TRADING CALL 21ST AUGUST 2015

AUGUST EXPIRY SPECIAL CALLS

BUY ITC 340 AUG CALL @ 0.9 TARGET 2.5-4 STOPLOSS 0

BUY FEDERAL BANK 70 AUG CALL @ 0.4 TARGET 2-3 STOPLOSS 0

GOOD LUCK

TRADING CALLS (F&O) 05TH AUGUST 2015

KEEP AN EYE ON FEDERAL BANK ABOVE 69.20 IT CAN BLAST UPTO 78-80 INTRADAY.

BUY FEDERAL BANK 75 AUG CALL @ 0.5 TARGET 2.5-4 STOPLOSS 0

BUY NMDC 110 AUG CALL @ 1.75 TARGET 3-4 STOPLOSS 0.75


GOOD LUCK

LOW RISK TRADING CALLS (OPTION) 23 JULY 2015

BUY ITC JULY 320 CALL @ 2.25 TARGET 5-7 STOPLOSS 1

BUY PNB JULY 150 CALL @ 0.90 TARGET 2.5-3 STOPLOSS 0

GOOD LUCK

LOW RISK TRADING CALLS (OPTION) 22 JULY 2015

BUY SAIL JULY 60 CALL @ 0.3 TARGET 1.5-2 STOPLOSS 0

BUY TATAMTRDVR JULY 250 CALL @ 1.5 TARGET 5-7 STOPLOSS 0

GOOD LUCK

TRADING CALLS (OPTION) 15 JULY 2015

BUY TATAMOTORS DVR JULY 240 CALL @ 6.25 TARGET 12-15 STOPLOSS 3.75

BUY ICICI BANK JULY 320 CALL @ 5.5 TARGET 9-12 STOPLOSS 3.5

BUY PNB JULY 150 CALL @ 2.5 TARGET 4.5-6 STOPLOSS 1

GOOD LUCK

TRADING CALLS 12TH JULY 2015

BUY PETRONET LNG JULY 200 CALL @ 1.75-2 TARGET 5-8 STOP LOSS 0.5

BUY TCS JULY 2500 CALL @ 45 TARGET 85-100 STOP LOSS 28

GOOD LUCK

TRADE CALLS 09TH JULY 2015

BUY PNB JULY 150 CALL @ 3.7 TARGET 5-7 STOPLOSS 2.75.

BUY TATA STEEL JULY 300 CALL @ 3.5 TARGET 6-8 STOPLOSS 2.

BUY NMDC @ 113 TARGET 122-125 STOPLOSS 110/- (INTRADAY)

GOOD LUCK

5 Best Stocks from Cement & Banking Sectors

Result Update: Action Construction Equipments Ltd

Action Construction Equipment (ACE) reported lower than expected revenues for4QFY2015, mainly owing to lower than expected revenue from the Cranessegment. Reported revenues were down 3.2% yoy, but were up 13.4% sequentially to164cr. Despite revenue is appointment, ACE impressed us by reporting a good set of EBITDA and PAT margins. The EBITDA margin expanded from 3.5% in 4QFY2014 to 4.5% in 4QFY2015, reflecting (1) 4.6% decline in raw material expenses (to136cr), and (2) 5.0% decline in employee expenses (to12cr). The PAT margin improved 21bp yoy to 1.2% for the quarter. This is despite 57.9% yoy decline in other income (to1cr), and sharp increase in effective tax rate to 40.1% (vs 14.0% in 4QFY2014). Key Positives: Turnaround in the Material Handling & Construction Equip (MH-CE) segment, Margin expansion ahead of our estimates. 

 

Key Negatives: Miss on the Cranes segment sales.

 

Outlook and Valuation: At the current market price of 39/share, ACE is trading at FY2016E and FY2017E P/E multiple of 37.7x and 10.1x, respectively. We are optimistic that ACE would be able to maintain its numero uno position in the domestic Pick and Carry cranes business. This, when coupled with a wide range of product offerings, wide pan-India distribution network, along with their recent cost cutting initiatives, comforts us. We estimate ACE to report an 18.4% and

138.1% top-line and bottom-line CAGR, respectively, during FY2015-17E.

 

Accordingly, we expect the RoE to improve from 1.3% in FY2014 to 11.3% in FY2017E. At the backdrop of sharp growth in profitability and RoE expansion, we assign 14.0x P/E multiple to our FY2017E EPS estimate of 3.9/share to arrive at a price target of 54.Given the 38.4%  upside in the stock from the current levels,we recommend a Buy rating on the stock. 

