Friday, October 30, 2009

Stock Idea: Seamec

Investment Argument
SEAMEC - is a MNC outfit of Technip Group of France. Its leader in operating MSVs/DSV in India, with 4 out of 6 vessels belonging to it and balance 2 are with ONGC. There are just about 30-35 MSV’s operating in the world. They are specialized vessels used for undertaking any kind of underwater engg, maintenance and developmental works. The company has strategy of deploying vessels on long term charters as against in the spot market, therefore the cash flow for the future is better predictable.
All the ships are fully deployed right now and charter rates are also strong, due to strong demand for such vessels. In past due to focus on spot market and also due to some kind of accidents etc, the performance of company was quite erratic and thus valuations of stock suffered too much. Company’s balance sheet is quite robust with Zero debt, huge cash balances and it is also likely to generate almost Rs. 265 cr for year ending Dec.’09. With market Cap of just Rs 680 Crs, this stock with likely [for Dec’09] NAV of Rs 350 per share and EPS of Rs 70 appears dam cheap at Rs 200/-. We think by the time annual results for Dec’09 are announced, stock can easily reach 260-280. BUY.
Background
South East Asia Marine Engineering & Construction (SEAMEC), was promoted by Peerless General Finance & Investment Company, but latter on acquired by MNC giant Technip Group of France. The company operates in Multi support vessels (MSV) for diving and provides under water/sub sea engineering and construction, maintenance, inspection of under water structures construction, rescue operations and fire fighting and other support services for offshore oil/gas installations located in India or abroad.
The company started operating on a single DSV in Indian Offshore market, grown subsequently to own and operate 4 Vessels. Seamec-I with 1700DWT, Seamec-II with 2100DWT, Seamec-III with 2100DWT and SEAMEC Princess. All vessels are deployed on various contracts. As demand for such vessels is strong, during intermediate period of contract also, they can undertake short term charters. The oil and gas sector in India as well as abroad, is witnessing significant investment activity and potential still appears to be huge. With oil prices recovering from lows of $30 to current $80, the E&P activities in oil & Gas sector will remain robust. Plus most of the E&P activities are in deep sea, so need of such support vessels is growing much faster.
Risks and concerns
Fluctuating crude oil prices causing downturn in oil exploration and production activities can affect the revenue stream of the company. Dry docking of vessels at regular interval will have loss of working days and may put pressure on OPM in later years. Company usually adopts the policy of conserving cash for asset creation and don’t give dividends.
Recommendation
Looking to the attractive earnings of Rs. 70/- and cash generation of around Rs 265 Crs in this year and with a debt free status; the stock looks quite attractive. Mostly company uses cash generation to buy fresh vessels, with huge cash it can buy more vessels, which can shore up earnings in future. With promoters holding of 75%, chances of delisting can’t be ruled out, but in that case also, buy back price could be quite attractive [over 350/-].
Source: Internet (Valuenotes by Anand Rathi)

Stock Idea: Voltas Ltd.

This Tata company has posted a set of encouraging results for the second quarter ended 30th September 2009. Net sales was up 11% on a YoY at Rs.1098 crore. Operating profit grew 52% at Rs.133 crore. Net profit was up 50% at Rs.92 crore. Cost cutting in manufacturing helped boost the margins.
Its Electro-mechanical projects and services unit showed a 22% rise in revenue at Rs.769 crore. On the other hand, engineering unit continued to feel the brunt of the recession and poor off take of capital goods led to this unit show a 28% lower growth in revenue. This is also the unit which supplies textile machineries and given the state of the textile sector, naturally this unit has taken a hit. The Unitary cooling system unit showed a 27% rise in revenue.
The company procured raw materials till Q2 at prices which were negotiated at the beginning of the year and now, from Q3 onwards, the higher costs would have some impact on the costs.
45-50% is the contribution of international business to overall revenue and profit. The Abu Dhabi Formula One project executed by Voltas is to be inaugurated in November and Burj Dubai, the largest building in the world, would be inaugurated in December.
The company electro-mechanical unit has an order book of Rs.4359 crore of which 25% is from the Middle East. The company plans to increase its presence in the Middle East, especially in UAE and Qatar.
The company has on August 25, 2009 increased its stake in Rohini Industrial Electricals, a subsidiary of the company, for a consideration Rs.23.56 crore from 51% to 67.33%.
Demand continues to remain low and the company has stated that inquiry is yet to pick up. Q4 is expected to be much better. Usually for the company, Q1 and Q4 are the best seasons so even on a cyclical basis, its best to wait out Q3. The aim of the company is to more or less maintain growth at the present levels in Q3.
Source: Internet (By S P Tulsian)

Intraday Trading Calls for 30th October

Indian Stock Market may open positive and remain good positve but very volatile today.

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

SCRIP NAME

TRIGGER

PRICE

TARGET 1

TARGET 2

VOLTAS

Buy Above

154.25

157.60

162.00

Sell Below

152.45

149.05

146.00

TRIVENI ENGI

Buy Above

106.20

110.35

115.00

Sell Below

103.40

99.25

95.00

TANLA SOLUTION

Buy Above

61.50

64.10

67.00

Sell Below

59.70

57.20

54.00

IDFC

Buy Above

147.60

151.35

155.00

Sell Below

145.05

142.05

139.00

JAIPRAKASH ASSOCIATE

Buy Above

213.20

218.55

224.00

Sell Below

209.40

204.35

198.00

BAJAJ HIND

Buy Above

210.10

216.45

224.00

Sell Below

207.55

202.60

196.00

NAGARJUN CONSTRUCT

Buy Above

148.60

153.75

158.00

Sell Below

146.35

142.70

138.00

Buy GTL INFRA (532775) at CMP Rs. 30/- Very Short Term Target Rs. 38/-.

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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