Stock Idea: Nahar Capital

Nahar Capital is a company belonging to the Ludhiana-based Nahar Group. This company was incorporated for the purpose of taking over the investments of Nahar Spinning pursuant to a scheme of arrangement, which happened in 2006. This company holds investments not just in the group companies but also has fairly large portfolio of other investments. If you look at the financials of the company, the equity capital of the company is about Rs 8.37 crore, book value is about Rs 250 and the market cap at the current price is close to Rs 80 crore.
If you look at the value of investments as on 31 March, 2009, this company was holding a total of Rs 218 crore of quoted investments, out of which, investments in the group companies accounted for about Rs 55 crore and balance Rs 163 crore was the portfolio of other investments.
At the current market price Rs 55 crore of investment in group companies has gone up to about Rs 130 crore. The various indices have gone up about 70% since 31 March.
If we try to be slightly conservative and assume that their portfolio of investment has only gone up by 40%, this would result in an investment portfolio of about Rs 220 crore for non-group investments.
The total equity investments or the quoted investments as on date is valued at close to Rs 350 crore and besides the quoted investment this company has got about Rs 10 crore in unquoted securities, out of which Rs 5 crore is in the equity of Delhi Stock Exchange Ltd.
Delhi Stock Exchange Ltd is also expected to start operations in the next couple of months. I believe once it starts operations, the valuation of this investment will go up. Beside this they have cash and bank balance of about Rs 44 crore.
All in all, this company has got investments and cash of close to 400 crore at the current market price. Marketcap of the company is just about Rs 80 crore, which means about 20% of the total value of investment. If you look at the holding companies, these companies generally command about 40-70% of the value of investments in the group companies.
In case of Nahar Capital the group portfolio only accounts for roughly third of the total investment, it is only about Rs 130 crore out of Rs 400 crore of total investments, which it owns. But if again we try to be conservative and assume that it will have a 40% of the total value of investment. The stock has a potential to go up by about 75-100% from these levels.

Source: Internet (Moneycontrol.com by Ashish Chug)

Intraday Trading Calls for 16th November

Indian Stock Market may open positive and remains good positive for the day today.

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

SCRIP NAME	TRIGGER	PRICE	TARGET 1	TARGET 2
BRFL	Buy Above	200.05	205.65	212.00
	Sell Below	197.35	192.75	188.00
HANUNG TOYS	Buy Above	116.60	121.25	125.00
	Sell Below	114.40	110.75	107.00
BAJAJ HIND	Buy Above	225.10	230.15	235.00
	Sell Below	222.70	218.15	212.00
INDIABULLS REALEST	Buy Above	236.75	242.15	248.00
	Sell Below	233.45	227.65	222.00
IDBI	Buy Above	129.25	132.45	135.00
	Sell Below	127.80	125.35	122.00
IDFC	Buy Above	171.25	175.45	179.00
	Sell Below	169.55	166.30	163.00
V GUARD (532953)	Buy Above	80.20	83.45	87.00
	Sell Below	78.75	75.65	73.00

GOOD LUCK

Stock Idea: TVS Motor Company Ltd

TVS Motor Company Ltd— BUY—59—INR
Sector — Automobiles
Regd.Off.— Jayalakshmi Estates, Haddows Road, Chennai - 600006
Listed — NSE, BSE.
Company overview—
Company was incorporated as Indian Motorcycle Pvt. Ltd. on 15th July 1982 and it was converted into a public limited company on 12th January 1984. Mr. N. Krishnan promoted it in collaboration with Suzuki Motor Co. Ltd. Japan. Company entered into a technical know-how and assistance agreement with Suzuki Motor Co. Ltd., of Japan. As per the terms of the Collaboration, Suzuki agreed to furnish complete technical information and know-how, trade secrets and other data. In 1992 company launched two new models of motorcycles "Samurai" and "Shogun". In 1993 company launched a new model of moped viz. "TVS Scooty". TVS-Suzuki, a joint venture between the TVS group and Suzuki Motor Corporation, Japan was the first company to launch a 100-cc motorcycle in the Indian market. Company also launched its new moped model, the XL Super. Its new generation state-of-the-art four-stroke scooter "Spectra" was launched in spectacular fashion at the TVS Millennium Show on October 1 in New Delhi. In 2000, Company launched Suzuki Fiero and later it launched its indigenously developed 4-stroke motorcycle, TVS Victor 125 cc. Company launched 4 new mobikes including a new brand 100-cc mobike called the Centra and Fiero F2 and Scooty Pep models. Company has tie up with SBI, UBI, Andhra bank and other banks for scooter and Motorcycle financing. The subsidiaries of the company are namely Sundaram Auto Components, TVS Motor Singapore, TVS Motor Company (Europe), PT TVS Motor Company, Indonesia.
Products & Services—
Company is one of the largest two-wheeler manufacturers in India. TVS Motor currently manufactures a wide range of two-wheelers from mopeds to racing inspired motorcycles. In Motorcycles it has various brands like Apache RTR, Fiero, Metro, Victor, Flame SR 125, StaR City, Sport etc. In Variomatic Scooters it has Scooty Streak, Scooty Pep+, Scooty Teenz etc. and in Mopeds it has TVS XL Super, TVS XL Heavy Duty. Company also provides various variants of these models for different class of consumers. Company has two state-of-the-art manufacturing plants in Mysore and Hosur.
Company has achieved world class levels in quality as well as improvements in design and processes; the company has formed special task forces to monitor quality related performance. The basic tenets of TQM, including Daily work management, Policy management, Kaizen (continuous improvement), Training and standardization are followed across the organization. TVS Motor Company awarded the prestigious and coveted Deming Prize, instituted by JUSE (Union of Japanese Scientists and Engineers). Company was also awarded the prestigious "TPM Excellence award - First category" by Japan Institute of Plant Maintenance (JiPm), rated as the benchmark in TPM excellence in India.
Company has one of the most extensive networks with over 541 dealers, 2500 Customer touch points and 1500 authorized service centers. Currently, more than 400 engineers work on developing radically new products and cutting edge engine technologies. R&D team has developed the revolutionary Variable Timing Intelligent (VT-i) Engines, one of the most innovative technologies developed in the two-wheeler industry.
Recent Development—
TVS Motor is planning to launch the country’s first motorcycle with automatic clutch by the end of this calendar year. It is learnt that this motorcycle will spare the rider of constantly having to engage the clutch to shift gears, which would be a welcome relief in choked traffic conditions. Only the gears need to be changed and there would not be any compromise on pickup or speed so that thrill and joy of biking are intact. Sources say that the company has been working over the last 18 months on this motorcycle.
Valuation—
At current market price, stock is trading at 12.4 P/E multiple of its FY2010 Estimated earnings. We recommend investors to buy "TVS Motor" with medium to long term investment horizon

