14 days.
QIB category subscribed by 29.11 times, HNI category subscribed 55.93 times while Retail category subscribed 3.79 times and Employees category subscribed by about 0.66 times. Retail category has 13.35 lakh allottees while HNI category had just 6,033 shareholders with 381 allottees in QIB category and 5,530 members in employees category. The total shareholders came to the company’s fold, post IPO, is 13.47 lakh.
Most of HNI applicants have applied in the issue, after availing 95% finance, at an average interest rate of 11.50% to 12.50%. If we calculate interest at 11.50% on 95% amount having availed, for 14 days, the interest cost per share comes to Rs. 8.25 per share. This results in a total cost per share to an HNI investor at Rs. 44.25 per share.
In Retail category, minimum of 175 shares and maximum of 2625 shares were allowed and firm allotment has been given to those who have applied for 700 shares and above. In this category, no applicant avails finance, hence interest cost, on notional basis to them, at 12% per annum, work out to 63 paise, per share of the share allotted. In QIB category, it is not material, as 10% of the money is only paid by these allottees. In such a case, interest cost to them is about 48 paise per share.
So HNI, will be at a great disadvantage and likely to see loss on listing day, if share lists below Rs. 44.25 per share, or rules below this level, throughout the day. Generally, such allottees are not in a mood to hold the position, as they mostly go for listing gain. Inspite of the share now remaining with them, without any debt burden or pledge, still higher cost keeps bothering them at all the time.
In such a scenario, it is likely to see selling pressure coming in from HNI and Retail category investors, for first 2 - 3 days, which will keep pressure on the stock price and may not allow it to move past Rs. 42. Also, poor listing of Adani Power, has disappointed this class of investors, as share is still languishing at Rs. 104. In case of NHPC, even in grey market, trades have taken place at a premium of Rs. 9 to Rs. 12 which will also pose a problem in its settlement, as it is causing loss to those who have gone long in this stock.
On fundamental basis, stock has long term prospect to give a steady and annualized return of about 15% to 18% from a level of Rs. 42. However, don’t expect fireworks in the stock in the near term as stock is likely to move gradually on the lines of NTPC and Powergrid, other 2 PSU utility companies.

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

Stock Idea: Rolta India Ltd.

Rolta India Ltd.
CMP Rs 178.35
Target Price Rs 255.00
Company Snapshot
Rolta is a market leader in providing specialized technology solutions and services for the Geospatial, Defense and Homeland Security and Engineering sectors. Rolta is a global company and offers a full complement of solutions to companies around the world. Rolta also offers a focused set of services in eSecurity, Enterprise IT Management, ERP Consulting and Deployment as well as a wide range of Database and Business Intelligence solutions in the area of Enterprise IT.

Rolta India Ltd has come up with sustained results for Q1FY10. The total revenue of the company has gone up from Rs.3211.07 million in Q1FY09 to Rs.3326.97 million in Q1FY10 showing an increase of 3.61%. The operating profits almost remained flat at Rs.1124.73 million in Q1FY10 as compared to Rs.1121.87 million in Q1FY09. The net profit of the company increased from Rs.508.27 million in Q1FY09 to a profit of Rs.762.28 million in Q1FY10 showing a rise of 49.98%. Operating profit margin remained at 33.81% down from 34.94% in the same quarter last year and the Net Profit Margin jumped from 15.83% last year to 22.91% in Q1FY10. The EPS of the company stood at Rs.4.73 in Q1FY10 which was Rs.3.16 in Q1FY09.

