Thursday, October 1, 2009

Stock Idea: Allied Digital Services Ltd.

Allied Digital Services Ltd. CMP Rs 480.30 Target Price Rs 580.00
Company Snapshot
Allied Digital is a leading IT Infrastructure management and technical support services outsourcing company. It enables global, large and medium enterprises along with service providers to reduce their total cost of ownership using a combination of onsite as well as remote services. It has over two decades of experience in technology and enterprise IT infrastructure implementation, management and consulting on complex IT and business systems for global businesses. The company operates across a network of 72 locations (direct presence) across the country with a team of over 1,000 employees from different managerial and engineering backgrounds.
Business Segments
Solutions: Solutions business is the system integration business wherein ADSL sets-up the entire IT infrastructure on a turnkey basis. It designs the operating infrastructure/environment on which enterprise-wide applications such as ERP, SCM and CRM run. The Solutions segment also includes software services and integrated Solutions. ADSL is a leading provider of the entire gamut of Integrated Solutions, with CCTV, access control, fire detection systems, smart cards and RFIDs.
Infrastructure Management Services:
Onsite Infrastructure Management: ADSL provides ITIL compliant onsite infrastructure management services specifically designed to meet client's complete IT outsourcing needs. Services include IT Help desk, Desk-side support, server management, network management, data centre operations management, security manag ment, application management, database administration, etc.
Remote Management Services: Adding on to the value chain of Infr structure Management Services, ADSL provides Remote Management Services through its ISO 27001 certified NOC/SOC centre at Mahape, to local and global customers. With highly skilled personnel, best industry practices and cuttingedge technologies, company provides expert services for network and security management.
Technical BPO: ADSL has OEM customers across various sectors for outsourced customer care services. Company provides telephone or web-based, on-site, logistic and repair services to Unisys, Fujitsu Siemens, EDS, Xenitis, Sahara Computers among others.
The company has registered tremendous results for the quarter ended June 2009. The net sales jumped around 72 percent in Q1FY10 at Rs.1589.60 million as against Rs.925.60 million clocked in same quarter last year. The operating profits for quarter ended June 2009 stood at Rs.297.70 million as against Rs.224.80 million in corresponding quarter previous year, portraying a sharp
growth of 32.43 percent. Similarly, adjusted PAT climbed by around 45% at Rs.227.70 million as compared with Rs.157.60 million for Q1FY09. On the margins front, operating profit margin remained flat at 18.73 percent on a sequential basis and similar is the case in net profit margins which stood at 14.32%. EPS for Q1FY10 stood at Rs.12.57 witnessing a sharp jump of about 50% from the corresponding quarter last fiscal.
Yearly Financial Highlights
On standalone basis, the company has posted excellent results for financial year ended March 2009. The Net sales stood at Rs 3916.41 million moved up by almost 32 per cent over the last year’s turnover of Rs 2970.35 million, at the same time the expenses stood at Rs 2946.73 million up by little less than 28 per cent driving the operating profits even higher to Rs 969.68 million posting a growth of 45.27 per cent on YoY basis. The increase in Total Income is due to steady growth in all lines of business. The cost of sales for the year ended March 2009 was 63% as compared to 67% during last fiscal. The bottom-line of the company stood at Rs 768.44 million registering a marvelous growth of 76.41 per cent from Rs 435.59 million clocked last year. The company has been able to keep its margins on growth trajectory despite slow down in the industry margins. The operating profit margins have expanded by 229 basis points to 24.76 per cent while the net profit margins have jumped to 19.62 per cent from 14.66 per cent in FY08 indicating the growing profitability of the company and an expansion of around 500 bps. The EPS for the financial year ended March 2009 stood at Rs 42.42 which is up by around 64% from last fiscal. Similarly Cash EPS stood at Rs.44.40 in FY09 as against Rs.27.09 last year.
Investment Rationale
Robust Order book: The Company has strong order backlog both on solutions and services segment. The order book position on the services side is close to around 153 Crores and on the solution side, it is close to 75 Crores. This is executable over next six months. For this quarter the company has 85 Crores on the solutions side. Further the company has also been able to get some good deal in the US among the top five finance companies and also some very good deals with an OEM manufacturing company out in US wherein it is exclusively providing remote management services and would be getting across in other regions within next seven months.
Efficient acquisitions: The recent En Pointe Global Services LLC (EPGS) acquisition has significantly increased international IMS revenues apart from driving domestic revenues through offshoring. Further, the key rationale behind this acquisition apart from gaining a strong US presence and large client relationships was to scale-up EPGS revenues by up-selling valued added se vices and improving margins through remote transition of delivery. In the current quarter the revenues from En Pointe is Rs.50 crores out of which 90-92% is on annuity basis leading to its 0.5% margin improvement. Acquisition of Digicomp Complete Solutions Limited has bought component repair services in company’s Technical BPO portfolio along with a strong middle management in the company.
Segmental gains: The Company has improved a lot in its services revenue, which was last quarter 50%-50% but now it stood at 55% services and 45% on Solutions. The revenues from infrastructure management services jumped around 16% from last quarter.
ADSL is a strong IMS player: The experience and expertise in system integration, wide onsite reach and sizeable remote infrastructure and technological depth makes ADSL a very competitive IMS player. ADSL brings significant cost savings for customers without any compromise on quality as compared to the large offshore IMS services providers. Company’s IMS clientele includes large domestic corporates such as Raymonds, M&M, Tata Power, Bajaj Auto, Kingfisher, Pidilite, Reliance, ICICI, etc.
Valuation
The company is well positioned to reap the benefits of its efficient acquisitions across the globe which entails its increasing global presence. Further, the company is expected to continue to post excellent financial performance on the back of its strong order backlog. In wake of the growth of the remote management services, Allied Digital Services Ltd. seems to be extremely attractive investment opportunity. Presently, the stock is trading at Rs 480.30 which is at 11.32 times to its earnings and 2.73 times to its book value of Rs 175.78. Since the stock offers good opportunity, we initiate a ‘BUY’ signal on the stock with a target price of Rs 580 in medium term investment horizon expecting an appreciation of about 21% from the current level of Rs 480.
Source: Internet (Valuenotes by Hem Securities)