Source: Internet (Valuenotes by Abhishek Jain)

Stock Idea: Kaveri Seed Company Ltd.

Kaveri Seed Company Ltd (Rs 215)
(BSE Code- 532899, NSE Code- KSCL)
(Equity - Rs13.7 cr, P/E - 10, Market Cap - Rs294 cr)
The prices of food and feed products are on an upward spiral, stoked by rising demand, shortfalls in output and expanding export opportunities. This has put producers of agricultural inputs such as hybrid seeds in a sweet spot. Kaveri Seed Company(KSC), an established producer of hybrid seeds for crops such as corn (maize), sunflower and paddy, may be one of the key beneficiaries of this trend. The nascent Indian market for hybrid seeds is set to expand strongly, given the rapid rate of hybrid adoption and buoyant produce prices. This suggests that the company may be well placed to deliver a 20 per cent-plus annual growth over the next two-three years A small-sized company with a sizeable portfolio of sunflower, maize, cotton, and paddy hybrids, KSC has sustained strong financial performance since its IPO in September 2007. With a two-decade presence in the seeds business, Kaveri Seed has a portfolio of about 40 certified hybrids in corn (12 hybrids), sunflower (5), cotton (6) and paddy (13). Building a product portfolio of this size requires a fairly long gestation period, as development of each hybrid strain usually takes four-six years. Production of hybrid seeds also calls for access to proprietary germplasm (genetic material) with the required traits making for high entry barriers to the business. The company also sells crop micronutrients under the brand name Microtek; another business with good potential The bright demand prospects for domestic seed companies arise from the huge shortfall in availability of quality seeds and increasing adoption of hybrids, given the need to improve agricultural yields on food and feed crops (Indian yields are far below world standards). The Indian market has been seeing a substantial deficit in the supply of certified seeds over the past few years. Data put out by the Agriculture Ministry for kharif 2009 suggests that crops such as paddy (shortfall of 28 lakh quintals for the season), maize (2.2 lakh quintals), sunflower (0.59 lakh quintals) and cotton (1.15 lakh quintals) saw persistent shortfalls over the past four years. All of these crops feature in Kaveri Seed’s portfolio. The policy regime for the sector is likely to be friendly over the next few years, given the incumbent government’s stated intention of improving seed availability In terms of financials, Kaveri Seed has managed to deliver impressive and yet consistent growth over the past four years, with a compounded annual growth of 22% in sales and over 100% growth in profits in this period, albeit on a low base. Operating profit margins over this period have expanded from the low single-digits to well over 25% for the past three years; the bulk of this improvement coming from a backward integration move into foundation seeds in 2006-07. That performance was sustained over the past year. For the year ended March 2009, net profits rose 64% to Rs 22.9 cr. while net sales grew 27% to Rs 123 cr., driven by a higher contribution from the seeds business and overall margin expansion. The micronutrients division despite more sedate growth than seeds managed improved margins. The FY09 EPS on a equity of 13.7 cr. (Promoters holding- 60.98%. FII/MF holding- 20%) stood at Rs 16.71 and the dividend declared was 20%. For the half year ended Sept. 2009, KSC has posted 26% growth in net profit to Rs 25.82 cr. on 50% rise in net sales to Rs 126.84 cr. Going forward, the company appears well placed to sustain margins at healthy levels, mainly due to pricing power. Focussed on lucrative cash crops such as sunflower, maize and cotton, the company may be comfortably placed to pass on any cost increases to consumers, given the strong demand. The upward bias in farm product prices and the sharp hikes in the minimum support prices of key crops last year are likely to have lifted the purchasing power of farmers and may lend support to both volumes and pricing power for Kaveri’s target crops. Kaveri’s balance sheet remains quite strong, with near zero debt (thanks to the IPO proceeds of Rs.68 crore), healthy ROCE and RONW (22% and 16% respectively).
The nascent Indian market for hybrid seeds is set to expand strongly, given the rapid rate of hybrid adoption and buoyant produce prices. This suggests that the company may be well placed to deliver a 20% plus annual growth over the next two-three years. At current valuations, the stock trades at 10.2 times its FY 2010E earnings (Rs 21) and 8.6 times its estimated FY 2011 earnings(Rs 25). Given the bright growth prospects for the seeds and micronutrients business, the company’s growth history and established presence, the stock deserves a better valuation. The risks to earnings arise from the company’s current crop and geographic concentration, agro-climactic risks and the stock’s low liquidity and small-cap status. Invest in small lots and accumulate on weakness linked to broad markets for decent returns over the medium-long term.