Source: Angelbroking.com

Result Update: Power Grid Corporation

Result Updates

Buy

CMP  143   Target Price   170

Revenue and earnings growth in-line with estimate Power Grid Corporation of India (PGCIL) reported a healthy 19.6% yoy increase in transmission revenues at Rs4,426cr, marginally below our estimate of Rs4,487cr. Consultancy revenues from services increased 6% yoy to Rs157cr, well ahead of our estimate of Rs133cr. Telecom revenues too were ~15% ahead of our estimate at Rs79cr. The increase in consultancy and telecom income more than offset the lower than expected transmission revenues, resulting in total operating income of Rs4,703cr, 0.3% higher than our estimate of Rs4,689cr. EBITDA margin increased 140bp yoy to 86.3% led by higher income from consultancy and telecom. Net profit increased ~20% yoy to Rs1,412cr vs our estimate of Rs1,378cr. Capitalisation below expectations, capex guidance maintained 4QFY2015 capitalisation came in lower than expected at Rs4,986cr, vs our estimate of Rs6,383cr. This was largely on account of delay in the commissioning of certain projects, which would be capitalized in 1QFY2016. PGCIL incurred a capex of ~Rs22,456cr in FY2015 in line with its target of Rs22,500cr. 

The company has guided for ~Rs45,000cr capex (Rs22,500cr in FY2016 and Rs22,550cr in FY2017) over the next two years. The current capital work in progress (CWIP) stands at ~Rs56,576cr. With total outlay upwards of Rs1,00,000cr, capitalisation is expected to remain healthy, providing strong earnings visibility. Outlook and valuation Led by strong capex plans and a healthy capitalisation rate, we expect PGCIL to report a revenue and EBITDA CAGR of ~15%. At the current market price of Rs143, the stock trades at a P/B of 1.8x and 1.6x its FY2016E and FY2017E BV of Rs81.5 and Rs91.2, respectively. We remain positive on the stock with a target price of `170, based on ~1.85x FY2017E book value, implying an 18% upside from the current levels. Maintain Buy.

Source: Angelbroking 

POSITIONAL TRADING CALLS FOR 22ND JANUARY 2014

BUY RELIANCE CAPITAL @ 348/- FOR TARGET 358-365-375/- STOP LOSS 344/-

BUY TITAN COMPANY @ 218/- FOR TARGET 226-232-235/- STOP LOSS 215/-

BUY KTK BANK @ 104/- FOR TARGET 109-115-122/- STOP LOSS 101.5/-

GOOD LUCK

TRADING CALLS FOR JUNE SERIES

BUY NMDC @ 105/- TARGET RS. 125-128 STOP LOSS 102/-

BUY DLF @ 178/- TARGET RS. 188-195/- STOP LOSS 173/-

GOOD LUCK

Tech Mahindra/Mahindra Satyam: Buy, add on dips

Tech Mahindra/Mahindra Satyam

Background
Started as Mahindra British Telecom (MBT) in 1986 as a 60-40 Joint Venture (JV) between Mahindra and Mahindra (M&M) and British Telecom (BT), Tech Mahindra focused exclusively on the telecom vertical with BT initially contributing 100% of its revenues. This revenue contribution from BT reduced to 72% at the time of IPO in July 2006. In April 2009, Tech Mahindra acquired 42.7% stake in the then troubled Satyam Computer Services for Rs 3,000 crore by purchasing 502 million equity shares at Rs 58 per share. Tech Mahindra has brought stability into Satyam’s business and since then Satyam has not seen any major client attrition.

Triggers
- Integrating Satyam will enable Tech Mahindra to participate in large deals, offer a strong expertise spread over different verticals and service lines and cross sell its service offerings to a much wider client base and eventually reduce dependence on British Telecom and AT&T.

- Over the last few years, the company has been successful in scaling up its  Non-BT revenues. This has not only helped it offset the decline in BT revenues but also post an overall growth for the company.

- Recent acquisition of 100% stake in Hutchison Global services (sales of USD 170 million expected per year for the next five years) and 51% stake in Comviva (sales of USD 70 million in FY11) by Tech Mahindra would further improve growth and enhance service offerings.