Business Details
Rolta is an Indian multinational organization that has executed in over 40 countries. In the Geospatial business, Rolta enjoys a market share of over 70% in India for segments such as infrastructure, telecom, electric, airports, urban development, town planning and environmental protection. Rolta now offers its Geospatial offerings to large markets in the developed and developing countries with its innovative solutions after the launch of high-end photogrammetry and comprehensive imaging technologies.
Indian Armed Forces have adopted Rolta’s Geospatial based operations and intelligence solutions resulting in a dominant market share. These solutions cover a range of domains such as Data Security and Service Management, Database Foundation, Enterprise Applications and Business Intelligence. Rolta has made a few strategic acquisitions. They acquired Orion, based in Canada, which provides spatial integration consulting, software and implementation services for global customers. They also acquired WhittmanHart Consulting, based in USA, which provides technology consulting and solutions for Business Intelligence and TUSC which provides integrated functional and technical solutions to customers.
Rolta has two joint ventures. Shaw Rolta Ltd with the Shaw Growp Inc., USA, which provides comprehensive engineering, procurement and construction management services to the power, oil, gas and petrochemical sectors. Rolta Thales Ltd with Thales, France offers leading-edge information systems to the defense, homeland security and intelligence sectors. Sectoral Outlook
While the global IT industry had a difficult year, the Indian IT industry has grown in strength and value and serves a significant portion of the global information technology outsourcing needs by leveraging its large, highly qualified and growing talent base. According to NASSCOM report,
IT Services alone constituted 57% of Indian IT exports in FY2009 and accounted for about $26.9 billion in value. The sector revenues as a proportion of national GDP have grown from 1.2% in FY 1998 to an estimated 5.8% in FY2009. India’s IT growth in the world is primarily dominated by IT software and services such as Custom Application Development Maintenance (CADM), System Integration, IT consulting, Application Management, Infrastructure Management Services, Software testing, Service-oriented architecture and Web services. Indian IT is also playing a key role in global technology IP creation. As per NASSCOM, exports from high-value-added services such as engineering, R&D and offshore product development grew by 15% to reach $7.3 billion in FY2009. The government expects the exports turnover to touch US$80 billion by 2011 growing at an annual rate of 30% per annum.
Investment Rationale
The company saw a lot of orders flowing in the month of June. The company has approximately Rs.1600 crore of firm orders in hand and Rs.5000 crore in the pipeline. The company has taken very strategic orders in the newer solutions that they have booked in the GeoSPatial Fusion, Rolta one view which has been introduced in the engineering space and in Rolta SOA which has been introduced in the IT space. A very large order in GeoSpatial Fusion is MIDE (Ministre de l’Agence de Developpement economique), which is the Canadian agency for economic development. Another large order for GeoSpatial Fusion is from the Road Transport Authority in Dubai. In India, their engineering services are given to the Department of space and ISRO for the design of rocket engines and to KBR in the last quarter. With these various orders in hand, the company is in a good position for the current year.

The management is positive on the company’s future plans. They have given a positive guidance to grow by 10-15% in the topline as well as in the bottomline during the current fiscal year. The company has been able to transform in the last one year by adding a lot of solutions, IPO, making a lot of acquisitions and by being able to transform the business. All this together makes the company very confident in moving forward. Rolta India Ltd reported good results in FY09. The net sales of the company went up from Rs.10722.14 million in FY08 to Rs.13728.13 million in FY09 showing a growth of 28.04%. This led to the increase in the operating profits of the company from Rs.3897.396 million last year to Rs.4635.27 million this year depicting a growth of 18.93%. The operating profit margin stood at 33.76% this fiscal dropping from 36.35% in FY08. The profit before taxes increased by 24.14% to Rs.3332.75 million in FY09 from Rs.2684.60 million in FY08. The net profit of the company stood at Rs.2938.28 million increasing at the rate of 27.42% from previous year’s Rs.2305.94 million. The Net Profit Margin of the company remained flat at 21.40%. The EPS increased from Rs.14.33 to Rs.18.25 in FY09.

Valuation
The company’s future prospects are becoming brighter with the various orders in hand and improving yearly and quarterly performance. Presently, the company is running at a P/B multiple of 2.02x to it’s FY09 book value of Rs.88.42 while the P/E multiple of the company is running at 9.77x to its FY09 EPS of Rs.18.25. However, the industry is running at a P/E multiple of 19.30x which leaves the stock with a significant upside potential. Hence, we recommend BUY on the stock with a medium term price target of Rs.255.00.