Source: Internet (Valuenotes by Sanjay Chhabria)

Stock Idea: Autoline Industries Ltd.

Autoline Industries Ltd (Rs 119)
(BSE Code- 532797, NSE Code- AUTOIND)
(P/E - 9.5, Market Cap - Rs145 cr, Equity - Rs12.2 cr)
Autoline Industries (AIL) supplies complex sheet metal assemblies and sub-assemblies to Tata Motors, Bajaj Auto, Kinetic Engineering, Mahindra & Mahindra, Walker Exhaust and Fiat India. Tata Motors, which buys components for passenger cars and commercial vehicles, is Autoline's largest customer. AIL, which has five facilities in Pune, is a design engineering and manufacturing solutions provider focused on sheet metal assemblies and formed tubular products. AIL had come with an IPO in January 2007 at Rs 225 per share. Funds raised through the IPO have been used to upgrade and expand Autoline's Chakan facility in Pune; set up another manufacturing facility at the same location; relocate and consolidate a couple of smaller units; establish a corporate office; fund acquisitions, and provide long-term working capital resources. The equity capital of the company is Rs 12.22 cr. of which promoters hold 26.62%, FII/Mutual funds hold 1.82%, corporate bodies hold 16.65% and Public holds 54.91% The Indian automobile ancillary sector is transforming itself from a low -volume, highly fragmented one into a competitive industry, and backed by competitive strengths, technology and transition up the value chain. Despite a relatively small share of Asia in the global pie, India is now amongst one of the most preferred destinations and has come to occupy the image of an exporting hub for most of the major global OEM players. Almost all the big auto manufacturers of the world are either already or are in the process of outsourcing from India.
AIL has realized the potential of component manufacture business. It owns in-house design engineering, rapid prototyping and mass manufacturing capabilities. AIL had an in-house CAD/CAE/CAM facility and decided to scale up the capabilities of this facility by acquiring a design engineering software company (a majority stake 51%) in Autoline Dimensions Software Pvt. Ltd. (Formerly known as Dimensions Engineering Software Services Pvt. Ltd.), which has expertise in design engineering services. Further it plans to expand capacities by setting up another plant at Chakan (Unit –II). AIL has taken efforts to shift from low margin products to high margin products. Autoline Dimension would be one of the future growth driver providing a boost to AIL’s revenue.
For FY09, AIL has reported net profit of Rs 4.68 cr. on net sales of Rs 350 cr. on consolidated basis.. On a equity of 12.2 cr., the EPS stood at Rs 3.84 and the dividend declared was 10%. From a turnover of Rs 51 cr. in FY-2004, Autoline's revenues scaled up to Rs 350 cr. in FY09. For the half year ended September 2009, the figures are net sales of Rs 198.23 cr. and net profit of Rs 6.67 cr. (up 68%) on consolidated basis. The EPS for first half stands at Rs 5.5. On Oct. 28, 2009, Autoline Industries USA, a wholly owned subsidiary of Autoline Industries announced that it has received orders to manufacture brake and clutch pedal assemblies from 2 US automakers. The new business will bolster the sales of US unit by US$ 40 Million over the next 4 year period AIL, should be able to post a topline of around Rs.400 cr, and PAT of Rs. 14-15 cr., iving an EPS of Rs.12-13 for FY10. The share is presently trading at Rs. 119, which discounts FY10E earnings by 9.5 times. In view of the improved results and good medium term prospects, Investors can start accumulating the stock at current levels and add more on declines for decent returns of 40%-50% over the next 6-8 months.

Source: Internet (Valuenotes by Sanjay Chhabria)