- Acquisition of 51% stake in Complex IT by Mahindra Satyam in Feb 2013 for $23 mm to strengthen Enterprise offerings and expand presence in Brazil.

Concerns
- Legal cases pending against Mahindra Satyam would remain an overhang in the short term.

- Any aggressive ramp down by top client BT would drag down revenue growth.

Valuation & Recommendation
Based on post merger creation of fifth largest entity, sound balance sheet, good execution track record and steady improvement in the operational performance with strong growth & margin expansion, HDFC Securities assigns 11.5xFY14E EPS, which gives them a price target of Rs 1258.9. They feel investors could buy this scrip at current levels and add it on dips in the price band of Rs 986 - 1029 (9-9.4xFY14E EPS) for their price target over the next one to two quarters. Investors who purchase Mahindra Satyam can do so as its share price will move in tandem with that of Tech Mahindra until the final swap (ratio proposed 2:17) takes place. The merger is expected to complete by end of Q4FY13 or early Q1FY14.
Source: valuenotes.com

HDFC Sec Scrip ID	Industry	CMP	Recommended Action	Target	Time Horizon
TECMAHEQNR	IT	Rs 1104.9	Buy at CMP and add on dips to Rs 986 to Rs 1029 band	Rs 1258.9	1-2 quarters
HDFC Sec Scrip ID	Industry	CMP	Recommended Action	Target	Time Horizon
SATCOMEQNR	IT	Rs 129.1	Buy at CMP and add on dips to Rs 114 to Rs 119 band	Rs 148.1	1-2 quarters

Investment Idea: Chemfab Alkalies

Buy Chemfab Alkalies at current levels, says Ashish Chugh, Investment Analyst & Author of Hidden Gems.

Chugh told CNBC-TV18, "Chemfab Alkalies manufactures caustic soda. Incidentally this was the first company in the country to have introduced the membrane cell technology which they did way back in 1985. Now there was a small incidence of gas leak in this company in the month of January. Though this was a small incidence but it was probably blown out of proportion and the plant remained closed for more than 3 months. Only after they filed litigation in the high court the plant got reopened in the month of May."

He further added, "Now the effect of closure of plant was reflected in both the March quarter and June quarter numbers wherein it reported a loss of about Rs 1.3 crore in the March quarter and about Rs 2 crore in the June quarter. Now looking at a full year number this company in spite of a loss of Rs 1.3 crore in the March quarter, ended the year with a profit after tax of close to Rs 9.7 crore as against Rs 7.2 crore in FY10."

"In Q2 also this company has reported sales of about Rs 24.25 crore which was up by about 4% and the profit before tax was up by 40% but profit after tax was down by 30% on account of an additional tax provision of Rs 2.5 crore pertaining to the previous years. Now if that provision had not been made, the quarter profit would have been more than Rs 4 crore."

"This company had a debt of about Rs 25 crore 5 years back. The company has been purling its debt and today it's a debt free company. Now looking at the valuations of the company currently the stock trades at about Rs 40 and the market cap is about Rs 37 crore. This is a totally debt free company and as on 31st March 2011 this company had cash and cash equivalents of close to Rs 23 crore which means that you have this business which is available at a business valuation of about Rs 14 crore."

"If you see the numbers of FY11 closely, the cash profit alone was about Rs 17 crore. In a normal year this company is able to make a profit after tax of about Rs 12-13 crore and a cash profit of close to Rs 20 crore. Gross block is about Rs 150 crore. So given all these things of course the numbers for first 3 quarters – the 3 quarters have not been very good but these are because of certain reasons which are not recurring in nature."

"Going forward we can see this company report good profit for the coming quarters and I think at a business valuation of Rs 14 crore, debt free, this company paid a dividend of about 50% for the last two years. Before that some years it had also paid about 100% dividend. It is a Rs 5 paid up stock and dividend yield at the current price comes to about 6.5%. So given all these factors I think this stock looks to be a value buy at the current price and I think it has got minimum downside from these levels."

Source: Internet (By Ashish Chugh)

Stock Idea: Patni Computer

The company had a dismal Q2, where its operations were affected largely by the change in the management and ownership. And looking at the Q3CY11 performance, it seems most of the integration pain has been absorbed. The results were better than expected with the company posting a net profit of Rs.90 crore v/s a net loss of Rs.51 crore in current Q2. Total income grew by just 2% . To a large extent, net profit was helped due to 16% decline in personnel costs at Rs.519 crore. The company laid off a few employees post its iGate acquisition; with the total employee strength now at 17,853, which is 519 employees lesser than Q2. Forex gain of Rs.36.39 crore also helped. Revenue realization in Q2 was at Rs.44.72/us$ and in Q3 it was at Rs.49.50/us$ which in itself was a huge advantage.