Source: Internet (Hem Securities)

Stock Idea: Indraprastha Gas Ltd (IGL)

Company overview—
Incorporated in 1998, a joint venture between Gail & BPCL. Government of national capital territory of Delhi is also a shareholder. Company started its operation with 9 CNG stations & 1000 PNG consumers and Crossed 156 stations as of now. Company Completed 12” steel pipeline laying project in December 2002. Company is sole distributor of CNG in NCTD to the automotive sector & also distributes piped natural gas (PNG) to the commercial & the domestic sector in NCTD. Supreme Court order to public transport vehicles to compulsory shift to clean CNG in NCTD has helped company to grow its sales aggressively.
At starting company was started to lay the network for the distribution of natural gas in the National Capital Territory of Delhi to consumers in the domestic, transport, and commercial sectors. With the backing of strong promoters i.e. GAIL (India) Ltd. and Bharat Petroleum Corporation Ltd., company plans to provide natural gas in the entire capital region. Main business objectives of the company are— to provide safe, convenient and reliable natural gas supply to its customers in the domestic and commercial sectors and provide a cleaner, environment-friendly alternative as auto fuel to Delhi’s residents. This will considerably bring down the alarmingly high levels of pollution. The transport sector uses natural gas as Compressed Natural Gas (CNG), while the domestic and commercial sectors use it as Piped Natural Gas (PNG). IGL now focuses on conversion of private vehicles to CNG. In this connection efforts are being made on the private vehicle front encouraging them to convert to CNG mode. Company is coordinating with CNG kit suppliers, Transport Department, Automotive Research Association of India and Vehicle research and Development Establishment to ease the process for endorsement of the same on Registration certificate of the vehicle.
Products & services—
Company is sole distributor of CNG in NCTD to the automotive sector & also distributes piped natural gas (PNG) to the commercial & the domestic sector in NCTD. CNG contributes almost 95% and PNG contributes around 5% of company’s sales. With over 156 dispensing stations company caters over 1,00,000 vehicles.
1) CNG stands for compressed natural gas. It is gaseous fuel and is a mixture of hydrocarbons mainly Methane. For use in Automobiles as fuel, it is compressed to a pressure of 200-250 Kg/cm2 to enhance the vehicle on-board storage capacity. The advantages of using CNG are various and distinct. The most important benefit of using CNG is that you are using a “green fuel’.
Green fuel - Commonly referred to as the green fuel because of its lead and sulphur free character, CNG reduces harmful emissions. Being non-corrosive, it enhances the longevity of spark plugs. Due to the absence of any lead or benzene content in CNG, the lead fouling of spark plugs, and lead or benzene pollution are eliminated.
Increased life of oils - Another practical advantage observed is the increased life of lubricating oils, as CNG does not contaminate and dilute the crankcase oil.
Mixes evenly in air - Being a gaseous fuel CNG mixes in the air easily and evenly.
Safety - CNG is less likely to auto-ignite on hot surfaces, since it has a high auto-ignition temperature (540 degrees entigrade) and a narrow range (5%-15%) of inflammability. It means that if CNG concentration in the air is below 5% or above 15%, it will not burn. This high ignition temperature and limited flammability range makes accidental ignition or combustion very unlikely.
Low operational cost - The operational cost of vehicles running on CNG, as compared to those running on other fuels, is significantly low. At the prevailing price of fuel in Delhi, operational cost of CNG vehicles is almost 68% lower than petrol and 36% lower than diesel.
2) PNG— Natural gas is mainly methane i.e. CH4 with a small percentage of other higher hydrocarbons. The ratio of carbon to hydrogen is least in methane and hence it burns almost completely making it the cleanest fuel. It is procured from the oil / gas wells and transported through a network of pipelines across the country. PNG has several distinctions to its credit of being a pollution free fuel, easily accessible minus storage troubles and being available at very competitive rates.
Uninterrupted supply--The source of PNG supply in Delhi is the famous Hazira-Bijaipur-Jagdishpur (HBJ) pipeline of GAIL (India) Limited. PNG offers the convenience of ensuring continuous and adequate supply of PNG at all times, without any problems of storing gas in cylinders.
Unmatched convenience--PNG eliminates the tedious routine of checking LPG refill cylinder for any suspected leakage, or it being underweight, at the time of delivery. Moreover, the user is spared the inconvenience of connecting and disconnecting the LPG cylinder when out of gas. Precious space, occupied by LPG cylinders is also saved.
Safety --The combustible mixture of natural gas and air does not ignite if the mixture is leaner than 5% and richer than 15% of the air-fuel ratio required for ignition. This narrow inflammability range makes PNG one of the safest fuels in the world.
Economy with PNG --PNG has been positioned to be cheaper than alternative fuels being used viz domestic LPG in case of House Hold, commercial LPG in case of Small Commercial and LPG Bulk & LDO in case of Large Commercial.
A versatile fuel --Natural gas is being used predominantly as a versatile fuel in many major cities catering to domestic and commercial applications, as a cooking fuel, for water heating, space heating, air conditioning, etc.
Environment friendly –Natural gas is one of the cleanest burning fossil fuels, and helps improve the quality of air, especially when used in place of other more polluting energy sources. Its combustion results in virtually no atmospheric emissions of sulphur dioxide, and far lower emissions of carbon monoxide, reactive hydrocarbons and carbon dioxide, than combustion of other fossil fuels. When natural gas burns completely, it gives out carbon dioxide and water vapour only.
No storage problems and stock accounting--PNG does not require any storage tank or storage space since it is supplied to you through pipelines. Also, the manpower and time that was earlier being used for ensuring minimum stock levels of LPG, HSD and LDO, can be used elsewhere. The other functions that accompany storing these fuels – monitoring stock levels, checking the quality and quantity of fuels received have also been rendered unnecessary.
Economy with PNG--PNG has been presently positioned to be cheaper than alternative fuels. For small commercials the pricing is indexed to 19 Kg LPG cylinders after adjusting for heat values. For Large Commercials, pricing is indexed to 90% LDO and 10% Bulk LPG again after adjusting for heat values.
No daily contact--The consumer is spared the task of contact with oil companies and co-ordinating with them for ensuring the daily supply of fuel, because PNG is supplied directly through pipes.
No spillage and pilferage--In case of spillage of fuels like HSD and LDO, there are liable to be immense product losses.
Lower maintenance cost --With PNG, soot or ash accumulation and greasy spillages are absent from your appliance. Maintenance costs are, thus, driven down.