Stock Idea: Shree Rajasthan Syntex Ltd.

Shree Rajasthan Syntex Ltd.
(Rs. 16.00/ Bse Code: 503837)
Rationale for Recommendation: 2007 & 2008 proved to be the worst ever in Indian Textile Industry wherein, demand slumped, R/M prices went up and selling prices plunged. Due to same, share prices of textile companies touched new lows. However, fortunes of many textile companies have again taken a U-turn and still such scrips are available at dirt cheap valuations. SRSL is one such company and hence the recommendation.
BACKGROUND: Udaipur based SRSL is engaged in the production of Grey Yarn, Dyed Yarn and PPMF Yarn: Grey Yarn: Grey yarn is produced using blends of different synthetic fibre such as polyester/viscose, 100% viscose yarn, 100% polyester fibre yarn and pure cotton. These qualities are produced in SRT division and Polycot division of the company.
The company has niche markets for 100% viscose fibre yarn. Specialty fibre yarns were developed for industrial and home textile applications. Dyed yarn: Dyed yarn is produced at Syntex division of the company. These yarns are relatively higher value added products and made according to customers specification of blend, counts and shades. The company has specialty in producing home textile dyed yarns for end use such as carpets, tapestry and upholstery. Further efforts are being made to develop melange yarn for weaving and knitting applications. PPMF Yarn: Polypropylene multifilament yarn is produced at Shree Shyam Filament division of the company at Bagru, Jaipur, POY and texturised yarn is produced for knitting, socks and furnishing applications. BCF yarn is produced for carpet applications.
Recently, SRS has also commissioned 10MW Power Plant for captive use. Its installed capacity are as under:
1. 67584 Spindles for Synthetic Blended Yarn.
2. 14520 Spindles for Cotton Yarn.
3. 3600 tonnes for PPMF.
In 2008-09, performance was severely affected due to slowdown in domestic as well as international market. It produced 22915 tonnes of yarn as against 24306 tonnes in previous year. During the year, exports fell to 56.50 crs. as against 102 crs. in previous year. Above results include forex loss of 5.24 cr. It means loss from the operations was 4.14 crs. Since depreciation stood at 10.66 crs., cash loss was just 1.28 crs. In Q4, it commissioned 10MW Power Plant which will not only reduce power cost but will ensure higher production.
Yarn prices had touched new low in Q3 08-09. Same started improving a bit in Q4. However, from April 2009 onwards, yarn prices started rising steeply. Due to recession, exports were down and yarn inventory with importers touched all time low. Once World Economy started improving, these importers have started importing heavily. It increased pricing power of spinners in domestic market also. Moreover, weaving capacity (main consumers of yarn) continued to rise. In this context, performance of Q1 is reasonably good. After providing 1.04 cr. forex loss, Company has incurred loss of 34 lakhs as against loss of 1.71 crs. in corresponding quarter of previous year. Moreover, Q1 Cash Profit is 3.32 crs.
In Q1, Company was executing earlier orders of relatively lower prices. Impact of higher priced orders booked in Q1 will be felt in Q2. Yarn prices continue to be firm whereas R/M prices are at reasonable levels (gone up much less as compared to rise in yarn prices). For 09-10, Company is likely to achieve EPS of Rs. 3.40 and Cash EPS of Rs. 12.35. Presently, huge expansion of weaving is taking place in Bhilwara which is the biggest yarn market in India. On the other hand, no new spinning capacities are in pipeline. Hence, it is estimated that next year, demand for yarn will be much higher and spinning companies like SRSL will have better profit margins. Also, even next year R/M prices will remain soft/reasonable and very unlikely to rise due to huge global capacities.
Valuations: SRSL is available dirt cheap at CMP considering the following:
A. Current Market Cap is just Rs. 18.80 crs. (and Company has a debt of 167 crs.). However, replacement cost of SRSL is nearly Rs. 350 crs.
B. Stock is trading at 1.42 x FY10E Cash EPS. Estimated cash profit is 14.50 crs. which is 85% of current market cap.
C. Stock is trading at 1.10 x FY11E Cash EPS.
D. Stock is available at 4.70 x FY10E EPS and 2.90 x FY11E EPS.
E. Current Market Cap is just 5.70% of FY10E sales.
F. Gross Block is 274 crs. It means, market cap is just 6.45% of gross block.
G. Net Block is Rs. 152 crs. It means market cap is just 11.65% of Net Block.
H. Scrip is trading at 0.40 x FY09 BV.
Thus, by all parameters, SRSL is extremely low priced. Share price has been lying so low as market men are looking only at bad performance of 08-09, without exploring prospects of current and coming years. Definitely, a riskfree buy. Our price Target:
1. Rs. 25/- in 3-6 months.
2. Rs. 40/- in less than a year.
Source: Internet (Valuenotes by Profittrack.com)