 

Looking ahead, the company will end 2011 with all the integration pain behind it and though YoY performance at the end of the year might seem under pressure, it is good to know that it is entering 2012 with a clean slate, a new management, fully integrated. iGate Corporation acquired a 82.4 per cent stake in Patni Computers in May 2011. During the quarter, the company generated cash flow of Rs.11.64 crorefrom operating activities and net cash flow was placed at Rs.213.26 crore. Q4 could be better and in 2012, the new management is sure to infuse more vigour into the company. The real spike up in the stock will come once the company announces delisitng, which seems like a certainty. This could happen over the next 6 to 12 months and those with the holding capacity can buy into the stock on not just delisitng expectations but also on strong earning outlook.

Source: Internet (By S P Tulsian)

Stock Idea: Dish TV

As expected,the company has come with a reduced net loss in Q1FY12. Loss was down at Rs.18.32 crore compared to Rs.37 croreloss in Q4FY11 and net loss of Rs.63 crore in Q1FY11. The company has done well on the topline front too. Net sales rose 6% on a sequential basis and 51% on a YoY at Rs.460 crore. OPM has been at its best at 27.33% v/s 25% in Q4FY11 and 13% in Q1FY11.

Margins have improved on the back of improved ARPUs and tight costs control. In current Q1, total operating expenses were at 76% of the topline, which is down from 89% in Q1FY11 and from 79% in Q4FY11. What has also helped is the increased price for set top boxes, improved pack mix, higher contribution from HD which earns a substantial premium over regular subscription packs. These improvements seem sustainable in the current fiscal and before the end of FY12, the company is sure to turnaround. The stock price dropped after results due to profit taking due over the long run, the stock holds promise.

Source: Internet (S P Tulsian)

Stock Idea: Crompton Greaves

For Q1FY12, despite a 6% YoY rise in net sales at Rs.2438 crore, the company reported a 58% fall in net profit at Rs.79 crore. Cost of raw material rose 35%. Contribution from power sector remained poor in the single digit but more sharp was the fall in the consumer sector, which fell from 35% to 2%. The company has blamed it all on the delays in new orders in the domestic market due to a slowdown in project finalisation by customers.International business activity in Middle East was affected by around 5-10%.

More than the poor performance, the market has probably taken other factors  - former CEO SM Trehan selling his entire holding of 1.8 lakh shares during Jun 29-July 1 at an average price of Rs.260/share. And secondly, investors continue to remain miffed with its buy of an aircraft for Rs.270 crore, which is being viewed as an extravagance. The stock has been witnessing a major sell off and for the discerning long term investor, this may be a good level to accumulate. The first half of FY12 could remain tough but second half could start seeing improvement.

Source: Internet (by S P Tulsian)

Stock Idea: Navin Flourine

This Arvind Mafatlal operates the largest integrated fluorochemicals complex in India and it also generates a good source of income from sale of Carbon Credits. Its performance for FY11 was subdued but it has begun current fiscal with a big bang. The company posted an unbelievable four-fold jump in net profit at Rs.60.22 crore v/s Rs.15.23 crore on Q1FY11. This is almost close to its entire FY11 net profit of Rs.72 crore. Net sales doubled up to Rs.195 crore. This performance was mainly on the back of robust sales and higher realisations from its refrigerant gas business. Sale of CERs (Certified Emission Reductions or carbon credits) continued in Q1FY12, earning it Rs.64 crore. If one may recollect, the company did not sell any CERs in Q1FY11 no CERs were sold in Q1FY11 due to a suspension of issuance by the UNFCCC. EBIDTA margin stood at a whopping 46% and PAT margin at 31%.

The company recently completed buying back equity shares at a price of Rs.400/share, which is why the equity capital today stands reduced from Rs.10.09 crore to Rs.9.76 crore. It is in the process of restructuring its Organic Chemicals activities including dismantling and redeploying some of the assets of its Dewas unit in other projects currently under implementation at Surat. The Rewas site is now being utilized to set up another state-of-the-art contract manufacturing facility. EPS for Q1FY12 stands at Rs.62, which discounts the current price by around 6 times. For entire FY11, its EPS was at Rs.71. Clearly a fantastic beginning!