Valuation---
At current market price, stock is trading at 11.2 X multiple of its FY2010 estimate earnings. We recommend investors “BUY” “Indraprastha Gas Limited” for medium to long-term investment horizon.

Source: Internet (By Abhishek Jain)

Stock Idea: BASF India

Given the cyclical nature of its business, the first two quarters of the fiscal, Q1 and Q2 are always good, with Q2 being the best in the year and the worst is Q4. BASF India has posted an ‘Ok’ performance for Q1FY10. It reported a rise of 12% in its net profit for Q1FY10 though total income fell marginally to Rs384.15 crore from Rs385.87 crore in Q1FY09.

The company plans to stop production of agrochemicals at its Dadra site under the company’s rationalisation measures. The company has stated that this will not affect the earnings of the company in any way. Further, to rationalise the company’s manpower needs and to build efficiency, the board has also approved the introduction of voluntary retirement scheme for employees. As a part of its rationalization, the company has removed low margin generic products and has also shifted its resources from cotton to soyabeans, fruits and vegetables which would help boost the margins.

The company is planning to set up a 9000 tpa compounding plant at Thane for the engineering plastics business, costing Rs.17.20 crore which is to be funded mainly via internal accruals.

On consolidated basis, BASF Polyurethanes a wholly owned subsidiary is incurring losses, and BASF SE have expressed their intention to acquire this subsidiary, which if happens, would re-rate the company as also would increase its bottomline even on consolidated basis.
In July 08, Promoters of the company raised their stake from 52.69% to 71.18% by acquiring shares under open offer at Rs.300 per share. Open offer at the time did not evoke full response as insurance companies and financial institutions did not tender shares in open offer and continue to hold about 18% in the company. News has been floating around for some time now that the company might soon get delisted.

And even if that does not happen, with all these rationalization moves, the company is sure to improve its margins substantially in the coming months. Q2 will be robust. One can acquire this share at current market price for good returns over 12 months.

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