Stock Idea: Biocon

This is the biggest biotech company of India and there has always been a certain sense of positive vibe around the company. Hence it was very reassuring to the see the company bounce back with vigour in first quarter ended 30th June 2009 after the dismal performance it had shown in Q4FY09.

For Q1FY10, consolidated net sales of the company rose, YoY, by % to Rs.498.45 crore. The revenue includes that from its German subsidiary AxiCorp, which has finally started giving returns since it came on board last year. Its contribution to the revenue has been at Rs.190 crore of the total revenue,which did not figure in last year’s financials.

Getting Axicorp into the fold is a good decision, as this subsidiary will add to the bottomline of Biocon once its starts commercial production of its insulin drug, which is expected to happen by early 2011. Once it gets the marketing authorization in Europe, Axicorp will be its base from that entire continent.

In Q1FY10, PAT increased to Rs.57.55 crore, thus registering a huge jump of 283% and if we look at the standalone performance, the rise has been 47%. By getting the lid on MTM losses, which were the main culprit, pulling down the margins last fiscal, is now finally left behind. It also managed to bring down its interest cost by 59% to Rs.75 lakhs. So the increase in revenue, no MTM loss and reduction in interest outgo, all together helped the company’s bottomline in current Q1.

The stock was buzzing yesterday on news of the company planning to launch its insulin drug in early 2011. Once this happens, the company will hit big time even in the international markets as this drug has been predicted to have a growth potential of over 15% in 2010-11. Pen-like injections, syringes and pumps dominate the market, and needle-free methods of delivering the drug would become a huge hit. The company, which currently sells the conventionally administered insulin in India, aims to increase its share of the domestic market to 50% from the present 15% in the next five years.

Hold on to the stock and if you are looking at long-term investments, buy into Biocon at every dip.
Source: www.premiuminvestments.in (By S P Tulsian)

Intraday Trading Calls for 01st October

Indian Stock Market may open negative and remains same for the day bcoz of some profit booking.

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

SCRIP NAME

TRIGGER

PRICE

TARGET 1

TARGET 2

IOB

Buy Above

127.25

131.05

135.00

Sell Below

125.45

122.20

118.00

PARSVNATH

Buy Above

145.60

150.25

156.00

Sell Below

143.55

139.20

135.00

REL POWER

Buy Above

168.25

172.30

178.00

Sell Below

165.35

161.25

157.00

YES BANK

Buy Above

206.75

211.65

216.00

Sell Below

203.45

198.25

192.00

SUNPHARMA ADVANCE

Buy Above

89.25

93.60

98.00

Sell Below

92.45

88.55

85.00

PRISM CEMENT

Buy Above

54.20

56.55

59.00

Sell Below

52.70

50.20

48.00

GMDC

Buy Above

117.20

121.55

126.00

Sell Below

114.70

110.35

101.00

GOOD LUCK

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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