Source: Internet (by SP Tulsian)

Stock Idea: ITC

Just when the Street had got disenchanted with the numbers of HUL, the performance of ITC came in and it spread a lot of cheer. On a 20% rise in net sales at Rs.5768 crore, the company for Q1FY12, on a YoY showed a 24.51% rise in net profit at Rs.1333 crore. Raw material cost was up 26%. The company has other income component of Rs.144 crore v/s Rs.98 crore in Q1FY11. Even if we remove this component, the rise in net profit is over 22%. Clearly, the bottomline has essentially been driven by the topline.

Cigarettes remained its main bread earner. It showed a 16% rise in revenue and 21% rise in EBIT. FMCG products showed a 20% rise in revenue and loss of Rs.76.28 crore, which is 14% lower than the loss of Q1FY11. Hotels revenue registered a 9% rise, 33% rise in EBIT. Agri revenue rose 26% with a 21% rise in EBIT while paper showed a 21% rise in revenue as well as EBIT. Overall, all segments have shown an improvement. The company had declared a 1:1 bonus and equity capital has thus shot up from Rs.381.82 crore to Rs.773.81 crore. And even post the bonus, the company is sitting on a jaw dropping reserve of Rs.15126.12 crore. Another positive point in favour the company is that its interest outgo for Q1FY12 at Rs.16.45 crore was just 0.28% of the net sales of the quarter. Surely a stock to own for long term.

Source: Internet (by S P Tulsian)

Stock Idea: Narmada Gelatin

Accumulate Narmada Gelatin below Rs 100, says Ashish Chugh, Investment Analyst.

Chugh told CNBC-TV18, "We like the stock of Narmada Gelatin for two reasons. First is this is a debt free co which is available at very attractive business valuation and also provides margin of safety. The second reason is the possibility of the company getting sold in the future and this event as and when it happens may lead to a huge value unlocking for the company in the future.”

He further added, “This is belonging to the Shaw Wallace Group and manufactures gelatin and this is a 50 years company. The user industries for the company’s products are primarily pharma and food industry.”

“If you look at the financials of the company for FY11, this company has achieved sales of about Rs 91 crore, which was up by about 10% in the same period last year. Profit after tax was up by about 15% to about Rs 9.5 crore. This company has got a small equity of about 4 crore. So EPS for FY11 was about Rs 23.50. At the current price of Rs 95 this stock is traded at a PE multiple of just about 4-4.5.”

“The reason I am saying that - the business is available at attractive valuations because if you look at the balance sheet of the company - now this is a totally debt free company. The net current asset in the balance sheet is close to Rs 26 crore - I am talking about FY10 balance sheet. The company has got investment in mutual fund of about Rs 5.5 crore. If you add the profit for FY11 into this - you get total current assets and cash of about Rs 41 crore. As against current assets of about Rs 41 crore the market cap of this debt free company is less than Rs 40 crore, which means that the biz of a company which is 50 years old is available virtually free of cost.”

“The promoter holding is about 75%. The company recently announced a dividend of 40% which at the current price of Rs 95 would result in a dividend yield of more than 4% for the investor. This company caters to a sector which is more steady compared to many other sectors. Pharma and FMCG is a sector, which is not really getting affected by the slowdown. The stock is available at a discount to book value. This is a 50 year old company having gross block of about Rs 50 crore. I think the current valuation will be substantially higher.”

“If you see the Shaw Wallace Group - they have been slowly selling most of their companies. Their flagship company - Shaw Wallace and Company, the other companies like Hindustan Dorr-Oliver, Mather & Platt Pumps, Falcon Tyres, Gordon Woodroffe - I think all these companies have got sold in the last few years. Narmada Gelatin is probably lying unsold mainly because of the fact that management may not have got an attractive valuation. So this is a business which is giving you a dividend yield of 4%.”

“It is steady stock, steady growth in the financials of the company. Whether and when this company gets sold is anybody’s guess. But I think in spite of that, given its steady performance over so many years and the attractive valuation - stock has got the potential to get re-rated. So I think any price below Rs 100 maybe a good opportunity to accumulate the stock."

Source: Internet (moneycontrol.com by Ashish Chug)